Appendix: Government response
Public information, private competition
Ordnance Survey costs the taxpayer nothing. Indeed,
it fulfils its role as the national mapping agency while returning
an annual profit to the Treasury. We recognise that the fact that
Ordnance Survey is required to fund both its Public Task and commercial
work entirely from its own revenues makes it difficult to define
precisely where its public duty ends and its competition with
private operations begins. (Paragraph 13)
1. Ordnance Survey is the only organisation to provide
maximum long-term reliability in the mapping of all of Great Britain
- from the most densely populated cities to the remotest corners
of the country. While most customer demand comes from dynamic
locations of change such as urban and suburban sites, transport
corridors and development areas, Ordnance Survey applies nationally
consistent specifications across all areas whether or not they
would be commercially attractive to map. In keeping the most detailed
mapping of remote areas up to date in the national interest, it
provides information that is absolutely vital for public administration,
emergency response and other essential services.
2. Many Government respondents to the Committee underlined
the importance to them of Ordnance Survey data maintained to high
levels of currency, reliability, consistency and completeness.
These needs are reflected in the new Ordnance Survey Public Task
document, approved by Iain Wright MP in July 2007, which sets
out the boundary of Ordnance Survey's "public service and
national interest work". Ordnance Survey is required by statute
to conduct all of its activities under the Trading Fund model,
thereby funding its public task activity by generating revenue
from licensing data and paper mapping sales, from which it must
cover all operating costs, investments in efficiencies and data
enhancements to meet user needs, and provide a dividend to the
Department.
3. In the Budget Report, the Government announced
an assessment of each of the Trading Funds, including Ordnance
Survey, to be undertaken by HM Treasury and the Shareholder Executive.
This work will look at governance, business plans and future development
strategies of the Trading Funds in support of departmental asset
management strategies.
Ordnance Survey is the only major public service
information holder that does not distinguish in its annual accounts
between the costs of and revenues from operations primarily conducted
in pursuit of its public and its private tasks. Our predecessor
Committee recommended as long ago as 2002 that Ordnance Survey
should account separately for its commercial activities. In the
interests of transparency, particularly given Ordnance Survey's
dominant market position, we recommend that it seek to distinguish
as clearly as possible in its annual accounts between the activities
it undertakes purely because it remains a quasi-governmental national
mapping agency and those it conducts on a firmly commercial basis.
We accept that the absence of public funding and the requirement
wholly to fund itself place Ordnance Survey in a unique position,
which will make a total separation of its activities difficult
to achieve. (Paragraph 16)
4. We agree that further clarity would be helpful.
The Office of Fair Trading (OFT), as part of its Commercial Use
of Public Information (CUPI) Study (December 2006), recommended
an accounting separation between Ordnance Survey's "monopoly
activities" ('unrefined' information) and "competitive
or contestable activities" ('refined' information). This
is not however the same as a distinction between "public"
and "commercial" activities. OFT recognises that Ordnance
Survey needs to charge for unrefined information in order to fund
unrefined information activities. Further, some Public Task activities
may fall in Ordnance Survey's refined information activities.
5. However, we believe that the OFT's recommendations
and those in the Committee's Report would in practice have fairly
similar implications, by providing greater transparency about
the funding of Ordnance Survey's activities and improved confidence
that it competes fairly in the marketplace. Ordnance Survey has
been discussing possible accounting separation with OFT and OPSI,
and expects to consult with private sector stakeholders on this
issue in due course, in order to develop an acceptable way forward.
Licensing data
We recognise that Ordnance Survey's need to fund
itself almost entirely from income obtained from licensing re-use
of the information it holds requires it to protect as stringently
as it can in those licences the intellectual property rights in
its base data. International experience suggests that any diminution
in its funding levels could affect the quality of the information
it provides to its customers. That said, Ordnance Survey should
work co-operatively with the private sector in the field. (Paragraph
17)
6. We welcome the Committee's recognition that rigorous
licensing activity is necessary, in the public interest, to maintain
funding levels and hence the quality of Ordnance Survey's data.
Ordnance Survey aims wherever possible to work co-operatively
with the private sector, and in recent years has built up an extensive
Partner programme. Over 500 private sector organisations are already
working with Ordnance Survey as licensed Partners or are trading
Ordnance Survey information in some way. Current arrangements
for Partners include:
- A Developer Programme which
enables innovators and developers to access a range of Ordnance
Survey data, technical and business advice for a modest annual
fee;
- A Partner Accreditation programme which enables
Licensed Partners to access a range of technical and business
support including sales, marketing and promotional activity, in
addition to having a nominated account manager as a first point
of contact with Ordnance Survey;
- The recent launch of OS OpenSpace, an innovative
applications programming interface which provides users who do
not have a deep knowledge of geographical information systems
with free access to Ordnance Survey map data on the Web, and enables
them to start experimenting and using the information within non-commercial
applications. The service also provides web forums for developers
and innovators to 'meet', share, discuss and help each other;
and
- A pricing and licensing regime (the Specific
Use licence model) which enables Ordnance Survey data to be priced
and licensed differently for different end uses, in response to
the different market environments in which Partners trade.
7. In addition a significant number of wholesalers
and retailers benefit from trading Ordnance Survey paper mapping
through both on-line trading and via the more traditional "high
street" book trade.
The fact that Ordnance Survey has included clauses
in licences that effectively require competitors not to compete
with it or to complain about it provides a clear example of why
both private sector and governmental organisations sometimes perceive
it to be acting uncompetitively and unfairly. No such condition
should again be included in any licence. (Paragraph 20)
8. We accept the Committee's recommendation, though
there may be some misunderstanding on this point. With reference
to "non-compete" clauses in licenses, Ordnance Survey's
contracts or agreements have never included clauses which prohibit
competition or complaint against Ordnance Survey. However, during
2006, Ordnance Survey included some comments on its web site relating
to Licence Exceptions. These Exceptions were published as part
of Ordnance Survey's obligations under the OPSI Information Fair
Trader Scheme (IFTS). As the Committee acknowledges, following
representations from OPSI and OFT the Exceptions were removed
or amended to the satisfaction of those bodies.
9. Ordnance Survey has never sought to inhibit complaints
and has a well developed Complaints Procedure, which has been
reviewed and cleared by OPSI as part of the IFTS re-accreditation
process. Ordnance Survey welcomes constructive feedback on all
aspects of its performance.
We are concerned that public sector organisations
charged with carrying out vital public services sometimes find
Ordnance Survey's licensing conditions too complex and inflexible.
Even the Ministry of Defence, whose predecessor created the national
mapping agency two centuries ago, is uncertain about what use
it may make of the data it buys from Ordnance Survey. This is
a serious indictment of the standards of clarity achieved in the
licences Ordnance Survey offers some customers. (Paragraph 21)
It is incumbent on Ordnance Survey, particularly
given its special status within the geographical information market,
to make the licences it offers partners and competitors as simple,
cost-effective and appropriate to the user as possible. It is
essential that licences contain conditions that fit the needs
of individual partners and competitors while yet protecting Ordnance
Survey's duty to guard and right to use the intellectual property
it holds. (Paragraph 24)
10. We agree that it is in everyone's interests that
licenses should be as simple, cost-effective and user-appropriate
as possible, whilst ensuring that the Government's intellectual
property rights are properly protected. Ordnance Survey has acknowledged
the need to improve matters for three years, but the numerous
reviews have delayed the implementation of planned improvements,
as for this length of time the future of Ordnance Survey has been
under consideration.
11. Ordnance Survey continues to work with OPSI to
ensure that its licensing arrangements meet the standards of the
Information Fair Trader Scheme.
12. It has been planned for over a year that, following
the conclusion of current discussions with OFT (initiated following
the publication of the CUPI report), Ordnance Survey will undertake
a detailed review of its licences. This will be aimed at implementing
any changes agreed with OFT, and at making any further revisions
to simplify the licences where this is possible.
13. Given the number of different licences involved
and the need for significant legal input, the costs and effort
involved in this exercise will be very substantial, both for Ordnance
Survey and for some licensees who will have to review the new
licenses. It is only fair to the thousands of license holders
that they have to work once only on a radical reform of license
structure - hence the delay until matters are concluded with OFT.
The regulatory framework
Confusion clearly exists over the extent to which
the Re-use of Public Service Information regulations apply to
Ordnance Survey activities, and this confusion arises from the
blurred distinction between its public and private tasks. It is
plainly nonsensical that both Ordnance Survey and a private company
should have spent 18 months and considerable sums of money on
an arbitration process that returned them to square one. We endorse
the view of the Advisory Panel on Public Sector Information that
the Government should urgently assess the degree to which the
Government's objectives are met by the current regulations. (Paragraph
29)
14. The Government recognises the issues highlighted
in the report, and that far greater clarity was required as regards
definition of public task. The issues were previously identified
as part of the OFT's CUPI study. As part of the Government responses
to CUPI and the Power of Information study, a team from Cambridge
University were commissioned to analyse the pricing of public
sector information held by trading funds. In the Budget Report,
the Government commissioned a separate review leading up to the
Comprehensive Spending Review 2010. This will examine the public
sector information held by trading funds to distinguish more clearly
what is required by Government for public tasks, ensuring this
information is made available as widely as possible for use in
actual and potential downstream markets.
The strict interpretation taken by the Advisory
Panel on Public Sector Information of the Re-use of Public Service
Information regulations highlights a potential flaw affecting
the intention behind those regulations. Products to which Ordnance
Survey has clearly added value and which it markets commercially
should properly be part of its private operation. The base information
Ordnance Survey holds as the national mapping agency should, however,
be as easily and widely available as possible, allowing for cost
recovery. The regulations as currently drafted may be inadequate
in ensuring that base information is easily accessible, and we
recommend that the Government seek urgently to amend the regulations
where deficiencies are identified. (Paragraph 30)
15. In addition to the Government review in the Budget
Report, the Office of Public Sector Information and the OFT have
joined forces to take forward the recommendations made in the
OFT's CUPI study. OPSI and the OFT are working jointly with Ordnance
Survey to tackle the issues highlighted in the report. As a first
stage in the joint working arrangements, OFT and OPSI will be
inviting customers of Ordnance Survey, both from business and
within Government, to attend a workshop by May 2008. The focus
will be on identifying the split between refined and unrefined
activities.
16. Both the OFT and OPSI have maintained an ongoing
dialogue with Ordnance Survey regarding these issues. Ordnance
Survey have been engaging constructively with the OFT since the
Government published its response to CUPI in June 2007. A particular
area of focus has been the split between refined and unrefined
activity. OPSI continues to regulate Ordnance Survey under the
Information Fair Trader Scheme, which ensures that set standards
of transparency, fairness and openness are met. Ordnance Survey
was verified in November 2007 and the IFTS report will be published
in April 2008.
17. In line with the EU review of the implementation
of the PSI Directive, by July 2008, OPSI will revisit the scope
of the PSI Regulations, updating guidance as necessary.
Geographic Information Panel
We commend the Government for creating a Geographic
Information Panel to provide a wide range of advice and views
on a national geographic information strategy. We believe that
the panel represents a proper range of interests, but recommend
that the Government consider whether relevant expertise among
the scientific and academic sectors might also be sought. (Paragraph
35)
The question of who chairs the Geographic Information
Panel is properly a matter for the panel itself. None the less,
while the expertise and unique commercial and governmental roles
of the Director-General and Chief Executive of Ordnance Survey
make the holder of that post an obvious contender for the job,
the chairmanship need not and should not be held ex officio by
that postholder. (Paragraph 37)
18. Vanessa Lawrence continues in the Chair on the
recommendation of the panel's membership to complete the negotiations
necessary to gain wide support and core funding for the UK Location
Strategy. We agree that the Chair need not be ex-officio the Director-General
and Chief Executive of Ordnance Survey.
19. Assuming the Location Strategy is funded in 2008,
the intention is that the Geographic Information Panel will be
closed and the Location Council will take over the role of the
Panel alongside its duties to implement across Government the
EC INSPIRE initiative and the UK Location Strategy. Ordnance Survey
would be a member of the Council but would not be the first Chair
or supply the secretariat.
National Interest Mapping Services Agreement
We welcome Ordnance Survey's commitment to maintain
rural mapping services following cessation of the National Interest
Mapping Services Agreement. We note Ordnance Survey's intention
to fulfil this task without receiving Government funding as an
example of how the agency maintains its public function in spite
of the commercial framework within which it works. (Paragraph
38)
We recommend that the Department for Communities
and Local Government commission at an appropriate future point
a study on the long-term impact of the decision to end the agreement
to ensure that the quality of the mapping of rural and other economically
unattractive areas is maintained. (Paragraph 39)
20. We welcome the Committee's recognition that the
current model allows Ordnance Survey to fulfil its public functions
whilst working within a commercial framework.
21. The Department will monitor the effects of the
decision to end the agreement and will commission a study if necessary.
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