United States Postal Service - Universal Service Obligation and Monopoly Status

Universal Service Obligation and Monopoly Status

Article I, section 8, Clause 7 of the United States Constitution grants Congress the power to establish post offices and post roads, which has been interpreted as a de facto Congressional monopoly over the delivery of mail. Accordingly, no other system for delivering mail – public or private – can be established, absent Congress's consent.

The mission of the Postal Service is to provide the American public with trusted universal postal service at affordable prices. While not explicitly defined, the Postal Service's universal service obligation (USO) is broadly outlined in statute and includes multiple dimensions: geographic scope, range of products, access to services and facilities, delivery frequency, affordable and uniform pricing, service quality, and security of the mail. While other carriers may claim to voluntarily provide delivery on a broad basis, the Postal Service is the only carrier with a legal obligation to provide all the various aspects of universal service at affordable rates.

Proponents of universal service principles claim that since any obligation must be matched by the financial capability to meet that obligation, the postal monopoly was put in place as a funding mechanism for the USO, and it has been in place for over a hundred years. It consists of two parts: the Private Express Statutes (PES) and the mailbox access rule. The PES refers to the Postal Service's monopoly on the delivery of letters, and the mailbox rule refers to the Postal Service's exclusive access to customer mailboxes.

Proponents of universal service principles further claim that eliminating or reducing the PES or mailbox rule would have an impact on the ability of the Postal Service to provide affordable universal service. If, for example, the PES and the mailbox rule were to be eliminated, and the USO maintained, then either billions of dollars in tax revenues or some other source of funding would have to be found.

Some proponents of universal service principles suggest that private communications that are protected by the veil of government promote the exchange of free ideas and communications. This separates private communications from the ability of a private for-profit or non-profit organization to corrupt. Security for the individual is in this way protected by the United States Post Office, maintaining confidentiality and anonymity, as well as government employees being much less likely to be instructed by superiors to engage in nefarious spying. It is seen by some as a dangerous step to extract the universal service principle from the post office, as the untainted nature of private communications is preserved as assurance of the protection of individual freedom of privacy.

Critics of universal service principles include several professional economists advocating for the privatization of the mail delivery system, or at least a relaxation of the universal service model that currently exists. Rick Geddes argued in 2000:

• First, basic economics implies that rural customers are unlikely to be without service under competition; they would simply have to pay the true cost of delivery to them, which may or may not be lower than under monopoly.
• Second, basic notions of fairness imply that the cross-subsidy should be eliminated. To the extent that people make choices about where they live, they should assume the costs of that decision.
• Third, there is no reason why the government monopoly is necessary to ensure service to sparsely populated areas. The government could easily award competitive contracts to private firms for that service.
• Fourth, early concerns that rural residents of the United States would somehow become isolated without federally subsidized mail delivery today are simply unfounded. ... Once both sender and receiver have access to a computer, the marginal cost of sending an electronic message is close to zero.

However, as the recent notice of a termination of mail service to residents of the Frank Church—River of No Return Wilderness indicates, mail service has been contracted to private firms such as Arnold Aviation for many decades. KTVB-TV reported:

'"We cannot go out every week and pick up our mail....it's impossible", said Heinz Sippel. "Everyone gets their mail. Why can't we?" said Sue Anderson. Getting mail delivered, once a week, by airplane is not a luxury, it's a necessity for those who live in Idaho's vast wilderness – those along the Salmon and Selway rivers. It's a service that's been provided to them for more than half a century – mostly by Ray Arnold of Arnold Aviation.

The decision was reversed; U.S. Postmaster General John Potter indicated that acceptable service to back country customers could not be achieved in any other fashion than continuing an air mail contract with Arnold Aviation to deliver the mail."

The Postal Act of 2006 required the Postal Regulatory Commission (PRC) to submit a report to the President and Congress on universal postal service and the postal monopoly in December 2008. The report must include any recommended changes. The Postal Service report supports the requirement that the PRC is to consult with and solicit written comments from the Postal Service. In addition, the Government Accountability Office is required to evaluate broader business model issues by 2011.

On October 15, 2008, the Postal Service submitted a report to the PRC on its position related to the Universal Service Obligation (USO). It said no changes to the USO and restriction on mailbox access were necessary at this time, but increased regulatory flexibility was required to ensure affordable universal service in the future.

Obligations of the USO include uniform prices, quality of service, access to services, and six-day delivery to every part of the country. To assure financial support for these obligations, the postal monopoly provides the Postal Service the exclusive right to deliver letters and restricts mailbox access solely for mail. The report argued that eliminating or reducing either aspect of the monopoly "would have a devastating impact on the ability...to provide the affordable universal service that the country values so highly." Relaxing access to the mailbox would also pose security concerns, increase delivery costs, and hurt customer service, according to the Post Office. The report notes:

It is somewhat misleading to characterize the mailbox rule as a "monopoly," because the enforcement of 18 U.S.C. § 1725 leaves customers with ample alternative means of delivering their messages. Customers can deliver their messages either by paying postage, by placing messages on or under a door or a doormat, by using newspaper or non-postal boxes, by telephoning or emailing, by engaging in person-to-person delivery in public areas, by tacking or taping their notices on a door post, or by placing advertisements in local newspapers. These methods are comparable in efficacy to communication via the mailbox.

Most of these alternatives are not actually free in some communities. For example, in Chicagoland and many other major metros you must get a background check from Police and pay a daily fee for the right to solicit or post commercial messages on private property.

Regarding the monopoly on delivery of letters, the report notes that the monopoly is not complete, as there is an exception for letters where either the amount paid for private carriage of the letter equals at least six times the current rate for the first ounce of a single-piece First-Class Mail letter (also known as the “base rate” or “base tariff”) or the letter weighs at least 12.5 ounces.

The Postal Service said that the USO should continue to be broadly defined and there should be no changes to the postal monopoly. Any changes would have far-reaching effects on customers and the trillion dollar mailing industry. "A more rigidly defined USO would ... ultimately harm the American public and businesses," according to the report, which cautions that any potential change must be studied carefully and the effects fully understood.