Select Committee on Communities and Local Government Committee Written Evidence


Memorandum by the Locus Association

INTRODUCTION

  The Locus Association welcomes the decision by the Communities and Local Government Select Committee to conduct a follow-up exercise to check the progress of recommendations made in its 10th report of Session 2001-02 (HC 481) and is grateful for the opportunity to submit our views on the questions posed in this new inquiry.

ABOUT LOCUS

  The Locus Association was launched in January 2006 and its President is a former Director General of the OFT and Oftel, Sir Bryan Carsberg. The Association exists to raise awareness of, and promote the development of, a healthy and competitive private sector in relation to PSI. Locus acts as a forum for exchange of information, keeps its members up to date with latest policy developments, and provides advice and guidance. Our members recognise the potential of PSI, but also the benefit of uniting to address some of the challenges and pooling resources to meet them. It is worth noting that the particular nature of the PSI market structure, where individual private sector organisations have limited influence, lends itself to the development of a trade body.

  Locus's members all have a pivotal interest in PSI policy and the actions of PSIHs; some members are primarily involved in the purchase of raw data and value addition, whilst some members also compete directly with PSIHs in the provision of value-added products and services.

BACKGROUND TO OUR SUBMISSION

The importance of Geographic Information:

  The Ordnance Survey (OS) believes that its maintenance and management of the National Geospatial Database underpins some 10% of the UK's GDP.[28]

  In 1999, PIRA estimated the value of the GI element of PSI across the European Community at Euros 35.8 billion.[29] A further study by the EC in 2004 suggested 80% of PSI was geographically referenced.[30]

  Whilst the exact statistics may be debated, the all-pervasive importance of "location" to a modern economy is well-recognised. Virtually all services, whether those of government or the private sector, relate to a location.

Ordnance Survey's market position:

  OS commands a central and (in some of the key information building-blocks) monopolistic position in the supply of geographic information. A third party could not economically justify recapturing most of the data collected by OS over many years of partially state-funded investment.

  There are many difficulties that the Trading Fund model must confront and OS's primary defence seems to be draconian licensing terms. Protective licensing, especially where it can be segmented between different markets, is a complex, expensive and potentially unproductive process to manage. It can also be very contentious. There is the unfortunate prospect of OS being unable to offer the licensing terms required by another part of government because of "precedent", affecting the public sector's operational efficiency to the detriment of all,[31] and of OS developing products to compete with those of other public sector bodies.[32]

  Because of the subject matter, its trusted brand image, position within government, and monopoly status, the management of OS is in a position either to offer substantial added benefits to the UK economy or to do it considerable harm by restricting innovation, choice, efficiency and enterprise. The Treasury's direct financial gain is not obvious. Since 31 March 1999, OS has paid £3.4 million in dividends whilst receiving NIMSA and reorganisation grants totalling £117 million, excluding licence fees paid to OS by other parts of the public sector.

SUBMISSION SUMMARY

  This paper argues that Ordnance Survey (OS):

    (i)  has become a very commercially focused organisation,

    (ii)  controls a monopoly supply of information which is

    (iii)  of key importance to the national economy

    (iv)  holds a privileged position in government, the effects of which are not properly recognised or controlled by government.

  These factors, when taken together, create significant difficulties for both the private and public sectors. We believe that they reduce product choice and opportunity, innovation and enterprise, and can increase costs and impede effective service delivery to the citizen. The questions posed by the Committee are answered against this background.

  Tensions, which were making their early appearance in 2002, have since become more apparent. OS's increasingly aggressive commercial approach has thrown the problems arising from their current business model into sharper relief and consequently made the recommendations of the Committee's predecessor in 2002 even more relevant today, especially when taken together with those of OS's final Quinquennial Review and the recent Office of Fair Trading (OFT) market study into the commercial use of public sector information (CUPI).

  The following are summary answers to the Committee's questions, which are expanded upon in the main body of this submission:

    Q1  The boundaries between the OS as maintainer/producer of base geographical data and as a commercial product vendor remain as opaque as they were in 2002. However, the OS's business approach in the intervening period has aggravated the position.

    Q2  Our own conclusions are that any process of arbitration should be quick, low cost, transparent, fair, properly enforceable and enforced. This is not the case at present.

    Q3  It is difficult, from the information available, to be encouraged by the progress of the GI Panel towards fulfilling its remit. Furthermore, its current level of secrecy creates distrust, potentially quite unnecessarily. At present, the GI Panel does not seem to be viewed as a serious force for positive change either within government or outside it.

    Q4  We consider that currently only two members are from the private sector and that the balance of the Panel and its remit needs to be re-considered.

    Q5  If GI is important to government, and we believe it is essential, then its source of advice should be entirely impartial and not capable of being tainted by accusations of partiality. This is not the case at present. Such accusations, based on real or imaginary issues, are avoidable. The commercial conflicts of interest would not be acceptable in the private sector and should not exist in government. They risk impeding and confusing the smooth flow of government operations.

    Q6  In our opinion, OS uses its monopoly position, intentionally or unintentionally, to prevent fair and transparent competition in the geographical information market. OS cannot have a monopoly of good ideas. Our view is that OS's actions, especially over the past six years, have had the effect of discouraging investment and innovation in the UK in the vital GI area.

LOCUS RESPONSE TO THE CLG SELECT COMMITTEE INQUIRY

Q1  The "need to define the boundaries of Ordnance Survey public service and national interest work." To what extent has the position changed in the intervening five years? How clear are the boundaries between the OS as holder of base geographical products and as a commercial operator?

The OS Framework Document

  Taken at face value, the Framework Document's description of OS's remit is so broad that it could currently include much of the work of HM Land Registry, the Environment Agency and others. Criticised at the time, the document, in our opinion, paved the way for a more expansionist commercial approach to product development and licensing by OS.

  The concept of "Public Task" is nowhere clearly differentiated from OS's commercial activities. Nor can we find reference to any "Public Duty" requirements in the Framework Document or other relevant documents (eg their Trading Fund Order). Conversely, the importance of OS making a financial surplus is emphasised.

  The recent response by the CLG to the Committee's enquiries (Third Report of 2006-07, HC 106; Ev 105) does little to clarify the position.

The OS

  The OS take their role as guardians of Crown Copyright seriously. The OS management is ambitious, able and now largely recruited from the private sector. It is thus unsurprising that the OS Board appears to interpret its remit primarily in commercial terms and pursue that remit with vigour, generally unfettered by the restraint of Public Duty. Because of their position in government, it is relatively easy for OS Directors to assume their commercial endeavours are de facto also in the national interest.

Statskontoret—The view from Sweden

  The Statskontoret, a Swedish government review board, concluded of their public bodies with commercial remits (including their mapping agency):

    "Many [Trading Funds] also have conflicting objectives within their own organisations that may result in their not knowing which objectives to work for. This often culminates in the profit motive taking precedence over the need to promote various national interests and the aim of competing on the market on equal terms."[33]

    "Commercial activities pursued by agencies alongside the exercise of official authority and performance of other public functions give rise to dual and conflicting roles. When the agency is both a purchaser and a producer of the service concerned it may be difficult for it to act neutrally in relation to other market operators. There is also a risk of cross-subsidisation and competition-curbing underpricing between grant funded official functions and commercial work in a competitive environment."33

APPSI view

  In its recent review,[34] APPSI concluded that OS's "Public Task" was in the development and maintenance of mapping data and that the sale of many commercial products derived from that data fell outside its public task. The APPSI arguments, framed from a legal standpoint, were detailed.

  The APPSI view has far-reaching effects which are unexpected and worrying. For example, if generally accepted (and it will be difficult to ignore), most current OS products would appear to fall beyond the constraining scope of the PSI Regulations; National Interest Mapping Agreement (NIMSA) funding might become construed as State Aid, being government granted funding to OS without public procurement for the collection of data which can only be obtained by third parties through the acquisition of OS commercial products.

  APPSI recommended that PSI Holders should reach agreement with OPSI as to which products and services constitute their Public Task and were thus covered by the PSI Regulations. Whilst this may provide a way of defining the coverage of the PSI Regulations it could also be construed as PSI Holders "marking their own exam papers".

The OFT View

  In its recent market study, the OFT drew attention to a substantial number of concerns relating to OS's commercial approach and commented:

    "One of the more noticeable factors is the way in which previous attempts by regulators and other bodies to influence the behaviour of OS have met with resistance."[35]

  Without clear boundaries to their operational remit but nevertheless with a clear commercial imperative, the OS behaviour should not have been unexpected.

Conclusions

  The boundaries between the OS as maintainer/producer of base geographical data and as a commercial product vendor remain as opaque as they were in 2002. However, the OS's commercial approach has become more aggressive in the intervening period and this makes the consequences more serious.

  The management of mapping and any other geospatial data which OS may argue might be "nationally important" can currently be designated to be within the scope of its remit and can be exploited for commercial benefit subsequently. This is a key risk factor for any new enterprise considering investment in the GI sector.

  OS carries out three streams of activity although these are, to the outside world, indivisible:

    (i)  maintenance of base topographic mapping;

    (ii)  distribution of OS products under licence; and

    (iii)  exploitation of commercial opportunities.

  The OS work maintaining the base-map feeds OS commercial products. Third-parties cannot access base topographic mapping data except through the acquisition of OS commercial products.

  For example, the aerial photographs required for the maintenance of the base topographic map are also sold as a separate commercial product (potentially creating a product cross-subsidy to the benefit of OS and the detriment of private sector companies specialising in aerial photography). Addresses collected from the Royal Mail, although not strictly required for the maintenance of the base map, have grid-references appended by OS and are sold as a map-related commercial product. As can be easily appreciated, it is a common perception that OS is taking advantage of a privileged commercial position.

  A continuing lack of definition of OS tasks and of clear boundaries between tasks inevitably deters third party innovation and restricts choice. Locus believes that the boundaries between these classes of activity need to be clearly drawn and, once drawn, they should not change without extensive consultation.

  The inequity of the current situation, particularly given OS's monopoly position, risks causing conflicts which are potentially damaging to OS itself; if not in commercial terms then in reputational ones. The status quo may appear superficially attractive to OS management but it is like navigating from A to B without charts and a tidal atlas.

Q2  The "clear need for some form of independent arbitration so that conflicts can be resolved between OS and its partners and customers." To what extent has the position changed in the intervening five years

The current options

  In the case of conflict, a potential or actual re-user of OS data has five possible courses of action.

1.  Take no action

  Where the re-user's business is already dependent upon an existing supply of data from OS there are strong and obvious arguments not to complain formally in order to protect an existing relationship with a monopoly supplier. The Committee's predecessor acknowledged this possibility and it remains true today. We believe that there have been only three formal complaints against OS in the intervening period.

  It should be noted, however, that the OFT research recorded that 31% of OS re-users had experienced problems with OS in the past three years, a total of 36% of all PSI re-users that had reported problems amongst the 15 largest UK PSI Holders.[36] This is a remarkably high proportion.

2.  Action under IFTS

  The Information Fair Trader Scheme (IFTS), essentially an accreditation scheme, covers OS because it has delegated powers to license Crown Copyright.

  Under the terms of the IFTS, if OS rejects a complaint, the complainant may appeal to OPSI. However OPSI, although the "Regulator", has limited powers of enforcement. If it finds in favour of the Complainant, OPSI may be deterred from action by the fact that its powers are only "nuclear" (essentially to remove the delegation of Crown Copyright licensing from OS).

  OPSI's position as part of National Archives (now part of the new Ministry for Justice) neither places it in a strong position to enforce its findings nor to bring effective pressure to bear for a change of approach by OS. Conversely, as an independent non-Ministerial government department, OS appears to be well-placed to resist pressure from OPSI.

3.  Action under the PSI Regulations

  The PSI Regulations are narrower in their application than the IFTS and have the force of law but exclude matters which are not part of a PSI Holders "Public Task". This makes the clear definition of Public Task all the more essential. Data which includes third party copyright is also excluded. Sensible application of either exclusion can enable a PSI Holder to argue that their PSI is not subject to the PSI Regulations.

  Whilst OPSI, also the initial appeal body under the PSI Regulations, may choose to interpret the Regulations on the basis of their policy-intent, the subsequent and final appeal body, the Advisory Panel for Public Sector Information (APPSI), must apply a purely legalistic interpretation. This can create a situation where the appeal body of first instance can review a case on a different basis to that of the final review body and come to different conclusions based upon the same information.

4.  Apply to the Office of Fair Trading

  The OFT has limited resources and is reluctant to intervene in cases which do not fall within narrowly defined priority areas. The cost of applying to the OFT is significant.

5.  Action in the Courts

  Taking action in the courts to resolve anti-competitive abuse means, in practice, taking action against government. This requires deep pockets, great patience and a willingness to face the uncertainties of a complex area of law.

A member's recent complaint

  One Locus Member, Intelligent Addressing (IA), brought one of the first complaints under IFTS and the PSI Regulations. This is not the place to rehearse the details of the Complaint, most of which are in the public domain if the Committee wishes to review them, however there are a number of generic issues arising from the complaint which we believe are relevant.

  The essence of IA's complaint was that, in the company's view, the OS had refused to allow the re-licensing of OS ADDRESS-POINT data on fair and reasonable terms, an element of which had been used with OS's prior agreement, in the National Land and Property Gazetteer (the NLPG). This prevents IA and local government from licensing the NLPG to third parties. In the meantime OS had developed and started to market a similar product (Master Map Address Layer 2).

  It is Locus's understanding that:

    —  The IA Complaint was initially lodged in February 2006 but is still unresolved. This is an unreasonable period for such a process;

    —  Unusually, IA has been willing and able to invest a significant proportion of its revenue to seek resolution. IA's costs have been, however, dwarfed by those of OS defending their position. Whilst this may or may not be a good use of tax-payers' money, it seems unfair that "depth of pocket" should be any factor in resolving PSI disputes;

    —  OPSI's review of the complaint reached a number of conclusions in IA's favour which it subsequently appeared unable to enforce. Locus' conclusions are that (1) OPSI is both under-resourced and under-empowered and that (2) IFTS currently may only work well with those PSI Holders who are keen to achieve "willing" compliance. This situation will not lead to the maximisation of re-use of PSI;

    —  The APPSI appeal (from both OS and IA) overturned some of the OPSI findings relating to the PSI Regulations. It is not satisfactory that an appeal body should apply different criteria to the same case.

  The IA complaint was watched by many PSI re-users, existing and potential, with interest. The outcome to date, using the complaints process available under both IFTS and the PSI Regulations, has not re-assured them.

Conclusions

  Although the PSI Regulations have been introduced during the last five years and APPSI formed, in reality, the existing arbitration and conflict resolution processes all have real limitations partly because the OS, singled out for criticism amongst PSI Holders by the OFT market study, is very likely to defend its business model robustly and with the considerable resources at its disposal. Complaining is a time-consuming undertaking, currently with an uncertain outcome.

  In its review of IA's complaint, APPSI suggested that its remit should be reviewed and extended and questioned whether an ADR process could be accommodated in the existing PSI Regulations.

  Whatever process of arbitration is chosen, it should be quick, low cost, transparent, fair, properly enforceable and enforced. This is not the case at present.

Q3  What is your assessment of the UK Geographic Panel's operation since its introduction in 2005?

The Official Remit

  The Panel's published remit is:

  ... to give high-level advice to ODPM Ministers on geographic information issues of national importance for the United Kingdom, in particular:

    —  To identify the key medium to long-term geographic information issues and advise Government through regular short reports to Ministers.

    —  To encourage more effective, extensive and systematic use of geographic information, led by the example of Government Departments and other public bodies where appropriate.

    —  To facilitate a co-ordinated position on potential legislation, both national and international, that might impact on the geographic information market.

    —  To promote a coherent approach to the management of geographic information in the United Kingdom.

  Subsequently it has been suggested that its remit is to "complement" (?) the advice to Government of the Director General of Ordnance Survey.

The initial concept

  The genesis of the GI Panel appears to have come from OS. The suggestion was that it should be a small team of three experts advising Ministers on GI issues "across central and local government".

  The Committee's predecessor, recognising the potential commercial conflict of interest in OS advising government, recommended that such a panel should be formed with at least three members and felt OS's suggestion had merit.

  Unfortunately the then Minister did not use the idea to remove the commercial conflict of interest, leaving the Director General as Official GI Advisor to Government, but making the GI Panel responsibile for advice to government for medium to long-term policy issues. Where, therefore do the advisory responsibilities of the Director General of OS end and those of the GI Panel begin?

  In a technical field most key issues requiring advice are short-term (0-5 year) ones. In Locus' view, a key part of the GI Panel's justification was thus never put in place. Groups do not perform well without a clear and clearly valuable remit.

  It is possible that the ODPM opted to form the GI Panel in order to avoid the need to build its own separate GI expertise within government, as suggested in the final OS Quinquennial Review4. If this was the case, then the GI Panel was, in our view, an inappropriate vehicle having too little resource and a lack of proper balance and expertise in its constituents.

The work of the Panel

  The Panel's activities appear to the outside world to be shrouded in secrecy. Minutes are generally published several months after a meeting has been held and are skeletal in their detail.[37] The Panel does not seem to follow any clear work programme.

    —  The Chair has stated that the contents of the Panel's advice to Ministers is not for publication.

    —  The GI Strategy, a potentially key output of the Panel, was initially constructed by consultants under strict confidentiality limitations.

    —  The GI Strategy has not met its intended timetable. It is unclear whether it has yet been presented to Ministers or if the Panel has seen a final report. The OS Director General has, however, presented a synopsis of it to key government committees.

    —  The draft GI Strategy is understood to recommend the adoption of the Digital National Framework (an OS-led initiative). This decision should, in our view, have been opened to more public debate.

    —  Given the remit of the GI Panel, it would seem appropriate that it should be leading the UK's response to the INSPIRE initiative. The last set of GI Panel minutes, however, suggests the formation of a separate programme board.

    —  There is no sign that the government's approach to GI is becoming more coherent as a result of the work of the GI Panel.

Conclusion

  It is difficult, from the information available, to be encouraged by the progress of the GI Panel towards fulfilling its remit. Furthermore, its current level of secrecy creates distrust, potentially quite unnecessarily. At present the GI Panel does not seem to be viewed as a serious force for positive change either within government or outside it.

  The GI panel has a conundrum at its heart. On the one hand it currently needs the wholehearted co-operation of the OS to work effectively and on the other there seems to be little real benefit to OS, as currently managed, to help to build an alternative and more independent source of advice to Ministers.

Q4  Is the current panel's membership sufficiently balanced with three private sector representatives among its 12 members?

DCLG

  Expectation When the Office of the Deputy Prime Minister (ODPM), the predecessor to the Department for Communities and Local Government, formed the GI Panel in April 2005, it stated that the group's composition needed to reflect the broader views of the GI community and added an unexplained rider that this requirement should be balanced with the need to be focused and able to make decisions rapidly.[38]

The position of the Chair

  The Director General of the OS became the first Chair and, after two years, the members of the Panel indicated in April 2007 that "it was not the appropriate time to change the Chairmanship of the GI Panel, given the continuing discussions surrounding the UK GI Strategy."[39] Given the commercial interest of the Director General's organisation in the outcome of the GI Strategy, Locus would have considered the reverse to be true.

Membership

  The membership of the panel currently consists of the Chair (OS), seven members of central government (not including the Chair), one member from local government, the RICS, the AGI, the Demographic User Group and the Association of British Insurers. The Secretariat is also managed by OS.

Conclusions

  Locus are unclear of ODPM's original intentions in creating a larger group than proposed. If the intention of the ODPM was to create a "balanced" group, able to reflect the broader views of the GI community, then Locus consider it should have had the following characteristics:

    —  An effective Chair, independent of any constituency and respected in government.

    —  A significant local government representation (say 2-3). Local government are probably the largest users of GI in the public sector.

    —  A significant central government representation (say 3-4), including Treasury and OS.

    —  Representation from the utilities (1-2).

    —  Expert and senior representation from the private sector (say 2-4).

    —  Academic representation (1-2).

  Locus would question whether the AGI and RICS, which have a wide spread of members (for example including many from OS and local government), are representative of the private sector or necessarily best placed to give detailed advice to the GI Panel.

  Locus thus consider that currently only two members are from the private sector and that the balance of the Panel and its remit needs to be reviewed.

Q5  Should the head of a commercially active organisation continue, ex-officio, to be official adviser to Ministers on "all aspects of survey, mapping and geographic information?"

The issue

  The advisory role of the OS Director General was highlighted by the Committee's predecessor as a potential anomaly and the formation of a more balanced group of advisers was proposed. In Locus' opinion, the formation of the GI Panel (the government response) has failed to address the conflicts for reasons explained under Q3 and Q4 above.

  The OS Quinquennial Review had already emphasised these potential conflicts and their potential consequences:

  "Ordnance Survey has acted as the lead policy advisor on a wide range of GI issues. However, it does so in a situation where, as we have noted, there is an absence of any effective policy making capability elsewhere in government. This is unsatisfactory, because whereas Ordnance Survey is well-equipped to offer advice on technical matters, it cannot reasonably be expected to offer impartial advice on issues affecting its own role or commercial interests."[40]

  In Locus' view, if the OS was split into a public interest and a commercial component (as may be contemplated) but remained under the same overall management, this would not resolve the conflicts. Government must find a new way of securing unconflicted advice on GI issues, both strategic and technical.

The current risks

  Government would not consider appointing its key commercial data supplier from the private sector as its preferred advisor, why therefore should it appoint an equivalent Trading Fund? Is it reasonable to expect a Director of a commercial organisation to give advice to Ministers which may be contrary to the interests of his or her own organisation?

  Civil Servants, looking for impartial advice on GI matters, regard OS as having the same moral and commercial ethos as themselves[41], in effect a member of the same club, focused on "Public Task" and "Public Duty", and subject to the same rules. OS advice within government has the imprimatur of a Civil Servant.

  However reality is not so straightforward. OS has been encouraged to become a commercial organisation and has to a large extent become one. It is not widely appreciated in government that, as a Trading Fund, OS has commercial pressures and that its Framework Document imposes no Public Duty upon it. OS thus sits both within the protected curtilage of government and is its main GI data supplier, both supported by (now) indirect funding from the public sector and able to expand in commercial markets.

  "Ordnance Survey is unusual among trading funds in its lack of a well-defined relationship with central government."[42]

  OS has claimed that it is poorly understood within government (and by the private sector also) but this lack of understanding can be used to its advantage as well. Ministers were surprised that the OS was singled out for criticism by the OFT CUPI study. Private sector re-users of OS data were not.

Examples

  It is difficult to offer firm evidence of the consequences of OS's position in government and remit, however we would offer three examples which cause us concern:

  1.  Locus believe that the long-running dispute over national "addressing"[43] has endured because of OS's combined advisory role and commercial position within government. The Association doubts OS would have taken the same stance had it been independent of government; nor do we consider that the lobbying against the NLPG could have been as effective.

  2.  OS's response to the Cabinet Office "Transformational Government—Enabled by Technology" proposed that the Digital National Framework has a "fundamental role to play in delivering success" stating that it is currently and "industry standard" being developed through effective co-operation between the private and public sectors. Many in the private sector consider that DNF is a child of OS and certainly being led by them for their own strategic reasons. It is not generally recognised as an industry standard.1 Regardless of the merit of the OS proposal, the recipients of OS's recommendations within government are likely to give them considerable weight.

  3.  The INSPIRE Directive, essentially an European Union initiative to help join-up GI data across Europe, gives OS the opportunity to take leadership and ensure that its own products are well-placed to provide the necessary GI infrastructure across GB. This type of strategic issue, essential to both public and private sectors, should be removed from any commercial interest.

Conclusions

  If GI is important to government, and Locus believes it is essential, then its source of advice should be entirely impartial and not capable of being tainted by accusations of partiality. This is not the case at present. Such accusations, based on real or imaginary issues, are avoidable. The commercial conflicts of interest would not be acceptable in the private sector and should not exist in government. They risk impeding and confusing the smooth flow of government operations.

  Locus believes that the OS relationship with government, as it is currently constituted and understood by others, creates risks for the public sector and acts to the detriment of the private sector as well.

Q6  Does OS use a monopoly position to prevent fair and transparent competition in the geographical information market?

Government Policy

  The UK government, on the one hand has a policy of maximising the use of PSI, and on the other, as in the case of Trading Funds such as OS, creates economic pre-conditions which inevitably ration and inhibit its use.

OS Aims

  "The vision is for OS and its partners to be the content provider of choice for location-based information in the new information economy."[44]

  This position requires some interpretation. OS "partners" are (with the exception of one true commercial partnership with Point X) Value Added Re-sellers (VARs) or customers of OS data. The majority are software vendors, partly because there are few companies who have ventured to collect GI in competition with OS. The vision statement is thus simply making clear OS's ambition to remain pre-eminent in the field of GI.

  Whilst this might be argued to be a reasonable position for OS to take, for a start-up company wishing to develop a new GI product in a tangential area to that of OS, the OS vision poses a clear threat of future competition from OS. An OS VAR can one day wake up to find themselves in direct competition with their "partner".[45]

OFT

  The Office of Fair Trading market study (the Commercial Use of Public Information) made clear its concerns (paras 7.45 and 7.46) about OS. It commented that the OS licensing terms do not encourage re-use and that it provides limited access to its unrefined information, concentrating on developing value-added or refined information itself.

  It also explained that, because OS does not separate its upstream and downstream operations, it makes it difficult to prove whether OS is providing equal access and the same prices to business customers and its own internal use of the information.

OS Approach

  OS does not allow direct re-use of data contained in the National Geospatial Dataset, arguing, as we understand it, that it would be unusable by a third party without refinement. OS's view is that its business products are the first stage at which the data becomes of value to re-users. Following the OFT report, Locus understands that OS is re-considering its position.

Conclusions

  It is the belief of the Locus Association and its members that Ordnance Survey uses its monopoly position, intentionally or unintentionally, to prevent fair and transparent competition in the geographical information market.

LOCUS RECOMMENDATIONS

  Locus believes that many of the difficulties encountered by its members would not have occurred had the original DTLR Select Committee recommendations been adopted. However time has now elapsed; some issues have become clearer and others more polarised. Simply restating the original recommendations may no longer deliver the necessary result.

  We hope that the DCLG Select Committee will find our responses clear. However, we would like to summarise our own current over-arching recommendations in respect of Ordnance Survey.

  1.  The work of OS in maintaining the base topographic map is important to this country. It is of recognised high technical quality and should be maintained in public ownership as Crown Copyright. However OS should cease to be producer, wholesaler and retailer of their "products and services". There must be a proper separation of upstream production/procurement (OS "public task") from downstream commercial activity (OS "commercial").

  2.  Government should build-up its own entirely independent in-house GI expertise. It must define the essential data boundaries which the base topographic map should contain and their standards (in accordance with INSPIRE data principles). These boundaries should be determined through an independent consultative process but with the objective of government avoiding re-capturing data already captured elsewhere in government or the private sector unnecessarily.

  3.  OS (public task) should (1) procure and oversee the ongoing maintenance of the base topographic map and (2) license that data on simple and non-onerous licensing terms at cost (perhaps plus 5%) to Value-Added Resellers (one of which might be a separate "OS Commercial" organisation). OS (public task) would cease to "exploit" the data or act as a VAR of its own data but would aim to break-even overall on its maintenance activities.

  4.  The OFT pointed to a risk of cross-subsidisation of products. OS (public task) accounting must cease to be opaque (a concern expressed by the Committee's predecessor) and must reflect the true costs of maintaining the respective elements of data.

  It is difficult to find a single example where opening up a non-core public service monopoly to fair competition has not improved both the quality and scope of services available to the consumer and increased economic activity.

  OS cannot have a monopoly of good ideas. Locus believes that the Government currently has an opportunity which it cannot afford to miss and which, if properly implemented, has the potential to open up the geographic information market-place to greater investment and innovation for the benefit of all.






28   Letter from the Director General to the Cabinet Office eGovernment Unit 02 February 2006. Back

29   "The UK government investment in public sector information for the year 2000/1 was Euro 1.25 billion with around 57% of this total being in the acquisition of GI-related services (mapping, land registration, meteorological, environmental and hydrographic data). Cost recovery was around Euro 1.1 billion". Commercial Exploitation of Europe's Public Sector Information. Final report for the EC, PIRA International (2000) Back

30   "Knowledge is a source of competitive advantage to the information economy. For this reason it is economically important that there is a wide diffusion of public information ... ... Currently geographic and meteorological information have the greatest economic potential ..." Digital Broadband Content: Public Sector Information and Content: Working Party on the Information Economy, Directorate for Science, Technology and Industry (30 March 2006). Back

31   This is believed to be the reason why the intitial PGA re-procurement, led by CLG in 2006, had to be withdrawn. Back

32   As several observers have indicated is currently the case with OS's Master Map Address Layer 2 being developed to "compete" with Local Government's "National Land & Property Gazetteer". Back

33   Competition at the Public/Private Interface: Swedish Agency for Public Management (Statskontoret) (2005). Back

34   Advisory Panel for Public Sector Information (APPSI)-Review of OPSI's recommendations 30 April 2007. Back

35   The Commercial Use of Public Information (CUPI)-OFT, December 2006. para 7.45, page 136. Back

36   OFT CUPI Market Study, Appendix B p 30. Back

37   For example the the GI Panel minutes of the meeting (Dec '06) immediately following the publication of the OFT CUPI Study somewhat surprisingly stated that "there is no evidence of private sector market failure, and therefore no argument for market intervention by government." No further explanation or justification was offered. Back

38   GI Panel Terms of Reference. Back

39   Minutes of GI Panel meeting 3rd April 2007. Back

40   Quinquennial Review of Ordnance Survey (2002), National Economic Research Associates (page 43) Back

41   In an attempt to resolve the dispute between Ordnance Survey and local government over address management ODPM sought to create a "new" solution (the National Spatial Addressing Initiative or NSAI) but offered OS the development and future management of the NSAI without public procurement. Back

42   Quinquennial Review of Ordnance Survey (2002), National Economic Research Associates (p 19). Back

43   Including Acacia, NSAI, the National Land & Property Gazetteer, AddressPoint, Master Map Address Layer etc. Back

44   OS Framework Document. Back

45   For example, Getmapping plc Back


 
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