To address his questions and related concerns, our objectives were to (1) determine the historical and current basis for restricting the private delivery of letters, including the Service’s efforts to administer and enforce the restrictions; (2) document changes in private sector capacity for letter delivery since 1970, including specific letter mail services for which the Service competes; and (3) estimate the possible financial effects on how the Service’s revenues, costs, and postage rates might change if current restrictions on private delivery of letters were to be changed. 19 (1970). To estimate the effects of mail volume losses on the Service’s revenues, costs, and postage rates, we used estimated mail volumes and other data that the Postal Service and Postal Rate Commission used in a recent rate case (Docket No. Responding to pressures to allow more private letter delivery, the Service suspended portions of the Statutes and has virtually stopped enforcing them. The complaint did not result in suspension. In 1979, the Postal Service suspended the Statutes for extremely urgent letters (39 C.F.R. Private Mail Delivery Capacity Has Grown Substantially Since 1971

In 1971, the Postal Service faced little competition for delivery of letter mail. This growth was attributable primarily to increases in mail volumes and revenues for those mail classes largely protected by the Statutes, First-Class and third-class. Estimated Financial Effects of Changing the Private Express Statutes Vary Among Mail Classes

Primarily on the basis of (1) existing private mail delivery capacity, (2) private firms’ actions and stated interests regarding expansion of mail delivery services, and (3) interviews with mailers, we determined that a greater percentage of Priority Mail volumes than other classes of letter mail would be at immediate risk if the Private Express Statutes were to be relaxed or repealed. Collectively, AMMA and DMA members generate the vast majority of advertising mail volume. 4.5.) 4.6.) As previously stated, the Service has lost most of its share of the expedited mail and package markets despite recent increases in Priority Mail and fourth-class mail volumes. Various Factors Limit the Service’s Competitiveness

The Postal Service recognizes that despite its efforts to become more competitive, it is constrained by various laws and regulations that limit its ability to compete successfully with private sector firms. Some Other Countries Have Narrowed Their Letter Mail Monopolies as Part of Overall Postal Reform

Many postal administrations around the world have mail monopolies to help meet universal letter delivery and other public service obligations, much like the U.S. Postal Service’s mail revenues are subject to the Private Express Statutes and implementing Service regulations. To that end, Member States shall take steps to ensure that the density of the points of contact, and of the points where mail is collected, take account of the needs of users.”
The directive defines universal service as including “every working day, and not less than five days a week save in exceptional circumstances or geographical conditions: one collection from the clearance points,  one door-to-door delivery for every natural or legal person.”
“To the extent necessary to ensure the maintenance of the universal service, the services which may be reserved to the universal  service provider(s) in each Member State are the collection, sorting, transport, and delivery of items of domestic [as opposed to international] correspondence whose price is less than five times the public tariff for an item of correspondence in the first weight step, provided that they weigh less than 350 grammes ...”
The European Commission has told us “It is important to note that the draft directive does not oblige member states to maintain any monopoly in their postal sector, but allows them to do so within the limits of the reserved services set out in the draft directive, to the extent necessary to ensure the maintenance of the universal service.”
The draft directive also provides that “direct mail” (mass advertising and marketing mail) and inbound international mail can also be reserved to the postal monopoly, “wherever their reservation is necessary for the financial equilibrium of the universal service provider(s)”, until December 31, 2000, at which time those services must be opened to competition unless the European Commission decides (by June 30, 1998) that the continuation of the monopoly in those areas is justified beyond that date.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the restrictions in federal, civil, and criminal law on private letter delivery, focusing on: (1) the Postal Service's experience in administering and enforcing the private express statutes since 1970; (2) the growth and development of private message and package delivery companies since 1970; (3) the possible effects of changing private letter delivery restrictions on the Service's mail volume, revenues, costs, and postal rates; and (4) other countries' postal reform efforts, particularly regarding private letter delivery.

What GAO Found

GAO found that: (1) supporters believe that the private express statutes are necessary to protect the Postal Service's revenue base and to ensure that the Service provides universal service and meets other public service obligations; (2) private carriers have challenged the assumption that a monopoly results in lower postage rates and less service disruption; (3) because of outside pressure, the Service has suspended the statutes for extremely urgent letters and has stopped direct enforcement of the statutes due to the difficulty in enforcing the statutes; (4) in 1971, the Service faced little competition, but by 1994, the Service had only a 16 percent share of the expedited mail and package delivery market; (5) the Service's volume and revenues for protected mail classes has increased since 1970, but volumes and revenues for classes subject to competition have shown little growth; (6) despite the rapid increase in alternative mail delivery systems since 1970, the Service delivers the vast majority of advertising and periodicals; (7) if the statutes are changed or repealed, the Service's loss of volumes and revenues would vary among mail classes, but Priority Mail would be at the greatest risk; (8) postage rates would be affected by the loss of first-class mail, but the effects of statutory changes on the Postal Service's mail volumes are difficult to estimate; (9) the Service has taken actions to become more competitive, but various laws and regulations limits its competitiveness; and (10) some other countries have narrowed their letter mail monopolies as part of their overall postal reform efforts and have given their postal administrations greater flexibility in providing universal mail service.