Free Our Data: the blog

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


Trading Funds report says: marginal cost is a good thing

The executive summary of the Trading Funds report says, after some preamble about the challenges of doing it, that

the analysis has generally been confined to comparing the existing average cost (cost-recovery) regime with marginal cost.

Performing this comparison on the subset of products suitable for analysis, it was found that, in most cases, a marginal cost regime would be welfare improving – that is, the benefits to society of moving to a marginal cost regime outweighed the costs.

And as they also note, for a digital product, the marginal cost is close enough to zero that there’s no difference between a zero-cost regime and a marginal cost regime.

In other words, the Free Our Data campaign is right, at least as regards raw [non-personal] data from the public sector.

Let’s continue with the executive summary:

For registration based trading funds (DVLA, Companies House and the Land Registry) it likely that this change in charging policy could be made without the need for government to provide additional funds as any shortfall could be made up from the registration side of their activities. For the other trading funds some direct assistance, beyond that already provided, would be required.

In the case of the UKHO and the Met Office the sums involved would be limited (around £1m) but in the case of Ordnance Survey would be substantially larger (though the benefits in this case would be commensurably bigger).

It does note that

A change in charging regime should not have a detrimental impact on the performance of trading funds in terms of efficiency or data quality, providing a suitable governance and regulatory regime is put in place (and this is desirable in any case).

This is of course the tricky thing to get right, and the authors add that

having an adequate governance/regulatory regime in place is absolutely central to realizing the potential benefits from change (and also for delivering value for money even under the present charging arrangements). Thus, getting this right should be one of the first items for consideration whether or not any restructuring does take place (and will be essential if additional subsidies are required under a move to marginal cost pricing).

More once we’ve digested further.

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