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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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USPS
By bah12 on 4/22/2011 9:22:33 AM , Rating: 2
quote:
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."
On top of all their other problems (some their own fault some regulatory), now they are being sued because they cannot price customers differently. This is just stupid, there is a standard rate for mailing (everyone has access to this pricing GameFly, you, me whoever). However, if you are big enough and can leverage that size to negotiate a better rate, then good for you. If not why should they be forced to give every bulk mailer the same rates.

Very sad indeed, I don't see how the USPS has any chance of remaining privately funded with this sort of BS handcuffing their operations every step of the way.




RE: USPS
By Reclaimer77 on 4/22/2011 7:24:48 PM , Rating: 2
I agree. This Collectivist idea of "fairness" is just ruining our country.

Where is it written that everyone has to be charge the same rate? Did I miss somewhere where it suddenly become illegal to offer different rates?


RE: USPS
By tng on 4/22/2011 8:41:37 PM , Rating: 2
I didn't check the source for this, but the ruling said that they had to establish a new rate for DVD mailers. Not sure if that meant they had to make the new DVD rate cheaper than what Gamefly is paying.

Could be that Netflix and Blockbuster will see their rates go up and Gamefly will not get a reduction.


RE: USPS
By Reclaimer77 on 4/23/2011 10:17:52 AM , Rating: 2
quote:
I didn't check the source for this, but the ruling said that they had to establish a new rate for DVD mailers.


Exactly, it's absurd. No Federal judge should have the authority to be making such a ruling. There was no law being broken here, it's just more unnecessary intervention into private business.

It's up to USPS if they want to establish new rates for DVD mailers, and NOBODY else.


RE: USPS
By semiconshawn on 4/24/2011 4:07:40 AM , Rating: 2
Really? You want Amazon to be able to be able to negotiate with the usps for a better rate? Then when the usps loses even more money we can pay more taxes? Good plan. The USPS is obsolete and should be abolished. Not going to happen so it has to be consistent. If not you will get even more taxpayer money in the postal system making up for the sweatheart deals netflix and amazon negotiate with your representatives in congress.


RE: USPS
By bah12 on 4/26/2011 11:40:02 AM , Rating: 2
So many things wrong with, where to start.

quote:
Then when the usps loses even more money we can pay more taxes?
And
quote:
If not you will get even more taxpayer money in the postal system making up for the sweatheart deals netflix and amazon negotiate with your representatives in congress.
I guess you don't understand that the USPS is NOT federally funded any longer? They support themselves off of postage. Now they are struggling sure, and yes there are problems but your taxpayer argument is invalid at the moment (not saying in the near future they won't need funding, but that is more an issue of regulatory matters than actually doing their job).
quote:
The USPS is obsolete and should be abolished.
While I would agree that they have outlived their usefulness to some degree, abolishing them is no easy task since they are explicitly required by our constitution. Nothing short of a constitutional amendment will change that. Of all the agencies they are one of the few that constitutionally SHOULD exist. http://en.wikipedia.org/wiki/Postal_Clause

However we could allow them to actually be competitive and still meet that requirement. Everyone likes to compare them to FedEx and UPS, but in reality those 2 do not have the same legal requirements as the USPS. One example, the USPS has to stop by every box daily to see if there is an outbound package. Whereas the USP/Fedex only come by when called. Not a huge deal in a city, but in rural areas where you may drive 10's of miles to a box that has no delivery or pickup, and are required to do so daily.

Not to say there aren't BLATANT flaws in the current setup, but cut them some slack. They have not been on the government teet for quite some time (unlike countless other agencies), and do a pretty good job at what they do.

Put it this way, how much would you charge me to come by my house each and every day, just on the off chance I have a letter for you to carry ANYWHERE in the US? I bet your ass it would be a hell of a lot more than $.44 per letter be it one letter a year or 2,000.


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