Mail Rates to Rise by Less Than a Penny

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Although postal officials have tentatively approved a
one-cent increase in the price of a first-class postage stamp, the cost of mailing cable
bills will increase by less than a penny, due to discounts for presorted bulk mailing.

According to billing vendors serving the industry, most of
cable's outgoing mail is the most deeply discounted type of first-class mail --
sorted by the vendor down to the local postal route. That class of mail is now 23 cents
for one ounce, but it will increase to 23.8 cents, pending a decision by the U.S. Postal
Service Board of Governors. The cost for the second ounce will drop by a penny, so costs
will not rise for telecommunications providers with heavier-weighted bills.

But what could be more problematic, vendors said, is a
proposal among the tiers of rate hikes to change postal rates for return payments. If that
is approved, it could hike the cost of doing business for America's bulk-mail
processors.

John DePiazza, director of postal relations for
International Billing Services, the statement-processing arm of U.S. Computer Services and
sister company to CableData, said remittance envelopes, which are bar-coded for easy
processing by the post office, can cost as little as $4 per 100 to process. By comparison,
handwritten return mail, in consumer-provided envelopes, can cost as much as $44.

The Postal Service is looking for a way of sharing the
savings of automation with the mailing public, but the proposals could be a nightmare for
bulk-mailing firms. DePiazza estimated that less than 10 percent of bulk mail would
qualify for the proposed discounted return envelope.

To ensure that only appropriate mail would get the
discount, the Postal Service would leave it up to billers to provide prepaid return
envelopes to consumers; to track the expense so that it could be effectively audited by
the Postal Service; and to add the cost of the return billing into consumers' bills.

If this option is approved, IBS would have to re-engineer
its production capacities to provide two parallel streams -- one for client companies that
use prepaid remittance envelopes, and one for those that don't. Customer service for
the expanded offerings would add another operating expense, billing companies said.

A less onerous proposal recommends offering commercial sale
of a discounted stamp only to be used for bill-remittance envelopes. Bulk mailers are
lobbying against both options.

"We hope that they will both go away," DePiazza
said.

Billing companies believe that the proposals may
unintentionally speed up the move toward online transactions.

Vendors said the 0.8-cent postal increase is so small that
they are doubtful that it will curb cable companies' use of the bill as a marketing
tool.

Bill presentation has become so efficient, said Pam
Vanlandingham, vice president and general manager of CSG Systems Inc., that there is still
plenty of room for billstuffers, yet operators still keep the overall statement under one
ounce.

Additionally, CSG customers are taking advantage of its
"Enhanced Statement Processing" product, which turns the bill itself into a
marketing message.

"Our customers are focused on staying under one
ounce," she said.

The Postal Service Board of Governors has not indicated
whether it will approve the rate hikes by the end of its fiscal year, Oct. 1, or whether
it will wait until the next calendar year.

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