Some businesses here that do extensive bulk mailing will need to adopt a new system for preparing their mail by early next year, when the U.S. Postal Service plans to require what it calls its Full-Service Intelligent Mail barcode to qualify for current discounted rates.

"If a mailer is mailing bulk mail, they need to recognize that this change that goes into effect Jan. 26 is a whole new ball game," says Jim Cote, president of The Master's Touch LLC, a Spokane-based provider of mail services.

"If they're not mailing under the full-service processing Intelligent Mail barcoding system, they will for the most part lose their bulk rate discount," Cote adds. "You'll not be allowed to mail bulk mail at a discounted rate unless you're using that system."

Bulk-mail service companies have known for several years about the Postal Service transition and have adopted earlier versions of a barcoded system. The postal barcodes are used for automated mail processing and have a series of vertical bars and spaces that represent a numerical series read by electronic scanners for better tracking.

The Intelligent Mail barcode contains more detailed tracking information, including a unique serial number for each piece that remains valid for 45 days, industry representatives say.

By the Jan. 26 implementation date, companies also must file bulk-mailing documents electronically to get the best rates, Cote says, versus a common practice of taking the paperwork to the post office.

Cote says The Master's Touch has completed all required steps for the new process and has been certified by USPS for prepping Full-Service Intelligent Mail. However, he says some other big mailers and businesses may be caught by surprise.

"Some mailers are frankly more up to speed than others," he says.

The Postal Service has a host of bulk-mailing postage discounts for pieces that meet certain requirements. A large category is what's called automation prices for first-class business letters when mail pieces are barcoded and meet addressing, readability, and other rules for processing on automated equipment.

Generally, to receive automation discounts, the new Intelligent Mail barcode will be required for first-class postcards, letters, and flats; second-class periodicals; third-class or standard letters and flats; and business and permit reply mail.

Typical first-class business letter automation prices range from 36 cents to 40.5 cents per piece, as compared with a first-class stamp price of 46 cents, those in the industry say. Other automation rates that apply to nonprofits range from just over 9 cents to 17 cents, they say.

Separately, The Kiplinger Letter, a weekly newsletter that provides business forecasts for management decision making, reported recently that Postal Service leaders are considering a standard-class postal rate hike at near 4 percent to 7 percent in January. Standard mail typically includes business fliers and other pieces that aren't in sealed envelopes.

Banks, utilities, and other businesses that send thousands of first-class letters to customers often hire a mail-service company to process their bulk-mailing pieces to receive discounted rates. Cote says the minimum number of mail pieces required to be eligible for first-class bulk rates is 500, while standard mail is at least 200.

To prepare bulk mailings under Intelligent Mail rules, many mail services have invested in Postal Service-approved database software and upgraded equipment, leading up to testing and certification by the federal agency to use the system, those in the industry here say.

Heather Schelling, a customer service representative at Walt's Mailing Service Inc., in Spokane Valley, says that company has invested about $38,000 since last fall in required new equipment and software upgrades to be prepared for the Intelligent Mail barcode system by January.

"The Postal Service has had a form of full-service barcode for a while," she says. "Quite honestly, the onus falls on the mail house. The mail house has to pay for the new software and upgrades. The customer, I don't see, will be impacted whatsoever."

Schelling adds, "A customer like Inland Power provides us the piece and we import the information and standardize addresses, put it in rotation order and then address the piece so each piece will have a unique barcode."

She says separate barcoded information also appears on the postal bins that hold the mail.

Some Spokane businesses still handle their own bulk-mail processing. One is Spokane-based Washington Trust Bank, which prepares statement mailings in-house, says bank President and Chief Operating Officer Jack Heath.

"We implemented the Intelligent Mail barcoding system last fall, and that's been in discussion with the post office for the last three years," Heath says. "What it does is streamlines mail through the post office system to the point of delivering much more efficiently."

Heath adds, "It took some technology changes. We had to modify our software, and it was a process to go through. There are still a lot of small businesses that do large mailings, and I imagine it could be cumbersome for them."

Amrik Kamoh, manager of business mail entry for the Seattle District of the Postal Service, says more than 60 percent of U.S. business mail is prepped as bulk mail using a postal barcode for discounted rates.

"The Intelligent Mail service has additional capabilities," Kamoh says. "We can track the mailing in our system. We can provide updates if the customer is interested in getting the updates in an electronic format."

The new barcode includes information about the sender, address delivery, category of mail, and details on how the mail was sorted. Kamoh says the types of customers most likely to benefit are those doing mass mailings to multiple ZIP codes.

"If someone has moved, it can send that change-of-address information back to the client who mailed the piece" electronically, Kamoh says. "We didn't have that ability in the past."

He adds, "That's the need of businesses right now; they need to know where in the operation this particular mail piece may be."

Kamoh says some bulk rate discounts without Intelligent Mail rules still will be available, such as for a nonprofit that doesn't have the software or ability to do a barcode.

Walt's Mailing Service has nearly completed full-scale adoption of the new system, Schelling says. The business employs 12 people at its facility, located at 9610 E. First, in Spokane Valley.

"We're closing in on the gap," she says. "The post office has its equipment to read a barcode, and reading the barcode is much faster and more efficient. One of the keys is having the correct barcode, size, and where it appears on the mail piece to qualify."

The Master's Touch, which employs 30 people, processes mail for clients here that include Sterling Bank and Union Gospel Mission, as well as for customers in 14 other states. The company is located at 1405 N. Ash, in North Spokane, and it also operates an office in Kailua, Hawaii.

Paul Bruhn, a Spokane-based consultant who owns Advanced Mailing Solutions, says companies that provide bulk mailing services should be close to done or done with installing the equipment and software to comply with the new regulations by now.

"They've been told it's coming and should have all been there by now," Bruhn says. "Everyone now is doing basic barcoding, but they just haven't done the intelligent part that has the unique serial number, the electronic side of it that requires extra software, and being able to upload data files."

He adds, "I just talked to a mailer in Bend (Ore.). They're just starting the process now. I'm sure there's a bunch out there."

He says the software is expensive, depending on the Postal Service-approved vendor providing it, and could cost businesses that do their own bulk mailings or bulk-mail services several thousand dollars to $10,000 annually.

Meanwhile, Postmaster General Patrick Donahoe in July called for sweeping reforms to allow the cash-strapped agency to adapt its business model. He renewed his call for a switch to five-day delivery, a step it planned for August but then abandoned in April under pressure from Congress.

The Postal Service has said a large portion of its financial troubles stem from a 2006 congressional mandate to prefund its future retirees' health care. Donahoe has asked lawmakers to eliminate the retiree prefunding requirement and allow the agency to control its own health care system.

On July 17, a House committee approved a measure that would end Saturday mail delivery, as well as door-to-door delivery by 2022, requiring mail pickup at curbside boxes or cluster boxes.