Waiting for Godot...And the Bookspan NSA?

The following is a postal perspective by PostCom President Gene Del Polito and Vice President Kate Muth.  

The Postal Rate Commission now has before it two baseline negotiated service agreements (NSA). This historic moment would seem a major achievement for a small regulatory agency that only three years ago approved the first-ever specialized agreement between the Postal Service and an individual mailer. The PRC has worked hard over the past thirty years to regulate one of the largest organizations in this country, the ubiquitous Postal Service.  

However, any triumph is muted by the fact that one of the cases before the PRC, the NSA between the Postal Service and Bookspan, has been awaiting a recommended decision for almost five months. While a few months might not be an unreasonable time to await a decision in a baseline case, five months certainly is. We are reaching a point where justice delayed is justice denied. 

The Postal Service filed its request at the PRC for an NSA with Bookspan in July 2005. The NSA would provide volume discounts on Standard Mail letters used to solicit new members to the company’s book clubs. The innovative filing served to highlight that NSAs were not only for financial service companies and their First Class Mail solicitations. Bookspan uses the Postal Service exclusively for all its mailings – from product offer to fulfillment. So while the NSA is structured to encourage greater use of Standard Mail letter volume, it has a multiplier effect. As Bookspan increases its membership in its book-order clubs, it would send more First Class Mail and fulfill more orders through the USPS’ package services offerings.  

PostCom filed a brief in support of the NSA as did nine other major companies/associations, including Time Warner, ADVO, Pitney Bowes, the Direct Marketing Association, the Alliance of Nonprofit Mailers and the Magazine Publishers of America. Each of these supporters argued in favor of the Bookspan NSA. 

Five months were spent litigating the case. The tightly controlled record in the Bookspan proceeding closed on December 15, 2005. But that’s not the full story. 

Keep in mind that any company interested in pursuing an NSA first has to sell the idea internally. Company executives and board members, if it is a public company, have to be convinced that this is a worthwhile use of considerable resources – not just money but time and talent as well. Then, the company has to approach the Postal Service and begin the work of crafting an agreement. This can take months to years of work. In the end, the Postal Service and the company have to reach terms that make an agreement desirable and beneficial for both parties.  

For Bookspan, a partnership of Bertelsmann and Time Warner, this meant selling the NSA to its board of directors. The publishing industry is among the most competitive industries there are. Customers of Bookspan can go elsewhere if price or service is not satisfactory. “Elsewhere” includes the Internet and brick-and-mortar bookstores. The former chief financial officer of the Postal Service noted at a February meeting that the USPS’ growth product, Standard Mail, has been hurting this year. Opportunities for growth, such as NSAs, should not be overlooked.  

With the next rate case expected soon, the mailing community is concerned that the Bookspan case will be put on hold indefinitely. This is not only unfair for the company; it is harmful to the industry. What other mailer that is not a financial services company will even think about coming forward with an NSA if the Bookspan case hangs in limbo?