There’s money in them postcodes

Thanks to Bob Barr for drawing my attention to the PAF Advisory Board which publishes some useful bits of information that the Address Management Unit of Royal Mail share with their user group.

One gem which caught Bob’s and my attention was a brief presentation on the accounts for PAF. PAF was a profitable business unit in 2009-10, returning 10.5% profit on just under £25m revenues. Put another way it costs £22.3m to run the business, it would be interesting to know how much of this cost base is data collection, quality control/improvement and how much is sales and marketing and compliance/licensing activity? In June Richard Whittaker made this FoI request which got at least partially batted aside by RM. The response suggests that half of the cost base is “address validation”. Anyone fancy another FOI request to see if they can prise some further breakdown from RM?

There does not seem to be a great deal of focus in the presentation on a public task, this is a business after all – effectively licensed or authorised in the Postal Services Act 200: Sec 116 (my italics)

(1)The owner for the time being of the Postcode Address File shall—

(a)maintain the File, and
(b)make the File available to any person who wishes to use it on such terms as are reasonable.

(2)Compliance with subsection (1) shall be enforceable by civil proceedings brought by the Commission for an injunction or for interdict or for any other appropriate relief or remedy.

(3)In this section—

“the Postcode Address File” means—

(a) the collection of relevant information which, immediately before the coming into force of this section, was owned by the Post Office, or
(b) that collection as it is from time to time revised, and

“relevant information” means postcodes in the United Kingdom which may be used to facilitate the identification of delivery points for the purpose of providing postal services.

(4)The terms which may be imposed under subsection (1)(b) include terms as to the payment of such fee (if any) as the owner considers appropriate.

One of the “highlights” of 2009-10 was

“Strong performance from revenue protection activity & audits”

The investment objectives for 2010-11 seem to be nearly all commercial initiatives including training staff in the use of a “compliance engine”

Elsewhere on the site there is an AMU Marketing & Communications Review which sets out plans for building the brand, market research, developing licensing and stimulating demand for PAF. the section on the new “compliance engine” is of interest:

The Address Management Unit has been committed to a programme of information and training to support the introduction of the new 2010 PAF® Licence
This new PAF® Compliance Centre is the latest part of that programme which aims to support consistent application of the Licence. The Compliance Centre will

• support better application of the licence
• provide valuable learning tools
• provide practical use of the Compliance Engine
• assist in achieving compliance across the market

The main feature of the Compliance Centre is a Compliance Engine.
The Compliance Engine will help you:

• understand the key principles of the PAF® licence
• provide a number of different Licensing scenarios to help show working examples of where PAF® is being used and how it is licensed
• provide a safe environment in which to induct staff, provide training and testing
• give clear tips and guidance on how to licence correctly

One might wonder whether the AMU could have saved some money by having a simpler license?

The most recent meeting of the PAF Advisory Board also had a presentation from Richard Mason, who will apparently be the MD of the newly announced GeoPlace merger between OS and LGG. This acknowledges that they will continue to pay royalties for the PAF elements incorporated in GeoPlace products (even those supplied under the PSMA).

It does appear that a fair chunk of the costs of the AMU are associated with their “commercial” activities, factor in the money paid by government to use data that at least in part they have provided to the AMU and it seems reasonable to ask whether all of this effort in marketing, licensing and compliance is really worthwhile or whether it wouldn’t be better to stop the commercial stuff and just make the data freely available.

I know that £25m is small beer in the bigger picture of a £9bn plus business whose future the government is still trying to decide. But surely in any deal that is struck, this vital element of the national addressing infrastructure could be freed up and the Royal Mail tasked with maintaining the PAF data set for free use, reuse, innovation and general public good?

It is interesting that in their accounts RM show that operating profit from Other Businesses is greater than 130% of external revenue, not sure how they achieve that (it is usually difficult to make a profit greater than your sales unless you are doing some neat internal recharges) or whether PAF is even in this category but that might explain why RM are so keen to hang on to it.