By CivilServiceWorld

02 Apr 2013

Under the coalition’s open data agenda, the trading funds are being encouraged to release more information without charge. But if they give away their biggest asset for free, how can they earn a living? Winnie Agbonlahor reports.


When the internet was emerging at the end of last century, the world had little idea of its value. Whilst a few visionaries began building the first generation of web giants, most of us were just getting used to mobile phones. But over a third of the world’s people have now used the internet, says US website www.internetworldstats.com.

It is just as hard to predict how the growing wave of digital data will affect the way we live – but the coalition is confident that opening up data can boost innovation, stimulate economic growth and improve public services. Paul Maltby, director of transparency and open data at the Cabinet Office (see interview), says the government is “at the forefront of a data revolution that will transform our lives for the better”. And there is some evidence that publishing public data can enable businesses to help government improve its operations: when GP prescription data was released, for example, Mastodon C – a start-up based at the Open Data Institute (ODI) – identified £200m that could be saved by switching from branded drugs to cheaper alternatives.

So economists, entrepreneurs, and a visionary cohort of public sector managers are enthusiastic about open data. However, the drive to make everything available free of charge creates a dilemma for those public bodies which currently charge for their data. And some of the government’s best data assets are gathered and maintained by trading funds, tasked with earning a living by selling it to public and private customers. The Land Registry, Met Office, Companies House and Ordnance Survey (OS) – recently brought together under the Department for Business, Innovation and Skills to form the Public Data Group (PDG) – are the most high-profile bodies within this group; and while they’ve already agreed to make some of their data available for free, they can’t make much more progress without undermining their own business model.

Of course, the government could simply step in to finance the data release and pump money directly into the trading funds. But this policy is probably a non-starter in the era of austerity – and anyway, many trading fund managers would regret their loss of autonomy, fearing the consequences of a change that would leave them dependent on Treasury generosity.

Another way to ensure the financial sustainability of trading funds is to release raw and basic data for free but charge for more specialised and bespoke datasets, says Richard Stirling, membership programme manager at the ODI. OS, for instance, offers the public free access to maps, but charges businesses for services such as personalised maps or licenses to use OS data. “The OS sell high value services, delivered on the back of their data, which is a really good model for financial sustainability,” says Stirling.

A similar system operates within the Royal Mail, which gives the public access to its postcode database – the Postcode Address File (PAF) – for free, but offers it to businesses and organisations for a licence fee. However, open data campaigners – including ODI chief Gavin Starks – have been calling loudly for the PAF to be available without cost. Ofcom is currently consulting on the future of PAF – which contains 28m addresses at more than 1.8m postcodes – and encouraging the Royal Mail to simplify its licensing arrangements.

Even if trading funds manage to hold the line against the advocates of open data, they encounter another tricky area when trying to sell added value services in order to fund the free release of more data: when their services meet those of private businesses in the market, they’re open to charges of unfair competition. For Stirling, this problem can be resolved by ensuring that everybody has access to the same basic data. “There is going to be competition. It is unavoidable: we have a market economy,” he says. “We just have to make sure it is not unfair by making sure the underlying data is freely available to others.”

In some cases, trading fund managers complain that the process of checking and improving data in order to get it up to a good standard for publication imposes big additional costs. “No data is free; somebody has to pay for the maintenance of it,” OS chief executive Vanessa Lawrence told CSW last year. But big data’s champions insist it’s best to get the data out there with appropriate health warnings, and let the public clean it up. Professor Nigel Shadbolt, chairman and co-founder of the ODI, believes that “crowd-sourcing” techniques can produce accurate data. “When the government released where all the bus stops were as part of its NaPTAN [National Public Transport Access Node] database, 17,000 out of 360,000 bus stops were not where the government thought they were,” he recalls. “But then a site was developed where people could enter the position of the stops. So it was crowd-sourced.”

The value of an accurate bus stops database is hard to judge – but we do have some figures on the costs and potential benefits of releasing trading fund data, thanks to a government business case examining the Public Data Group. This was published in response to a Freedom of Information request for “any evidence which was considered or used to evaluate the economic impact of releasing data without charge”.

The document predicts that spending £100,000 to release Met Office data without charge would generate £50.8m of “direct benefits” over 20 years. For the Land Registry, though, the equation is much more finely balanced: data releases could cost £8.5m, it says, with a direct benefit of £7.4m over the same period. CSW understands the direct benefit is a figure made up of the amount of money current users of the data would save because the data would be available for free. Asked to explain exactly what is included in the costs, the Cabinet Office – which leads on open data – had not responded by the time CSW went to press. Broadly, though, the paper argues that data is a “key driver” for the digital content market, which is expected to be worth £23.6bn globally by 2014 – up from £10.9bn in 2009.

To find out how the value of freely available data can be maximised, the government has set up the Data Strategy Board (DSB), chaired by YouGov chief Stephan Shakespeare. Shakespeare is examining this tension between the current interests of the trading funds and those of open data, and is expected to recommend where to draw the lines in late spring.

He will, no doubt, be taking a look at Denmark, whose public sector digitalisation strategy makes it a global leader. The Danish government believes that its open data initiatives will be producing “revenues for society” of £91m a year by 2020, and wants ultimately to release all basic data – defined there as the “core information authorities use in their day-to-day case processing, eg. data on individuals, businesses, addresses, real properties and geography”. So far, it has provided free access to geodata and commercial data, previously available for a fee.

Chris Hammeken, a Danish government spokesman, puts the cost of giving free access to geodata and commercial data at £5.1m annually. It will cost more to produce, maintain, clean up and publish all the basic data, and the Danes have decided to share out these costs between central and local government: “This work will still have to be financed to ensure the continued availability of quality basic data,” says Hammeken.

In the foreword to the Open Data White Paper, Francis Maude, minister for the Cabinet Office, described the benefits of open data as “effective, personalised, 21st-century democracy”. The government’s aim of complete transparency will, in his words, “empower citizens, foster innovation and reform public services”. However, the project of translating these ambitions into practical pipelines of usable data has run up against the existing business model used by the trading funds. Forcing them to give away more data without subsidy would damage their revenues, ultimately weakening the quality of their raw material – and killing the golden goose. Stepping in to subsidise more free data giveaways could end up expensive for the Treasury, and is a solution that the trading funds are likely to greet with mixed feelings. And while it might be possible for the trading funds to fund more free data publications by stepping up their commercial activities, this would sit oddly alongside the government’s wish to support a private sector industry around open data. Stephan Shakespeare’s review, anticipated in a month or so, will have to walk a very fine line to please all the many stakeholders watching this fast-developing area.

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