License to expand
A case arose concerning the USPS’s nonpostal licensing authority. Could it enter into licensing agreements with third parties to sell new commercial products containing the USPS name and logo in general retail outlets rather than in actual post offices? Citing unfair competition and consumer confusion, the Postal Regulatory Commission initially ruled that it could not. But a court ruling forced the Commission to reconsider its decision and, in the end, it reversed itself.
Essentially, it opened the door for the USPS to offer almost any good or service in competition with the private sector — cell phones, printers, laptops, lunch boxes, banking, telecom, or logistics services, you name it — provided that it does so through a licensing agreement. Congress sought to prevent the Postal Service from engaging in just such activities. But the Commission’s ruling allows the USPS to use licensing to make an end run around the 2006 law’s limitations.
The Commission’s decision is fatally flawed. First, the Commission confused “public need” with the needs of the USPS itself by favoring activities that generate revenues that “accrue to the Postal Service” that “will help to sustain a viable, effective universal mail system that meets a widely recognized public need for postal service.” In past decades there was a much-ridiculed saying: “What’s good for General Motors is good for the country.” This is the government version. The USPS can argue that licensing third parties to slap its logo on products and services will generate revenue for it, which in turn will allow it to provide better mail delivery to the public. What’s to limit it?
Second, although the Commission initially identified unfair competition and consumer confusion concerns, its final decision simply ignored these issues. Sorry, but when a government monopoly throws its weight around by offering products competing with private providers, it distorts markets. Will all private firms competing with USPS-licensed products need to seek such licenses themselves to even the playing field?
The purpose of the 2006 law was to head off just such USPS activities!
The principal reason for the USPS’s decline is that entrepreneurs in past decades have triggered a communications and information revolution with personal computers, the Internet, laptops, iPods, smart phones, and iPads. We can only guess at the marvels they will offer us in the future. But it is certain that if entrepreneurs and consumers are forced to work around a government monopoly that distorts the market, innovation will be stifled.
The Postal Reform Act of 2011, a piece of legislation now before the House, prohibits the USPS from directly offering nonpostal services. The act also encourages cost controls and downsizing. It is doubtful that in the long term such measures will save the postal monopoly. But for now, through whatever means, the Postal Service must be made to stick to its core functions.
Ed Hudgins is director of advocacy at The Atlas Society and editor of The Last Monopoly and Mail @ the Millennium.