Free Our Data: the blog

A Guardian Technology campaign for free public access to data about the UK and its citizens

Trading Funds report: is PSI the new electricity and roads?

Still chugging through the Trading Funds report (because it is 154 pages, after all): here we are at chapter 6.

Where we find (PDF p107-108):

With the development of the ‘knowledge’ economy, driven in large part by improvements in digital technology, the supply of data by trading funds can be seen as an analogous activity in ‘information’ sector to the supply of physical infrastructure in the form of power and electricity, transport (roads, trains etc), and telecommunications. This comparison is illuminating in a variety of ways.

First, existing utilities often have similar cost structures where large fixed costs are combined with low marginal costs. Related to this, many of them, at least in some areas of their activities, have ‘natural’ monopolies just as trading funds may do in some areas of their business. Utilities are usually providing ‘essential’ infrastructure which, if not directly essential to government, are essential to the general economy – this could be seen as similar to the ‘public task’ of trading funds.

For a combination of these reasons many of these utilities are regulated and have been now for some time and one might think that these regulatory experiences would have something to offer when considering the situation of trading funds (few, if any, of which have any independent regulation at the present time).

This is an interesting point. It’s been clear for a long time that trading funds tend to be natural monopolies (it would make no sense – as we have pointed out – to have two competing national mapping agencies, nor to privatise Ordnance Survey, because the latter would create the situation where mapping would be a cherry-picking exercise).

Two things: first, which trading funds are tightly regulated? One does hear the phrase of “capture”, in which a trading fund is able to persuade its controlling minister that it’s doing everything just right, and because it’s handing over the money every year the minister doesn’t have any cause to come down heavily on it – quite the opposite: don’t annoy the Treasury is one of the first rules of Being A Government Minister.

Of course, utilities – certainly electricity and gas, and increasingly roads and rail – aren’t free. But then again, it costs money to generate and distribute electricity and gas, or build roads and rail. By contrast, the cost of running online distribution is falling all the time; the amount of data that the Met Office distributes every day – a few gigabytes, it told the report’s authors – would cost a few pounds per day to distribute if held on Amazon’s S3 system. That’s pretty cheap.

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