APPENDIX B ............................................. Private Sector Input
It has become evident that the methods of cooperation between public and private
organizations in the delivery of Advanced Traveler Information Systems (ATIS) is at
least as important in determining success as the technology applied. These
relationships have been coined ATIS Business Models. In 1997-1999, ITS America and
U.S. DOT conducted an extensive review of ATIS Business Models and published a report
that illustrated various business models and the factors that would lead a region or
state to consider one model over others.
Although not nearly as exhaustive, this report updates the collective understanding
on ATIS business models by gathering and examining current examples of public/private
ventures and arrangements used to provide traveler information services.
This study was supported a group of volunteers from ITS America's ATIS Committee.
These volunteers assisted us in identifying literature to review, professionals and
sites to interview and questions to ask in interviews. The authors are grateful for
The study used a two-pronged approach to gather data for business models assessment:
literature review and interviews of active participants in ATIS.
2.1 Literature Review
Many sources of documentation, ranging from evaluations and scholarly studies to
news articles and brokerage analyses, provided useful input into the study. Most of
this information aided in understanding the general trends of the ATIS industry as a
whole, and thus indirectly have affected the evolution of ATIS business models.
Literature examined included:
- Metropolitan Model Deployment Evaluation Reports, 1999.
- Closing the Data Gap: Guidelines for Quality Advanced Traveler Information System
(ATIS) Data as well as preparatory materials and proceedings from the February
2000 workshop on this subject (ITS America), 2000.
- U.S. DOT ITS Deployment Tracking Data, 1999-2001.
- On-Time Reliability Impacts of ATIS: Washington, DC Case Study (Wunderlich et al),
- Environmental Scan of ATIS (Schuman), 2001.
- The Future Role of Government in ATIS (Crosby, Stein et al), 2000.
- Wireless Carrier filings to the FCC regarding enhanced 911, 1999-2001.
- UBS Paine Webber Traffic Data Market Study, 2001.
- Sharing Data for Traveler Information: Practices and Policies of Public Agencies, 2001.
In the following section, major findings from the literature review will be highlighted.
While the literature review can set the backdrop for business models, the literature does
not generally document the specific "deals" that make possible the provision of
traveler information. These deals are generally codified in contracts, policy statements and
handshake agreements. To gain current understanding of the issues surrounding ATIS business
models, it is necessary to talk in depth with the main participants, both in the public and
In this study, interviews were sought with public sector officials in over 25 metropolitan
areas and with more than five private sector information service providers. The initial
inquiries resulted in 10 documented summaries of metropolitan business models and multiple
interviews of information service providers. These interviews were conducted in July,
August and September 2001. While it would be desirable to have conducted all interviews, the
authors and our sponsor from U.S. DOT determined that conclusions could be drawn from the pool
of interviews conducted.
The metropolitan summaries are provided as Appendix A. A summary of private sector
interviews is located in Appendix B.
When looked at holistically, the documents reviewed portray a largely consistent
picture of the state of the ATIS industry/market. Rather than rehashing the details of
each document, the important findings are provided in this section, organized by general themes:
Overall ATIS Industry
- Self-sustaining national ATIS ISP model has yet to be demonstrated in the U.S.
The only business known to be profitable from an operating revenue standpoint in the information
service provider market is Westwood One, and their profitability is mainly attributed to their
broadcast operations, not their "ATIS" activities. As in 1997, that does not mean that
a profitable ISP model is not possible, it just has yet to be achieved.
- The economic slowdown is having a tangible effect on industry growth. In the late
1990s, several firms either entered or were close to entering the ISP or ATIS marketplace,
backed by sizeable venture or corporate investments. Only one significant new market entrant
remains - Mobility Technologies.
- Lack of quality data is still most important issue. Multiple sources indicate that
the lack of ubiquitous, high quality data is a major factor in the lack of progress in the ATIS
market. With only an estimated 22% of freeway miles in metropolitan areas under electronic
surveillance (as an example), businesses that aim to aggregate, bundle and "productize"
traveler information just do not have enough content to work with.
- The environment for "monetizing" traveler information is as weak - or weaker -
than it was when the original business models review efforts occurred in 1997-1999. With
consumers resisting spending for new information services and a relatively soft advertising
market, the environment for generating revenue from traveler information is as challenging as
ever. ISPs will need to be innovative and creative to develop new revenue streams. In the past
few years, the focus has been more on generating revenues through broadcast partners, which has
the macroscopic effect of reallocating the "pie", but not increasing it.
- The data gap exists and is not being filled rapidly. As stated earlier, the lack of
quality data is a principal issue in the generation of sustainable, quality "advanced"
traveler information services.
- E-911 based systems are evolving slower than hoped so to look at this type of data
collection as a savior may be premature. With many carriers delaying their E911
implementations well past the October 2001 deadline, it is increasingly unclear when such systems
will be implemented, what approaches for location determination these systems will use, and
whether the technologies selected are amenable for traffic flow calculations.
- A greater emphasis on travel time data collection is needed. As discussed below,
travel time reliability is a key benefit - if not the key benefit - of ATIS to a user. However,
in most cases information provided through ATIS is anecdotal in nature, identifying what has
happened and where it is, but not providing a quantitative assessment of the impact. Without
being able to calculate the impact on travel time of an incident or event, the traveler - or a
product or service that could make such a calculation on the traveler's behalf - is unable to
determine the best course of action.
- The model of aggregating data at a national level for data dissemination has been
clearly demonstrated. Many service providers are seeking traffic/travel data from major
metropolitan markets nationwide to incorporate as one of many services they offer through their
particular delivery chain. Examples include OnStar in the telematics market, Yahoo and MapQuest
in the internet portal market and AT&T Wireless/TellMe in the audio portal market. This
trend is very positive for the ATIS industry and the traveling public, as information is
becoming available nationally via well recognized brands.
- Viable markets for ATIS include broadcast, fee-for-service and national wholesaling.
Radio and TV broadcast of traffic/travel information predates ATIS, but such services are being
improved via access to more CCTV cameras, automated incident reporting feeds and traffic and
weather monitoring data. The value of this new data in increasing the quality of these reports
cannot be underestimated. Providing contracted ATIS dissemination services to government
agencies such as web sites and telephone systems under a "fee for service" model are
growing in popularity. This model clearly defines risk/reward for both the public and private
sectors and is the "cleanest" method of engaging the private sector, though of course
it requires sufficient public sector funding availability to achieve. As described earlier,
providing a national data feed to an aggregator of many types of content can generate substantial
revenue, though it is not clear yet if the revenue generated can wholly support a national data
collection and fusion infrastructure.
- Fee-based direct to consumer services have yet to prove viable. TrafficStation
planned to develop a business national in scope that largely revolved around direct to consumer
business model was unable to build such a business and is now out of business. The literature
does not identify a single instance as of yet in which fee-based consumer ATIS services have
- Advertising-driven services have yet to prove viable as a primary revenue source for ATIS.
Though clearly advertising has proven capable of supporting the broadcast model for traveler
information, it has yet to demonstrate significant potential to support other methods of ATIS
dissemination such as web sites and e-mail alerts, telephone services, text messaging and in-vehicle
- Consumers like and will use ATIS information. Many studies exist that
illustrate the desire of the traveling public to have quality traveler information
services. It has also been demonstrated that an important factor in usage and
overall satisfaction of consumers is quality of service. Timeliness, accuracy and
reliability are all required. Of course, as stated earlier, consumers are
generally unwilling to pay directly for such services, so these services will
either need be provided by the public sector and/or be "monetized" in
some fashion that does not create an obvious fee to the user (e.g., the Weather
Channel is not free to cable subscribers, rather its costs are built into the
monthly cable bill).
- Travel time reliability is principal benefit of ATIS to users.
Groundbreaking work by Mitretek Systems has identified the likely principal
benefit of ATIS to travelers: the increased reliability in trip travel times
and the corresponding decrease in "slack time" that must be
allocated to a given journey. Reduced uncertainty, while it may not increase
the efficiency of a single trip, will of the course of months and years
greatly increase the efficiency of travel.
When reading the detailed summaries in Appendices A and B,
two main findings result:
The most successful implementations are those with significant public sector support.
- The Seattle Washington ATIS service (which in fact covers the entire state), has
complete coverage provided by the public sector. Even if the data is manually entered
or recorded, the dispersal of responsibilities to the various regional traffic centers
allows for sufficient updates to keep the system current and well used. In fact, the
IVR system receives over 1 million calls annually on a combined local/toll-free phone
- The system in Houston Texas, does not expend significant funds providing
information directly to the public. Instead, they take their traffic management data
and video, and “sell” the information as products to the private sector for re-packaging.
TxDOT even sells space on their operations floor to private companies and still
maintains a level of control over the data through usage agreements. While currently, it
only costs an ISP a modest $12,500 annually for data and video feeds as well as a
location on the floor, it does provide a mechanism to separate serious firms from pretenders.
- Boston, arguably the first direct dissemination ATIS service, is fully funded by the
public sector. Though services are offered through a private company, everything from the
staffing to the telephone lines and data connections are paid (at a 70% level) by MassHighway.
The only truly successful public-private partnership does have it's drawbacks; those being that
SmartRoute Systems owns the brand name, most of the physical equipment that has been
installed for data gathering and all of the software and equipment for data fusion and
dissemination. In fact, were MassHighway to decide to award the ATIS contract to a new company,
this new ISP would be starting nearly from the beginning for everything from finding a new
telephone number, making agreements with the wireless carriers, setting up CCTV cameras and
connections (SmartRoutes has 36 of its own cameras and connections to monitor 32 from
MassHighway and MassPort), not to mention the creation of a space to function as an operations
center (the lease for the facility in Cambridge is in SmartRoutes' name as well).
- The Gary-Chicago-Milwaukee corridor's system is over 40 years old and was built around a
traffic management system that happens to be able to provide information to the private
sector as well. No formal agreements are in place yet the free availability of the information
allows for wide dissemination of travel times and video.
On the whole, these systems show one significant commonality: each has the public sector
supporting or implementing the data gathering systems. In most cases this also includes data
fusion, as the systems that gather information also merge the data into usable streams for
distribution to private companies or in some cases, directly to the public.
On the other side of the table, certain business models have proven un-successful.
- The Exclusive Franchise model used in Detroit is one that will not be repeated. MDOT
officials have stated that the model failed due to poor performance by the contractor, SmartRoute
Systems. SmartRoutes has stated that the failure was due to a misinterpretation of the market and
therefore, lack of sales.
- This misinterpretation of the market may also have been a factor in the demise of
Trafficstation Inc., a company built on the belief that wholesale and retail sales of
personalized services could create self-supporting ATIS services that would not require continued
public sector funding.
- Also on the downside, is Partners in Motion in Washington, DC. This model is also a
public-private partnership, built around limited funding (3 years) and a contract that requires
continued operation (5 years) of a self-sustaining business. The revenue for this continued
operation is not present, however the ISP (again, SmartRoute Systems), is continuing with its
obligation to operate the systems, albeit with some modifications (i.e. the operations center has
moved to Maryland and is now co-located with Metro Networks operations facility).
In summary, it appears that we can infer a number of items from the literature review and the interviews:
- Public funding or facilities, especially with regard to data collection, is essential to a
successful ATIS implementation. Any initiative that increases the availability of quality data
should be a national priority.
- The public sector may have the opportunity to sell its own wares, as long as the data being
sold is of sufficient quality and is on a level that the private sector cannot gather similar data
on their own. However, the value of such data is likely to be relatively low at present and for
the foreseeable future. Any region looking to obtain private sector revenue substantial enough to
support its ITS investments is setting itself up for failure.
- Revenue generation from ATIS services, both wholesale and to the individual, has not proven
successfully that this revenue can wholly support an ATIS service. There may be new models and new
ventures determined to prove this model viable, but they are unproven at this time.
- If there are specific traveler information services public agencies in a region or state wish
to provide to their traveling public, they should be prepared to underwrite most or all of the cost.
While it may be possible to have such services provided for free as part of a partnership model, the
experiences indicate that as often as not, these services do not evolve to the level of quality and
use desired by the public sector unless they are either operated in-house or contracted on a "fee
for service" basis.
Finally, the authors of this report recommend that ITS America's ATIS Committee develop a process
for regularly revisiting ATIS business models on a regular basis. In particular, it would be highly
beneficial to the community if every region known to have an ATIS model is documented an updated on
a regular basis. As described earlier, 25 areas were identified as targets for updates, but only 10
could be completed as part of this study.
Appendix A - Site Reports
Appendix B - Private Sector Input