Special Summer Postal Rate Program, 27845-27851 [E9-13641]
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Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices
3. Pursuant to 39 U.S.C. 505, the
Commission appoints Kenneth E.
Richardson to represent the interests of
the general public in this proceeding.
4. The Commission directs the
Secretary of the Commission to arrange
for prompt publication of this Notice in
the Federal Register.
By the Commission.
Judith M. Grady,
Acting Secretary.
[FR Doc. E9–13744 Filed 6–10–09; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL REGULATORY COMMISSION
[Docket No. R2009–3; Order No. 219]
Special Summer Postal Rate Program
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Postal Service has
prepared, and the Commission has
approved, a special program offering
reduced rates for Standard mailers this
summer. This document addresses
related issues and provides pertinent
details.
DATES: Effective June 11, 2009.
FOR FURTHER INFORMATION CONTACT:
Stephen L. Sharfman, General Counsel,
202–789–6820 and
stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Introduction
On May 1, 2009, the Postal Service
filed with the Commission a notice
announcing its intention to adjust prices
for Standard Mail letters and flats
pursuant to 39 U.S.C. 3622 and 39 CFR
part 3010.1 The proposed adjustment is
in the form of a ‘‘Standard Mail Volume
Incentive Pricing Program’’ (Summer
Sale program) with a planned
implementation date of July 1, 2009 and
a planned expiration date of September
30, 2009. The Summer Sale program
represents a reasoned approach by the
Postal Service to exercise its flexibility
in market dominant pricing under the
Postal Accountability and Enhancement
Act (PAEA), Public Law 109–435, 120
Stat. 3218 (2006).
In Order No. 209, the Commission
established Docket No. R2009–3 to
consider matters raised by the Postal
Service’s filing, appoint public
representatives, and afford interested
persons an opportunity to comment.2 By
1 United States Postal Service Notice of MarketDominant Price Adjustment, May 1, 2009 (Notice).
2 PRC Order No. 209, Notice and Order
Concerning Standard Mail Volume Incentive
Pricing Program, May 4, 2009; located at 74 FR
21837 (May 11, 2009).
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this order, the Commission approves the
proposed Standard Mail Volume
Incentive Pricing Program.
The Commission finds the proposal to
be a judicious exercise of the Postal
Service’s pricing flexibility under the
PAEA. The Postal Service is to be
commended for its response to current
market conditions. Much can be learned
from what, in essence, is a short-term
pricing experiment. However, the
program is not without risks. Thus,
development and use of appropriate
metrics in evaluating the program are
critical in determining whether the
program is successful, and also for
assessing the long-term implications of
such an approach.
II. Standard Mail Volume Incentive
Pricing Program
A. Postal Service Filing
The Postal Service notes that the
Summer Sale program is necessary to
counteract the dramatic volume
reduction due to the economy, support
a struggling mailing industry, and
increase volume during a typically low
volume period in which there is excess
capacity; and secondarily to improve
customer relations, to fine tune future
programs, to gather feedback from
customers, and to gather data which
may improve postal data systems.
Notice at 2–3. The Postal Service’s
Notice provides a high level overview of
the Summer Sale program, identifying
its salient features as follows.3
Under the proposed Summer Sale
program, eligible mailers will receive a
30 percent rebate of postage paid on the
volume of Standard Mail letters and
flats mailed from July 1, 2009 to
September 30, 2009 that exceeds mailerspecific thresholds.4 The rebate may be
reduced for volumes shifted from
October 2009 into the sales period.5
Notice at 3–4.
Eligibility for the Summer Sale
program is limited to mailers who are
permit holders who have a
demonstrable volume of at least 1
million Standard Mail letters and flats
3 Much of the justification for the proposal was
submitted in response to Chairman’s Information
Request No. 1, May 8, 2009 (CHIR No. 1). Any such
future proposals must be accompanied by the
requisite financial (cost, revenue, and volume) data
underlying them.
4 The threshold is calculated by comparing
average volumes over distinct periods to determine
a trend in the mailer’s volume. That trend is
applied to the average expected mail volume over
the Summer Sale program months, and any volume
above the trend adjusted average is eligible for the
discount.
5 To quantify this possibility, the Postal Service
will measure each mailer’s October 2009 volumes
using a trend analysis based on the mailer’s prior
years’ volumes for that month. Id. at 4.
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between October 1, 2007 and March 31,
2008 for one or more permit imprint
advance deposit accounts, pre-canceled
stamp permits, or postage meter
permits. Id. at 4.
Mail service providers are excluded
from the program to help ensure that the
Summer Sale program generates new
volumes, rather than shifts existing
volumes. However, individual mailers
who meet the above criteria but use a
mail service provider may participate if
they meet certain conditions. Id. at 4–
5.
B. Chairman’s Information Request No.
1 (CHIR No. 1)
CHIR No. 1 was designed to clarify
the Postal Service’s proposal. The
responses substantially expand on the
Postal Service initial filing and provide
essential details regarding the scope of
the program and its underlying basis.
CHIR No. 1 sought information on
metrics to measure the success of the
Summer Sale program, including
complete cost analyses and volume
migration from other classes or time
periods, the definition of short-run
excess capacity, eligibility for the
program, contribution level for Standard
Mail flats, and documentation of cost
and revenue estimates. See CHIR No. 1.
The Commission expects the Postal
Service to provide this level of detail in
future initial filings.
The Postal Service defines the
primary measure of success for the
Summer Sale program as ‘‘incremental
revenue and volume growth over the
threshold for the universe of eligible
participants[.]’’ See Response of the
United States Postal Service to
Chairman’s Information Request No. 1,
May 15, 2009, at 2 (Response to CHIR
No. 1).6 The Postal Service also
anticipates monitoring customer
feedback and the efficacy and efficiency
of its administration of the program. Id.
The Postal Service does not believe
the additional incentive of the Summer
Sale program will induce any First-Class
advertising mail to migrate to the
program, due to different demand
characteristics and the significant gap in
price which already exists. Id. at 4.
Further, the Postal Service does not
believe that mailers have enough lead
time to shift volume from June or earlier
into the program. Id. In addition, the
Postal Service cites precautions it has
6 The pages to the Postal Service’s response to
CHIR No. 1 are not numbered. For the convenience
of the parties, the Commission has numbered the
pages for purposes of citation. If the normal citation
practice was followed (citing just the relevant
question being answered), parties may have
difficulty in finding the specific reference as some
of the responses are lengthy.
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taken, including mailer certification of
volumes, to mitigate any attempt by
mailers to shift volume among permits.
Id. at 4–5.
The Postal Service’s initial Notice
references excess capacity only as it
relates to delivery. Notice at 3. It makes
no attempt to define or otherwise
elaborate on the concept. In response to
CHIR No. 1, the Postal Service indicates
that excess capacity exists when
‘‘capacity to handle volume is larger
than the volume presented to it.’’
Response to CHIR No. 1 at 6. It also
discusses the secular, cyclical, and
seasonal effects on mail volumes that, in
turn, affect capacity. Id.7
To support its claim of excess
capacity, the Postal Service appears to
rely principally on a cyclical decline in
volume due to the general economic
conditions and seasonal variation
associated with the fourth quarter. Id. at
6–8, 12. The Postal Service claims it is
difficult, if not impossible, for it to
reduce capacity at the same rate as
volume has fallen when comparing year
over year declines. Id. at 12–15. In
addition, the Postal Service indicates
that its inability to rapidly adjust work
hours and building capacity contributes
to seasonal excess capacity. Id. at 7–9.
The Postal Service asserts that shortrun attributable costs for incremental
pieces, during a period of excess
capacity, are lower than the long-run
attributable costs. See id. at 16–17. The
Postal Service provides estimates of the
attributable costs by product by
breaking out each of the cost segments
and examining where volume can be
absorbed without incurring additional
incremental cost. Id. at 17–24. As a
result of this analysis, the Postal Service
estimates that cost coverage for the
incremental volume in each product
included in the Summer Sale program
will exceed 100 percent. Id. at 26.
The Postal Service identifies the
administrative costs of the Summer Sale
program as $977 thousand. Id. at 32.
The Postal Service estimates that it may
require up to six full-time employees for
four months at $300 thousand, up to 10
part-time employees for four months at
$250 thousand, and up to four contract
analysts for up to four months at $400
thousand. Id. The Postal Service assigns
$7 thousand to Web site development
and $20 thousand to production of
invitation letters to eligible customers.
Id.
7 The Postal Service states that secular volume
changes reflect long-run trends and are considered
permanent, whereas cyclical variations are caused
by general economic conditions and are temporary.
Seasonal volume fluctuations occur throughout the
year and reflect seasonal variations in mailing
patterns. Id.
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The Postal Service justifies the
eligibility threshold principally on the
grounds that the administrative costs
(approximately $20 million) of
including Standard Mail customers who
mailed less than 1 million pieces during
the relevant period would exceed the
net revenues (approximately $17.2
million) attributed to such sales. Id. at
27–28. In addition, it estimates that the
average small business would only save
42 dollars, which probably would not be
worth the business’s time and trouble.
Id. at 28–29.
The Postal Service reiterates that the
rationale for not including mail service
providers (MSP) in the Summer Sale
program is to protect it from MSPs
shifting volumes to optimize the
discount. Id. at 29. The Postal Service
indicates that First-Class advertising
mail was not considered for the program
since it could not reasonably segregate
First-Class advertising mail from other
First-Class Mail. Id.
Finally, the Postal Service also
believes including Standard Mail flats
in the Summer Sale program, despite its
low cost coverage, is justified since the
program may help offset challenges to
postal customers hit hardest by the
challenging economic climate, and
because the incremental volume will
cover its costs. Id. at 30.
C. Chairman’s Information Request No.
2 (CHIR No. 2)
CHIR No. 2 8 was designed to gather
information on the Postal Service’s
initial estimates for the program, and to
assist the Commission in determining
measurement of the success of the
program compared to those estimates.
CHIR No. 2 was also designed to bring
to light the Postal Service methodology
for determining the volumes, revenues,
and costs caused by the Summer Sale
program, so that such measurements are
straightforward at the completion of the
program.
The Postal Service states that it
developed the incremental volume
estimates for the Summer Sale program
by taking into account the demand
models provided to the Commission on
January 20, 2009, consulting Postal
Service managers and executives, and
corresponding with mailers. See
Response of United States Postal Service
to Chairman’s Information Request No.
2, June 2, 2009, at Q.1 (Response to
CHIR No. 2). The Postal Service states
that it did not derive separate volume
estimates for each Standard Mail
product. Id.
8 Chairman’s Information Request No. 2, May 27,
2009.
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The Postal Service plans to measure
incremental volumes caused by the
Summer Sale program based on the
same trend calculations used to
establish mailer threshold for program
eligibility. Id. at Q.2. The Postal Service
plans to measure actual short-run
attributable costs resulting from the
Summer Sale program volume by
applying the same method it used to
estimate those costs in response to CHIR
No. 1. Id. To ensure the application of
those costs is appropriate, the Postal
Service will revisit the assumptions it
made regarding excess capacity in its
response to CHIR No. 1. Id.
III. Comments
The Postal Service’s proposal has
generated significant interest and
support from the mailing community.
The Commission received 23 formal
comments: 20 support the Summer Sale
program,9 2 request inclusion in it,10
while 1 does not oppose it.11 The
Summer Sale program enjoys broad
support and the majority of the
commenters, citing the recession and its
effect on the Postal Service and mailers,
urge the Commission to approve it
expeditiously. See, e.g., MOAA
Comments, BOA Comments, Pitney
Bowes Comments, PostCom Comments,
PSA Comments, Quad/Graphics
9 Comments of Mail Order Association of America
to Postal Regulatory Commission Notice and Order
Concerning Standard Mail Volume Incentive
Pricing Program, May 12, 2009 (MOAA Comments);
Comments of the Association for Postal Commerce
in Response to Order No. 209 Concerning Standard
Mail Volume Incentive Pricing Program, May 19,
2009 (PostCom Comments); Comments of Parcel
Shippers Association to Postal Regulatory
Commission Notice and Order Concerning Standard
Mail Volume Incentive Pricing Program (PSA
Comments); Comments of the American Catalog
Mailers Association on the Standard Mail Volume
Incentive Program (Summer Sale) (ACMA
Comments); Comments of Quad/Graphics, Inc. in
Response to Order No. 209 (Quad/Graphics
Comments); Comments of Bank of America
Corporation on the United States Postal Service
Proposal for a Summer Sale Program (BOA
Comments); Comments of Pitney Bowes Inc. on the
United States Postal Service Proposal for a Summer
Sale Program (Pitney Bowes Comments); Comments
of the Direct Marketing Association on the United
States Postal Service ‘‘Summer Sale’’ (DMA
Comments); Valpak Direct Marketing Systems, Inc.
and Valpak Dealers’ Association, Inc. Comments
Regarding Standard Mail Volume Incentive Pricing
Program (Valpak Comments); and Comments of the
Public Representatives (Public Representatives
Comments); all filed on May 21, 2009; Comments
of Discover Financial Services, May 22, 2009 (DFS
Comments); and Comments of 7R Communications,
June 2, 2009 (7R Comments).
10 Comments of National Automotive Marketing,
May 19, 2009; Comments of Planner Pads Co., May
21, 2009.
11 Comments of National Newspaper Association
on Volume Incentive Program Known as the
‘‘Summer Sale’’, May 21, 2009 (NNA Comments).
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Comments, DMA Comments, and
ACMA Comments.
While the majority of the commenters
endorse the program without
reservation, a few express concerns
regarding the scope of the program and
measurement of it. See, e.g., Valpak
Comments regarding measurement of
the program success; see also NNA
Comments regarding scope of the
program. Specific comments are
addressed below in section IV,
Commission Analysis.
In addition, the Commission’s Office
of Public Affairs and Government
Relations received nearly 300 letters,
expressing nearly unanimous support
for the program, and urging the
Commission to approve it.12 Several
letters suggested that the Postal Service
should lower the participation
threshold.
Short-run marginal cost pricing.
Valpak comments that the Postal
Service’s use of short-run marginal cost
to justify pricing in the Summer Sale
program raises methodological issues.
Valpak Comments at 4. As such, Valpak
suggests a proceeding, apart from the
Commission’s review of the Summer
Sale program, which gives interested
persons an opportunity to address those
methodological issues. Id.
In its response to CHIR No. 1, the
Postal Service cites secular, cyclical,
and seasonal effects on mail volume to
support its conclusion of excess
capacity and to justify its use of shortrun marginal cost pricing. In reviewing
the Postal Service’s claims of excess
capacity, the Commission, for purposes
of the Summer Sale program, relies on
secular and cyclical effects on mail
volume to support its conclusions.13
The principal cause of the sharp volume
reductions is the current serious
economic recession, a cyclical
occurrence. Thus, under the
circumstances, the Postal Service’s
proposal represents a reasonable
attempt to maintain volume-related
efficiencies.14
12 These letters are maintained in the
Commission’s ‘‘Commenter File’’ for Docket No.
R2009–3. The file includes letters, e-mails, and
faxes sent to the Commission, but not filed in the
docket or stylized as comments. It is available for
inspection at the Commission’s Public Reading
Room during normal business hours.
13 While the secular effects do not appear to be
applicable to Standard Mail, there is, nonetheless
an effect on capacity.
14 Seasonal effects on mail volume, though
evident, are not unique to this year. This opinion
does not evaluate whether a recurring seasonal
effect may justify short-run marginal cost pricing.
The Commission is sensitive to the combined effect
of seasonal effects, with secular and cyclical effects,
on the Postal Service’s ability to shed capacity (and
thus costs) to keep up with falling volume.
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The Commission agrees that the
Postal Service’s use of short-run
marginal cost to justify a change in price
raises methodological issues which may
impact future pricing incentive
programs and the Commission’s Annual
Compliance Determination. The
methodological change has broad
implications which warrant
examination. This, however, is not the
forum for that examination. The
Summer Sale program is unique on
several levels and can, for purposes of
this proceeding, be addressed on the
merits. After this program has been
completed and its results analyzed, the
Commission may better evaluate
whether to initiate a proceeding to
consider the methodological issues
surrounding short-run marginal cost
pricing.
IV. Commission Analysis
Faced with unprecedented historic
volume and revenue declines, the Postal
Service has put forth an integrated
proposal designed to stem that trend
and assist the mailing industry. See
Notice at 2–8. Illustrative of the current
challenges faced by the Postal Service,
recently released data show a net loss
for April of 2009 of $381 million, with
a year-to-date loss of $2.7 billion.15
Total volume decreased 14.8 percent
over Same Period Last Year (SPLY),
with Standard Mail down 17.8 percent.
Total year-to-date volume has declined
about 15.2 billion pieces or 12.3
percent. Id. Total revenues for the
month are down 11.9 percent and yearto-date revenues are about $41.7 billion,
or 8.8 percent less than SPLY. Id.
Impact on the price cap. The Postal
Service proposes to treat the Summer
Sale program, for purposes of its effect
on the price cap, as if all the discounted
incremental volume paid the applicable
full postage. Notice at 8. This is
analogous to the way Negotiated Service
Agreement (NSA) volume is treated for
purposes of the price cap. Id. The
proposal, therefore, does not result in a
net price decrease, which could be
banked and applied to all mailers as a
future rate increase, including those
which could not participate in the
Summer Sale program. Id.
DMA suggests that the Postal
Service’s proposal to treat incremental
Summer Sale program volume as if it
paid the full rate is justified, as it
protects mailers who do not participate
in the sale from future rate increases
based on an increased banked amount
in the cap. DMA Comments at 2–3.
Valpak comments that since the Postal
15 See USPS Preliminary Financial Information
(Unaudited), May 27, 2009.
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Service proposes to treat the program as
an NSA, for purposes of the price cap,
its results should be comprehensively
evaluated in a similar fashion. Valpak
Comments at 2–3. The Public
Representatives do not oppose the
Postal Service’s proposal to treat the
program as analogous to an NSA for
purposes of calculating the price cap.
Public Representatives Comments at 10.
The Postal Service’s treatment of the
Summer Sale program as an NSA for
purposes of the price cap is reasonable.
It shields mailers not eligible for the
program from being charged higher rates
based on the amount which otherwise
would be banked from the program.
Objectives and factors, workshare
discounts, and preferred rates. Pursuant
to the Commission’s rules, 39 CFR
3010.14(b)(7), the Postal Service
addresses how the Summer Sale
program helps achieve the objectives of
39 U.S.C. 3622(b) and takes into account
the factors of 39 U.S.C. 3622(c). See
Notice at 8–13. It asserts that the
Summer Sale program does not
substantially alter the degree to which
Standard Mail prices address the
objectives and factors, but further
satisfies the objectives of pricing
flexibility and financial stability. Id. at
8–9. The Postal Service also believes the
‘‘program is a prime example of how the
Postal Service can utilize the pricing
flexibility provided under the PAEA in
order to encourage increased mail
volume[.]’’ Id. at 12. It projects the
program will not hinder Standard Mail’s
ability to cover cost and will help to
alleviate the burden that the current
economic conditions have placed on
some mailers. Id. The Postal Service
also claims that workshare discounts
will remain in compliance, and the
fixed discount ensures that the proper
ratio for preferred rates remains
unchanged. Id. at 13.
The Public Representatives do not
dispute any of the Postal Service’s
claims that the Summer Sale program
satisfies the objectives and factors,
workshare discount requirements, and
preferred rate requirements. See Public
Representatives Comments at 10–12.
The Public Representatives express
concern regarding the cost coverage for
Standard Mail flats. Id. at 11. However,
upon review of the Response to CHIR
No. 1, the Public Representatives
conclude that the Postal Service has
made an adequate demonstration that
the factor requiring attributable cost
coverage for each class of mail is
satisfied. Id.
The Commission finds that the
objectives and factors in 39 U.S.C. 3622
appear to be satisfied by explanations
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and data in the Notice and Response to
CHIR No. 1.
39 U.S.C. 3622(e) requires that
workshare discounts given by the Postal
Service do not exceed their avoided
costs unless certain criteria are fulfilled.
The Postal Service claims that
workshare discounts will be made
smaller by virtue of the 30 percent
discount; and, therefore, the Summer
Sale program moves those discounts
which are out of compliance closer to
compliance. See Notice at 13.
The Commission finds that given the
expected mail mix, relatively small net
impact of the volume induced by the
Summer Sale program, and that the
rebate applies at all workshare discount
tiers, the program’s effect on workshare
discounts evaluated in Docket No.
R2009–2 will be limited.
39 U.S.C. 3626 requires that nonprofit
categories of products shall be set to
yield 60 percent of the per-piece
revenue of their commercial
counterparts. The Postal Service expects
that, given the Summer Sale program’s
flat 30 percent discount on incremental
mail volume across nonprofit and
commercial subclasses alike, the
required 60 percent differential will be
maintained. Id. Based on the Postal
Service’s estimate of the mail mix of the
incremental volume, the Commission
agrees that the required 60 percent
differential will be maintained.
Eligibility threshold. The volume
threshold for eligibility in the program
raises two principal concerns: first,
whether it is reasonable, and second
whether it can be manipulated, e.g., for
mailers to earn discounts on mail that
would have been sent without the
discount.
Several commenter letters to the
Commission request that the Postal
Service include lower volume mailers in
the Summer Sale program. NNA also
comments that the Summer Sale
program ‘‘offers little to smaller mailers,
with the possible exception of the
system-wide benefits if a short-term
infusion of revenues reaches USPS
coffers[.]’’ NNA Comments at 3.
The Commission is sensitive to the
mailers who wish to participate but do
not meet the volume minimums set out
by the Postal Service for participation in
the Summer Sale program. On review
however, recognizing this is a first effort
to test a ‘‘sale’’ price, the Postal Service
has provided a reasonable rationale for
the threshold. Issues arising from Postal
Service calculation of usage by mailers,
and whether adequate communication
took place with appropriate mailer
executives, also can be better resolved
in future programs should they be
developed.
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The Postal Service provides
calculations which demonstrate that, if
the average expected incremental
volume increase held for mailers of
generally lower volume, the incremental
volume generated would cover its shortrun variable costs. However, such mail
would not produce enough revenue to
cover the increased administrative costs
of the broadened program. See Response
to CHIR No. 1 at 27–28. The
Commission accepts the Postal Service’s
analysis that opening the program to all
Standard Mail customers would create
administrative costs which outstrip the
net incremental revenue the program
would generate. Also, the relatively
small probable impact and limited,
experimental nature of the program
suggest that small mailers would neither
significantly benefit from nor be
disadvantaged by the program.
The Postal Service recognizes the
possibility that the threshold may be
effectively manipulated and has taken
steps to guard against this happening.
Because some participants may use
MSPs for a portion of their mailings, the
Commission is concerned about the
possibility for discounts to be awarded
for mail shifted from MSP permits to
mailer owned permits, which would not
be incremental volume. The Postal
Service responds to these concerns by
explaining that participants will be
required to certify to the best of their
knowledge that their threshold is based
on an accurate representation of all
Standard Mail sent by the mailer. See id.
at 4–5.
In Response to CHIR No. 1, the Postal
Service attached guidelines for mailers
seeking to document their MSP volumes
for participation in the Summer Sale
program. The guidelines state that
‘‘[t]here are two situations though that
leave the Postal Service blind to a
mailer’s mailing history. The first is
when no ghost permit is assigned to a
mailing sent on an MSP permit. The
second is when a mailer’s mailing is
part of a co-mail program run through
an MSP permit.’’ See id. at Attachment
B.16 The Commission expects that the
Postal Service will develop and
implement appropriate revenue
protection mechanisms to verify that
participants do not exploit these blind
spots and receive discounts for nonincremental volume.
Data collection and program
evaluation. Valpak comments that a
plan for evaluation, ‘‘including criteria
against which success (or failure) will
16 Business Mail Entry Unit clerks create ghost
permit numbers to identify mail owners when no
permit number is associated with mail owners’
names in PostalOne! See https://www.uspsoig.gov/
FOIA_files/MS-MA-06-002.pdf at 1–2.
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be assessed’’ should be established
immediately. Valpak Comments at 3.
Valpak asserts that public availability of
the plan and subsequent results are
required under the PAEA for
transparency and accountability. Id.
Such transparency would foster
understanding and help identify and
avoid possible problems with any other
similar program in the future. Id. Pitney
Bowes notes the Postal Service’s efforts
to ensure qualifying volume in the
program is actually new incremental
volume rather than a result of volume
shifting. Pitney Bowes Comments at 4.
Similarly, the Public Representatives
express concern about the possibility of
volume migration from First-Class
advertising mail to Standard Mail as a
result of the program, accuracy of the
cost coverage projections, and volume
migration from the months prior to the
program. Public Representatives
Comments at 13. The Public
Representatives call for the Postal
Service to issue a report on these issues
at the conclusion of the program. Id.
NNA comments that the Summer Sale
program does not guard against the
possibility of volume shifting from
November and December into the sale
period. NNA Comments at 3.
The Commission expects the Summer
Sale program to yield data which will
prove useful in assessing the merits of
other pricing incentive programs. The
Public Representatives’ and Valpak’s
comments are well taken that evaluation
criteria and a plan for data collection
must be established prior to the
implementation of the program. The
Commission shall require data reporting
from the Postal Service within 15 days
after the Postal Service credits the
rebates due to the Summer Sale
program’s participants.
In considering the data needed to
evaluate the Summer Sale program
fully, the Commission concludes that
the following information is required.
First, for each eligible Standard Mail
user,17 the Postal Service shall provide
monthly volumes and revenues for all
Standard Mail letters by product and
flats by product, further broken out into
commercial and nonprofit categories.
The reporting period shall be from
October of 2006 through October of
2009. The Postal Service shall also
provide information on any rebate paid
to each eligible user, with supporting
calculations. The information provided
pursuant to this paragraph shall be filed
under seal, and the Postal Service may
mask mailer identities by using a
17 Eligible Standard Mail users meeting the
qualifying conditions established for the Summer
Sale program. See Notice at 4.
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Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices
generic identification number. See
Appendix A.
Second, the Postal Service shall
publicly provide the monthly
information requested in the preceding
paragraph, but aggregating mailer data.
Third, for each eligible Standard Mail
user, the Postal Service shall provide
monthly permit volumes for First-Class
presort letters, cards, and flats.18 The
information provided pursuant to this
paragraph shall be filed under seal, and
the Postal Service shall, if it masks
mailer identities, use the same generic
identification number used to report
Standard Mail data.
Fourth, the Postal Service shall
identify the actual short-run volumevariable cost by each Standard Mail
letter and flat product. See Response to
CHIR No. 1 at 18–24.
Fifth, the Postal Service shall identify
the actual administrative costs of the
program. See id. at 32.
The data requested should provide
the Commission and public an
opportunity to evaluate thoroughly the
program’s impact on Postal Service
volumes, revenues, and costs. This
information is likely to be instrumental
in the design of future Postal Service
programs of a similar nature.
Conclusion. The Postal Service
proposes to implement a novel program,
broadly supported by the mailing
industry and commenters in this
proceeding. The Commission is hopeful
the program may offer one solution to
cyclical and secular volume declines,
and provide information useful for
considering other potential pricing
incentives. The Commission believes
the reporting required by this order is an
essential feature of the program.
Without such metrics, the merits of the
program cannot be fairly evaluated.
The Commission has reviewed the
threshold volume, average revenue per
piece, short-run attributable cost data
submitted by the Postal Service, and
conducted its own preliminary analysis
using such data. The Postal Service
estimates the volume response from the
program as 2.0 to 5.15 percent over
threshold levels. Based on these
assumptions and other submitted data,
the Commission estimates positive
contribution for both the upper and
lower bound volume figures. Separately,
based on an analysis using demand
elasticities from the latest set of Postal
Service demand models and
incorporating a First-Class Mail presort
demand shift, the Commission finds a
much lower, but still positive
contribution. See PRC–LR–1 (Library
Reference 1 to be filed with this order).
Thus, based on these scenarios, the
Commission concludes that a positive
contribution from the program is likely.
The Commission notes, however, that
results are sensitive to the degree to
which First-Class Mail migrates to
Standard Mail, an aspect of the program
that must be carefully evaluated in
assessing its merits.
V. Ordering Paragraphs
A full review of the United States
Postal Service Notice of MarketDominant Price Adjustment, filed May
1, 2009, has been completed. With
regard to the price adjustments
contained therein, for the reasons set
forth above, it is ordered:
1. The Commission approves the
Standard Mail Volume Incentive Pricing
Program.
2. The Commission directs the Postal
Service to report on the Standard Mail
Volume Incentive Pricing Program
within 15 days after the Postal Service
27849
credits the rebates due to the Summer
Sale program’s participants as
consistent with this order.
3. The Motion of Discover Financial
Services for Late Acceptance of
Comments, filed May 22, 2009, and the
Motion of 7R Communications, LLC for
Late Acceptance of Comments, filed
June 2, 2009, are granted.
4. The Secretary of the Commission
will arrange for publication of this order
in the Federal Register.
By the Commission.
Steven W. Williams,
Secretary.
Appendix A
Summer Sale Data Collection Plan and
Rebate Calculation Information
This appendix contains an outline of the
Summer Sale Data Report contents as
specified in Order No. 219. The template is
presented to help clarify the disaggregation
by product, commercial or nonprofit status,
and time period as described in the order.
The specific format of the report may be
tailored to fit the presentation format of the
data generation programs of the Postal
Service, but should be in a broadly available
electronic format such as Microsoft Excel.
Workbook 1: Mailer Information contains
the disaggregated Volume and Revenue
information to be reported for each mailer
eligible for the summer sale. This tab, and the
summer sale rebate calculations contained
therein, should be replicated for each eligible
mailer.
Workbook 2: Aggregate Information
contains the Volume and Revenue categories
as they appear in tab 1. The Summer Sale
Aggregate Incremental Volume and Aggregate
Rebate should be a summation calculation
linked to each mailer information tab so that
each volume and revenue figure represents
the total for all eligible mailers for the
relevant month.
WORKBOOK 1—MAILER INFORMATION
Month (for each month)
October 2006 through
October 2009 1
jlentini on PROD1PC65 with NOTICES
Mailer-specific information
Volume .....................................................................................................................................................................
Commercial .......................................................................................................................................................
Letters ...............................................................................................................................................................
Flats ..................................................................................................................................................................
Carrier Route Letters ........................................................................................................................................
Carrier Route Flats ...........................................................................................................................................
High Density and Saturation Letters ................................................................................................................
High Density and Saturation Flats ....................................................................................................................
First-Class Presort Letters and Cards ..............................................................................................................
First-Class Flats ................................................................................................................................................
Nonprofit ...........................................................................................................................................................
Letters ...............................................................................................................................................................
Flats ..................................................................................................................................................................
Carrier Route Letters ........................................................................................................................................
18 The Postal Service has not collected First-Class
Mail permit data from the eligible mailers, but once
such data are obtained, it can be used to evaluate
the effect on First-Class Mail volumes due to the
VerDate Nov<24>2008
16:37 Jun 10, 2009
Jkt 217001
program. Given the finite universe of eligible
mailers and the speed with which the Postal
Service gathered Standard Mail permit volume
information, the Commission does not expect the
PO 00000
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collection of First-Class Mail volumes for the same
mailers to burden the Postal Service.
E:\FR\FM\11JNN1.SGM
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27850
Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices
WORKBOOK 1—MAILER INFORMATION—Continued
Month (for each month)
October 2006 through
October 2009 1
Mailer-specific information
Carrier Route Flats ...........................................................................................................................................
High Density and Saturation Letters ................................................................................................................
High Density and Saturation Flats ....................................................................................................................
Revenue ...................................................................................................................................................................
Commercial .......................................................................................................................................................
Letters ...............................................................................................................................................................
Flats ..................................................................................................................................................................
Carrier Route Letters ........................................................................................................................................
Carrier Route Flats ...........................................................................................................................................
High Density and Saturation Letters ................................................................................................................
High Density and Saturation Flats ....................................................................................................................
First-Class Presort Letters and Cards ..............................................................................................................
First-Class Flats ................................................................................................................................................
Nonprofit ...........................................................................................................................................................
Letters ...............................................................................................................................................................
Flats ..................................................................................................................................................................
Carrier Route Letters ........................................................................................................................................
Carrier Route Flats ...........................................................................................................................................
High Density and Saturation Letters ................................................................................................................
High Density and Saturation Flats ....................................................................................................................
Rebate Calculation for each mailer
Formula
Calculation
Threshold .................................................................................................................................................................
Incremental Volume .................................................................................................................................................
October 2009 Adjustment ........................................................................................................................................
Eligible Volume ........................................................................................................................................................
Average Revenue Per Piece ...................................................................................................................................
Rebate .....................................................................................................................................................................
1 Formulas used in the determination of Volume Threshold, Incremental Volume, October 2009 Adjustment, Average Revenue per Piece, and
Summer Sale Rebate should be shown on each mailer page. Only mailer input data should be hardcoded.
WORKBOOK 2—AGGREGATE INFORMATION
Month (for each month)
October 2006 through
October 2009 1
jlentini on PROD1PC65 with NOTICES
Eligible mailer information
Volume .....................................................................................................................................................................
Commercial .......................................................................................................................................................
Letters ...............................................................................................................................................................
Flats ..................................................................................................................................................................
Carrier Route Letters ........................................................................................................................................
Carrier Route Flats ...........................................................................................................................................
High Density and Saturation Letters ................................................................................................................
High Density and Saturation Flats ....................................................................................................................
First-Class Presort Letters and Cards ..............................................................................................................
First-Class Flats ................................................................................................................................................
Nonprofit ...........................................................................................................................................................
Letters ...............................................................................................................................................................
Flats ..................................................................................................................................................................
Carrier Route Letters ........................................................................................................................................
Carrier Route Flats ...........................................................................................................................................
High Density and Saturation Letters ................................................................................................................
High Density and Saturation Flats ....................................................................................................................
Revenue ...................................................................................................................................................................
Commercial .......................................................................................................................................................
Letters ...............................................................................................................................................................
Flats ..................................................................................................................................................................
Carrier Route Letters ........................................................................................................................................
Carrier Route Flats ...........................................................................................................................................
High Density and Saturation Letters ................................................................................................................
High Density and Saturation Flats ....................................................................................................................
First-Class Presort Letters and Cards ..............................................................................................................
First-Class Flats ................................................................................................................................................
Nonprofit ...........................................................................................................................................................
Letters ...............................................................................................................................................................
Flats ..................................................................................................................................................................
Carrier Route Letters ........................................................................................................................................
Carrier Route Flats ...........................................................................................................................................
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16:37 Jun 10, 2009
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E:\FR\FM\11JNN1.SGM
11JNN1
Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices
27851
WORKBOOK 2—AGGREGATE INFORMATION—Continued
Month (for each month)
October 2006 through
October 2009 1
Eligible mailer information
High Density and Saturation Letters ................................................................................................................
High Density and Saturation Flats ....................................................................................................................
Rebate Calculation for each mailer
Formula
Calculation
Incremental Volume .................................................................................................................................................
Rebate .....................................................................................................................................................................
1 Formulas used in the determination of Volume Threshold, Incremental Volume, October 2009 Adjustment, Average Revenue per Piece, and
Summer Sale Rebate should be shown on each mailer page. Only mailer input data should be hardcoded.
[FR Doc. E9–13641 Filed 6–10–09; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–28758; 812–13619]
Nuveen Tax-Advantaged Total Return
Strategy Fund, et al.; Notice of
Application
June 4, 2009.
jlentini on PROD1PC65 with NOTICES
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
18(a)(1)(A) and (B) of the Act.
APPLICANTS: Nuveen Tax-Advantaged
Total Return Strategy Fund, Nuveen
Real Estate Income Fund, Nuveen
Diversified Dividend and Income Fund,
Nuveen Multi-Strategy Income and
Growth Fund, Nuveen Multi-Strategy
Income and Growth Fund 2, Nuveen
Quality Preferred Income Fund, Nuveen
Quality Preferred Income Fund 2,
Nuveen Quality Preferred Income Fund
3, Nuveen Senior Income Fund, Nuveen
Floating Rate Income Fund and Nuveen
Floating Rate Income Opportunity Fund
(each, a ‘‘Fund’’ and collectively,
‘‘Funds’’).
SUMMARY OF APPLICATION: Applicants
request an order (‘‘Order’’) granting an
exemption from sections 18(a)(1)(A) and
(B) of the Act for a period from the date
of the Order until October 31, 2010. The
Order would permit each Fund to issue
or incur debt subject to asset coverage
of 200% that would be used to refinance
all of the Fund’s issued and outstanding
auction rate preferred shares (‘‘ARPS’’)
issued prior to February 1, 2008 that are
outstanding at the time such post-order
debt is issued or incurred. The Order
also would permit each Fund to declare
dividends or any other distributions on,
or purchase, capital stock during the
VerDate Nov<24>2008
16:37 Jun 10, 2009
Jkt 217001
term of the Order, provided that such
post-Order debt has asset coverage of at
least 200% after deducting the amount
of such transaction.
FILING DATES: The application was filed
on December 29, 2008, and amended on
March 27, 2009, and June 2, 2009.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on June 29, 2009, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090.
Applicants: c/o Gifford R. Zimmerman,
Managing Director, Assistant Secretary
and Associate General Counsel, Nuveen
Asset Management, 333 West Wacker
Drive, Chicago, IL 60606.
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, or Julia Kim Gilmer,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
SUPPLEMENTARY INFORMATION:
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
Applicants’ Representations
1. Each of the Funds is organized as
a Massachusetts business trust and is a
closed-end management investment
company registered under the Act. Each
Fund is advised by Nuveen Asset
Management (‘‘Nuveen’’) and has issued
and outstanding a class of common
shares and a class of one or more series
of ARPS.
2. Applicants state that the Funds
issued their outstanding ARPS for
purposes of investment leverage to
augment the amount of investment
capital available for use in the pursuit
of their investment objectives.
Applicants state that, through the use of
leverage, the Funds seek to enhance the
investment return available to the
holders of their common shares by
earning a rate of portfolio return (which
includes the return obtained from
securities purchased from the proceeds
of ARPS offerings) that exceeds the
dividend rate that the Funds pay to
holders of the ARPS. Applicants
represent that ARPS shareholders are
entitled to receive a stated liquidation
preference amount of $25,000 per share
(plus any accumulated but unpaid
dividends) in any liquidation,
dissolution, or winding up of the
relevant Fund before any distribution or
payment to holders of the Fund’s
common shares. Applicants also state
that dividends declared and payable on
ARPS have a similar priority over
dividends declared and payable on the
Funds’ common shares. In addition,
applicants state that ARPS are
‘‘perpetual’’ securities and are not
subject to mandatory redemption by a
Fund (provided certain asset coverage
tests are met). Further, applicants state
that ARPS are redeemable at each
Fund’s option.
3. Applicants state that prior to
February 2008, dividend rates on the
ARPS for each dividend period were set
at the market clearing rate determined
through an auction process that brought
together bidders, who sought to buy
ARPS, and holders of ARPS, who sought
E:\FR\FM\11JNN1.SGM
11JNN1
]]>Agencies
[Federal Register Volume 74, Number 111 (Thursday, June 11, 2009)]
[Notices]
[Pages 27845-27851]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-13641]
-----------------------------------------------------------------------
POSTAL REGULATORY COMMISSION
[Docket No. R2009-3; Order No. 219]
Special Summer Postal Rate Program
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Postal Service has prepared, and the Commission has
approved, a special program offering reduced rates for Standard mailers
this summer. This document addresses related issues and provides
pertinent details.
DATES: Effective June 11, 2009.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 and stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
On May 1, 2009, the Postal Service filed with the Commission a
notice announcing its intention to adjust prices for Standard Mail
letters and flats pursuant to 39 U.S.C. 3622 and 39 CFR part 3010.\1\
The proposed adjustment is in the form of a ``Standard Mail Volume
Incentive Pricing Program'' (Summer Sale program) with a planned
implementation date of July 1, 2009 and a planned expiration date of
September 30, 2009. The Summer Sale program represents a reasoned
approach by the Postal Service to exercise its flexibility in market
dominant pricing under the Postal Accountability and Enhancement Act
(PAEA), Public Law 109-435, 120 Stat. 3218 (2006).
---------------------------------------------------------------------------
\1\ United States Postal Service Notice of Market-Dominant Price
Adjustment, May 1, 2009 (Notice).
---------------------------------------------------------------------------
In Order No. 209, the Commission established Docket No. R2009-3 to
consider matters raised by the Postal Service's filing, appoint public
representatives, and afford interested persons an opportunity to
comment.\2\ By this order, the Commission approves the proposed
Standard Mail Volume Incentive Pricing Program.
---------------------------------------------------------------------------
\2\ PRC Order No. 209, Notice and Order Concerning Standard Mail
Volume Incentive Pricing Program, May 4, 2009; located at 74 FR
21837 (May 11, 2009).
---------------------------------------------------------------------------
The Commission finds the proposal to be a judicious exercise of the
Postal Service's pricing flexibility under the PAEA. The Postal Service
is to be commended for its response to current market conditions. Much
can be learned from what, in essence, is a short-term pricing
experiment. However, the program is not without risks. Thus,
development and use of appropriate metrics in evaluating the program
are critical in determining whether the program is successful, and also
for assessing the long-term implications of such an approach.
II. Standard Mail Volume Incentive Pricing Program
A. Postal Service Filing
The Postal Service notes that the Summer Sale program is necessary
to counteract the dramatic volume reduction due to the economy, support
a struggling mailing industry, and increase volume during a typically
low volume period in which there is excess capacity; and secondarily to
improve customer relations, to fine tune future programs, to gather
feedback from customers, and to gather data which may improve postal
data systems. Notice at 2-3. The Postal Service's Notice provides a
high level overview of the Summer Sale program, identifying its salient
features as follows.\3\
---------------------------------------------------------------------------
\3\ Much of the justification for the proposal was submitted in
response to Chairman's Information Request No. 1, May 8, 2009 (CHIR
No. 1). Any such future proposals must be accompanied by the
requisite financial (cost, revenue, and volume) data underlying
them.
---------------------------------------------------------------------------
Under the proposed Summer Sale program, eligible mailers will
receive a 30 percent rebate of postage paid on the volume of Standard
Mail letters and flats mailed from July 1, 2009 to September 30, 2009
that exceeds mailer-specific thresholds.\4\ The rebate may be reduced
for volumes shifted from October 2009 into the sales period.\5\ Notice
at 3-4.
---------------------------------------------------------------------------
\4\ The threshold is calculated by comparing average volumes
over distinct periods to determine a trend in the mailer's volume.
That trend is applied to the average expected mail volume over the
Summer Sale program months, and any volume above the trend adjusted
average is eligible for the discount.
\5\ To quantify this possibility, the Postal Service will
measure each mailer's October 2009 volumes using a trend analysis
based on the mailer's prior years' volumes for that month. Id. at 4.
---------------------------------------------------------------------------
Eligibility for the Summer Sale program is limited to mailers who
are permit holders who have a demonstrable volume of at least 1 million
Standard Mail letters and flats between October 1, 2007 and March 31,
2008 for one or more permit imprint advance deposit accounts, pre-
canceled stamp permits, or postage meter permits. Id. at 4.
Mail service providers are excluded from the program to help ensure
that the Summer Sale program generates new volumes, rather than shifts
existing volumes. However, individual mailers who meet the above
criteria but use a mail service provider may participate if they meet
certain conditions. Id. at 4-5.
B. Chairman's Information Request No. 1 (CHIR No. 1)
CHIR No. 1 was designed to clarify the Postal Service's proposal.
The responses substantially expand on the Postal Service initial filing
and provide essential details regarding the scope of the program and
its underlying basis. CHIR No. 1 sought information on metrics to
measure the success of the Summer Sale program, including complete cost
analyses and volume migration from other classes or time periods, the
definition of short-run excess capacity, eligibility for the program,
contribution level for Standard Mail flats, and documentation of cost
and revenue estimates. See CHIR No. 1. The Commission expects the
Postal Service to provide this level of detail in future initial
filings.
The Postal Service defines the primary measure of success for the
Summer Sale program as ``incremental revenue and volume growth over the
threshold for the universe of eligible participants[.]'' See Response
of the United States Postal Service to Chairman's Information Request
No. 1, May 15, 2009, at 2 (Response to CHIR No. 1).\6\ The Postal
Service also anticipates monitoring customer feedback and the efficacy
and efficiency of its administration of the program. Id.
---------------------------------------------------------------------------
\6\ The pages to the Postal Service's response to CHIR No. 1 are
not numbered. For the convenience of the parties, the Commission has
numbered the pages for purposes of citation. If the normal citation
practice was followed (citing just the relevant question being
answered), parties may have difficulty in finding the specific
reference as some of the responses are lengthy.
---------------------------------------------------------------------------
The Postal Service does not believe the additional incentive of the
Summer Sale program will induce any First-Class advertising mail to
migrate to the program, due to different demand characteristics and the
significant gap in price which already exists. Id. at 4. Further, the
Postal Service does not believe that mailers have enough lead time to
shift volume from June or earlier into the program. Id. In addition,
the Postal Service cites precautions it has
[[Page 27846]]
taken, including mailer certification of volumes, to mitigate any
attempt by mailers to shift volume among permits. Id. at 4-5.
The Postal Service's initial Notice references excess capacity only
as it relates to delivery. Notice at 3. It makes no attempt to define
or otherwise elaborate on the concept. In response to CHIR No. 1, the
Postal Service indicates that excess capacity exists when ``capacity to
handle volume is larger than the volume presented to it.'' Response to
CHIR No. 1 at 6. It also discusses the secular, cyclical, and seasonal
effects on mail volumes that, in turn, affect capacity. Id.\7\
---------------------------------------------------------------------------
\7\ The Postal Service states that secular volume changes
reflect long-run trends and are considered permanent, whereas
cyclical variations are caused by general economic conditions and
are temporary. Seasonal volume fluctuations occur throughout the
year and reflect seasonal variations in mailing patterns. Id.
---------------------------------------------------------------------------
To support its claim of excess capacity, the Postal Service appears
to rely principally on a cyclical decline in volume due to the general
economic conditions and seasonal variation associated with the fourth
quarter. Id. at 6-8, 12. The Postal Service claims it is difficult, if
not impossible, for it to reduce capacity at the same rate as volume
has fallen when comparing year over year declines. Id. at 12-15. In
addition, the Postal Service indicates that its inability to rapidly
adjust work hours and building capacity contributes to seasonal excess
capacity. Id. at 7-9.
The Postal Service asserts that short-run attributable costs for
incremental pieces, during a period of excess capacity, are lower than
the long-run attributable costs. See id. at 16-17. The Postal Service
provides estimates of the attributable costs by product by breaking out
each of the cost segments and examining where volume can be absorbed
without incurring additional incremental cost. Id. at 17-24. As a
result of this analysis, the Postal Service estimates that cost
coverage for the incremental volume in each product included in the
Summer Sale program will exceed 100 percent. Id. at 26.
The Postal Service identifies the administrative costs of the
Summer Sale program as $977 thousand. Id. at 32. The Postal Service
estimates that it may require up to six full-time employees for four
months at $300 thousand, up to 10 part-time employees for four months
at $250 thousand, and up to four contract analysts for up to four
months at $400 thousand. Id. The Postal Service assigns $7 thousand to
Web site development and $20 thousand to production of invitation
letters to eligible customers. Id.
The Postal Service justifies the eligibility threshold principally
on the grounds that the administrative costs (approximately $20
million) of including Standard Mail customers who mailed less than 1
million pieces during the relevant period would exceed the net revenues
(approximately $17.2 million) attributed to such sales. Id. at 27-28.
In addition, it estimates that the average small business would only
save 42 dollars, which probably would not be worth the business's time
and trouble. Id. at 28-29.
The Postal Service reiterates that the rationale for not including
mail service providers (MSP) in the Summer Sale program is to protect
it from MSPs shifting volumes to optimize the discount. Id. at 29. The
Postal Service indicates that First-Class advertising mail was not
considered for the program since it could not reasonably segregate
First-Class advertising mail from other First-Class Mail. Id.
Finally, the Postal Service also believes including Standard Mail
flats in the Summer Sale program, despite its low cost coverage, is
justified since the program may help offset challenges to postal
customers hit hardest by the challenging economic climate, and because
the incremental volume will cover its costs. Id. at 30.
C. Chairman's Information Request No. 2 (CHIR No. 2)
CHIR No. 2 \8\ was designed to gather information on the Postal
Service's initial estimates for the program, and to assist the
Commission in determining measurement of the success of the program
compared to those estimates. CHIR No. 2 was also designed to bring to
light the Postal Service methodology for determining the volumes,
revenues, and costs caused by the Summer Sale program, so that such
measurements are straightforward at the completion of the program.
---------------------------------------------------------------------------
\8\ Chairman's Information Request No. 2, May 27, 2009.
---------------------------------------------------------------------------
The Postal Service states that it developed the incremental volume
estimates for the Summer Sale program by taking into account the demand
models provided to the Commission on January 20, 2009, consulting
Postal Service managers and executives, and corresponding with mailers.
See Response of United States Postal Service to Chairman's Information
Request No. 2, June 2, 2009, at Q.1 (Response to CHIR No. 2). The
Postal Service states that it did not derive separate volume estimates
for each Standard Mail product. Id.
The Postal Service plans to measure incremental volumes caused by
the Summer Sale program based on the same trend calculations used to
establish mailer threshold for program eligibility. Id. at Q.2. The
Postal Service plans to measure actual short-run attributable costs
resulting from the Summer Sale program volume by applying the same
method it used to estimate those costs in response to CHIR No. 1. Id.
To ensure the application of those costs is appropriate, the Postal
Service will revisit the assumptions it made regarding excess capacity
in its response to CHIR No. 1. Id.
III. Comments
The Postal Service's proposal has generated significant interest
and support from the mailing community. The Commission received 23
formal comments: 20 support the Summer Sale program,\9\ 2 request
inclusion in it,\10\ while 1 does not oppose it.\11\ The Summer Sale
program enjoys broad support and the majority of the commenters, citing
the recession and its effect on the Postal Service and mailers, urge
the Commission to approve it expeditiously. See, e.g., MOAA Comments,
BOA Comments, Pitney Bowes Comments, PostCom Comments, PSA Comments,
Quad/Graphics
[[Page 27847]]
Comments, DMA Comments, and ACMA Comments.
---------------------------------------------------------------------------
\9\ Comments of Mail Order Association of America to Postal
Regulatory Commission Notice and Order Concerning Standard Mail
Volume Incentive Pricing Program, May 12, 2009 (MOAA Comments);
Comments of the Association for Postal Commerce in Response to Order
No. 209 Concerning Standard Mail Volume Incentive Pricing Program,
May 19, 2009 (PostCom Comments); Comments of Parcel Shippers
Association to Postal Regulatory Commission Notice and Order
Concerning Standard Mail Volume Incentive Pricing Program (PSA
Comments); Comments of the American Catalog Mailers Association on
the Standard Mail Volume Incentive Program (Summer Sale) (ACMA
Comments); Comments of Quad/Graphics, Inc. in Response to Order No.
209 (Quad/Graphics Comments); Comments of Bank of America
Corporation on the United States Postal Service Proposal for a
Summer Sale Program (BOA Comments); Comments of Pitney Bowes Inc. on
the United States Postal Service Proposal for a Summer Sale Program
(Pitney Bowes Comments); Comments of the Direct Marketing
Association on the United States Postal Service ``Summer Sale'' (DMA
Comments); Valpak Direct Marketing Systems, Inc. and Valpak Dealers'
Association, Inc. Comments Regarding Standard Mail Volume Incentive
Pricing Program (Valpak Comments); and Comments of the Public
Representatives (Public Representatives Comments); all filed on May
21, 2009; Comments of Discover Financial Services, May 22, 2009 (DFS
Comments); and Comments of 7R Communications, June 2, 2009 (7R
Comments).
\10\ Comments of National Automotive Marketing, May 19, 2009;
Comments of Planner Pads Co., May 21, 2009.
\11\ Comments of National Newspaper Association on Volume
Incentive Program Known as the ``Summer Sale'', May 21, 2009 (NNA
Comments).
---------------------------------------------------------------------------
While the majority of the commenters endorse the program without
reservation, a few express concerns regarding the scope of the program
and measurement of it. See, e.g., Valpak Comments regarding measurement
of the program success; see also NNA Comments regarding scope of the
program. Specific comments are addressed below in section IV,
Commission Analysis.
In addition, the Commission's Office of Public Affairs and
Government Relations received nearly 300 letters, expressing nearly
unanimous support for the program, and urging the Commission to approve
it.\12\ Several letters suggested that the Postal Service should lower
the participation threshold.
---------------------------------------------------------------------------
\12\ These letters are maintained in the Commission's
``Commenter File'' for Docket No. R2009-3. The file includes
letters, e-mails, and faxes sent to the Commission, but not filed in
the docket or stylized as comments. It is available for inspection
at the Commission's Public Reading Room during normal business
hours.
---------------------------------------------------------------------------
Short-run marginal cost pricing. Valpak comments that the Postal
Service's use of short-run marginal cost to justify pricing in the
Summer Sale program raises methodological issues. Valpak Comments at 4.
As such, Valpak suggests a proceeding, apart from the Commission's
review of the Summer Sale program, which gives interested persons an
opportunity to address those methodological issues. Id.
In its response to CHIR No. 1, the Postal Service cites secular,
cyclical, and seasonal effects on mail volume to support its conclusion
of excess capacity and to justify its use of short-run marginal cost
pricing. In reviewing the Postal Service's claims of excess capacity,
the Commission, for purposes of the Summer Sale program, relies on
secular and cyclical effects on mail volume to support its
conclusions.\13\ The principal cause of the sharp volume reductions is
the current serious economic recession, a cyclical occurrence. Thus,
under the circumstances, the Postal Service's proposal represents a
reasonable attempt to maintain volume-related efficiencies.\14\
---------------------------------------------------------------------------
\13\ While the secular effects do not appear to be applicable to
Standard Mail, there is, nonetheless an effect on capacity.
\14\ Seasonal effects on mail volume, though evident, are not
unique to this year. This opinion does not evaluate whether a
recurring seasonal effect may justify short-run marginal cost
pricing. The Commission is sensitive to the combined effect of
seasonal effects, with secular and cyclical effects, on the Postal
Service's ability to shed capacity (and thus costs) to keep up with
falling volume.
---------------------------------------------------------------------------
The Commission agrees that the Postal Service's use of short-run
marginal cost to justify a change in price raises methodological issues
which may impact future pricing incentive programs and the Commission's
Annual Compliance Determination. The methodological change has broad
implications which warrant examination. This, however, is not the forum
for that examination. The Summer Sale program is unique on several
levels and can, for purposes of this proceeding, be addressed on the
merits. After this program has been completed and its results analyzed,
the Commission may better evaluate whether to initiate a proceeding to
consider the methodological issues surrounding short-run marginal cost
pricing.
IV. Commission Analysis
Faced with unprecedented historic volume and revenue declines, the
Postal Service has put forth an integrated proposal designed to stem
that trend and assist the mailing industry. See Notice at 2-8.
Illustrative of the current challenges faced by the Postal Service,
recently released data show a net loss for April of 2009 of $381
million, with a year-to-date loss of $2.7 billion.\15\ Total volume
decreased 14.8 percent over Same Period Last Year (SPLY), with Standard
Mail down 17.8 percent. Total year-to-date volume has declined about
15.2 billion pieces or 12.3 percent. Id. Total revenues for the month
are down 11.9 percent and year-to-date revenues are about $41.7
billion, or 8.8 percent less than SPLY. Id.
---------------------------------------------------------------------------
\15\ See USPS Preliminary Financial Information (Unaudited), May
27, 2009.
---------------------------------------------------------------------------
Impact on the price cap. The Postal Service proposes to treat the
Summer Sale program, for purposes of its effect on the price cap, as if
all the discounted incremental volume paid the applicable full postage.
Notice at 8. This is analogous to the way Negotiated Service Agreement
(NSA) volume is treated for purposes of the price cap. Id. The
proposal, therefore, does not result in a net price decrease, which
could be banked and applied to all mailers as a future rate increase,
including those which could not participate in the Summer Sale program.
Id.
DMA suggests that the Postal Service's proposal to treat
incremental Summer Sale program volume as if it paid the full rate is
justified, as it protects mailers who do not participate in the sale
from future rate increases based on an increased banked amount in the
cap. DMA Comments at 2-3. Valpak comments that since the Postal Service
proposes to treat the program as an NSA, for purposes of the price cap,
its results should be comprehensively evaluated in a similar fashion.
Valpak Comments at 2-3. The Public Representatives do not oppose the
Postal Service's proposal to treat the program as analogous to an NSA
for purposes of calculating the price cap. Public Representatives
Comments at 10.
The Postal Service's treatment of the Summer Sale program as an NSA
for purposes of the price cap is reasonable. It shields mailers not
eligible for the program from being charged higher rates based on the
amount which otherwise would be banked from the program.
Objectives and factors, workshare discounts, and preferred rates.
Pursuant to the Commission's rules, 39 CFR 3010.14(b)(7), the Postal
Service addresses how the Summer Sale program helps achieve the
objectives of 39 U.S.C. 3622(b) and takes into account the factors of
39 U.S.C. 3622(c). See Notice at 8-13. It asserts that the Summer Sale
program does not substantially alter the degree to which Standard Mail
prices address the objectives and factors, but further satisfies the
objectives of pricing flexibility and financial stability. Id. at 8-9.
The Postal Service also believes the ``program is a prime example of
how the Postal Service can utilize the pricing flexibility provided
under the PAEA in order to encourage increased mail volume[.]'' Id. at
12. It projects the program will not hinder Standard Mail's ability to
cover cost and will help to alleviate the burden that the current
economic conditions have placed on some mailers. Id. The Postal Service
also claims that workshare discounts will remain in compliance, and the
fixed discount ensures that the proper ratio for preferred rates
remains unchanged. Id. at 13.
The Public Representatives do not dispute any of the Postal
Service's claims that the Summer Sale program satisfies the objectives
and factors, workshare discount requirements, and preferred rate
requirements. See Public Representatives Comments at 10-12. The Public
Representatives express concern regarding the cost coverage for
Standard Mail flats. Id. at 11. However, upon review of the Response to
CHIR No. 1, the Public Representatives conclude that the Postal Service
has made an adequate demonstration that the factor requiring
attributable cost coverage for each class of mail is satisfied. Id.
The Commission finds that the objectives and factors in 39 U.S.C.
3622 appear to be satisfied by explanations
[[Page 27848]]
and data in the Notice and Response to CHIR No. 1.
39 U.S.C. 3622(e) requires that workshare discounts given by the
Postal Service do not exceed their avoided costs unless certain
criteria are fulfilled. The Postal Service claims that workshare
discounts will be made smaller by virtue of the 30 percent discount;
and, therefore, the Summer Sale program moves those discounts which are
out of compliance closer to compliance. See Notice at 13.
The Commission finds that given the expected mail mix, relatively
small net impact of the volume induced by the Summer Sale program, and
that the rebate applies at all workshare discount tiers, the program's
effect on workshare discounts evaluated in Docket No. R2009-2 will be
limited.
39 U.S.C. 3626 requires that nonprofit categories of products shall
be set to yield 60 percent of the per-piece revenue of their commercial
counterparts. The Postal Service expects that, given the Summer Sale
program's flat 30 percent discount on incremental mail volume across
nonprofit and commercial subclasses alike, the required 60 percent
differential will be maintained. Id. Based on the Postal Service's
estimate of the mail mix of the incremental volume, the Commission
agrees that the required 60 percent differential will be maintained.
Eligibility threshold. The volume threshold for eligibility in the
program raises two principal concerns: first, whether it is reasonable,
and second whether it can be manipulated, e.g., for mailers to earn
discounts on mail that would have been sent without the discount.
Several commenter letters to the Commission request that the Postal
Service include lower volume mailers in the Summer Sale program. NNA
also comments that the Summer Sale program ``offers little to smaller
mailers, with the possible exception of the system-wide benefits if a
short-term infusion of revenues reaches USPS coffers[.]'' NNA Comments
at 3.
The Commission is sensitive to the mailers who wish to participate
but do not meet the volume minimums set out by the Postal Service for
participation in the Summer Sale program. On review however,
recognizing this is a first effort to test a ``sale'' price, the Postal
Service has provided a reasonable rationale for the threshold. Issues
arising from Postal Service calculation of usage by mailers, and
whether adequate communication took place with appropriate mailer
executives, also can be better resolved in future programs should they
be developed.
The Postal Service provides calculations which demonstrate that, if
the average expected incremental volume increase held for mailers of
generally lower volume, the incremental volume generated would cover
its short-run variable costs. However, such mail would not produce
enough revenue to cover the increased administrative costs of the
broadened program. See Response to CHIR No. 1 at 27-28. The Commission
accepts the Postal Service's analysis that opening the program to all
Standard Mail customers would create administrative costs which
outstrip the net incremental revenue the program would generate. Also,
the relatively small probable impact and limited, experimental nature
of the program suggest that small mailers would neither significantly
benefit from nor be disadvantaged by the program.
The Postal Service recognizes the possibility that the threshold
may be effectively manipulated and has taken steps to guard against
this happening. Because some participants may use MSPs for a portion of
their mailings, the Commission is concerned about the possibility for
discounts to be awarded for mail shifted from MSP permits to mailer
owned permits, which would not be incremental volume. The Postal
Service responds to these concerns by explaining that participants will
be required to certify to the best of their knowledge that their
threshold is based on an accurate representation of all Standard Mail
sent by the mailer. See id. at 4-5.
In Response to CHIR No. 1, the Postal Service attached guidelines
for mailers seeking to document their MSP volumes for participation in
the Summer Sale program. The guidelines state that ``[t]here are two
situations though that leave the Postal Service blind to a mailer's
mailing history. The first is when no ghost permit is assigned to a
mailing sent on an MSP permit. The second is when a mailer's mailing is
part of a co-mail program run through an MSP permit.'' See id. at
Attachment B.\16\ The Commission expects that the Postal Service will
develop and implement appropriate revenue protection mechanisms to
verify that participants do not exploit these blind spots and receive
discounts for non-incremental volume.
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\16\ Business Mail Entry Unit clerks create ghost permit numbers
to identify mail owners when no permit number is associated with
mail owners' names in PostalOne! See https://www.uspsoig.gov/FOIA_files/MS-MA-06-002.pdf at 1-2.
---------------------------------------------------------------------------
Data collection and program evaluation. Valpak comments that a plan
for evaluation, ``including criteria against which success (or failure)
will be assessed'' should be established immediately. Valpak Comments
at 3. Valpak asserts that public availability of the plan and
subsequent results are required under the PAEA for transparency and
accountability. Id. Such transparency would foster understanding and
help identify and avoid possible problems with any other similar
program in the future. Id. Pitney Bowes notes the Postal Service's
efforts to ensure qualifying volume in the program is actually new
incremental volume rather than a result of volume shifting. Pitney
Bowes Comments at 4.
Similarly, the Public Representatives express concern about the
possibility of volume migration from First-Class advertising mail to
Standard Mail as a result of the program, accuracy of the cost coverage
projections, and volume migration from the months prior to the program.
Public Representatives Comments at 13. The Public Representatives call
for the Postal Service to issue a report on these issues at the
conclusion of the program. Id. NNA comments that the Summer Sale
program does not guard against the possibility of volume shifting from
November and December into the sale period. NNA Comments at 3.
The Commission expects the Summer Sale program to yield data which
will prove useful in assessing the merits of other pricing incentive
programs. The Public Representatives' and Valpak's comments are well
taken that evaluation criteria and a plan for data collection must be
established prior to the implementation of the program. The Commission
shall require data reporting from the Postal Service within 15 days
after the Postal Service credits the rebates due to the Summer Sale
program's participants.
In considering the data needed to evaluate the Summer Sale program
fully, the Commission concludes that the following information is
required. First, for each eligible Standard Mail user,\17\ the Postal
Service shall provide monthly volumes and revenues for all Standard
Mail letters by product and flats by product, further broken out into
commercial and nonprofit categories. The reporting period shall be from
October of 2006 through October of 2009. The Postal Service shall also
provide information on any rebate paid to each eligible user, with
supporting calculations. The information provided pursuant to this
paragraph shall be filed under seal, and the Postal Service may mask
mailer identities by using a
[[Page 27849]]
generic identification number. See Appendix A.
---------------------------------------------------------------------------
\17\ Eligible Standard Mail users meeting the qualifying
conditions established for the Summer Sale program. See Notice at 4.
---------------------------------------------------------------------------
Second, the Postal Service shall publicly provide the monthly
information requested in the preceding paragraph, but aggregating
mailer data.
Third, for each eligible Standard Mail user, the Postal Service
shall provide monthly permit volumes for First-Class presort letters,
cards, and flats.\18\ The information provided pursuant to this
paragraph shall be filed under seal, and the Postal Service shall, if
it masks mailer identities, use the same generic identification number
used to report Standard Mail data.
---------------------------------------------------------------------------
\18\ The Postal Service has not collected First-Class Mail
permit data from the eligible mailers, but once such data are
obtained, it can be used to evaluate the effect on First-Class Mail
volumes due to the program. Given the finite universe of eligible
mailers and the speed with which the Postal Service gathered
Standard Mail permit volume information, the Commission does not
expect the collection of First-Class Mail volumes for the same
mailers to burden the Postal Service.
---------------------------------------------------------------------------
Fourth, the Postal Service shall identify the actual short-run
volume-variable cost by each Standard Mail letter and flat product. See
Response to CHIR No. 1 at 18-24.
Fifth, the Postal Service shall identify the actual administrative
costs of the program. See id. at 32.
The data requested should provide the Commission and public an
opportunity to evaluate thoroughly the program's impact on Postal
Service volumes, revenues, and costs. This information is likely to be
instrumental in the design of future Postal Service programs of a
similar nature.
Conclusion. The Postal Service proposes to implement a novel
program, broadly supported by the mailing industry and commenters in
this proceeding. The Commission is hopeful the program may offer one
solution to cyclical and secular volume declines, and provide
information useful for considering other potential pricing incentives.
The Commission believes the reporting required by this order is an
essential feature of the program. Without such metrics, the merits of
the program cannot be fairly evaluated.
The Commission has reviewed the threshold volume, average revenue
per piece, short-run attributable cost data submitted by the Postal
Service, and conducted its own preliminary analysis using such data.
The Postal Service estimates the volume response from the program as
2.0 to 5.15 percent over threshold levels. Based on these assumptions
and other submitted data, the Commission estimates positive
contribution for both the upper and lower bound volume figures.
Separately, based on an analysis using demand elasticities from the
latest set of Postal Service demand models and incorporating a First-
Class Mail presort demand shift, the Commission finds a much lower, but
still positive contribution. See PRC-LR-1 (Library Reference 1 to be
filed with this order). Thus, based on these scenarios, the Commission
concludes that a positive contribution from the program is likely. The
Commission notes, however, that results are sensitive to the degree to
which First-Class Mail migrates to Standard Mail, an aspect of the
program that must be carefully evaluated in assessing its merits.
V. Ordering Paragraphs
A full review of the United States Postal Service Notice of Market-
Dominant Price Adjustment, filed May 1, 2009, has been completed. With
regard to the price adjustments contained therein, for the reasons set
forth above, it is ordered:
1. The Commission approves the Standard Mail Volume Incentive
Pricing Program.
2. The Commission directs the Postal Service to report on the
Standard Mail Volume Incentive Pricing Program within 15 days after the
Postal Service credits the rebates due to the Summer Sale program's
participants as consistent with this order.
3. The Motion of Discover Financial Services for Late Acceptance of
Comments, filed May 22, 2009, and the Motion of 7R Communications, LLC
for Late Acceptance of Comments, filed June 2, 2009, are granted.
4. The Secretary of the Commission will arrange for publication of
this order in the Federal Register.
By the Commission.
Steven W. Williams,
Secretary.
Appendix A
Summer Sale Data Collection Plan and Rebate Calculation Information
This appendix contains an outline of the Summer Sale Data Report
contents as specified in Order No. 219. The template is presented to
help clarify the disaggregation by product, commercial or nonprofit
status, and time period as described in the order.
The specific format of the report may be tailored to fit the
presentation format of the data generation programs of the Postal
Service, but should be in a broadly available electronic format such
as Microsoft Excel.
Workbook 1: Mailer Information contains the disaggregated Volume
and Revenue information to be reported for each mailer eligible for
the summer sale. This tab, and the summer sale rebate calculations
contained therein, should be replicated for each eligible mailer.
Workbook 2: Aggregate Information contains the Volume and
Revenue categories as they appear in tab 1. The Summer Sale
Aggregate Incremental Volume and Aggregate Rebate should be a
summation calculation linked to each mailer information tab so that
each volume and revenue figure represents the total for all eligible
mailers for the relevant month.
Workbook 1--Mailer Information
------------------------------------------------------------------------
Month (for each month) October 2006
Mailer-specific information through October 2009 \1\
------------------------------------------------------------------------
Volume.........................
Commercial.................
Letters....................
Flats......................
Carrier Route Letters......
Carrier Route Flats........
High Density and Saturation
Letters.
High Density and Saturation
Flats.
First-Class Presort Letters
and Cards.
First-Class Flats..........
Nonprofit..................
Letters....................
Flats......................
Carrier Route Letters......
[[Page 27850]]
Carrier Route Flats........
High Density and Saturation
Letters.
High Density and Saturation
Flats.
Revenue........................
Commercial.................
Letters....................
Flats......................
Carrier Route Letters......
Carrier Route Flats........
High Density and Saturation
Letters.
High Density and Saturation
Flats.
First-Class Presort Letters
and Cards.
First-Class Flats..........
Nonprofit..................
Letters....................
Flats......................
Carrier Route Letters......
Carrier Route Flats........
High Density and Saturation
Letters.
High Density and Saturation
Flats.
------------------------------------------------------------------------
Rebate Calculation for each mailer Formula Calculation
------------------------------------------------------------------------
Threshold...............................
Incremental Volume......................
October 2009 Adjustment.................
Eligible Volume.........................
Average Revenue Per Piece...............
Rebate..................................
------------------------------------------------------------------------
\1\ Formulas used in the determination of Volume Threshold, Incremental
Volume, October 2009 Adjustment, Average Revenue per Piece, and Summer
Sale Rebate should be shown on each mailer page. Only mailer input
data should be hardcoded.
Workbook 2--Aggregate Information
------------------------------------------------------------------------
Month (for each month) October 2006
Eligible mailer information through October 2009 \1\
------------------------------------------------------------------------
Volume.........................
Commercial.................
Letters....................
Flats......................
Carrier Route Letters......
Carrier Route Flats........
High Density and Saturation
Letters.
High Density and Saturation
Flats.
First-Class Presort Letters
and Cards.
First-Class Flats..........
Nonprofit..................
Letters....................
Flats......................
Carrier Route Letters......
Carrier Route Flats........
High Density and Saturation
Letters.
High Density and Saturation
Flats.
Revenue........................
Commercial.................
Letters....................
Flats......................
Carrier Route Letters......
Carrier Route Flats........
High Density and Saturation
Letters.
High Density and Saturation
Flats.
First-Class Presort Letters
and Cards.
First-Class Flats..........
Nonprofit..................
Letters....................
Flats......................
Carrier Route Letters......
Carrier Route Flats........
[[Page 27851]]
High Density and Saturation
Letters.
High Density and Saturation
Flats.
------------------------------------------------------------------------
Rebate Calculation for each mailer Formula Calculation
------------------------------------------------------------------------
Incremental Volume......................
Rebate..................................
------------------------------------------------------------------------
\1\ Formulas used in the determination of Volume Threshold, Incremental
Volume, October 2009 Adjustment, Average Revenue per Piece, and Summer
Sale Rebate should be shown on each mailer page. Only mailer input
data should be hardcoded.
[FR Doc. E9-13641 Filed 6-10-09; 8:45 am]
BILLING CODE 7710-FW-P
