Creating Last-Mile Incentives from Inside-Out. A Template Drawn from Rural Telecom

On December 1, 2017, the Postal Regulatory Commission (PRC) issued a Notice of Proposed Rulemaking in which it concluded that the rate-making system had not maintained the financial health of the Postal Service and that service quality had deteriorated. The aim of this article is to offer a novel supplement to the PRC’s incentive program that grew out of the author’s experiences in the telecommunications industry. In the absence of external pressure, internal incentives are an important starting point for developing a framework to attract private capital and management at reasonable prices. The basic strategy offered here is to organize competing service territories within the Postal Service into subsidiaries and award bonuses tied to superior performance that go beyond service delivery standards now in place. A further recommendation is to develop a “best practices” simulation model that can be used to fine-tune internal benchmarks and to set minimum bid prices for operating service territories in case the Postal Service decides to subcontract with the private sector or spin off service territories to the private sector.