POSTAL RATE AND FEE CHANGES,
i
1
2000
Docket
No. R2000-1
NOTICE OF
MAGAZINE PUBLISHERS OF AMERICA, INC.
ALLIANCE OF NONPROFIT MAILERS
AMERICAN BUSINESS MEDIA
COALITION OF RELIGIOUS PRESS ASSOCIATION
DOW JONES & CO., INC.
THE MCGRAW-HILL COMPANIES, INC.
NATIONAL NEWSPAPER ASSOCIATION
TIME WARNER INC.
CONCERNING ERRATA TO TESTIMONY
OF WITNESS COHEN (MPA-T-l) (ERRATUM)
(MAY 31,200O)
Pursuant to the Commission’s Rules of Practice, Magazine
Publishers
of America, et al., hereby provide notice of the filing of a second erratum
to the testimony
Witness
Cohen’s
developed
of witness Cohen
testimony
(MPA-T-1).
regarding
This erratum
transportation
concerns
cost
figures
by Witness Nelson (MPA-T-3). The revisions to Witness Cohen’s
testimony reflect late changes made to Witness Nelson’s testimony, which
were
made
corrections
after
Witness Cohen’s
are to transportation
testimony
had
been
filed.
The
costs and to all cost figures that use or
incorporate
transportation
costs.
The revisions can be found on page 4
(at Table 2), page 32 (at line 9), and page 34 (at Table 3). The revisions
appear
in boldface
reference.
type
The attached
in the attachment
corrected
to this notice,
pages replace
for ease of
the original pages 4,
32 and 34, filed as part of MPA-T-1 on May 22, 2000.
Respectfully submitted,
I
James R. Cregan
Anne R. Noble
Counsel
Magazine Publishers of America,
Suite 610
1211 Connecticut Avenue NW
Washington DC 20036
(202) 296 7277
Inc.
CERTIFICATE OF SERVICE
I hereby certify that I have this date served the foregoing document
upon all participants of record in this proceeding in accordance
with the
Commission’s Rules of Practice.
Anne R. Noble
Washington DC
May 31,200O
2
3
1
methodologies.
This review continued
in a cooperative
2
effort was completed.
3
changes proposed
by the Postal Service in its direct case that were encouraged
4
by this cooperative
effort.
5
mail processing
6
operational
7
further data collection.
8
of mail processing
9
witness Stralberg
In this section, I review a number of methodological
I also explain the need for further improvements
cost attribution and distribution
considerations
methodologies
and propose appropriate
My testimony supports and incorporates
costs to classes and subclasses
(TW-T-1) and discussed
presented
11
attribution
12
T-4) analysis of the new method.
13
their testimonies,
14
the Commission
15
improvements
16
methodology
17
In total, the costing methodology
18
Year Periodicals
and witnesses
Crowder’s
As witnesses
witness Raymond’s
the distribution
by Time Warner
Further,
city carrier street time
(ADVO-T-1)
and Hay’s (MPA-
Crowder and Hay will describe in
carrier street time study is defective, and
should not accept it. Finally, I discuss several methodological
MPA witness Nelson (MPA-T-3)
and adjustments
makes to transportation
to rural carrier costs presented
changes
costs (without piggybacks)
costing
by witness Glick.
I propose and advocate
reduce Base
by $293 million.
Table 2.
19
Periodicals
20
Cost Attribution
and Distribution
21
Improvements
22
Without
Piggybacks
23
(in millions
of dollars,
BY)
$127
Mail Processing
City Carriers
$57
Rural Carriers
$13
Purchased
$96
Transportation
$293
Total
25
based on
by witness Glick (MPA-T-2).
in this section I discuss the Postal Service’s proposed
methodology
in
interim solutions pending
10
24
manner after the field
In Section IV, I estimate Test Year After Rates (TYAR) costs based upon
the aforementioned
cost reduction programs, the more accurate variability
-4-
the Postal Service’s own description
practices and, consequently,
costs.
of highway transportation
significantly
Witness Nelson demonstrates
principal contributing
attributed
decrease
overstates the true variability of these
that this incorrect model specification
factor to the rapid increase in the transportation
to periodicals
Correcting
operating
is a
costs
in recent years.
witness Bradley’s highway models leads to a significant
in the variability of these costs. The revised model is included in
witness Nelson’s testimony and leads to a decrease
in Periodicals
Base Year
costs of $88 million.
10
The Postal Service’s
11
Incorrect
12
Distribution
Of Costs For Amtrak
There is a new type of transportation
Roadrailers
Is
cost in this case, namely the use of
13
“roadrailers”
14
is not part of the current TRACS sampling system, so the Postal Service has no
15
data on the precise composition
16
as part of the Amtrak rail service.
Movement
of mail by roadrailers
of mail moving by this mode of transportation.
To distribute these costs to classes and subclasses,
the Postal Service
17
uses the distribution
18
However, as discussed
19
analogous
20
movements
21
costs from the pool of accrued Amtrak costs and distribute it to classes and
22
subclasses
using the inter-SCF distribution
23
Periodicals
Base Year costs by $3 million.
24
The Distribution
25
the Use Of Rail To Transport
26
key for the portion of Amtrak that is sampled by TRACS.
by witness Nelson, roadrailer service is more likely to be
to inter-SCF highway transportation
with respect to the types of
for which it is used. Witness Nelson proposes to remove roadrailers
of Costs for Empty
As discussed
key. His proposal
Equipment
Equipment
reduces
Movements
Via Rail Ignores
Of All Types
by witness Nelson, the Postal Service transports
27
equipment
for many modes of transportation,
28
via rail. The method proposed
29
costs of empty equipment
30
freight rail and Amtrak.
including highway transportation,
by the Postal Service incorrectly
shipments
empty
distributes the
solely on the basis of volumes moving on
Witness Nelson corrects the distribution
-32-
of these costs,
Table 3. TYAR Costs by Subclass
1
(in Thousands
I
Subclass
Letters & Parcels
Presort Letters & Parcels
Private Pos+~~r~=
,L”Yl
“U
/Presort Private Postcards
/All
of Dollars)
MPA
USPS
Attributable Cost Attributable Cost
$12,736,959
$13437,357
$4,640,108
$5,019,464
‘E539,919
$525,446
I
$156.354
1
;168,9581
_ .__,__.
$2,717,012
$3,064,062 1
- 1Rf-lQRdI
$A31 -882
<,,““,“I,”
%iodicals
_. .,__.
Route
$2,471,864 1
a? 831 !a?? I
$208,577 1
$1,320,611 1
$1,052,15$479,204
5301 ,I 95-,
$47,444
540,346
51,429,916
$1,539,113
I
kdard
(A)
IPa
Is Zone Hate
i Printed Matter
vry-,y, ,tandard
Library Rate
All
All
All
2
V. RATE CONSIDERATIONS
3
A. Overall
4
$1845
$l,lr
_ , - _ _, _ _
$1,456,111(
Rate Increase
The Postal Service in this case has proposed
that, by its own admission,
a rate increase for
5
periodicals
6
increase of 6.4 percent.
7
average rate increase proposed for outside county periodicals
8
USPS-T-32
9
T -, - - -, -
v”,“-“,“““,
I
is at least twice the overall average rate
As stated by witnesses
at 32; USPS-T-38
Mayes and Taufique, the
at 6.
In fact, however, the situation faced by periodicals
10
than described
11
county periodicals
12
Postal Service, averaging
13
American
14
responding
is 12.7 percent.
mailers is even worse
in the Postal Service’s direct case. The rate increase that outside
mailers are facing is, in fact, much higher than stated by the
Business Media.
15 percent for Periodicals
Attachment
providing input to MPA and
A contains a coded list of magazines
to MPA’s most recent postal survey and the rate increase each will
-34-