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Postal Rate Hike Could Be Harbinger of Things to Come

Aired January 6, 2001 - 10:20 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BRIAN NELSON, CNN ANCHOR: Well, here at home the price of snail mail inches up this weekend. At midnight, postage for a first-class letter goes up a penny to 34 cents. Fees for other services go up as well.

Kathleen Koch takes a look at what's behind the rate hike and what consumers think about it.

(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): Stocking up on new stamps for the new year: a one-cent hike in first-class mail rates goes into effect Sunday, so customers lined up at 38,000 post offices around the country to beat the Monday rush. Most didn't mind the increase to 34 cents.

UNIDENTIFIED FEMALE: No, the mail's got to go, the mail's got to go.

UNIDENTIFIED MALE: I think that for the cost of postage in the United States, we get a real bargain.

KOCH: Also rising, express mail, priority mail, parcel post, periodicals, advertising and international mail.

Angela Moro (ph) spent an extra $15 mailing letters overseas for her office.

ANGELA MORO: The cost of living, everything else is going up, why not stamps?

KOCH: Rising costs and declining revenues are what the postal service blames for the increase.

JUDY DE TOROK, U.S. POSTAL SERVICE: Fuel costs were a major hit for us, millions and millions of dollars. Health care costs, inflation costs, so all of these costs combined together have forced us to raise rates.

KOCH: And the future doesn't look any brighter. The Postal Service, which functions without taxpayer support, lost money last year for the first time in five years. First-class mail growth has stalled because of competition from Internet offerings like e-mail and online bill paying. The Postal Service is trying to compete, with online services of its own, but experts say real profits will require real change.

GENE DEL POLITO, ASSOCIATION FOR POSTAL COMMERCE: We either subsidize the system that we have today because we're unwilling to change it or we privatize the system, meaning we change it into a true foreign corporation.

KOCH (on camera): A bill that would give the U.S. Postal Service the freedom to operate more like a business is languishing in Congress.

(voice-over): If it doesn't pass, some are predicting rate hikes every year to keep the struggling Postal Service on its feet.

Kathleen Koch, CNN, Washington.

(END VIDEOTAPE)

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