When consumers get cornered into buying from one supplier, they’re gonna get soaked, then pissed
By Ryan Skinner (email)
Through my work, I’ve become intimately acquainted with what feels like a scandal in the making. Right now, it’s only a big deal in the small hydrographic community, but – as mandatory ECDIS drives more attention to the market – it may explode into headlines.
The gist is this: Mandatory ECDIS will require shipowners to get ENCs (the official Electronic Navigational Charts proscribed by the IMO and IHO), or risk port state detention. Contrary to its own intentions to make ENCs widely available to a non-profit, central and independent organisation, the UKHO is withholding hundreds of ENCs. They’ve basically betrayed their multilateral intentions and gone bilateral, using governmental muscle. Think this will be good for competition or good for shipowners in the long run? Doubt it.
It didn’t have to be like this. A principle called WEND stated that hydrographic offices would make all ENCs available through non-commercial entities called RENCs (Regional ENC coordinating centres). Today, there are two: the Primar RENC in Norway and the UK’s IC-ENC; the UKHO actually runs the latter. These non-profit entities make the full database of ENCs available to distributors.
The beauty of the RENCs is this: They provide a quality-controlled and professional channel for hydrographic offices to make charts available to the market. Without RENCs, shipowners and distributors would need to patch together dozens of agreements with individual hydrographic offices. Most hydrographic offices, distributors and owners are not prepared for the complications such a situation would create.
Thus it’s disturbing that the UKHO has quietly neglected to make hundreds of ENCs available to the RENCs. On the face of it, this is a cynical play to grab as much market share as possible, based on access to charts. Both hydrographic offices and distributors have complained that this move compromises safety and innovation. As one insider so eloquently put it: “Chart suppliers should not compete on access to charts, but on the price, the service and the value they add to delivery.”
This issue pops up frequently within the hydrographic community, most recently at Digital Ship Oslo and in the ECDIS Yahoo! group. Usually, the ENC distributor community, some of the savvier owners and operators and some hydrographic offices express a great amount of consternation; the UKHO stays mum. Then, nothing happens. It’s a fait accompli.
Why has the UKHO ventured into these murky waters? The UKHO possesses two conflicting missions, one as governmental regulator and another as market actor. Unfortunately, the latter role, which is exposed to competition, is leveraging the former, which is granted by the queen. The result bends any definition of fairness.
Anyone doubting the UKHO’s profit motives need only go to their own web-site. I quote their vision: “To become the world leader in the supply of digital hydrographic information and services.” Sounds like Google, right? But these guys are supposed to be the government…
Time will tell if the UKHO’s move blows up in their face. As more and more shipowners scrutinise this market, they will start screaming. After all, we all know what monopolies do to prices, and if there’s anyone in the world who’s price conscious it’s shipowners.
For more on the WEND principles, see the IHO web-site here.
For the IC-ENC co-operation agreement (establishing a RENC), see this page.
For an example of how the UKHO is using exclusive ENC access to win market share, see this story.[via 59° 56′ N]