Summary: Today, the U.S. Postal Service competes with communications technologies and private carriers for the delivery of services in markets that in 1970 were the sole domain of the Postal Service. Many observers believe that the current ratemaking process takes too long for the Postal Service to respond to today's rapidly changing market conditions. This report discusses (1) whether changes in policies concerning volume discounting and demand pricing should still be considered by Congress, (2) the issues surrounding the current ratemaking process, and (3) proposals for modifying the postal ratemaking process and other changes that merit further consideration by Congress. The proposals that GAO offers--to improve the effectiveness of the postal ratemaking process, ensure financial accountability, and give the Postal Service more flexibility to price and compete in the marketplace--provide the Postal Service, the Postal Rate Commission, and Congress with a variety of options to consider in reforming the ratemaking process.
