Byting the hand that feeds them: information vendors are robbing the government blind.
"She's all alone in the tub," coos an alluring voice. "Jump in. It's wet." The recorded message continues: For $19.95, you can spend three minutes on the phone with a luscious, well-jacuzzied woman.
Has the federal government's weather service gone softcore? Not exactly. It's gone private. In many areas of the South, where the feds' National Weather Service has shut down its toll-free information lines, private corporations have leapt into the void. In exchange for a nominal fee-a year's worth of basic federal weather data costs about 3,500-companies are now permitted to charge the public for access to the very barometer readings and pollen counts that those citizens have already paid hundreds of millions of dollars to collect. To further increase their profits, those companies can sell space on the weather line for advertisements-some of which happen to be for phone sex. (You get your weather after the ad.) All of which adds up to a very profitable, low-cost deal for America's private weather industry. Thanks in large part to federal largess, 100-odd companies now rake in about $200 million annually from the sale of climatic information.
The above is one of the more titillating examples of a serious phenomenon: the privatization of public information. In the past decade, the federal government has increasingly come to rely on private vendors to disseminate the vast quantities of information it gathers, collates, loads, and stores in electronic format-everything from the number of building starts in Seattle to the health hazards posed by pesticides to the number of Detroit children who live in poverty. As a result, the American public often pays twice for government data: once for an agency to collect the figures, the second time for the privilege of perusing it-that is, if they can afford it. This market's invisible hand tends to prefer a select group of major corporations to tens of millions of curious citizens.
Consider AGNET, a nonprofit group based at the University of Nebraska that until the mid-eighties received crop and livestock statistics, export sales reports, and other agricultural data from the U.S. Department of Agriculture (USDA). Those figures were essential and affordable to AGNET's subscribersfarmers and researchers who paid a $50 annual fee and $30 per hour for computer time. A Nebraska bean farmer reckoning how much to plant this year could enjoy 50 hours of access to the USDA's database for only $1,550.
But in 1985, the USDA effectively granted a monopoly on the database's distribution rights to one of America's biggest info-corporations, Martin Marietta Data Systems. Under the agreement, the USDA simply gives the data, gratis, to Martin Marietta, which in turn sells it for $45 per hour, on top of a minimum fee of $150 per month. Under this system, 50 hours of computer time costs two and one half times what it used to. "I did one search to show some newspeople how it works," says Nancy Kranich, a New York University librarian and chair of the American Library Association's Coalition on Government Information. "It cost me $24 for one soybean price."
Of course, most of the database's current subscribers can afford the higher prices-because most of them aren't public-minded nonprofit groups. As of 1989, Martin Marietta's database had only 34 regular non-governmental users. Of these, half were news services like Knight-Ridder; the rest were commodity cowboys like E.F. Hutton, W.R. Grace & Co., and Quaker Oats. Unlike AGNET, these firms can absorb the higher access rates by passing them on to clients. But since AGNET's farmbelt customers couldn't afford the steeper charges for the use of the USDxs information, the network dropped the service altogether.
Maybe you don't care that a few small Nebraska bean farmers are planting blind. Unfortunately, you're still paying to use other government data-as a taxpayer. Come back into the weatherman's hot tub. Believe it or not, today, when the National Weather Service wants access to some of its own data and records, it must pay the multimillion-dollar private corporations that own it.
Yet why should the government spend bushels playing the cut-rate reference librarian to every poor farmer in the country? Indeed, it shouldn't. And it doesn't have to. Fair distribution of information should be available at low cost to consumers and the government. And while the free market has little interest in meeting that obligation to consumers, modem technology ensures that the government can -if it wants to. We have the know-how. But thanks in large part to a powerful information lobby on Capitol Hill and the complicity of the Reagan-Bush administrations, government has been content to let the free market serve the few at the expense of the many.
The elitist franchising of government information is a strange byproduct-make that unintended consequence-of America's computer revolution. Even in the logy federal government, information once stowed in binders and gunmetal files is now neatly ensconced on computer diskettes, magnetic tapes, and CD-ROMs-compact discs, read by a laser beam, that contain words and numbers, not songs. But while the government can store data in these configurations, most ordinary personal and business computers can't read it. What private vendors do is mold the raw data into a form that their customers can use. In so doing, they "add value" to public information and gain the right to copyright the final product" and charge high prices for its use.
Those high-priced vendors add value to public information in any number of ways, some of them arduous and beneficial. For years, lawyers have had a choice between the federal government's low-cost texts of Supreme Court decisions and a more sophisticated, annotated version put out by West Publishing-the version many lawyers find worth the cost. Similarly, in its LEXIS database, Mead Data Central collects and indexes disparate bodies of case law and places them on an on-line database that also contains academic legal writings. But these are the great exceptions. Today, most information vendors' mark-ups bear little relation to the amount of effort, investment, or imagination the company adds-in large part because many have a virtual monopoly on that information and a captive corporate audience.
In the case of the agricultural database, Marietta simply takes data that the government has already organized and categorized and places it into an on-line format that its clients can use-a pretty simple computer task. Other info-vendors place bulk information into files in a pre-existing computer database. Again, nothing terribly complex. James Love, director of the Taxpayers Assets Project, a Nader organization, complains, "A high school student could write the software." Joe Sophomore should be so lucky: Because vendors have nowhere else to go for the information, that one program might reap tens of millions of dollars in profits.
In short, the government doesn't just hand companies a license to print money; it buys them the paper and ink to do it, thanks to a neat dovetail between that computer revolution and antigovernment Reaganism. In 1980, Congress passed the Paperwork Reduction Act, which directed agencies to cut costs wherever possible by using advanced electronic technology to collect, maintain, and disseminate information. The "Paperless Agency" quickly became the new bureaucratic ideal.
The Office of Management and Budget was charged with developing and implementing the broad project. In 1985, the OMB issued Circular A-130, which became the information industry's Ur-text. To save money, increase efficiency, and stimulate the economy, it read, federal agencies should henceforth place "maximum feasible reliance on the private sector for . . . dissemination of products and services." A-130 explicitly prohibits agencies from undercutting private enterprise by duplicating systems already available from the private sector. Under this new regime, federal agencies would continue to do the heavy lifting-i.e., gathering, storing, and processing data-at taxpayer expense, and then would make their loads available to private industry at bargain prices, or no price at all.
Lost in State
These were good tidings for the multi-billion dollar information industry, which boomed in the eighties. Currently, about one fifth of the 4,000-odd electronic databases available to computer operators consist of repackaged federal data. Mead Data Central, which runs LEXIS/NEXIS, tallied revenues of $31 million in 1980. Last year, the firm reaped nearly $440 million-taking home $34 million in pure profit. Info-glomerates like Mead, Dow Jones News Retrieval, and Knight-Ridder reap a significant percentage of their profits by gouging the public for access to the fruits of government labor. For example:
* The National Trade Data Bank (NTDB), which synthesizes decades' worth of information on international economics and export opportunities, is sold in bulk on CD-ROMs for only $35. But while America's 1,300 National Depository Libraries-public reading rooms for government documents-receive the CD-ROMs free of charge, most lack the hardware required to read them. McGraw Hill's Data Resources Inc. adds value to NTDB data simply by translating the information into an accessible on-line database. But users pay dearly for the value added to the information: $80 per hour, plus 54 cents for each individual statistic retrieved.
* In fiscal year 1991, the federal government will spend $51.5 million to maintain the Securities and Exchange Commission's EDGAR system, the nation's most comprehensive corporate disclosure database and one of the key sources of reliable information on a company's assets, debt, stock, and long-term plans. Once fully operative, the system, designed and run by Mead Data Central, will be used only by SEC staffers and by researchers at the nation's three SEC public information rooms, which are located in Washington, Chicago, and New York. Individuals unable to travel to the information hubs can gain access to EDGAR only through private vendors. Disclosure, a commercial vendor currently under contract with the SEC, receives the SEC data on paper for free, types it into a computer, and then charges its users $45 per hour, plus $20 for each record accessed. An investigator who calls up 10 corporate reports in an hour on Disclosure will have to shell out $245.
But even if you haven't the slightest interest in seeing the assets Drexel Burnhain still controls, don't kid yourself. You're paying for the lack of access anyway. Because the SEC stores the EDGAR data in the raw form that most of its computers cannot read, the agency-that is, the taxpayers-will have to pay for access to its own data. Marietta translates the SEC data into machine-readable form, which it then copyrights. So under the terms of the SEC-Marietta contract, the government will never own a copy of the database in a useful format. Over the next several years, the SEC will pay Mead nearly $2 million annually for the privilege of searching and retrieving information the SEC collects.
-The State Department recently condensed four publications-the Bulletin, Current Policy, Gist, and Update for State-into one: The Department of State Dispatch. Dispatch is now available on paper for a $75 annual subscription-more than three times the combined price of the four publications it replaced.
In February, the Computer Information Delivery Services (CIDS), which is owned by Martin Marietta and disseminates information for several federal agencies, began to carry dispatch, as well as transcripts of daily press briefings, travel advisories, and James Baker's speeches, testimony, and press conferences. (Some material carried on CIDS no longer appears in any department periodical.) Since the State Department puts information into CIDS at taxpayer expense, Martin Marietta neither pays for its raw material nor adds value to the information.
And yet Marietta charges high prices for access. CIDS users must pay a minimum of $75 per month, an hourly rate, plus a charge of 2 cents per line for retrieving data. Marietta reaps further profits by selling the information to other vendors. For example, Mead Data Central pays the monthly minimum ($75), connects to CIDS for a few minutes each week, and pays the 2 cents per line charge when it converts Dispatch to the LEXIS system. Mead then collects hundreds of times, by charging $39 per hour, plus a per-search charge (ranging from $3 to $50), plus a 2 cents per line charge for data lifted from Dispatch. If Henry Kissinger wanted to find and retrieve a five-page article on the failed Soviet coup, it would set him back about 50 bucks.
But Henry had better act quickly, because the information he wants might not be around in a few months. Vendors are not required to keep backlogs of the information they buy and sell. After carrying it for a week, CIDS purges the State Department daily press briefing, which is no longer available on paper. This failure to preserve "unvaluable history" may be the most severe long-term consequence of privatization.
The $20,000 question
Since public information serves as the fuel for many vendors' money-making machines, the Information Industry Association (IIA), a heavy-hitting Washington lobby, works vigilantly to ensure the uninterrupted flow of cheap government raw material to its 800 member firms and organizations. IIA officials regularly testify at congressional hearings and work with state and local policymakers to encourage the passage of favorable legislation.
The IIA casts itself as a stalwart guardian of the public's right to know. "Whatever the government has should be available to everybody on equal terms. And at minimum cost," says IIA Senior Vice President Ken Allen. IIA literature is full of similarly uplifting egalitarian rhetoric. "Citizen access to information and a diversity of information sources are the foundation of U.S. democracy, unique among the community of nations," gushes Allen in one leaflet. Another industry agitprop warns darkly against monopoly control over information held by a government entity."
As seen, though, many IIA members profit greatly from their virtual monopolies on public information. And the vendors see no danger if the government has a monopoly over obscure or unmarketable information. "Where there is not a marketplace value yet there is a public need, we certainly think the government should move in and offer the services," says Allen. In other words, the government should disseminate its information only when vendors cannot turn a profit by doing it. And preservation? "Government has a responsibility to preserve data," says Ronald Plesser, IIA:s outside counsel.
This talk of "marketplace value" underscores the fundamental flaw in the privatizers' logic. At its most basic level, public information is an organic byproduct of the government's daily functions. Government exists, in part, to produce information. Public information is a national resource, not a commodity. And regardless of its format, it should be available, and usable, to both vendors and consumers at the price it costs the government to copy and deliver the information. Public access-and not private profit or cost-cutting-should be the animating spirit behind any policy covering the dissemination of government data.
Of course, the information industry isn't too worried that few ordinary citizens can afford its services. It knows who its real client is-big business. In fact, Plesser, a former Nader Raider, is getting a little tired of hearing about "every hypothetical graduate student needing some numbers."
Gregory Orman, a recent graduate of Princeton, was a non-hypothetical undergraduate student who needed a decade's worth of Federal Reserve Board data to research his honor's thesis. Until 1985, academics could obtain the tapes free of charge. But now the National Technical Information Service (NTIS), the Commerce Department branch that disseminates electronic information, charges $500 per tape. The necessary data would have cost Orman $20,000. A Freedom of Information Act request filed on Onnan's behalf was denied on the grounds that he could have simply purchased the information.
Orman's case highlights the dangerous implications of the eighties' attitude toward public information. Even government-learning precisely the wrong lesson from privatization-is now willing to gouge the public for what that public pays to collect. But public, schmublic. NTIS has only 60 subscribers, most of which are large financial institutions and commercial vendors. I'd tell you who they are if I could afford to: NTIS charges $185 for the list.
It's so self-evident it shouldn't need saying: Instead of helping major corporations at the expense of economics majors, a good government ensures that public information is equally accessible through a diversity of sources at a minimal cost. To realize how critical-and how economically possible-that is, you don't have to be some luddite longing for the days of the fusty archive and the accordion file. Nor do you have to go to Canada or Sweden or some other high-tech, high-humanity Valhalla. You simply have to locate the paragons of electronic access in the United States government-agencies like the Environmental Protection Agency and the National Institutes of Health, and a few branches of the Department of Commerce-where privatization is still a foreign word.
Using basic communications software on a basic personal computer, I was able to dial up Commerce's Economic Bulletin Board (EBB) and browse through files for 20 minutes free of charge. A habitual user can open an account for $35. Thereafter, the service costs $12 per hour during business hours, and $3 per hour after 6 p.m. and on weekends, with no extra charges for retrieval. The revenues EBB reaps from these modest charges-between $120,000 and $150,000 annually-more than cover the system's operating and staffing costs.
On the EBB, I leafed through the Daily Treasury Statement, which provides up-to-date numbers on the U.S. debt ($3.233 trillion as of July 9), as well as figures on how much the federal government has spent to date on food stamps, Medicare, and other social programs. In the Trade Opportunities file, I learned that Qatar's Department of Ports is seeking a U.S. supplier of portable well-drilling equipment. There's also a Gulf Reconstruction Commercial Information file-a referral service that describes ongoing United States efforts in Kuwait, offers advice on how to travel there, and provides phone numbers, addresses, and names of helpful contacts. The EBB contains files of recent National Science Foundation press releases, a list of Government Printing Office (GPO) publications, the schedule of Bureau of Economic Analysis release dates, and much, much more.
Curing the terminal illness
The EBB is a wonderful example of how advanced technology can make useful information available to large numbers of people at reasonable costs. And there's nothing to prevent a vendor from collecting this information, repackaging it, adding value to it, and reselling it. In fact, that's what I've done in this article. I took some government information, combined it with other information, and added value to it by putting it into a reasonably readable form.
Rep. Charles Rose has introduced legislation that would replicate the EBB on a broader scale. H.R. 2772 directs the GPO to set up a single point of online public access to a wide range of electronic federal databases. The GPO Window-a one-stop discount shopping center for public information-would be accessible to private vendors as well; companies would then have to truly add value, not just sell back to us what we built with our own funds.
The construction of the Window would take only a small federal investment-no more than a few million dollars. Most of that money would go for some relatively uncomplicated hardware, which would allow an outsider to gain access to all the existing databases. Agencies would still maintain their own database, while the GPO would bear primary responsibility for opening them to John Q. Public.
The government sucks in an unfathomable amount of information. But not all of it has to be added to the Window immediately. The GPO could easily jumpstart this project simply by consolidating the dozens of free-standing government databases that are already accessible through remote personal computers. And it could continue by placing on-line some of the most essential government publications, many of which are already digitalized. The first generation of Window products should include the Federal Register, Congressional Record, National Trade Data Bank, FEC campaign contributions, and U.S. Reports, to name a few.
Once up and running, the Window would pay for itself through user fees-just like the EBB does. Users would pay telecommunications charges and a modest on-line charge. The revenues would cover the GPO's costs for hardware, software, support staff, documentation, updating, and training.
The Window is an ambitious, even subversive, project, for it pushes the responsibility for disseminating information squarely back onto the broad shoulders of the federal government. "It gives the Government Printing Office an affirmative responsibility to disseminate electronic information," says James Love of the Taxpayers Assets Project. But advanced technology makes services like the EBB and the proposed GPO Window eminently feasible and affordable. Only a lack of political imagination stands in the way.
If the notion of the Window is not as sexy as a sultry-voiced woman in a hot tub, its pleasures would be a lot less fleeting: the promotion and preservation of information that lets ordinary American farmers, students, journalists, and other citizens see the same statistical world as the American elite. That's not a free market for information-just a fair on.
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|Date:||Nov 1, 1991|
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