Memorandum by Getmapping (OS 14)
Getmapping (GM) welcomes the inquiry of the
Urban Affairs Sub-Committee of the Select Committee on Transport,
Local Government and the Regions into the OS. It is an opportunity
to review the services provided by OS, with references to its
performance against its remit as the National Mapping Agency,
its use of public funds, and the efficiency and probity of its
GM supports Government policy towards OS, as
set out in recent written answers. Sally Keeble MP (PUSS, DTLR)
stated "working with partners is a central element of the
Ordnance Survey corporate strategy" (WA 21 November 2001)
and that the Quinquennial Review of OS, announced in February
2001, "has provided extensive opportunities for consultation
with internal and external stakeholders" (WA 28 November
2001). However, GM asserts that OS has misused its dominant position
to compete unfairly in GM's market.
GM was founded in 1998 specifically to create
and maintain a complete aerial survey of the UK (the Millennium
Map) and to sell it to all users at affordable prices. No such
survey had ever existed and the OS had no plans to create one.
GM has invested over £10 million in the project and employs
65 staff. The Millennium Map is now complete for England and Wales
and can be used on-line by anybody who sets up an account. Sales
are growing strongly, and GM expects to be profitable by the end
of 2002. OS by contrast has no experience in the market, never
having commissioned any colour photography before June 2001.
GM is an OS Licensed Partner (using OS data
to make the Millennium Map map-accurate). OS confirmed to GM throughout
1999-2000 that selling colour aerial photography was not in its
remit, and that GM's business did not conflict with OS's business.
Trusting the honour of these assurances, GM agreed that OS could
become a reseller of the Millennium Map in September 2000, and
as a result GM has spent considerable effort briefing OS staff
on all aspects of the business, thus providing OS with vital marketing
intelligence. At no time until 2001 did OS declare a conflict
In December 2000, GM presented the Millennium
Map and explained how well it would fit into MasterMap: the OS
was enthusiastic, and agreed in principle to the use of the Millennium
Map as a layer for MasterMap. In January 2001, GM made a formal
proposal to the OS to adopt the Millennium Map as a layer within
MasterMap. It was only after this that OS decided to acquire its
own Imagery Layer. We can provide detailed evidence for this.
In May 2001 OS started the procurement of an
Imagery Layer for Britain very similar to the Millennium Map.
GM protested that this was unnecessary and offered to license
the Millennium Map to OS free of charge under a long-term partnership
to satisfy OS requirements. However, OS rejected GM's offer on
the grounds that the Millennium Map did not meet the OS specification.
Instead, OS wants to license small parts of the Millennium Map
to get it started with an Imagery Layer. OS now intends, over
the next few years, to use its own cartographic photography as
the basis for the Imagery Layer thus excluding GM from any serious
future involvement. To facilitate this all OS cartographic flying
was switched to colour in June 2001.
OS chose a specification for the Imagery Layer
which OS knew would make the Millennium Map non-compliant. Furthermore,
the specification was set without a proper understanding of the
market, without consulting the private sector imagery providers,
and, as far as we know, without properly consulting the customer
base. GM strongly suspects that the specification was chosen to
further OS's commercial interests, and not for valid market reasons.
OS has a remit to maintain Britain's National
Mapping, to maintain the geographic referencing system and to
support third party data providers by facilitating the interchange
of geographic information. This third point is an explicit aim
of the new MasterMap. ". . .It is not the purpose of [MasterMap]
to supplant any existing systems, but to underpin and support
them". By attempting to procure an Imagery Layer of its own,
OS is acting outside its remit without any overriding justification
of public good.
In short, the facts point to a large, well-established
and partly publicly funded body using its strength, market power
and privileged access to a smaller partner's trade secrets to
undermine that smaller company which had pioneered investment
in a new market in which OS had previously been uninterested.
GM has offered what it considers to be excellent terms to OS for
continued partnership. However, OS appears to have moved from
a relationship based on partnership to a head on competition which
threatens GM's survival.
In the course of its "partnership"
with OS, GM has acquired experiences and views which it hopes
will inform the Select Committee's inquiry.
1. We suspect a misuse of public funds
Under a National Interest Mapping Service Agreement
(NIMSA), the Government contributed £42 million in 1999 to
support certain OS mapping services which could not attract sufficient
commercial funds to cover their costs. Included in this package
was "the most intensive programme of aerial survey work ever
undertaken by OS" to "accelerate the updating of detailed
maps of rural areas from the north of Scotland to the south of
England". These photographs were to be taken in black and
white. There was no mention of any need or intention to create
an Imagery Layer. If, as OS has recently claimed to GM, they had
been planning a colour Imagery Layer for a long time, there was
no sense in embarking on the NIMSA programme using black and white
photography. All OS flying was moved to colour in June 2001. GM
suspects that NIMSA funding is now being used to support (more
expensive) colour photography which is going to be used in the
OS Imagery Layer in competition with the private sector. If so,
this is a clear misuse of NIMSA funding.
2. OS is not operating on a break-even basis
The OS Framework Document (April 1999) defines
how OS is to operate: "The Trading Fund model is one of breaking
even taking one year with another after allowing for operating
costs, investment needs, loan repayments and agreed levels of
dividend". GI News, September 2001, states that OS made a
retained profit of £28.6 million on £99.6 million turnover
(including a £19 million award from AA). This amounts to
29 per cent profit which is well in excess of a breakeven model.
Far from operating on a breakeven basis, OS appears to be building
up a sizeable war chest, which gives it the capability to compete
with the private sector in markets outside its remit.
3. OS may intend to break its own cross subsidy
rules to disadvantage the private sector
The OS Framework Document states that "There
is no cross subsidy between the various elements of the OS operations".
But OS has stated that aerial photography flown for cartography
(and probably part-funded by NIMSA) will be used to create the
Imagery Layer. This would give OS a huge and unfair advantage
over the private companies who pioneered the Imagery Layer market
(unless the photography is charged to the Imagery Layer business
at full commercial rates). We have asked OS to confirm that the
cartographic photography will be charged to the Imagery Layer
at full commercial rates, but OS's answer is not entirely clear.
4. Why has OS not sold any imagery as a reseller
of the Millennium Map?
OS has been remarkably unsuccessful as a reseller
of the Millennium Mapin fact it has not sold a single image.
In contrast, in 2001, the Geoinformation Group sales of the Millennium
Map topped £100,000, Integrated Statistical Solutions sold
over £50,000, and others sold a total of over £85,000.
This is remarkable: OS has the largest sales force of all GM's
resellers and the best access to key public sector and private
sector clients. Does OS really not have skills or knowledge in
this market (which, by extension would indicate that they are
in no position to decide on the best specification for an Imagery
layer without consulting GM and other private sector providers)?
Or has OS deliberately not tried to sell GM's data (in which case
they are in breach of their reseller agreement and are working
deliberately to disadvantage a supposed partner)?
5. OS has biased its competition for its
We suspect that OS chose to specify orthorectified
data not to comply with market demand, but to allow it to declare
the Millennium Map non-compliant. The experience of GM and TGG
(the most successful suppliers in the market up until 1999) is
that the main market demand is for geocorected rather than orthorectified
data. This view is strongly supported by a recent Business Research
Centre market survey which demonstrates that only a small minority
of users need orthorectified data. OS has never sold any colour
imagery (see point 4), and therefore OS should have based its
specification on the experience of the companies currently working
in the market. OS claims to have conducted a thorough and statistically
significant market survey to justify the choice of orthorectified
imagery. We have asked OS for a copy of their market survey but
it has been refused on the grounds that it is commercially sensitive.
It is important to note that in practice there
is very little difference between the Millennium Map and an orthorectified
Imagery Layer. Please see Annex A for an illustration.
6. Collateral damage to GM from OS's Imagery
By undertaking to acquire its own Imagery Layer
in direct competition to the Millennium Map, OS is inflicting
severe and demonstrable damage on GM's business. Several of our
major customers are now waiting to see how the OS imagery Layer
evolves; others are reluctant to purchase the Millennium Map because
OS promotional material appears not to endorse it: "Our data
customers have made it clear to us that they need and expect a
comprehensive OS Imagery Layer to be orthorectified, as such imagery
has geometric fidelity . . . Orthorectification is increasingly
seen as the all-purpose standard for the future" (Philip
Round, Chief Press Officer, OS). OS is the dominant force in the
UK mapping business; it has a monopoly to provide mapping to the
public sector. It is understandable that major public sector and
private sector customers are unwilling to commit to GM's product
when OS is embarking on its own competitive product. Orthorectified
data will become the natural specification for an Imagery Layer
in a few years time once the errors in OS LandLine have been corrected,
and the second layer of the Millennium Map will be orthorectified
to reflect this. But today the Millennium Map is the only product
available and it fits LandLine better than an orthorectified product.
OS should therefore be promoting the merits of the Millennium
Map rather than seeking to undermine the market prospects of its
own legal partner.
7. The OS procurement of web serving tools
raises ethical questions
Web serving tools for graphics are outside OS's
remit: "In order to allow Licensed Partners scope to develop
their offerings and their markets, we will not ourselves introduce
an on-line graphics service immediately. We will neither launch
any other pay-as-you-use services on our web site, nor will we
compete head on with our Licensed Partners with such services
for the foreseeable future" (OS Information Paper 3/2000).
Although OS's analysis of its Imagery Layer
Business and Technical requirements was completed by April 2001,
there was no mention of any web serving tools in its Imagery Layer
specifications of May and August. However, GM's response to the
Imagery Layer ITT offered to provide OS with its web serving tool,
Imagexpress, and gave OS a detailed description of the capabilities
of the system. In October OS started a new procurement for web
serving tools for the Imagery Layer. Again, OS appears to be using
information gained through its relationship with GM to start a
procurement for tools outside its own stated remit. This runs
wholly against the partnership ethos.
GM considers that OS's attempt to procure an
Imagery Layer is unnecessary given that this new market is now
well-served by the private sector. Furthermore, OS's procurement
activities appear to have been badly handled, (in particular the
specification of orthorectified data without industry consultation
or proper market analysis). By its activities OS has badly damaged
GM's business. It is therefore recommended that OS should immediately
withdraw from the procurement of an Imagery Layer for a period
of at least five years. This will give the private sector initiatives
time to mature. In the moratorium period OS can serve both the
Millennium Map and other private sector datasets as third party
layers within MasterMap, exactly in accordance with the MasterMap
philosophy of underpinning and supporting third party datasets.