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  (Source: bulk2.destructoid.com)
A two-year battle ends in GameFly's favor

After a nearly two-year dispute, the U.S. Postal Regulatory Commission has ruled that the U.S. Postal Service gave an unfair advantage to GameFly competitors like Netflix and Blockbuster. 

GameFly initially filed the complaint against the U.S. Postal Service on April 23, 2009 after spending the previous 18 months trying to sort the conflict out informally. GameFly claimed that the U.S. Postal Service was charging the video game subscription company more for postage, sorting, and breakage of disc mailings than Netflix and Blockbuster. 

Netflix DVDs are returned in a prepaid, letter-sized mailer that is non-machinable. These discs are often damaged and can cause machine jams, but many Netflix DVD mailers are separated and hand processed by the U.S. Postal Service without a non-machinable surcharge.

GameFly discs, on the other hand, were being damaged due to automated letter processing equipment. To make matters worse, the U.S. Postal Service was unwilling to hand process GameFly's discs, which resulted in an additional ounce charge on all GameFly mail (which is about 1.2 million shipments per month).

According to GameFly, Netflix pays a one-ounce letter rate of $0.44 in order to avoid automated letter processing of return mailers. GameFly, on the other hand, pays a two-ounce flat rate of $1.05, which is a difference of about $730,000 based on its volume. David Hodess, President and CEO of GameFly, noted that this amount "represents more than 100 percent of GameFly's monthly net income in 2011."

The U.S. Postal Service argued that GameFly did not use letter mail and designed its flat pieces to weigh two ounces for machine processing. Also, it noted that GameFly did not have an easily identifiable mailpiece design.  

Now, the U.S. Postal Regulatory Commission has found that the U.S. Postal Service had "unduly discriminated against GameFly." The Commission said that GameFly runs similarly to NetFlix and Blockbuster, and that the U.S. Postal Service has 60 days to establish two parallel rate categories "within First-Class Mail for round-trip DVD mail."

The first rate category is to establish that DVDs sent as presorted First-Class mailers to customers will not acquire a non-machinable surcharge when it is returned to the U.S. Postal Service. The second rate category authorizes that DVDs mailed as First-Class Mail flats will not acquire ounce charges when being sent to and from customers. 



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RE: hmm...
By lennylim on 4/21/2011 2:43:06 PM , Rating: 4
That's a funny typo "steaming" - makes it sound like you're getting only certain categories of movies from netflix :)


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