February 8, 2017 (RARC-WP-17-003)

  • Recently stakeholders have expressed an interest in understanding how other major posts’ prices are regulated and how posts manage the relationship between price regulation, profitability, and service.
  • The OIG worked with WIK-Consult to provide research on how postal prices are regulated in five other countries.
  • We found that in all of the five countries, price regulation has recently become more flexible in two ways – through a reduction of scope of products that fall under price regulation or allowance of higher price increases on regulated products.

The current price regulation for the U.S. Postal Service’s market dominant products includes a price cap based on the Consumer Price Index (CPI). Previous work by the U.S. Postal Service Office of Inspector General (OIG) has shown that the existing price cap is unsustainable in the current environment of declining First-Class Mail volume. The OIG asked WIK-Consult (WIK), a consulting firm with expertise in international postal regulation, to provide research on how postal prices are regulated in five countries: Australia, Canada, France, Germany, and the United Kingdom. The OIG notes several key findings from this report.

  • Price regulation in these countries has not been static. In all of the five examined countries, the regulators revisited and modified price regulation to allow for greater pricing flexibility in response to changing market conditions. Changes occurred in two ways — reduction in the scope of products covered by regulation and allowance of higher price increases on regulated products. Most recently, the changes have allowed price increases that are greater than inflation.
  • It appears that the combination of higher prices, efficiency gains from modernization, and growing parcel volumes have helped to stabilize the posts’ respective financial positions.
  • In general, service has remained stable or declined slightly, but it is unclear what is driving this result. Price increases may have allowed the posts sufficient revenue to maintain service. However, it is also possible that service performance has been driven by better enforcement mechanisms or more achievable service goals.

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Comments (2)

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  • anon

    I am an 81-year-old retired Vietnam vet and I cannot believe how I have been treated by your Joe Pool post office located at 5521 Hampton Rd, Dallas, TX 75232. I received a renewal notice from the post office for my annual payment for my POBOX. I placed my check for $45 inside the postal service issued envelope and dropped it inside the post office mail boxes at the Joe Pool location on April 24, 2017. The other day I received a notice in my pobox stating the box was closed due to none payment. I then on Saturday 13th contacted Nikki at the location and was told there was nothing she could do until the envelope made its way back to her location. I then filed a complaint with your main post office and was told I had to wait 3 business days for an investigation to take place. In the meantime, I have medication that I am waiting for that will not be delivered to the pobox. So today I was forced to pay $22 to re-instate the box and another $45 for the pobox itself. This is the biggest rip off I have ever seen. The problem is an INTERNAL one, however, no one within Joe Pool post office or the main branch will take the time to look for it. Therefore the solution is for me the customer to pay additional monies until you'll sort it all out. This is said and I plan to bring this to the attention of my elected officials...no one should be taken advantage of because you'll lose mail within your own buildings.

    May 15, 2017
  • anon

    Thank you for your message. If your issue has not yet been resolved by the USPS Office of Consumer Affairs, please file a complaint with our Hotline, so we can look into this matter for you.

    May 16, 2017

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Contributors

  • Jennifer Bradley, Jeff Colvin, and Laraine Balk Hope contributed to this report.

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For questions, media inquiries, or to obtain more information regarding this report, please contact Agapi Doulaveris at 703-248-2286 or by email