European weather data pricing:

Private sector view

Dr. Pirkko Saarikivi, Managing Director

Foreca Consulting Ltd

PSI Pricing thematic meeting

Helsinki, Finland 19th April, 2007

Who needs weather services?

• Beneficial for the whole society: increases security and well-being, industry needs info for decision-making

• Average cost/benefit factor from 1/5, up to 1/100

• Benefits in Europe at least 10 billion Euros annually

• Most important user groups: all modes of transport, media (TV, radio, newspapers, Internet, mobile), agriculture, power industry, construction, retail, sports

• Meteorologists are the few people who actually do know something valuable about the future

How to do it?

• Long service chain starts from global 24/7 observing system

• Analysis and climate databases

• Global long-range models run in supercomputer centres

• Local models and forecasters for fine-scale products

• Delivery automatically to customers (e.g. ftp, Internet)

Weather observations 24/7

•Most data comes from public observing systems run by National Meteorological Services (NMSs)

•Dedicated global telecom network GTS

•Coordinated by United Nations / World Meteorological Organization

•Other data sources e.g. from aviation and road authorities

•Continuous 24/7 data flow and large climate data archives

SYNOP surface observations

TEMP radiosonde soundings

Buoy observations to fill the gaps on oceans

Geostationary and polar orbiting satellites

Aircraft observations

Weather radars and lightning detectors

• Many kinds of atmospheric models producing weather parameters,

• 1-100 km resolution, local to global, hourly to seasonal

Weather data pricing rules

• Competition Law must be followed in EU, thus ECOMET E.E.I.G. created 1990-95 for the pricing and delivery of weather data by European NMSs www.meteo.oma.be/ECOMET/

• Currently weather data priced on a unit by unit basis for real time synoptic data, climatological data, models, radar images, lightning detection and some satellite imagery

• Price varies country to country, and also by type of customer (end user, broadcaster, service provider excluding or including redistribution licence)

• Other data sources: In Finland road weather data is fine, business separated to a company and data is freely available with a permission. In Sweden not.

Weather data pricing rules cont.

•Small part of global data is free of charge for security reasons, European data has very high basic price.

• Volume discounts and further discounts for small service providers available, but only for a part of data (ECMWF model and EUMETSAT data charged on top using their own pricing rules)

• In addition to data price, delivery or transmission costs and internet broadcast fees charged

• Thus ECOMET pricing structure overly complicated, inconsistent between countries, prohibitively expensive and discriminatory

• Some examples of complicated ECOMET prices:

Pricing of surface observationsCountry No of Synops Price per Gross Cost No of Obs Volume Volume Adjusted

(Chargeable) Service per anum per year Discount Price PriceProvider E (Obs after D) Adjustment

incl redistrib Ratio

Austria 6 0.210 11,038 52,560 0.370 4,081Belgium 31 0.180 48,881 271,560 0.370 18,072Denmark 50 0.400 175,200 438,000 0.370 64,773Finland 52 0.320 145,766 455,520 0.370 53,891France 155 0.170 230,826 1,357,800 0.370 85,339Germany 148 0.200 259,296 1,296,480 0.370 95,864Greece 66 0.400 231,264 578,160 0.370 85,501Hungary 32 0.400 112,128 280,320 0.370 41,455Iceland 30 0.280 73,584 262,800 0.370 27,205Ireland 12 0.320 33,638 105,120 0.370 12,436Italy 83 0.200 145,416 727,080 0.370 53,762Luxembourg 1 0.160 1,402 8,760 0.370 518Netherlands 41 0.180 64,649 359,160 0.370 23,901Norway 0 0.000 0 0 0.370 0Portugal 29 0.500 127,020 254,040 0.370 46,961Spain 0 0.000 0 0 0.370 0Sweden 112 0.100 98,112 981,120 0.370 36,273Switzerland 67 0.120 70,430 586,920 0.370 26,039Turkey 113 0.200 197,976 989,880 0.370 73,194UK 0 0.000 0 0 0.370 0

Cost of Chargeable Observations 2,026,626 9,005,280 3,329,348 0.370 749,265

Pricing of radar observationsCountry No of No of Price per Gross Cost Gross Cost No of Cost of Cost of Cost of Zone

Radar Radar SP per anum per anum Radar Single Composite CompositeSites Images incl SP or SP incl Images Site National Int'l

per hour Redistrib End User Redistrib per year Radar Radar Radar

Austria - single site 4 12 N/A 105,120 420,480 105,120 EEAustria - national composite 1 12 N/A 52,560 105,120 52,560 EEBelgium - single site 2 12 0.900 189,216 210,240 189,216 WEBelgium - national composite 1 12 1.500 157,680 105,120 157,680 WEDenmark - single site 4 6 1.040 218,650 210,240 218,650 NEDenmark - national composite 1 6 1.200 63,072 52,560 63,072 NEFinland - single site 7 12 3.720 2,737,325 735,840 2,737,325 NEFinland - national composite 1 4 9.850 345,144 35,040 345,144 NEFinland - international composite 1 2 6.250 109,500 17,520 NEFrance - single site 20 12 1.650 3,468,960 2,102,400 3,468,960 WEFrance - national composite 1 4 3.550 124,392 35,040 124,392 WEFrance - international composite 1 4 3.550 124,392 35,040 124,392 WEGermany - single site reflectivity 16 4 0.500 280,320 560,640 280,320 WEGermany - single site reflectivity, short range 16 12 0.150 252,288 1,681,920 WEGermany - national composite 4km 1 4 1.000 35,040 35,040 WEGermany - national composite 2km 1 4 2.000 70,080 35,040 70,080 WEGermany - Europe composite 4km 1 4 3.100 108,624 35,040 WEGermany - Europe composite 2km 1 4 5.250 183,960 35,040 183,960 WEGreece - N/A N/A 0 EEHungary - single site 3 4 2.500 262,800 105,120 262,800 EEHungary - national composite 1 4 3.750 131,400 35,040 131,400 EEIceland - N/A N/A 0 NEIreland - single site 2 4 2.000 140,160 70,080 140,160 WEIreland - national composite 1 4 3.000 105,120 35,040 105,120 WEIreland - UK/Ireland composite 1 4 N/A 144,715 35,040 144,715 WEItaly - N/A N/A 0 WELuxembourg - N/A N/A 0 WENetherlands - national composite 1 4 N/A 73,584 35,040 73,584 WENorway 1 4 0.000 0 35,040 NEPortugal - single site 1 13 N/A 337,085 113,880 337,085 WEPortugal - national composite 0 N/A 0 0 WESpain - single site 14 6 0.480 353,203 735,840 353,203 WESpain - national composite 1 2 1.860 32,587 17,520 32,587 WESpain - national composite rainsat 1 2 1.860 32,587 17,520 WESweden - single site 12 4 1.400 588,672 420,480 588,672 NESweden - international composite (Nordrad 1) 1 2 4.600 80,592 17,520 80,592 NESweden - international composite (Nordrad 2) 1 2 4.340 76,037 17,520 NESweden - international composite (Southern Sweden) 1 2 3.600 63,072 17,520 NESweden - international composite (Middle Sweden) 1 2 3.980 69,730 17,520 NESweden - international composite (Northern Sweden) 1 2 3.830 67,102 17,520 NESwitzerland - single site 3 12 0.120 37,843 315,360 37,843 WESwitzerland - national composite 1 12 0.500 52,560 105,120 52,560 WETurkey - N/A N/A 0 EEUK - single site 13 4 2.330 1,061,362 455,520 1,061,362 WEUK - UK/Ireland composite 1 4 4.956 173,658 35,040 173,658 WEUK - European composite 1 4 4.956 173,658 35,040 173,658 WE

Cost of Radar 713,064 11,970,785 9,136,680 9,780,715 1,381,837 707,317

National Composite Radar Costs £ RatioSum of Western Europe 789,661 57%Sum of Northern Europe 408,216 30%Sum of Eastern Europe 183,960 13%Total 1,381,837 100%

= Gross cost 11 Me per annum

Pricing of climate data

• Archived climate data is priced by each weather parameter (in Finland 0,16 € for service provider)

• Accumulated data volumes very large, millions of parameters per year

• Thus total price of European climate data is enormous (several hundreds of Euros, impossible to calculate)

• Some NMSs very reluctant to sell climate data (or any other data)

• Climate change has had no effect to these restrictive policies

Global weather markets

Weather business in Finland, EU, Japan and USA. Light blue: total annual business in late 90’s, Red: five year potential relative to market size

0

100

200

300

400

500

600

700

M e

Finland EU Japan USA

Now

Potential

Global weather markets

• European private weather business small and weak. 40-50 SMEs with small turnover (<1 Me), only very few are >1Me

• At least 300 Me business missing, society losing some 3000 Me in direct and indirect benefits and about 2000 new jobs not created

• Governments are losing annually at least 150 Me in returning taxes

• Meanwhile only 0,5-1 Me returned to Ecomet from data sales

Key problems in today’s Europe

• EU weather market weak, non-competitive, restricted data policy vs. US and Japan open policy and strong market

• Data prices very high, not reasonable for business. Only fraction of data is affordable to companies

• Heavy barriers for entry to the market

• Public subsidies and predatory pricing still common

• Public and business activities mixed inside governmental institutes, no separation, no transparency in accounting

Key problems in today’s Europe

• Some business areas still governmental monopoly (e.g. aviation)

• NMSs sharing regionally the market, very little real competition

• No real competition on data sales either, private company has only one real alternative (national)

• New data directives (environmental, PSI, Inspire) have had no effect. Heavy lobbying to water them down

• Result: innovation potential and creation of new services will be in trouble in the EU

Key solutions for tomorrow’s Europe

• Most important: all weather business must be separated, legally and physically from institutes to real business companies

• Weather information gradually openly and unrestrictedly available as in the USA

• Before that we need more reasonable pricing rules

• Delivery efficient, on-line. We need a centralized organization and public data server for environmental data as in the USA

Key solutions for tomorrow’s Europe

• New carrot to NMSs: success measured by the increased weather business sector, quality of providing and quantity of use of basic weather information

• Secured financing from the state for public needs

• Private companies join decision making and quality control

• New data policy rules must come top-down from the governments and ministries to avoid personal conflicts of interest

PRIMET for private weather data policy

PRIMET Association (formerly AEDUE) of 32 weather and environmental companies acting for open environmental data policy in Europe

www.primet.org

General secretary since 1.4.2007: Richard Pettifer

richard.pettifer@dsl.pipex.com

Forecast for EU weather services?

• Some positive development is going on, especially in the Netherlands, the UK, Norway and Spain

• Some negative development recently on internet and broadcasting rules

• Inertia in the governmental organisations very strong

• EU global competitiveness getting even worse if politicians do not take action

• Long-term forecast thus: we need a good data policy storm first to get the sun eventually shining

Contact for more information

Foreca Consulting Ltd

Helsinki, Finland

www.foreca.com

tel +358 9 6689 6466, fax +358 9 6689 6411

Pirkko.Saarikivi@foreca.com