[Federal Register Volume 75, Number 222 (Thursday, November 18, 2010)]
[Notices]
[Pages 70753-70754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29086]


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POSTAL REGULATORY COMMISSION

[Docket No. MT2011-1; Order No. 584]


Market Test Involving Greeting Cards

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a recently-filed Postal Service 
proposal to conduct a market test involving greeting cards. A key 
feature of the market test is an alternative arrangement for payment of 
postage. Under this alternative, participating companies would be 
responsible for paying applicable postage, rather than having the 
sender of the card affix postage. This document describes the proposal, 
addresses procedural aspects of the filing, and invites public comment.

DATES: Comment deadline: December 8, 2010.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov. Those who cannot submit comments 
electronically should contact the person identified in the FOR FURTHER 
INFORMATION CONTACT section by telephone for advice on filing 
alternatives.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6820 or [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Background
III. Notice of Filing
IV. Ordering Paragraphs

I. Introduction

    On November 8, 2010, the Postal Service filed a notice, pursuant to 
39 U.S.C. 3641(c)(1), announcing its intent to initiate a market test 
beginning on or about January 1, 2011, of an experimental market 
dominant product, Alternate Postage Payment Method for Greeting 
Cards.\1\ The market research test will consist of providing a means 
for individuals to mail greeting cards without affixing postage. Id. at 
1.
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    \1\ Notice of the United States Postal Service of Market Test of 
Experimental Product--Alternative Postage Payment Method for 
Greeting Cards, November 8, 2010 (Notice).
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II. Background

    The Postal Service states that First-Class Mail single-piece 
correspondence has been a declining part of U.S. mail volume, and the 
communication alternatives, such as e-mail, use of the Internet, and 
cellular services, have had an impact on the mail volume of personal 
correspondence. Id. at 3-4. It proposes the instant market test as a 
convenient method for individuals to purchase a greeting card without 
the need to pay postage. Id. at 4. The Postal Service expects that the 
simplicity of the product design, which allows the customer to sign and 
address the card and place it in a collection box, will make greeting 
cards more likely to be purchased and mailed. Id.
    The Postal Service explains that under the proposed market test 
participating businesses will produce and distribute pre-approved 
envelopes according to specific design requirements which will be 
packaged for sale with greeting cards. Individuals can mail the 
greeting cards in the pre-approved envelopes without affixing postage. 
Id. at 2. The Alternate Postage Payment Method has a two-stage process 
for businesses to pay postage. Id. at 1. First, at least 50 percent of 
the postage will be paid based on the company's reports on the number 
of cards sold to customers or third-party vendors. Generally, this 
payment would be retained by the Postal Service regardless of whether 
the cards are also mailed. Second, the balance of the postage due will 
be collected based on scans of the cards that are mailed. Id. at 1, 6.
    Statutory authority. The Postal Service indicates that its proposal 
satisfies the criteria of section 3641, which imposes certain 
conditions on experimental products. 39 U.S.C. 3641. For example, the 
Postal Service asserts that the Alternate Postage Payment Method for 
Greeting Cards is significantly different from all products offered by 
the Postal Service within the meaning of section 3641(b)(1). Notice at 
8-9. In addition, it contends that the market test will be limited to a 
small portion of the total greeting card volume and therefore does not 
create an unfair or inappropriate competitive advantage for the Postal 
Service or any mailer. Id. at 9; see also section 3641(b)(2). The 
Postal Service states that the Alternative Postage Payment Method for 
Greeting Cards is correctly classified as a market dominant product. 
Id. at 10-11; see also section 3641(b)(3). The Postal Service

[[Page 70754]]

states that the duration of the market test will not exceed 24 months. 
Id. at 8.
    The Postal Service does not anticipate that the annual revenues 
from the market test will exceed $50 million. However, it does 
anticipate that annual revenues will exceed $10,000,000 and therefore 
requests that the Commission exempt this market test from the annual 
revenue limitation under 39 U.S.C. 3641(e)(2). Id. at 8, 12.
    Description and nature of market test. Pursuant to section 
3641(c)(1)(B), the Postal Service provides a description of the nature 
and scope of the market test. The Postal Service explains that 
participating businesses will produce and distribute pre-approved 
envelopes with specific design requirements that will be included as a 
part of the greeting card packaging. The company producing the cards 
will add markings as defined by the Postal Service to identify the 
greeting cards in the mailstream and individuals can mail the greeting 
cards in the pre-approved envelopes without affixing postage. These 
markings are scanned to produce a count. Id. at 1. The Alternate 
Postage Payment Method derives part of the postage payment on sales 
data reported to the Postal Service by participating mailers. Id. at 2. 
The process involves the use of Intelligent Mail (IM [supreg]) 
technology to identify and scan each unique item's movement through the 
postal system which produces a count of the number during normal 
processing. Id. Each participating business will receive a unique 
Mailer ID only for this market test. Id. at 5. This count is used to 
debit the card producer's Centralized Automated Processing System 
(CAPS) account for the portion of postage that was not based on the 
sales data. Id. at 2.
    Product description. Postage will be paid by the card producer 
based on sales information, along with the data captured during mail 
processing. The mailpieces include a combination of four elements:
     Intelligent Mail Barcode (IMb) enables the recording of 
piece-level information for volume and revenue reporting;
     Legend identifies the business customer responsible for 
paying the postage;
     Facing Identification Mark (FIM) facilitates mail 
processing and allows separate identification of this mail for future 
use; and
     Imprint: ``No Postage Necessary if Mailed in the United 
States'' will be printed in the upper right corner of the address side 
of the item.

Id. at 5.

    Under the proposed market test, the Postal Service states that 
participating companies must meet specific mail item design 
requirements which must be approved prior to distribution. Id. The 
Postal Service also states that market test mail items will be 
processed and delivered according to single-piece First-Class Mail 
letter standards. Id. The Postal Service expects that greeting card 
companies will use the product to increase the sale of greeting cards, 
and customers will have a simpler manner of mailing the cards. Id. at 
6.
    The Postal Service states that Alternate Postage Payment Method 
will be a premium product with a price above First-Class Mail single-
piece postage. Id. The proposed price is 48 cents for cards and 
envelopes with a combined weight of no more than one ounce for sales or 
scans completed during the first year. For mail and envelopes with a 
combined weight between one and two ounces, the price will be 48 cents 
plus the second ounce price for sales or scans during the first year of 
the market test. In the test's second year, the Postal Service will 
determine how to modify the price based on market conditions and 
changes in the single-piece price. It also plans to test more than one 
postage rate during the second year. Thus, the Postal Service proposes 
a range of rates during the market test period. Id. at 7.
    The Postal Service contends that the benefits of the market test 
include reduction in the costs of selling stamps to the public, 
proportional increase in the mailing of greeting cards, convenience, 
and a cost effective product for customer. Id. Additionally, it asserts 
that the product should contribute to the financial stability of the 
Postal Service.
    The Notice also addresses the Postal Service's plan to monitor 
performance and its data collection plan. Id. at 13.

III. Notice of Filing

    The Commission establishes Docket No. MT2011-1 for consideration of 
matters raised by the Notice. Interested persons may submit comments on 
whether the Postal Service's filing in the captioned docket is 
consistent with the policies of 39 U.S.C. 3641. Comments are due no 
later than December 8, 2010. The filing can be accessed via the 
Commission's Web site (http:www.prc.gov).
    The Commission appoints Katrina R. Martinez to serve as Public 
Representative in this docket.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. MT2011-1 for consideration 
of the matters raised by the Notice.
    2. Pursuant to 39 U.S.C. 505, Katrina R. Martinez is appointed to 
serve as officer of the Commission (Public Representative) to represent 
the interests of the general public in this proceeding.
    3. Comments by interested persons are due no later than December 8, 
2010.
    4. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2010-29086 Filed 11-17-10; 8:45 am]
BILLING CODE 7710-FW-P