[GSDI Legal Econ] [geo-discuss] speculation about the OS future business model?
Roger Longhorn
ral at alum.mit.edu
Sun Nov 5 12:58:56 EST 2006
Thanks, George. The interesting bit from the Australian Post Office site
about CSO's - which you forgot to include in your posting, reads:
<begins>
*Community Service Obligation Costs*
"We are required by law to provide a universal letter service which is
accessible to all Australians and, in addition, to provide a standard
letter service at a uniform price (currently 50 cents) from anywhere to
anywhere in the country. This means our cost of delivering some letters
can be many times higher than the postage charged. The cost of meeting
our CSOs, currently estimated to be around $88 million each year, is
funded by earnings from the reserved services (letters up to 250 grams)
within Australia Post's letters business. We do not receive any taxpayer
money from the Government to meet the costs of CSOs."
<ends>
So, in fact, Australia Post's charging regime has a flavour of "trading
fund" to it - providing a basic national postal service in which
'reserved services' - still provided by Australia Post (solely? as a
monoply?) - are charged at a fee sufficiently high to cover total CSO costs.
As to Francis's comment on "certain services which are considered
necessary for the health of the public at large or its social and
economic welfare are better provided by government agencies to assure an
equitable level of service", George's postal service example is another
interesting instance of the 'charging for services' debate. No one
expects a national post office to offer a postal service for free -
although one might contend that if they did, the postal service is
probably as important a part of a national 'information infrastructure'
as is topographic data or statistical data. And the idea is not far away
from free local phone calls enjoyed throughout the USA for decades,
especially in rural areas, the cost being cross-subsidised by national
long-distance and international call charges by telecom operators.
In the UK, the government-owned Post Office agency was established in
1635 as Royal Posts and began to offer its first commercial enterprise
that was not related to postal collection and delivery (issuing and
handling of money orders) in 1838, eventually launching a full national
banking operation in 1968 - neither of which has much to do with its
primary mission of "providing universal postal service".
Royal Mail now faces competition from 18 other postal service providers,
although some were initially licensed to handle only certain classes of
postal items. Typical competitors are DHL, UPS, TNT and similar parcel
and business mail enterprises. Yet Royal Mail has access to a
well-established network of over 14,500 post offices (2006), although
more than 7,500 were closed in the past 15 years (2500 in the past three
years) under various 'efficiency measures'. The main office and
sub-office network (mainly franchises sold to local shopkeepers) was
created primarily before the postal market was opened to competition.
Yet one report states that the current financial problems faced by Royal
Mail stems from a "£UK 2 billion shortfall in investment by successive
governments for automation in order to remain competitive." Obviously,
the Post Office faced the same sort of competition for limited and
finite government funding from taxation that all government agencies
face - including national mapping, cadastral, hydrographic or geological
survey agencies. And the postal service did not get that funding - just
as the UK rail network also failed to secure the government investment
it needed to remain modern, safe and competitive with other forms of
transport (road and air) - in this case, a shortfall estimated at UK£ 30
billion (in 2002).
Royal Mail now face serious shortfalls in revenue, which hit the news
last week in the UK with the proposal that up to another 600 sub-post
offices are likely to be closed as they lose money every year, a
situation complicated by the fact that some previous revenue-earning
activities, such as renewing BBC TV licenses, was removed from Royal
Mail's remit and given to a private contractor. Some predict that fewer
than 10,000 main and sub-post offices will remain by 2010 as further
revenue-earning activities are removed from the franchises, dramatically
affecting the sustainability of sub-post offices.
PostComm, the Postal Services Commission - http://www.psc.gov.uk/ -
states "Postcomm is the independent regulator for postal services in the
UK. It is our job to *protect the universal service* and make sure that
postal operators, including Royal Mail, *meet the needs of their
customers* throughout the UK. We are also responsible for *introducing
choice* to a market that has been a closed monopoly for 350 years". "On
1 January 2006, a new licensing framework was implemented
(http://www.psc.gov.uk/postal-licences-and-operators/the-multi-operator-market.html),
designed to make the multi-operator market work effectively, and
balancing the need to encourage new entrants to the mail market with our
reponsibility for protecting our customers' interests. "
(http://www.psc.gov.uk/policy-and-consultations/consultations/licensing-framework-for-a-fully-open-market.html).
Under the new framework, competitors can provide virtually any type of
service.
I realise that the UK Royal Mail and other government postal services
are not a direct parallel with spatial data gathering, maintenance and
dissemination remits and regimes. But from investment in services for
the public sector 'good' point of view, one has to ask why one service
should be provided for free (free national GI) or heavily subsidized
(for example, rail services in Belgium) versus 'for a fee' which the
actual user pays without more and better research into (a) the overall
impact on society and the economy, (b) how well the current alternative
business models (public-private) are working and (c) if there are as yet
unexplored business models that will still provide a better service to
citizens in the long run.
Kind regards
Roger Longhorn
ral at alum.mit.edu
George Cho wrote:
> Hi Francis and Roger
>
> I read your query to Roger regarding 'government services' being
> provided to people living in remote areas.
>
> In Australia these sorts of services are called 'community service
> obligations' (CSO) and whilst the name may have changed over time the
> intent is the same. These services apply to government business
> enterprises (GBE) in Australia and are so designated by Parliament,
> for example Australia Post, some telecommunication services, air
> travel and the like. Appended below are two excerpts, one discussing
> the economics of CSO's and the other giving the legislative mandates
> for doing so. Hope you find this useful.
>
> Cheers
>
> George Cho
> 3 Nov 2006
>
> Averil Cook (1999) Community service obligations and their
> implications, I/nternational Journal of Social Economics/, Vol. 26 No.
> 1/2/3, 1999, pp. 211-221,
>
> What are CSOs?
> The specification and hence funding of CSOs involves the adoption of
> an accepted definition, and then each business enterprise must
> particularly identify the services which are their CSOs. The following
> definition has in general been accepted by all governments although
> adjustments have been made by some:
> A Community Service Obligation arises when a government specifically
> requires a public enterprise to carry out activities relating to
> outputs or inputs which it would not elect to do on a commercial
> basis, and which the government does not require other businesses in
> the public or private sectors to generally undertake, or which it
> would only do commercially at higher prices (SCNPMGTE, 1994, p. xi).
>
> /Source/:
> http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Pdf/0060260110.pdf
>
>
> Community Service Obligations
>
> Australia Post's Community Service Obligations (CSOs) are set out in
> Section 27 of the Australian Postal Corporation Act which requires that:
>
> * the corporation provides a letter service for both domestic and
> international letter traffic;
> * the service be available at a single uniform rate within
> Australia for standard letters;
> * the service be reasonably accessible to all Australians wherever
> they reside; and
> * the performance standards for the service reasonably meet the
> social, industrial and commercial needs of the community.
>
>
>
> /
> //Source: /http://www.auspost.com.au/BCP/0,1080,CH3310%257EMO19,00.html
>
>
>
>
> Francis Harvey wrote:
>
>> Roger,
>> Since you're deeper into this discussion, can you shed some light
>> into an underlying issue I think I see in this approach that seems to
>> define government activities as commercially competitive: what has
>> happened to the public provision of services for the general good in
>> this approach?
>>
>> I think I'm paraphrasing and drawing on social and legal traditions
>> that are not applicable everywhere, however, as I recall public
>> administration 101, certain services which are considered necessary
>> for the health of the public at large or its social and economic
>> welfare are better provided by government agencies to assure an
>> equitable level of service. Certainly there's competition for the
>> provision of mapping services in an urban area between government and
>> private agencies, but the "monopoly" granted the government here
>> helps assure a level of service in area lacking the competition.
>>
>> Isn't this the model used to fund telephone service to remote areas
>> in the US?
>>
>> A corollary to this question is, does this proposal distinguish
>> primary from secondary uses in considering competition?
>>
>> Maybe I'm missing something here, but this sure is an interesting and
>> problematic train of logic if I understand it rightly.
>> Francis
>>
>>
>>
>>
>> On 2 Nov 2006, at 05:09, Roger Longhorn wrote:
>>
>>> Giles approach is not radically new, in that something similar was
>>> proposed in Sweden - the supposed home of 'free' info in Europe - in
>>> 2000 (see translation below of report from Statskontoret - the
>>> Swedish Agency for Public Management) - note the third paragraph.
>>>
>>>
>>> Press Release by Statskontoret (the Swedish State Office) 2000-04-03
>>>
>>>
>>> Create the same competition conditions for governmental and private
>>> actors
>>>
>>> Many state agencies and companies sell products and services in
>>> competition with private companies. Part of this activity has proven
>>> to have a dampening effect on the possibilities of especially small
>>> enterprises to establish themselves and grow in the market place.
>>> The reason is that fundamentally different conditions apply to state
>>> and private actors which means that they do not compete on equal terms.
>>>
>>> Statskontoret has in its report ‘*The state as a commercial actor*’
>>> on behalf of the (Swedish) government explored and analysed the
>>> activities in which governmental authorities and companies are
>>> engaged in competition with private companies. The impact on
>>> competition and growth has been studied in more detail in five case
>>> studies. In addition Statskontoret has analysed earlier reports and
>>> studies which raise the question of commercial activities by the
>>> state from a competition perspective. Studies made both internally
>>> and by other parties form the basis for a number of proposals for
>>> action to reduce competition distortions.
>>>
>>> *In cases where motives for state players to engage in commercial
>>> competitive activity are lacking, Statskontoret proposes that such
>>> activities be prohibited. In some cases there are motives for the
>>> state to engage in commercial activities. For all such activities
>>> Statskontoret proposes the followed three general actions:*
>>>
>>> *
>>>
>>> *define the term ‘uppdragsverksamhet’ (ordered service activities)
>>> in law and specify it in more detail in the instructions given to
>>> the authority*
>>>
>>> *
>>>
>>> *regulate a requirement for special auditing of cost-based
>>> revenues under competition*
>>>
>>> *
>>>
>>> *make arrangements for a supervisory function for public
>>> commercial and competitive activities.*
>>>
>>> In some cases where motives do exist for the state to engage in
>>> commercial activities, the preconditions for creating the same
>>> competition circumstances for state and private actors are lacking.
>>> In these cases Statskontoret proposes that the activity is
>>> monopolised or regulated. One example is the research contracts
>>> which should be continued to be undertaken within universities and
>>> colleges in order to reach the goals set up by the governmental
>>> authorities as regards increased co-operation with industry.
>>>
>>> For the five markets which have been studied in more detail
>>> Statskontoret proposes special steps to make the conditions for
>>> competition more equal and to reduce the obstacles to competition.
>>> Here the following can be mentioned:
>>>
>>> *
>>>
>>> make the full operational activities of Banverket (the rail track
>>> agency) subject to competition
>>>
>>> *
>>>
>>> handle the service activities of Lantmäteristyrelsen (the land
>>> survey authority) through commercial entities to be created
>>>
>>> *
>>>
>>> acquire as appropriate through competitive tendering the
>>> employment services required by the state aimed at the long-term
>>> unemployed and other weak groups in the work place.
>>>
>>>
>>> *Information*: Expansion unit;
>>> Pia Bergdahl, project leader
>>>
>>> _pia.bergdahl at statskontoret.se
>>> <mailto:pia.bergdahl at statskontoret.se>_, or
>>>
>>> Anders Gerde
>>>
>>> _anders.gerde at statskontoret.se <mailto:anders.gerde at statskontoret.se>_
>>>
>>> <ends>
>>>
>>> Then read the extract (attached) of the Statskontoret report of 2005
>>> of what they found specifically in National Land Survey and SMHI
>>> (Met and Hydrological Office) and what actions were then taken by
>>> government to separate competitive from non-competitive activities
>>> within these organisations. The full 2005 report is available from:
>>>
>>> http://www.statskontoret.se/upload/Publikationer/2005/200519A.pdf
>>>
>>>
>>> An extract from my extract of that report, specifically relating to
>>> Swedish National Land Survey:
>>> <begins>
>>>
>>> *National Land Survey*
>>>
>>> In its final report of *autumn 2003, the National Land Survey
>>> Commission expressed the view that the Survey’s commercial work
>>> should be restricted so as to supplement, rather than dominate, the
>>> market.* The Commission recommended the *Survey to clarify its
>>> commercial role in a market and competition policy*. The agency’s
>>> *point of departure should be that it should promote market
>>> development for private operators, and not take over the market
>>> under its own aegis*.
>>>
>>> The Commission *proposed discontinuation or hiving-off of commercial
>>> cartographic work, direct sale of maps, aerial photographs and
>>> photogrammetry, geodetic measurement, some activities in
>>> geographical information technology, measuring services and detailed
>>> local mapping*. Production, administration and supply of basic data
>>> were to remain the functions of the National Land Survey. However,
>>> the agency would be free to order such work internally or outsource
>>> them on the open market.
>>>
>>> In the Commission’s opinion, *the combination of internal and
>>> external assignments and funding within Metria was problematical
>>> from the competition point of view*. It therefore proposed clearer
>>> demarcation of the two in terms of results. *All commercial work for
>>> purchasers outside the National Land Survey should be assigned to a
>>> special division for external commercial work, subject to the
>>> requirement of full cost coverage*. On the other hand, the
>>> Commission proposed that the local and regional Land Survey offices
>>> should be allowed to continue accepting assignments in competition
>>> with others, albeit with some limitations.
>>>
>>> In a *Government Bill of September 2005 on the National Land
>>> Survey’s work, the Government writes that its commercial work should
>>> be demarcated better than at present and its focus and content
>>> clarified.
>>> *
>>>
>>> *<ends>
>>> *
>>>
>>>
>>> Kind regards
>>>
>>> Roger Longhorn
>>> ral at alum.mit.edu
>>>
>>> Jo Walsh wrote:
>>>
>>>> dear all,
>>>> Excuse me if you've seen this but in the light of recent speculation
>>>> about the impact of the withdrawal of NIMSA funding on the Ordnance
>>>> Survey's future business model / proprietary stance i find this
>>>> writeup of Giles Lane's for an IPPR case study illuminating.
>>>> http://urbantapestries.net/weblog/archives/000181.html
>>>>
>>>> His modest proposal is to split the OS in two; one maintains a central
>>>> "National Geographic Database" with access at no more than the cost of
>>>> reproduction; the other is "product development" and commercial R'n'D.
>>>> I would argue that the latter is going to be hard to sustain a
>>>> monopoly on in an open market. The former half is enticing but what
>>>> with the cost of online reproduction tending to zero, we would be
>>>> talking about a massive cultural shift. Still it is good to dream...
>>>>
>>>> cheers,
>>>>
>>>>
>>>> jo
>>>>
>>>> _______________________________________________
>>>> geo-discuss mailing list
>>>> geo-discuss at lists.okfn.org
>>>> http://lists.okfn.org/mailman/listinfo/geo-discuss
>>>>
>>>>
>>>> <Statskontoret_Rep_2005_19A_NLS_SMHI_competition.pdf>
>>>
>>> _______________________________________________
>>> Legal-Econ mailing list
>>> Legal-Econ at lists.gsdi.org
>>> http://lists.gsdi.org/mailman/listinfo/legal-econ
>>
>>
>>
>>
>> Francis Harvey
>>
>>
>>
>>
>>
>>------------------------------------------------------------------------
>>
>>_______________________________________________
>>Legal-Econ mailing list
>>Legal-Econ at lists.gsdi.org
>>http://lists.gsdi.org/mailman/listinfo/legal-econ
>>
>>
More information about the Legal-Econ
mailing list