Supplementary Note by Ordnance Survey
I have studied all the oral and written evidence
provided to the Committee over the past four months. As I understand
that you are now beginning to work on the final report, I thought
it might be helpful to you if I provided a little more information
and clarification about some of the topics that have engaged members'
These notes are intentionally brief, but I shall
be happy to provide more detail if required.
During 1999, in "Joined-up geography for
the new millennium",
we redefined the core functions of Ordnance Survey for the information
age, describing them in terms of four roles:
1. To provide a unique national referencing
system for geospatial information relating to Great Britain.
2. To capture and maintain an authoritative
definition of the topographic features of the landscape, both
natural and man-made.
3. To associate selected non-topographic
attributes and other non-topographic geospatial information with
this topographic information.
4. To make this information available in
an affordable and useable manner to as wide a range of users as
possible, but leave to them exactly how they use it.
I note that the association role has caused
some concern among those giving evidence, particularly in relation
to the extension of layers within OS MasterMap.
Ordnance Survey has plans for a number of new
layers of OS MasterMap in its forward development programme. The
creation and maintenance of many of the new layerssuch
as imagery, land height, building height, pre-build, land and
property and integrated transportcould be managed in a
number of ways, and we are likely to use a range of options. We
could develop all the layers ourselves, but we do not believe
that is beneficial to the industry where we recognise there are
skills that we do not have ourselves. In particular, through open
competition, we have already involved supplier partners in the
creation of the imagery layer and the points of interest layer.
We are working with private and public sector partners to develop
the land and property layer. We are also likely to involve supplier
partners in the height, boundary and land use layers. In many
instances we expect our partners to maintain an IP interest in
the data they supply and consequently they will share in the revenue
derived from onward licensing of that data by us through OS MasterMap.
Partners can of course continue to license their own data directly
There will, however, be some instances, where
economies of scale are likely to lead to sound business decisions
that we use our own existing resources to collect some datainstances
here include improvement of the address component of the land
and property layer and initial work on the integrated transport
Finally, there will be third party datasets
that have a geographical component that we would not envisage
incorporating within OS MasterMap. We would, however, encourage
the data owners to geo-reference their data within the DNF standards
so that direct customers of these third parties can be confident
that the datasets will integrate immediately with OS MasterMap
and any other datasets similarly associated with OS MasterMap.
In defining the boundaries of our business at
the beginning of 2001 we stated that "As a general rule,
we will not be involved in developing applications", and
subsequently we have acted to rationalise activities. Good examples
being the ceasing of co-publication and consultancy activity in
our core activities where we felt our business had developed beyond
what was necessary, to fulfil the fourth role mentioned above.
Our published vision for Ordnance Survey reinforces the role of
partnerships in meeting customers' needs: Ordnance Survey and
its partners will be the content provider of choice for location-based
information in the new information economy.
It has been suggested that NIMSA might be modified
to subsidise the price of Landranger and OS Explorer series maps.
NIMSA exists to support the national interest by ensuring national
coverage, national consistency and maintenance of the national
geospatial infrastructure. It does not contribute to the creation
of specific products, nor do we believe that it could or should.
Any subsidy of Landranger or OS Explorer maps, which compete with
the products of the private sector, would be open to charges of
breaching UK and European competition law.
I am pleased to say that we have reached agreement
on a pilot Pan Government SLA for 2002-03 improving the access
of Ordnance Survey data from use by 40 departments who currently
hold data licenses to approximately 560 government departments
and agencies. We are using inclusion in the Civil Service Year
Book as the basis for determining who is eligible to benefit from
It is existing Ordnance Survey users who are
funding the pilot together with some gap funding from DTLR and
an input from the Neighbourhood Statistics project. Existing users
get immediate access to a wider range of data. New users will
also benefit from initial Ordnance Survey support to help them
identify the most effective use of geographic information in their
activities. The agreement will also generate growth in the wider
geographic information market as new users seek software and longer
I regret to say though that there is no agreement
on funding the agreement beyond one year. Understandably, the
existing users do not feel able to fund new users for more than
one year. Existing users wish to benefit themselves from a reduction
in unit price that a long term agreement will generate. Together
with DTLR we are engaging officials in Cabinet office and Number
10 Downing Street policy unit who recognise the benefit of geographic
information, but we have not yet identified a source of long term
funding. The outlook for agreed funding for a permanent Pan Government
remains difficult. If we cannot get agreement, we will have to
return to our previous arrangements with individual or small groups
of government departments.
A short answer to the apparently simple question
of whether or not Ordnance Survey occupies a monopoly position
is not particularly helpful, for two reasons. First, as witnesses
have pointed out, monopoly of itself is not necessarily a problem
if properly managed; indeed a benign monopoly may be desirable
in the geographical information market. Secondly, under current
competition law the relevant test is not whether an organisation
holds a dominant position but whether it abuses that position
to the detriment of consumers. In recent months, we have taken
a good deal of legal advice from Slaughter & May, the leading
experts on competition law. We are acutely aware of our legal
responsibility to behave fairly and we keep under constant review
the controls we have in place to ensure that we do.
Ordnance Survey operates in a competitive marketplace
in all aspects of its business. In particular, the barriers to
entry into the large scale arena are falling all the time. Large
scale competition will be increasingly global in nature with competitive
products being developed by companies with significant financial
muscle. We believe that this competitive marketplace and the importance
we place on fulfilling our competition law obligations taken together
with the roles of the Office of Fair Trading (OFT) and HMSO means
that the need for more formal regulation is unnecessary.
The view has been expressed that an aggrieved
party's only recourse is to law, in the event that Ordnance Survey
breaches its obligations under the Competition Act. This is not
a fair reflection of the true position. Having first exhausted
our own complaints procedure, a complainant can contact the Ombudsman
in addition to OFT or HMSO.
We do not publish our prices and discount structures
for individual products. We continue to simplify these pricing
and licensing structures. Current proposals from the Controller
of HMSO, as regulator of Crown Copyright, indicate that she wishes
to assure herself by audit that all Trading Funds are applying
in practice the pricing algorithms they publish. We welcome this
proposals and will incorporate the proposed Fair Trader Certificate
for all Trading Funds into our published plans and reports. We
need to reserve only one area for individual negotiationthat
of value-added applications built by our partners. We will apply
similar terms and conditions to similar applications, but both
HMSO and ourselves recognise that there has to be different pricing
terms and conditions for wholly different applications in different
markets. We have developed Pay As You Use and royalty based pricing
models for use by Partners. Partnership agreements therefore are
unique and a ``one size fits all'' approach is infeasible.
The majority of concerns should, we think, be
alleviated by the system of checks and balances that already exists
or, in the case of HMSO regulation, is currently proposed.
Witnesses argued that the Director General of
Ordnance Survey should no longer be the official adviser to government
on geographical information, on grounds of lack of impartiality
and/or partial knowledge of the market. We understand some of
the reasons underlying these views. Our goal is for Great Britain
to have an effective geographic information policy that allows
the national mapping agency to operate in a way that ensures its
continued viability, ensures that customer and government needs
are met economically and enables fair and effective competition.
Given the centrality of our role, we would of course expect to
continue to be consulted on major issues whether or not the formal
role of adviser continues in its present form.
If it is not possible for the Director General's
formal role as adviser to government on geographic information
to continue in its present form, one way forward may be establishment
of a small team of experts to advise Ministers on geographic information
policy across central and local government. We could envisage
a team of three with a clear understanding of the potential of
geographic information. Membership should comprise the chair of
the Association of Geographic Information, the Director General
and Chief Executive of Ordnance Survey together with a representative
from the private sector.
As mentioned above, we do not see any benefits
at all in formal regulation. Whatever the theoretical benefits
of regulation, they must be set against the costs of administration
as well as, possibly, the drag they may apply to the market by
hindering the response of businesses to emerging opportunities.
This is likely to present a significant obstacle in the case of
geographical information, since the regulatory overhead would
be very high in relation to market value.
It is also not clear to us just how much work
would fall to a regulator in normal conditions. We firmly believe
that there are enough checks and balances on Ordnance Survey activities
today to ensure that the nation and customers have a national
mapping agency that fulfils all its obligations properly.
There is no doubt that the rapidly changing
business environment requires greater agility from Ordnance Survey.
The key question is only how this is to be achieved.
Stage 2 of the Quinquennial review is comparing
the costs and benefits of conversion to GOPLC with those of an
enhanced Trading Fund. There seems little argument that the GOPLC
option will offer greater flexibility than Trading Fund in the
areas of business agility, investment capital, acquisitions and
joint ventures, and little doubt that a GOPLC framework can be
designed so as to provide the most appropriate financial controls
and governance arrangements. We do not believe that the Trading
Fund financial regime, with its narrow focus on Return on Capital
Employed, is conducive to effective medium and long term development.
GOPLC status would also be helpful in moving
the culture of the organisation to one that is more responsive
and adaptable to changing needs. Part of this would come from
the ability to employ a wider range of options for terms and conditions
of employment, but we also understand now that these specific
needs could largely be met under a more flexible Trading Fund
We understand the importance of the national
interest activities that we undertake today and we have led the
arguments to sustain these activities within our remit. We have
been very consistent in our view that full privatisation or anything
other than a 100 per cent government owned PLC are not acceptable
We share Sally Keeble's view that she evaluate
the costs and benefits of 100 per cent government owned PLC versus
an enhanced Trading Fund status before making a final decision.
Ordnance Survey will, of course, be content
to operate under any regime that allows us to fulfil our potential,
sustain the business in the face of new global competitors and
deliver a national mapping service that meets the need of all
its customers across the spectrum of national interest, government
customers and private sector customers.
I hope these notes will be helpful in preparing
your report, which I look forward to reading in due course.
Director General & Chief Executive
15 April 2002
2 Ordnance Survey (1999), Joined-up geography for the
new millennium, Ordnance Survey Information paper 13/1999. Back