Charging for Postcodes and the Legendary Ryanair Toilet Levy

Posted: November 19th, 2013 | Author: antoin | 4 Comments »

Yesterday we got some information about how open the Irish postcode system will be funded. Essentially the idea is to pay for its setup and operating costs out of a charge to end-users for the database – charging for access to the ‘facility’, if you like. This ‘licence fee’ is a rather humdrum traditional idea about charging for things to do with computers and information.

This idea is basically outmoded. We live in a world of open standards. Stuff like databases of very commonly used information about public infrastructure are increasingly free at the point of use. Why? So that they will be used. An address and postcode database is valuable precisely because so many people use it so freely. Restricting its use doesn’t make it more valuable. It makes it less valuable.

So the model of charging a licence isn’t a good one from the point of view of driving uptake. It will be a deterrent for a lot of businesses, especially very small ones. It isn’t just the charge itself, it’s also all the hassle involved. There will also be the perception that it is a ‘money-making scheme’.

So how much money can this money-making scheme bring in? Here is where we make the odious UK comparisons. The UK postcode system is largely offered for free, and for many business applications, what is offered for free is perfectly adequate. The detailed address file is charged for, and has a big-looking ticket price of £90,000, but in practice, very few companies indeed actually pay that price. Almost all users can get on perfectly well with a licence that costs a fraction of that. And of course that file includes many times more addresses than the equivalent Irish file will contain. Now the reality is that the fee that Royal Mail collects for this stuff is not pure profit. There are serious expenses for billing, customer support, reseller discounts and all the rest of it. You could calculate this comparison a lot of ways, but by the time it is all done, it will be tough going to bring in a million euros a year to contribute towards the cost of maintaining the Irish postcode.

Of course, the thing has to be paid for. It seems to me that the right people to pay for it are the people who benefit the most, i.e., the landowners. Mapped and addressed premises are simply more valuable than unmapped premises. In the construction phase in particular, clear understanding of where the premises is actually located is invaluable A setup charge for new buildings of 50 euros, payable when planning permission is granted followed by charge of one or two euro a year per premises, collected each time freehold or leasehold changes hands would yield millions per year and be plenty to fund a very fine postcode

The code would then be completely free to access and use.

Now, there is one problem with this. What is the point in imposing such small nicknack charges on landowners ? A euro here, a euro there and so on. These charges cost money to collect, even if you only collect them every ten or twenty years. It’s not as if you have a choice whether to be part of the postcode or that you can reduce your use of the postcode and so conserve resources (as is possible with resources like waste disposal, water or energy). No costs will be conserved through pricing. There is no scarcity of postcodes. And landowners and users already pay loads of different direct and indirect taxes on the construction and ownership of their property (and rightly so).

The total money involved is also very small. A million or two a year is a drop in the bucket in infrastructure development and operations terms even in a country as small as Ireland. Just maintaining roads in County Cork alone costs €50m a year.

So does it make sense to collect a fee for postcodes at all? Is the postcode charge just the equivalent of the oft-proposed Ryanair toilet charge?

Of course there are two differences between the postcode licence fee and the Ryanair toilet charge. Firstly, the toilet charge actually makes sense. Even if there is little revenue from the charge itself, a reduction in toilet use could allow Ryanair to reduce the number of onboard toilets, thereby allowing an extra row of seats resulting in a 2 percent increase in revenue for each flight. There is no such benefit to be had from a postcode charge.

Secondly, whilst Ryanair talk a lot about their plans and hopes for this stupid charge, they have never actually implemented it.


4 Comments on “Charging for Postcodes and the Legendary Ryanair Toilet Levy”

  1. 1 Ciaran Lyons said at 10:38 am on November 20th, 2013:

    I’m totally lost. There seems to be great hay being made about the fact that the post codes will be uniquely identifiable, even to sub-divisions within buildings (apartments?). And that this is the first in the world. Huzzah! But why? At what cost (administration) and for what benefit (dubious emergency services remarks)?

    Help?

  2. 2 antoin said at 10:41 am on November 20th, 2013:

    I think the cost was estimated at 15 or 20 million over 15 years. Benefits? Well, you can have a look through the archives – stuff like http://www.eire.com/2013/a-matter-of-life-and-death/. But addresses in Ireland are generally very ambiguous and this will certainly make things easier to find.

  3. 3 Ciaran Lyons said at 2:47 pm on November 21st, 2013:

    I was imprecise. I think that it’s very necessary for Ireland to implement a postcode system and I’m a huge fan of the Singapore system of 6-digit, easy to Google postcodes [https://maps.google.com.sg/maps?q=singapore+428228]

    Rather it is the nature of the uniqueness – I don’t see, but can be convinced about the practicality of assigning postcodes to the apartment level. Also the complexity it seems to be introducing in terms of management and administration. But maybe it’s just baffling me that the saga is taking this long to implement.

  4. 4 Antoin O Lachtnain said at 5:15 pm on November 22nd, 2013:

    Ah, see what you mean. Yes, there are other difficulties too. What does ‘delivery point’ really mean in an apartment building? It depends what you are delivering, it turns out. If you are delivering a letter, it is in one place. If you are an ambulance, then it is a different place. If there is a goods lift, then something like a piece of furniture could be a different place again.

    Strictly, there is in fact something very close to the postcode for multi-dwelling/office buildings in Singapore. There is a structured system of numbering by floor and unit. Any address can be resolved just the floor, unit number and code.


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