Postmaster General Jack Potter unveiled the long-awaited USPS Transformation Plan at the National Press Club in Washington, DC, last week. The plan outlines strategies USPS can follow under current law, examines moderate legislative reform in key areas such as pricing flexibility and presents long-term options to maintain universal service.

The Transformation Plan outlines three alternative business models: government agency, privatized corporation or commercial government enterprise. Each would require structural legislative reform.

Potter said USPS has not found much support for a privatized corporation that would reduce universal service. He said delivery standards and prices might be dictated by where a person lives or where a business is located. "People speak of a digital divide. We don't need a delivery divide."

The second alternative - a governmental agency - would take USPS back to the days of federal subsidies and taxpayer support.

The Postmaster Gerneral said USPS believes that the third alternative, a commercial government agency, would best allow integration of the postal system into the modern economy. At the same time, it would preserve the ability of the Postal Service to fulfill its mission of universal service.

The new model, called a Commercial Government Enterprise (CGE), would create a government-owned entity, but one that enjoys some of the operational and financial flexibility found in the private sector. Under the CGE, the Postal Service would set rates more predictably, be able to retain earnings, work under private sector labor laws and, depending on future legislation, could even pay taxes or dividends to the government.

The CGE model would be a structural transformation requiring legislative acts of Congress. The proposed legislative changes would be the most extensive since the Postal Reorganization Act of 1970, which enabled the Postal Service to function effectively until the end of the 20th Century.

"The 1970 legislation worked for 30 years to ensure that every American had access to a fundamental means to communicate - through the mail," said Potter. "We now need legislative change that preserves mail delivery for the next 30 years and beyond. This plan begins that process."

The Newspaper Association of America came out with a statement opposing the USPS transformation plan. "The U.S. Postal Service's transformation plan that proposes, once again, to give the Postal Service authority to operate more like a private business and, among other things, set its own rates without oversight by the Postal Rate Commission, is a flawed vision for the future," according to the association of newspapers.

"NAA and other members of the Main Street Coalition for Postal Fairness are calling for President Bush to appoint an independent panel of distinguished Americans to assess postal transformation issues and make bold and creative recommendations for the future of the Postal Service that are fair to the public and to all mailers," said NAA President and CEO John F. Sturm.

As previously reported, the USPS may raise rates on most classes of mail as early as June 30th. The independent Postal Rate Commission approved a proposal that would increase first-class postage by 3 cents to 37 cents and would make the priority mail rate for two-pound packages distance-based instead the current flat-fee rate. The USPS Board of Governors is meeting on April 8 and 9 and is expected to approve the rate increase.

Postmaster General John Potter promised on Friday that, following the planned rate increase, postage rates for first-class letters won't rise again for two years.