RECEIVEI)
UNITED STATES OF AMERICA
Before the
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20268-0001
Postal Rate and Fee Changes, 2000
JUN 19 II 48
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OFFICE
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Docket No. R2000-1
1
ANSWERS OF THE OFFICE OF THE CONSUMER ADVOCATE
TO INTERROGATORIES
OF UNITED STATES POSTAL SERVICE
WITNESS: TED P. GERARDEN (USPSIOCA-Tl-I-IO)
(June 19,200O)
The Office of the Consumer
Gerarden to interrogatories
Advocate
USPSIOCA-Tl-I-IO,
hereby submits the answers
dated June 8, 2000.
is stated verbatim and is followed by the response.
Interrogatories
USPSIOCA-Tl-11-12
Respectfully submitted,
”
TED P. GERARDEN
Director
Office of the Consumer Advocate
1333 H St. NW
Washington, DC 20268-0001
(202) 789-6830; Fax (202) 789-6819
of Ted P.
Each interrogatory
have been redirected to OCA witness Callow (OCA-T-6).
SHELLEY S. DREIFUSS
Attorney
AM'Olj
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPS/OCA-Tl-I-IO
USPSIOCA-Tl-1
(4
Has the OCA conducted any market research, studies or surveys to determine
the number of unused basic rate First-Class Mail postage stamps a typical postal
customer has on-hand when the Postal Service implements a change in the basic FirstClass Mail rate? If so, please provide all documents related to such research, studies
and surveys.
Has the OCA conducted any market research, studies or surveys to determine
(b)
whether the number of unused basic rate First-Class Mail postage stamps a typical
postal customer has on-hand when the Postal Service implements a change in the
basic First-Class Mail rate varies depending on the time of year the rate change
occurs? If so, please provide all documents related to such research, studies and
surveys.
RESPONSE
TO USPWOCA-Tl-1
(4 - 03
No.
In response
to OCA/USPS-48,
postage
Service
In response
delivery addresses
to OCAAJSPSJO,
that while
billion for FY 1999.
it does not distinguish
among
with a rate
in the
Using the 130 million domestic
indicated by the Postal Service in response to OCA/USPS-10,
“typical postal customer”
either.
it “estimates
the Postal Service stated that postage
an average of $12.52 of outstanding
these customers
stated
of postage nor isolate the portion of such postage associated
hands of the public is $1.628
suggests
the Postal
in the hands of the public in the aggregate,
denominations
change.”
Evidently the Postal Service does not have such information
postage for each delivery address.
the Postal Service means household
consumers,
that
If by
presumably
would hold most of their postage in basic First-Class stamps.
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-1-10
USPSIOCA-Tl-2
In your testimony at page 7, lines 14-16, you assert that “[plost offices experience
lines and frustrated
customers
as consumers
purchase
stamps in the
denomination and make-up stamps to go with their existing supplies of stamps.”
long
new
Please estimate or indicate the duration of time (in days) during which this
(4
phenomenon occurs. Provide copies of all documentation which supports that estimate
or indication.
(b) Please estimate or indicate the percentage of customers in these lines who are
there solely to purchase make-up stamps. Provide copies of all documentation which
supports that estimate or indication,
Please estimate or indicate the percentage of customers in these lines who are
(4
there primarily to purchase make-up stamps.
Provide copies of all documentation
which supports that estimate or indication.
Please estimate or indicate the percentage of customers in these lines who are
(4
there solely to purchase new (higher rate) basic First-Class Mail stamps.
Provide
copies of all documentation which supports that estimate or indication.
Please estimate or indicate the percentage of customers in these lines who are
63
there primarily to purchase new (higher rate) basic First-Class Mail stamps.
Provide
copies of all documentation which supports that estimate or indication.
(9
Please estimate or indicate the percentage of customers in these lines who are
there solely to conduct postal transactions
in the ordinary course of business,
irrespective of a pending or recent rate change. Provide copies of all documentation
which supports that estimate or indication.
Please estimate or indicate the percentage of customers in these lines who are
(9)
there primarily to conduct postal transactions
in the ordinary course of business,
irrespective of a pending or recent rate change, but who seize the opportunity to either
purchase new (higher-rate) basic postage stamps or make-up stamps. Provide copies
of all documentation which supports that estimate or indication.
RESPONSE
(4
TO USPWOCA-Tl-2
I do not have direct information
long lines and frustrated
customers
on the duration of post offices’ experience
at the time of the January
with
1999 rate increase or at
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-I-IO
prior rate changes.
the increase
Presumably
in stamp purchase
Postal Service window transaction
transactions
resulting from the change to higher rates,
and the period over which the increased transactions
the baseline
level.
Contemporary
news
indicate that post offices experienced
peak of activity on Monday, January
data would indicate
reports,
increased
occurred before reverting back to
discussed
in more detail
below,
visits before the rate change
11, 1999, and continued
above-average
date, a
levels of
visits for several days thereafter.
The OCA attempted
post offices
Although
information
increased
the Postal
responses
(b) - (9)
incurred
to obtain information
increased
the OCA attempted
without
costs at the time of the January
to phrase
burdening
the
its questions
Postal
volume of window transactions,
Service
that would indicate the extent to which
Service
on the
the answer to each OCA question
was that
OCANSPS-71,
solely to purchase
First-Class
business,
stamps,
new basic First-Class
Mail stamps,
to conduct
to purchase
primarily
of the number
Service
or percentage
to purchase
transactions
make-up
in the ordinary
in the ordinary course of business
either make-up
of
1999 rate increase who were
mail stamps, primarily to purchase
postal
or to conduct postal transactions
seized the opportunity
stamps.
make-up
See, e.g., Postal
and OCANSPS-103.
The OCA does not have an estimate
solely to purchase
lengthy
useful
research
postal patrons waiting in lines at the time of the January
there
in this way to elicit
with
did not have any such information.
to OCANSPS-50,
1999 rate change.
stamps,
new basic
course
of
but who
stamps or new basic First-Class
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Ti-1-10
Contemporary
reports, however, indicate that the majority of patrons visiting post
offices at and shortly after the time of the rate increase were seeking one-cent make-up
stamps,
whether
or not they were also purchasing
new basic (33 cent) First-Class
stamps.
The OCA is filing Library Reference
electronic
retrieval services of newspaper
in January
purchase
1999.
one-cent
that resulted
January
articles that appeared
document
of reprints through
in various newspapers
the surge of postal patrons
seeking
to
stamps to go with their existing 32 cent stamps, and the long lines
in many post offices.
For example, the Los Angeles
stamps on the first business
commented
Times reported
on
day of the latest postal rate increase,”
of “the thousands
who crammed
their neighborhood
Likewise, the Tampa Tribune reported on January
Tampa
post offices Monday
lines in different branch offices.
customers
“flooded
shortages
of l-cent
of frustrated
commenting
Washington
and
that “[Ilines snaked and parking lots were jammed from Ventura to Orange
because
Monday.”
“flooded
reports
consisting
12, 1999, that “crowds of people braved long lines and frustrating waits to snap
up one-cent
County”
These
OCA-LR-I-4
customers
post offices
On January
snaked
that the “panic
12, 1999, that customers
stamps”
and noted the long
The Chicago Tribune noted on January
Chicago-area
stamps.”
looking for l-cent
took
through
US.
Monday
Postal
offices”
Service
12, 1999, that
only to find long lines and
13, 1999, the Baltimore
post
post offices
and
“frazzled
officials
Times reported on January 10, 1999, that “[clustomers
Sun reported
“lines
employees,”
by surprise.”
The
flooded Washington
area post offices” with lines stretching through lobbies to the front door. On January
13,
ANSWERS OF OCA WlTNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-I-IO
1999, the Star-Ledger
of humanity
(Newark, N.J.) quoted a postal clerk as saying “[w]e got an influx
in here like you wouldn’t believe.”
Like the January 14, 1999 edition of The
Denver
Rocky Mountain
News, which reported
crowded
January
13, many articles referred to the situation as a “stamp-ede.”
A common theme of these contemporary
difficulty
obtaining
supply quickly.
obtain
make-up
temporary
one-cent
Numerous
stamps
shortages.
make-up
stamps,
post offices on Wednesday,
reports was that customers
had great
as many post offices sold out of their
articles reported that postal patrons were simply unable to
to go with their existing
32-cent
stamps
See, e.g., articles in the San Francisco
because
Examiner,
the Augusta
Chronic/e, the Times Union (Albany, N.Y.), the Chicago Tribune, the Baltimore
Washington
Sun, the
Post, and the St. Louis Post-Dispatch.
The frenzy for purchasing
of Postal Service planners.
reported
of the
in January
make-up stamps evidently exceeded
It is my view that the panic-type
1999 would
be alleviated
the expectations
buying behavior commonly
if every postal
patron
received
courtesy make-up stamps in advance of the next change in the basic First-Class
ten
rate.
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-I-IO
USPWOCA-Tl-3
Please refer to your testimony at page 9, lines 21-23, where you state that savings from
a reduction in the number of window transactions would tend to offset the costs of your
free make-up stamp proposal.
On page 17, lines 8-9, of your testimony, you state that the Postal Service will
(4
avoid $17.9 million in retail transaction costs with the free make-up stamp proposal. Is
this $17.9 million the savings you refer to at page 9, lines 21-23, of your testimony?
If
not, please explain.
The $17.9 million in savings is premised on avoiding the “need for just 30% of
(b)
the 130,000,000
households
and businesses
to conduct an additional
window
transaction.”
Explain the basis for this estimate and provide all documentation
and
supporting information.
RESPONSE
TO USPSIOCA-Tl-3
Preliminarily,
I note that this question,
through USPSIOCA-Tl-10,
or to “free make-up
word “free.”
delivery
address
make-up
Please note that nowhere
in my testimony
that the Postal Service provide ten make-up
without
stamp proposal
USPSIOCA-Tl-4
all refer to my proposal as a “free make-up stamp proposal”
stamps.”
I suggest
as well as questions
charge to the customer,
did I use the
stamps to each
but I also realize that the courtesy
has a cost to the Postal Service.
The cost is easily justified
and may be partly or even entirely offset by savings from modified consumer
in purchasing
references,
stamps at the time of a change to new stamp rates.
therefore,
behavior
The appropriate
are to my “courtesy make-up stamp proposal” or “courtesy
make-
up stamps,”
(4 - 04
estimate
The $17.9 million referred to at page 14 (not page 17) is an illustrative
of savings
in window
transactions
costs if distribution
of courtesy
make-up
ANSWERS OF OCA WlTNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-1-10
stamps would modify customer behavior such that 30 percent of the 130 million delivery
patrons
did not make an extra trip to the post office to purchase
illustrative
estimate
of the possible
savings
referred
stamps.
It is an
to at page 9 of my testimony.
Given the high volume of customers
visiting post offices at the time of the last rate
change
in OCA-LR-I-4,
as reflected
reasonable
estimate
in the reports
of the extent to which distribution
30 percent
of courtesy
appears
make-up
to be a
stamps
would avoid some of the extra trips made solely because of the change in rates; it may
even be a conservative
estimate.
There is no documentation
of the estimate.
ANSWERS OF OCA WlTNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-I-IO
USPSIOCA-Tl-4
At page 7, lines 6-17, you testify that ‘[rlegardless of the efforts made by the Postal
Service, many consumers are inconvenienced”
during implementation of new postage
rates.
(4
Has the OCA conducted any market research or surveys which quantify or
otherwise measure the nature and magnitude of inconvenience to which you refer? In
particular, does any such research or survey indicate how much of the inconvenience is
associated with transactions involving new (higher rate) basic First-Class Mail stamps
as distinct from those involving the purchase of make-up stamps? Please provide all
documents related to such research and surveys.
Do you agree that different individuals
(b)
same
inconvenience,
irrespective
of a
inconvenience as either “great” or “small”?
have different levels of tolerance for the
generally-accepted
measure
of that
Is it possible that, short of distributing free make-up stamps, the Postal Service
(4
could implement measures (considered reasonable by the OCA) to improve the general
mailing public’s transition to a higher basic First-Class Mail rate and still be faced with
(fewer than before, but still) “many” complaints by customers (uninterested
in free
make-up stamps) who considered that they still experienced too much inconvenience
related to the transition?
RESPONSE
(a)
TO USPSIOCA-Tl-4
No, the OCA
described
in the question.
OCA-LR-I-4
significant
information
has not conducted
confirms
indicates
obtaining
one-cent
although
large crowds
research
or surveys
I note, however, that the anecdotal
that the magnitude
and certainly
market
newsworthy
when
of the inconvenience
rates increased
that most of the inconvenience
make-up
evidence
stamps rather than in purchasing
contained
in
to the public
in January
stemmed
of the type
1999.
was
This
from the difficulty
in
new basic rate stamps,
and long lines would make any window
transaction-not
just
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-1-10
stamp purchases-inconvenient
of customers
(b)
attempting
Yes.
It is
inconvenienced
for any postal patron delayed because
of the number
to make stamp purchases.
possible
that
some
even if they experienced
patrons
abnormally
did
not
consider
themselves
large crowds, long delays, and an
inability to purchase make-up stamps.
(4
Yes.
The only way to avoid any (much less “many”) complaints
raise the basic First-Class
Commission
Service.
stamp rate. The OCA proposal is an effort to persuade
and the Postal Service that an innovative outreach
change in the First-Class
No outreach
inconvenience
would be to not
rate is in the best interests of consumers
program,
no matter
how
well
the
at the time of the next
as well as the Postal
conceived,
will
eliminate
in the transition to new rates. The OCA believes that its proposal strikes
the optimal balance of reducing inconvenience
of the program on the Postal Service.
to the public and minimizing
the impact
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPS/OCA-Tl-I-IO
USPSIOCA-Tl-5
To what degree is your free make-up stamp proposal driven by the fact that the basic
First-Class Mail rate increase sought by the Postal Service is only one cent? In a case
where a three-cent or nickel increase were proposed, would your make-up stamp
proposal be the same? If not, how might it change?
RESPONSE
TO USPSIOCA-Tl-5
Since the Postal Service
filing in Docket
No. R2000-1
rate, I have not considered
proposes
a one-cent
increase
in the basic First-Class
how a courtesy
outreach
program might be structured if the increase were greater than one cent.
stamp
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-I-IO
USPSIOCA-Tl-6
In implementing your free make-up stamp proposal, what measures should the Postal
Service take to ensure that the stamps are used for their intended purpose, to
supplement 33-cent basic rate stamps whose denomination
was superseded
upon
implementation of a 34-cent rate?
RESPONSE
TO USPSIOCA-Tl-6
The Postal Service could print unique stamps indicating that they are only for use
in conjunction
cents).
with a 33 cent stamp (or 20 cent card rate if that rate is increased
Restrictions
the stamps.
postage
on the use of the stamp could be printed on the pane containing
In other words, the Postal Service could refuse to accept the stamps as
except when used as “make-up”
Class, first-ounce
exchangeable
that consumers
The courtesy
for superseded
single-piece
First-
make-up stamps should not be redeemable
of only ten such stamps to each delivery address
or
makes it unlikely
would use the stamps for other than their limited intended
Some individuals
because
rates.
postage
for other stamps.
Distribution
their intended
to 21
might keep the stamps as collector’s
items.
Even though that is not
use, it would not be harmful to the Postal Service.
an element
of this proposal
involves fostering
purpose.
Please note that,
good will on the part of the
public towards the Postal Service, it may be preferable for the Postal Service to accept
the courtesy stamps for any postage use. This would recognize,
may be some customers
for instance, that there
who do not have ten remaining 33 cent stamps with which to
use the courtesy stamps, but who could use the stamps as part of payment of postage
on a package or similar item.
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPS/OCA-Tl-I-IO
USPSIOCA-Tl-7
At page 8, lines 34, you propose that ten free make-ups stamps be distributed
delivery address.”
(a)
Please confirm that this includes every business address.
(b)
Please confirm that this includes every post office box.
Please
Cc)
address.
confirm
that this includes
every Federal,
state and local government
Cd)
Please confirm that this includes every prison or other correctional
(4
Please confirm that this includes every university or college.
0
Please confirm that this includes every charitable or nonprofit institution.
RESPONSE
(4 -
delivery
facility.
TO USPSIOCA-Tl-7
(9
Confirmed.
addresses
“to every
I have not attempted
in making this proposal.
addresses,
holders complaining
to differentiate
I considered
but that approach
limiting the proposal
might result in businesses
that they were being discriminated
possible that individuals
among types of delivery
using both a household
against.
to household
or post office box
I also realize that it is
delivery location and a post office box
might receive two panes of courtesy make-up stamps.
Given the difficulties of trying to
avoid possible
and the low inherent
duplication
among delivery addresses,
value of ten make-up stamps to each recipient, however,
to include
all delivery
addresses
Postal Service developing
in the proposal.
sensible
guidelines
I considered
I would
monetary
it more feasible
have no objection
or limits on the distribution
to the
to delivery
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-I-IO
addresses,
so long as the principal purpose of providing
the stamp-using
public is accomplished.
courtesy
make-up
stamps to
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-I-IO
USPSIOCA-Tl-8
Assume that your free make-up stamp proposal is implemented and the Postal Service
has taken steps to reasonably assure itself that it has delivered the stamps to every
address.
Describe the procedures and policies which should be employed to resolve
claims that make-up stamps were not delivered to a particular address.
RESPONSE
TO USPSIOCA-Tl-8
The most logical approach
a small supply
of panes
of
courtesy make-up stamps at each post office, and to allow the Postmaster
discretion
to
decide whether
to dispense
would
be to provide
a pane to a customer who asserts that the courtesy make-
up stamps were not delivered to a particular address.
I do not envision that there would
be any formal “claims,” i.e., that this would not lead to any claims process,
requirements,
transition
procedures.
etc.
The courtesy
make-up
to higher rates for the public.
stamp proposal
is intended
paperwork
to ease the
It should not give rise to unnecessary
The rule of reason should prevail.
formal
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPS/OCA-Tl-I-IO
USPSIOCA-Tl-9
In your testimony at page 8, lines 5-7, you assert that the inclusion of ten free make-up
stamps would transform “ordinary public education efforts into meaningful outreach to
consumers
.II
(4
Is it your testimony that a public education effort that did not include distribution
of IO free l-cent postage stamps to every address would be a meaningless outreach to
consumers?
(b)
Is it your testimony that postal customers would not perceive as meaningful an
improved rate implementation program that did not include distribution of ten free l-cent
postage stamps to every address?
RESPONSE
(a)
TO USPSIOCA-Tl-9
Please note that I made a deliberate
as previously
undertaken
an imminent
upon by the public.
reason
for which
readiness
teams
OCAAJSPS-51,
information
change
Third New International
in postage
The shortcomings
the Postal
have
February
Service’s
recommended
16, 2000).
about a rate change
service announcements,
public education
outreach
Dictionary).
of past public education
Gateway
A nation-wide
mailing
mailing
(see
or not acted
implementation
response
(i.e., direct delivery
would be outreach;
posters, lobby displays, etc., are not.
(“the act or
efforts may be one
to the Household
a nation-wide
efforts
Typical efforts
rates often are overlooked
to households)
efforts are of course not meaningless,
testimony.
between
by the Postal Service and meaningful
process of reaching out,” Webster’s
to announce
distinction
whereas
to
of
public
Such public education
but they are not outreach as I use that term in my
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-I-IO
(b)
Any improvement
be perceived
in a rate implementation
as meaningful
patrons when rates change.
measures,
program
if it does not proactively
A nation-wide
is welcome,
ease the transition
obtaining
stamps in advance of the rate change date.
as more meaningful
than past education
for postal
mailing, coupled with other public education
will likely do a better job of informing the public about the change
and may result in more consumers
new denomination
efforts.
It is my testimony
than would be the case otherwise.
in rates,
stamps and make-up
Some postal customers
courtesy make-up stamps will make any such outreach significantly
consumers
but it may not
may perceive this
that the inclusion of
more meaningful
to
ANSWERS OF OCA WITNESS TED P. GERARDEN
TO INTERROGATORIES USPSIOCA-Tl-I-IO
USPSIOCA-Tl-10
Please review the list of eight objectives that you, at the top of page 9 of your
testimony, assert that the Postal Service can achieve by delivering an informational mail
piece and free make-up stamps to all delivery addresses.
Please identify which ones can be achieved without the provision of free make(4
up stamps.
Please identify which ones cannot
04
make-up stamps.
RESPONSE
can be accomplished
effectively
requests
by an explanatory
by the addition
understanding
without
the provision
of free
TO USPSIOCA-Tl-10
The question
achieved
be achieved
of courtesy
me to distinguish
mailpiece
make-up
of the purpose of the question:
(4
Nos. 1, 2, and 6.
0))
Nos. 3,4, 5, 7, and 8.
between
which objectives
alone and which objectives
stamps
to the mailing.
can be
With this
DECLARATION
I, Ted
interrogatories
P. Gerarden,
declare
USPSIOCA-Tl-I-IO
correct, to the best of my knowledge,
Executed
under
penalty
of perjury
that the
answer
to
of the United States Postal Service are true and
information and belief.
CERTIFICATE
OF SERVICE
I hereby certify that I have this date served the foregoing
participants
of record in this proceeding
in accordance
NIE WALLACE
20268-0001
upon all
with Section 12 of the Rules of
Practice.
Washington, DC
June 19,200O
document