• Even though the U.S. Postal Service earns $66 billion in revenue annually, employs 850,000 workers, and handles about 40 percent of the world's mail, technological improvements in communications, including telephones, facsimiles, and electronic mail, are currently threatening the Postal Service's core revenues.
• The Postal Service's regulator, the Postal Rate Commission, has insufficient authority to regulate the Postal Service. It does not have the authority to actually set rates, and does not have the power to require the Postal Service to provide it with documents. It does not have the authority to determine the level of service quality.
• The Postal Service remains a government-owned monopoly. The lack of competition from other delivery firms and the lack of accountability to shareholders has resulted in an organization that is poorly governed and unresponsive to the needs of customers.
• The Postal Service, through its definition of a letter, has effectively been able to define the scope of its own monopoly over letter delivery.
• The Postal Service also has a monopoly over the use of the customer's mail box.

Key Findings:

• The Postal Reorganization Act of 1970 was an improvement over the old Post Office and increased the productivity of the Postal Service. It placed the cost of mailing letters on mailers rather than on taxpayers.
• However, the Act also failed in important ways: It exacerbated the wage differentials between postal workers and other workers. It also exacerbated the ability of the Postal Service to subsidize activities where it faces competition (such as package delivery and overnight mail) using revenues from its monopolized activities (such as letter mail), creating an unfair advantage.
• The traditional justification for government-enforced monopoly over letter delivery is to ensure that high-cost, rural customers will receive service. That is usually referred to as universal service. However, the difference in the cost of serving rural versus urban customers is actually insignificant.
• Numerous other industries with a structure similar to postal services, such as railroads, trucking, and airlines, have been deregulated, creating enormous social benefits.
• Many other countries have undertaken extensive reform of their postal services, including privatization and demonopolization, and citizens have benefited from those reforms.
• The ideal structure for postal services is a completely demonopolized, privately owned firm.

Needed Reforms:

• The Postal Service currently uses universal letter delivery service as the justification for retaining its monopoly. The monopoly power must be decoupled from the universal service mandate.
• To that end, guaranteed universal delivery of letters should become a responsibility of Congress and not of the Postal Service. That would leave Congress free to guarantee universal delivery service in any way it believes best, including the use of other firms, which would end the postal monopoly.
• To guarantee universal service, Congress should use detailed licenses. These licenses would be issued on the condition that the providers assure universal service.
• The Postal Rate Commission is the natural body to administer those licenses. Through its licensing authority, the commission would acquire the power to set rates, to subpoena documents, and to determine the quality of service, among other powers.
• The Postal Service should be granted additional commercial flexibility to divest underperforming activities and make other prudent business decisions such as the closing of unprofitable post offices--it may wish to replace them with counter services out of other outlets, for example grocery stores, or sell them to another provider. It should also be relieved of any privileges and immunities it enjoyed, such as special borrowing privileges and exemption from taxation and the antitrust laws.
• Publicly traded shares should be issued in the Postal Service (as done in Germany and Holland), and employees should be given an ownership stake in the new firm.