UNITED STATES OF AMERICA POSTAL REGULATORY COMMISSION

WASHINGTON, RUTH Y. GOLDWAY
CHAIRMAN

DC 20268-0001

March 24, 2011 Dear Member of Congress: Today, the Postal Regulatory Commission submitted to the Postal Service the attached Advisory Opinion, which we hereby forward to you. We present this careful, objective analysis of the impact of the proposed elimination of Saturday mail delivery and related activities in order to assist you in your decisions. During the review process of the Postal Service's Proposal, the Commission heard from over 20,000 individuals and held seven field hearings at which 55 witnesses provided testimony. A majority were in opposition to the proposal. Yet while we learneda great deal about the potential effect of the proposal on particular groups and were impressed by the very high regard in which the Postal Service is held, our decision is basedon the official record of the formal hearing process,not on popular opinion. The Commission found, in general, that the Postal Service overestimated potential savings and likely underestimated potential lost revenues. The Commission accepted all the formulations presented by the Service where they could be substantiated or corroborated. When they could not, we used established, well-accepted models. Some of our analysis suggests that even lower estimates of savings and higher volume losses are possible. But in all cases,we chose the cautious, conservative path. Our estimates, therefore, should be seen as the most likely, middle ground analysis of what could happen under a fiveday scenario. Overall, we estimate that net savings of $1.7 billion annually will be achieved after about a three-year phase-in. Savings are not immediate in the first year. Further, if in the near term, the Postal Service implements new system-wide network efficiencies, the savings attributable solely to eliminating Saturday would be less. The Postal Service did not evaluate the impact of the proposals on customers who reside or conduct business in rural or remote areas. The Commission did, however, receive significant input from rural Americans, met with customers and civic leaders in South Dakota and Wyoming and considered testimony from SenatorsMurkowski and Akaka. We found that rural America will be disproportionately impacted by the Postal Service's proposal. Additional matters brought to our attention were not pursued in the record. Various witnesses and field hearing participants suggestedthat the Postal Service would lose potential for growth by giving up the competitive advantage of Saturday delivery in comparison to its competitors who don't deliver on Saturday. Others commented that there was value in the presenceof letter carriers on the nation's streets.

While we did not find any reliable method to measure these concerns, they are nevertheless noted for reference. All five members of the Commission However, concurring each Commissioner have signed the necessary certification for this Advisory Opinion. Separate of

interprets the implications only.

of the results somewhat differently. The final determination

opinions are offered in the belief they will be helpful to the Postal Service and the Congress. on the elimination

We recognize that ours is an advisory opinion

Saturday delivery rests with Congress and the Postal Service. While the potential reduction potential demand for mail is shifting. institution unifying should facilitating the nation. in service could compromise needed financial the Universal Service Obligation (USO), the

savings could provide

relief to the Postal Service.

The nature and level of

The heavier burden on remote and rural areas may be lessened as Internet Yet the Postal Service remains a vital, beloved and important aiding small businesses, enhancing communications and and delivery growth,

broadband adoption increases over time. economic care.

A decision to change the existing patterns of postal communications The Commission stands ready to provide further

be made with progress.

assistance as the

deliberations Sincerely,

~df~
Chairman

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