READY TO BE REREAD

Return to Sender

-- By ZachMW - 07 Nov 2011

Insufficient Postage

The United States Postal Service is facing a dire problem – and so are the American people. The delivery of First Class mail peaked in 2001 at 104 billion pieces. Last year that number dipped to 73.5 billion, and the projection for 2020 is 39 billion, a precipitous decline of 46 percent since 2001. While stamps are cheap, such a dramatic drop off is expensive; USPS is on pace to close out the year with record losses of $14 billion.

So what should be done? The USPS plans to close 252 mail processing plants, shed 28,000 employees, discontinue overnight delivery of first class mail, cease Saturday service, and raise the price of stamps. These changes, it maintains, would save $2.1 billion annually.

Senate Republicans are normally in favor of cutting costs, but Sen. Susan Collins from Maine opposes the plan presented by Postal Service leadership, saying it “could well accelerate [USPS’] death spiral.” Instead, she faults her colleagues in the House and Senate for failing to pass reform bills.

While reform is clearly necessary, Senator Collins fails to get a message that will be delivered at great cost to U.S. citizens unless Congress shifts its focus to the future. It is electronic mail that is suffocating USPS. This result is somewhat inevitable, and it would not be entirely undesirable were it not for the fact that the postal service is run in the public interest, whereas Internet providers seek to serve the corporate kind of citizen – shareholders. Consequently, the American people are in the process of replacing a common carrier-esque institution that dates back to 1775 with telecom companies, which have successfully eluded that designation in their provision of cable and wireless Internet.

Accordingly, if Senator Collins wants to ensure that Americans have access to low cost and efficient means of communication, she should direct her attention to the FCC rather than the USPS. Because as cases like Brand X demonstrate, the agency with the potential power to turn modern Internet providers into common carriers has abdicated its authority to do so. Instead of challenging the telecom companies under Title II, the main source of the FCC’s regulatory authority over common carriers, it has repeatedly resorted to Title I and the shaky, shifting ground of ancillary authority. The upshot is that the formative years of the mass Internet may pass without Verizon, AT&T and Comcast having to bear the burdens of common carrier responsibility in exchange for the benefits oligopolistic opportunity.

It did not have to be this way. Even the FCC used to believe that the provision of electronic mail would classify as a common carrier service. Back in 1981, the Postal Service saw the digital writing on the virtual wall and realized the potential for electronic messages to destroy First Class mail, its primary moneymaker. Hoping to forestall this occurrence, USPS offered E-COM, which was essentially an electronic version of First Class mail (i.e., a crude email prototype). But the FCC objected with an argument that today it would disclaim: “in offering ECOM,” the agency said, “the Postal Service is engaging in a common carrier activity.” (In re Request for declaratory ruling and investigation by Graphnet Systems, Inc., concerning the proposed E-COM service, FCC Docket No. 79-6 (Sept 4, 1979)).

If the FCC still stuck to this statement, the timestamp could eventually replace the postage stamp, ushering in a new era of communications but preserving the old common carrier ideal. Instead, by failing to regulate under Title II, the FCC has diminished its own authority and relevance while abandoning consumers to the pricing plans preferred by companies like Verizon and AT&T.

Data Points

To see the advantages of common carrier regulation, one need look no further than wireless data plans, which enable consumers to access the full panoply of Internet applications. Indeed, the choices for data usage are all-encompassing: email, text message, mobile applications, even digital voice communication through VoIP? . This arena, then, would seem the obvious choice for the FCC to pursue a policy of consumer protection, thereby guaranteeing that Americans have unlimited access to the unlimited Internet.

Left unimpeded, however, industry is heading in the other direction. AT&T and Verizon recently replaced their unlimited data plans with tiered plans. AT&T offers a two-gigabyte plan for $25 a month, and Verizon offers two, five, and 10 gigabyte plans that cost as much as $80 per month. When customers exceed their tiered limit, both companies charge an additional $10 for an extra gigabyte of data.

The rationale of the wireless companies is that they have to take protective measures to prevent their networks from becoming overburdened. AT&T already expects to carry “more data in the first two months of 2015 than in all of 2010.” This estimate is based on the increasing ubiquity of smartphones, the increasing number of data-consuming applications, and the increasing utilization of 4G networks. Accordingly, the wireless companies explain that they, like common carriers, are factoring the public interest into their price plans. The FCC, they maintain, need not concern itself here.

Silver Lining

Incredibly, there might be a silver lining, even if Congress fails to legislate and the FCC fails to regulate. This would require – as good authority predicts – that there be no money to be made moving bits in the 21st century. Under such circumstances, fierce market competition, rather than common carrier regulation, could drive down data costs, changing the business model for telecom companies. AT&T and Verizon could prove susceptible to a lean and hungry wholesaler who found it in her interest to offer unlimited data to retail customers at wholesale prices. If you believe what you see on TV, Sprint may be auditioning for this very role.

Of course, this does nothing to save USPS and its employees, whose jobs the government has essentially outsourced to private telecom companies in this Internet era. So it remains to be seen whether laid off mail carriers, and the cause of common carriage in essential communications, will ever be put back to work.

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