National Road Pricing Conference
Proceedings
SESSION 4
The Critical Role of Technology in Pricing
Moderator: Jack Opiola, D'Artagnan Consulting
I have to look at and consider the funding crisis Delvin Dennis spoke about early. He calculated the average fuel tax that an American is paying. He showed the average vehicle getting 20 mpg and estimating the average vehicle fuel tax at $384 per year. But now if you look at the new federal guidelines with a fleet average of 35.4 mph averaged into the mix we only get about $216 in fuel tax and with inflation by 2015 the actual real value is only $181. The future in the automotive industry means trying to do more with less.
We are seeing a number of mitigation measures out there that will involve how technology can help. That is what this session will discuss. We will look at the different elements technology of road pricing today. The first element of road pricing we have to look at is that ubiquitous universal form of cash collection. We know we cannot have a toll booth on the HOT lanes or toll lanes where we want them to be multi-lane and free flow configurations. Since we cannot use toll booths, we can look at different technologies out there like video, auto license plate reading, RFID (radio frequency ID) tags that are coming down in price. Tags used to be in the $9-10 range are now $2-3 and doing the same job. We are looking at DSRC (dedicated short range communications) tags which are more full-functioning with processors and memory that can handle interfaces. Finally, we are looking at the future being in global positioning systems (GPS) or what we do with our mobile phones. All these technologies are elements to help us move our congested freeways. People do not pay for our freeways now but people will pay for improved service. Most important in our search for technology is finding common standards because there are three major elements constantly in balance:
- technical considerations, how does it work and what do we want from it;
- financial considerations, what is the payment mechanism; and,
- my business rules.
At any time we have to keep two of these in line in order to define the third one. That is where common standards between all of them need to take place. Common standards are required to get to interoperability between systems. Common standards do not necessarily rule out proprietary standards. Common standards need to be a mix of open standards on communications and then the devices themselves can be proprietary. These devices can be proprietary because people have invested fortunes in their own technology and they have a right to protect their investment but that right stops at the communications link where people have a right to exchange information freely without being forced to use one certain vendor.
The Transforming Effect of Technology on Road Pricing
Ted Hull-Ryder, ETC Corporation
We have worked on six HOT lane/express lane/managed lane projects at this time. We are a system integrator, technology and services provider. I will primarily discuss:
- roadside technology and how it has transformed over time,
- some of the technology in place going into HOT lanes and express lanes,
- some of the technology enablers and back office solutions,
- different roadway components and elements and different capabilities in the back office; and,
- what the future holds for us.
As we looked at the traditional technology we looked at how to collect tolls. We looked at manual toll collection, the ACM (automated coin machine) environments where you had a large foot print on the roadway, quite a bit of right of way used, low throughput capabilities, low ability to have a variable price mechanism associated with it, limited visibility into the facility which actually created congestion on the roadways. Next the tolling industry moved to an AVI (automatic vehicle identification) technology environment where we have the ability to move into express lanes which can move traffic at a very quick pace and allow a more efficient collection on the roadside. In 2007, AVI technology allowed the tolling industry to collect about 67 percent of the tolls in the US electronically. The AVI technology provides the advent of moving to all electronic toll collection allowing a smaller footprint in the roadway. A smaller footprint can allow us to move to a single gantry area and still have AVI and license plate capture ability so we can enforce but more importantly add capability for non tag users to use roadway. This environment has moved the tolling industry to managed lanes and HOT lanes.
We are now seeing a combination of methods working together in HOT lane environments but each roadway will have its own approach to using multiple technologies. Changeable message signs allow you to communicate information to users before they enter the expressway or toll way. Messages can be about travel time savings, cost information and a variety of other things. We have CCTV (closed caption television) cameras and the capabilities of being able to watch dynamic message signs and watch a particular toll zone allowing toll agencies to manage the whole area more effectively. In many cases we are looking at remote traffic microwave sensors embedded in the roadway to gather traffic information effectively. This traffic information can help us determine if it is necessary to move into dynamic pricing. It is important to know what the traffic is doing not only in managed and express lanes, but also in the general purpose lanes.
In terms of enforcement there are beacons lights mounted on gantries that can communicate what type of vehicle: HOV, SOV, non-tag, etc. In-vehicle capabilities for law enforcement are also available to interrogate tags. Other improvements for enforcement technologies have been seen with the improvements of image capture and automated license plate recognition. All of these technologies help HOT lanes run because we now have the ability to incorporate all of those technologies into the footprint of a HOT lane environment.
In the two lane environment you have the capabilities of a free flow area and there can be a zone for message signs and the zone may even have traffic sensors which can feed information for dynamic pricing. Technology can provide all of the elements for tolling: vehicle identification and classification, multiple classifications, sensors in pavement to count vehicles and sensors that can cut across the entire roadway to even read those in toll lanes and vehicles in the general purpose lanes. Bringing all this information together we can use it to develop a dynamic pricing solution in order to price and manage congestion. It important to have a strong technology solution that provides both HOT lane and general purpose lane information. Technology solutions also need to provide a predictive model to help analyze trends and predict what to expect. Technology can offer a solution to optimize systems for congestion management (if that is your goal) and one that maximizes revenue generation. Systems should handle all sorts of alternatives such as time of day pricing, static pricing and manual overrides that might be needed.
There are technology enablers out there such as sticker transponders and transponders that are switchable (a switch allows for transponder to declare the vehicle as either a HOV or SOV). The advances in image capture capabilities and OCR (optical character recognition) capabilities now allow for the finger printing of vehicles. These two technologies in association with transponders and the images of vehicles can allow for unique filtering in the back office that might be needed when you are doing trip combinations or developing different enforcement mechanisms. The back office arena can use software that will give different locations capabilities without the need to have all the same hardware and infrastructure for every facility. Using software can allow for the use of a single point back office for use by multiple facilities which can reduce capital, operating and maintenance costs and is proving to be more efficient.
What does the future hold for us? In the future we are going to see HOT lanes replace HOV lanes in metropolitan areas. The capacity that is there needs to be maximized from a revenue perspective. We will see dynamic congestion pricing to reduce congestion and VMT. All autos will have some sort of device to pay tolls or other premiums on facilities using pricing. Pricing is important for sustainable infrastructure and for our overall transportation needs.
Smartphone Application for Toll Payment
Mark Swank, BancPass
I would like to touch on mobile cell phone applications for toll payment, but primarily discuss the issues and problems with toll payment systems. The industry has only seen about an 80 percent penetration of transponder tags and the penetration depends on demographics (higher in the north/ lower in the south), pricing, toll use and make up of customers. The BancPass system interfaces the toll system and the data host into a retail model to make an efficient standard retail transaction. The mobile phone application that we developed was a way to address the non-tag users and offer a way to reduce violations and to provide simple straightforward methods for customers to pay. We find that a large number of the violators are casual and they would pay if there was a simple and obvious way to pay. This is the market we are going after right now. The North American toll industry processes about 20 billion payment points annually with about 25 percent of those transactions being non-tag users, cash payments or transient users; that is about five billion transactions. We are not looking at this from a toll perspective, we are looking at this from a payment processing perspective. We are working with a partner, Chase Payment Tech, whose entire business runs five billion transactions in a year. These are the toll industry's most expensive customers and that is why we are developing applications such as the mobile phone application. It is really about making toll transactions as simple as a retail sale.
Why mobile phone payment? Phones are popular, they have increased applications, and even the non bankable people have better than a 100 percent penetration of mobile phones. Phones do not provide a simple means of interoperability; all the phone does is provide communication with the interface hub which interfaces with toll host data directly to the retail transaction network in almost real time.
How do you use the phone application? The phone application is downloaded and then the users can enter their license plate number or take a photo of the license plate to upload with the phone. Next the user can select their payment method in the application. BancPass picks up the data, exchange files with the toll authority and we guarantee payment on those files that are recognized as our customers. To a toll authority, it is a fleet account where the fleet is everyone signed up to be billed by us. The system is specifically designed so the driver does not have to do anything when driving.
The information is exchanged through the toll host's data, our interface and to the phone application. Once the transaction at the toll area happens, the phone will show that you owe a toll. The user will need to touch one to determine how they would like to pay the toll. The driver does not have to touch the phone at that moment of the transaction. The driver can do this whenever they want to do this.
We invite any toll agency to connect to us and if the toll authority picks up one of our customers, we will send the money to them almost real time. The real goal is to work with the agency to build a retail model in transaction and billing. BancPass is not a back office; we connect to back offices.
We, as a business, operate under basic business rules. Standardization for us is important, but if we need to discuss other issues concerning the interface with a toll authority we will do that. BancPass knows that the toll authority has to maintain control of the vehicle classification and rate schedules. We just take the data that is provided by the toll authority and convert the data to a retail process.
We have conducted tests in Austin through Wells Fargo Systems and in September the mobile phone application will be commercially viable. We are also talking to other tolling agencies outside the state as well.
Active Traffic Management on I-5, I-90, I-405, and SR 520
Craig Stone, Washington State Department of Transportation
How does active traffic management integrate with toll lanes? How is technology being brought to corridors? How do you have integrated corridors and provide balanced solutions? First, I want to say that the international scans do bring back technology and we do apply the technologies. For example I was on a scan in 2006 to look at traffic management technologies and WSDOT is now implementing 40 miles of active traffic management in Seattle. Additionally, a former employee at WSDOT went on a scan in the 1980s and brought back the concept of variable speed limits which Washington implemented on mountain passes on I-90 and US-2. So the active traffic management system we are using now is building off of those legacies.
Right now we are implementing on I-5 heading north into Seattle where we will have variable speed limits and lane control with 24/7 traffic management. Once you turn these on the system you are liable for what is showing up on the dynamic message signs (DMS). You are liable because the drivers start to expect something there and if no message is there, we are liable for accidents caused by the lack of information. The system is built on drivers trusting that the message on the DMS is accurate. If a warning is displayed and there is not an incident ahead, the drivers will start to not trust the system.
Where are we doing this? We are implementing this system on the south end of I-5 near Boeing Field, where we have about 600 accidents per year, into downtown. There is major congestion in this area. Each day drivers wonder where the end of the queue is and not if there is a queue. The majority of these accidents are congestion related. Most of these accidents occur during the daylight hours. This project is being implemented for safety. We expect a 30 percent reduction in injury accidents and a15 percent reduction in property damage accidents. We are also implementing these systems on SR-520 and the I-90 bridges, as spoken about earlier. The I-5 active traffic management system will open in August 2010. The SR-520 system will open in the fall of 2010 and the I-90 system is opening in the spring of 2011.
There are two styles of DMS signs that will be used in this project. There are signs that are mounted over each lane and two side mounted DMS signs. The overhead mounted signs will display speed limits and lane control Xs and Arrows, and will be black during non-use times. The side mounted signs will show warnings and reasons for reduced speeds. We believe from the system will pay for itself within four years just in the cost of accident savings and the delays caused by accidents.
Active Traffic Management on Priced Dynamic Shoulder Lanes on I-35W
Nick Thompson, Minnesota Department of Transportation
I am all for scans and was on a scan in December. In Minneapolis we have the I-394 HOT lane project which was opened 5 years and 2 weeks ago. Additionally we have the I-35W corridor that has an active traffic management system and the left HOV or shoulder priced.
Technology influenced the ability of Minnesota to implement pricing. Five years ago there was no tolling in the state at all. Minnesota had a failed attempt ten years ago to implement tolling. The failure was due to the fact that people did not like the available options for paying for tolls. Five years ago technology caught up and allowed us to move forward with the I-394 HOT lane because we no longer have to use toll booths. Additionally we could not meet our performance goals of managing lanes, maintaining speeds, and maintaining free flow speeds next to the general purpose lanes because we needed variable pricing.
A hurdle we had to get over with legislators was the enforcement of the lane. Enforcement was addressed with technology through Raytheon for mobile enforcement for troopers on the fly. We replicated what we did on I-394 five years ago and added traffic management and a next generation HOT lane. We still had to build some portion of the HOT lane, as it did not take you all the way into downtown Minneapolis. We were able to build an additional four miles but funding was not available for the last two miles of lanes, so with the help of traffic management and the UPA funding we began using the left shoulder as a HOT lane during peak periods. It has been open since September. We have electronic signing giving pricing, guidance and added inroad lighting to help guide users in and out of lane. It is important drivers do not use this lane during off-peak periods so it can remain open for breakdowns and emergency use. This method was safe and a low cost way to get more capacity on our facility quickly. We were able to build out two miles of interstate within five months. We will consider these projects first when looking at building in new capacity on any of our facilities.
What have we learned from I-394? How do you control access? The HOT lane had 65 percent closed access. We redesigned access to the HOT lane allowing access almost anywhere. This is much more accepted by the customers. We have found we have a network effect going on. First we had one lane in a corridor and then two corridors close together and now we are seeing 15 percent of our customers are using both roads. We did not anticipate a bigger network. Additionally, our customers have a high expectation that our system will be interoperable with other systems. Unfortunately, we are an island of tolling; the only place that is close to us is Chicago and now our customers are asking if this system can be used in Chicago.
Audience Questions
Who pays the fee in addition to toll? toll agency to BancPass? Do you get a markup or a discount?
Mark Swank: It depends on rules and nature of the toll industry. Right now we have a standard service agreement. There is typically a spread between the electronic toll rate and the cash rate. Yes, we have to have a markup to pay for our service. We get a price, it is less than cash, but more than the tag holder rate.
Minnesota is sort of a laboratory with a large range of access in the area. You have barrier separated reversible, buffer separated and the dynamic shoulder lane. What lesson is learned about access choices?
Nick Thompson: I like to think we have five different types of HOT lanes in our corridors and they all have pros and cons, some are unique to corridor conditions. I-394 has four intersecting freeways and needs access about every two miles. I-35W is unconventional compared to what the design philosophy of HOT lanes is, especially from the federal highways philosophy. We have used more of a customer approach when designing our HOT lanes. I like to think we have proven it works, but the jury is still out. Our future toll lanes will be built more towards a much more open access than the more restricted.
Question for Craig Stone: Do you see your lanes being as dynamic as those in Minnesota?
Craig Stone: Yes, but it depends on the corridor we are looking at. We are doing a feasibility study on I-5 to see what happens when you change speeds so that the HOT lanes are running at a good speed while lowering the speeds of the adjacent general purpose lanes. Is this an incentive or disincentive to use the lane? Can you legally change speeds in just select lanes and where does that put you in regards to tort liability? So far we think it is compatible. We are looking at tolling every lane on US-520 with variable toll rates.
Question to Ted Hull-Ryder and Mark Swank: You both made reference to enforcement and a balance between payment systems and enforcement. The balance being if you make it easy to pay you need less enforcement; if you make it too difficult to pay, you need more enforcement. Can you both go back and address the balance you have between payment systems and enforcement at the lane level and enforcement level.
Hull-Ryder: Enforcement is twofold. Enforcement relative to HOV occupancy is being handled by the police in the lanes. The issue right now is how we communicate to the police what type of driver they have there. We had a case where we were working with the California Highway Patrol (CHP) and we allowed them to have the ability to interrogate tags from their cars but that did not work for them. The CHP wanted lights on the gantry to indicate vehicle status. If transponders are required in every type of lane and a vehicle does not have one, you can either bill them via invoice with service charge or ticket them. Occupancy detection technology was alluded to earlier and it is almost there and we expect to be using it in the future. The best thing for the tolling industry is to have a system that is easy to use.
Mark Swank: We are not in the enforcement business; we are on the transaction side. We do not offer lane technology or solutions like Mr. Hull-Ryder. If someone has a transponder and we have an account for them, we pick up the transaction. We try and make payment mechanisms convenient. There are some people out there that just think they should not have to pay tolls. I am not trying to fix that problem; I am trying to address the customer that would pay a toll if they could. One way we do this is to allow our mobile phone application users to sign up after the fact. We are also working with gift card companies to have retail reloadable toll cards for cash customers off the road. We are coming up with a reloadable card tied to a license plate. All we can do is provide an interoperable standardized transaction system that will allow the toll industry to service the non-tag customers.
Is I-35W tolled for everyone?
Nick Thompson: No, 2+ carpools, motorcycles, and buses are free. They do not need a transponder.
Have you had any safety issues regarding your shoulder lane usage or diminished lane?
Nick Thompson: No, however the lane leading in will not be complete until November this year. Traffic patterns will change when construction is completed but I don't anticipate any issues.
What is your view on a universal transportation account?
Jack Opiola: The issue is really interoperability; where do you stop? If you are in California do you have to be worried about a customer from Virginia? There is a huge cost to interoperate or exchange data with someone. I believe in an open system, where you can bring bank customers or vendors with different technologies. Who am I to close my system to anyone?
Nick Thompson: We want interoperability, not just with Chicago but with our parking systems and ideally transit. We tested a concept last year where we gave away transit credits and free tolls if you signed up for MnPass. We found about 10 percent of people used both systems but the problem is both of these systems are stand alone and there is an interoperability issue. There is a cost and right now that interoperability cost cannot be justified. The only thing that is stopping us right now is operating costs.
Craig Stone: We have one device across the state and Oregon has been a good player with us to see how we can interact with them. We have one DOT and we are working to have one system with our ferries, so it is just a matter of how you price it and there are some Coast Guard issues. We are working with the Port of Seattle on parking. Legislators ask us when the nation will get interoperability and we can't answer that yet. Yes, we have users from California, British Columbia (BC) and the issues with being a border state. How do we handle BC plates that come through? An expert review panel came in and decided it was best to stick with plates. The good news for us it that we are new and we can create our future; the bad news is we are new and we do not have a lot in place yet.
What can you tell us about interoperability from the lane level?
Ted Hull-Ryder: We have some levels of inoperability right now. In Washington state now, there are two protocols of tags being read now. There is the CVISN protocol (used by the trucking arena) and a more standard protocol, so we see some interoperability there. We see regional interoperability in the State of Texas but the capabilities are confined within the Texas border and are not interoperable with the surrounding states; we see the same thing in Florida and elsewhere. We have the technical ability for interoperability with AVI tags if we can get beyond some of the business rules and some of the potential litigation associated with that, but the one thing we do have is license plates. I see license plates as an immediate capability of being interoperable. So that toll customers can have an account that is associated with a license plate that could be shared across regions. However, there is not that big of an operational incentive now to do that.
What is your view on interoperability from being technology agnostic?
Mark Swank: We have no control from a business perspective; it is not our side of it. We are prepared for the plate migration but we recognize that the embedded tag base is going to be there a while and we are going to have to support that also. In regard to interoperability, we have developed a standardized interface on a payment system which is being tested this month with New York State Bridge Authority. One of the requirements for this system is that they test and certify our standards interface which has been released on an open architecture license through Omni Air and we are also talking with the Alliance for Toll Interoperability (ATI). We are not demanding that everyone use our standard, we are trying to promote creating an interface standard for the toll road industry so we can interconnect. British Columbia invited us and is interested in our payment interface.
Jack Opiola: Some people say we cannot solve interoperability on the state level. Some people think it needs to be done on the federal level by enacting new legislation or dictating a standard but many people from the industry do not want the interference. At the same time there are things that can be done right now, i.e.: license plates. The National Law Enforcement Exchange (NLEX) has license plate information but unfortunately a toll transaction or violation does not fit the description that will allow us into NLEX information unless there were multiple occasions where you can call it fraud. In that case you could go to NLEX on a violation and obtain the information. Is interoperability something we must address now?
Ed Regan: Everyone developed his own system and did not think about interoperability. The result is that the industry set the standards. It would have been nice if everyone had gotten together and formed one central clearinghouse and one communication interface that all the vendors could work with and then add their own bells and whistles to. If the industry would have set that standard, it would have been better off, but it did not happen and now we have to solve that problem after the fact.
Bob Poole: I would like to mention the cross border systems between Canada and the US which is Highway 407 in Toronto. It was the first all electronic controlled billing toll road. Even without a transponder they bill through a license plate image agreement with State of Wisconsin Motor Vehicle department. Canada also has that agreement with other states.
