Lectronic Toll Collection

lectronic Toll Collection

Market Structure
Market Development Issues
Market Forecast
Summary of Research Findings

MARKET STRUCTURE

Sector Description
Electronic toll collection (ETC) is a success story in the intelligent transportation industry. Significant new and retrofitted electronic toll facilities are springing up in the United States and Europe, with nationwide activities in Japan soon to follow in force. Traditional toll collection (including coin, magnetic card, and manual toll payment) already represents a multibillion dollar business worldwide and will likely see positive growth within the next several years. Because ETC technology is profitable and efficient and has the potential to eliminate congestion on existing and new toll facilities and to minimize fraud, most new major toll road projects around the world will begin routinely implementing ETC systems in the near term.

Unlike many other ITS technology markets, ETC is not dependent upon the implementation of new, advanced technical systems or an integrated infrastructure to find market success. Even some modest ETC systems have been efficiently processing basic transactions for several years. However, ETC will benefit greatly from the synergistic development of advanced technologyó such as smart cards and wireless telecommunicationsóoutside the ITS sector that will enhance the functionality of ETC and other ITS systems. Together with ATMS, ETC will also pave the way for the integrated traffic management systems that glean information from a wide range of sources, including roadside sensors, and transmit the information via in-vehicle devices to drivers.

Market Categories
ETC generally makes use of removable, contactless, radio-frequency-based tags that communicate with roadside readers. The readers detect an identification number on the invehicle tag and either bill the account associated with the number or deduct the appropriate toll from the tag as the driver passes through a specially equipped toll lane. Tagsótransponders in more sophisticated systems can either be passive (without batteries) or active (powered by batteries). Type I systems, which use removable passive read-only tags, currently dominate the market because they are inexpensive and compact, operate on low power, and exhibit fewer environmental problems (such as the emission of electromagnetic fields). Type II systems with removable read-writeóor activeótags, can exchange information such as updates of a customer's balance after a transaction has been made. A new generation of Type III system using read-write vehicle-mounted transponders is now under trial in nonstop tolling envirouments; it incorporates a removable smart card with an integrated-circuit chip, enabling increased services, ranging from dedicated ETC to electronic purse functionality, encrypted information, billing specifications, and personalized transportation schedules and data.

All ETC systems rely to a greater or lesser extent on sensors, communications equipment, and data processing.

Sensors.Sensing technology is used both to detect the presence of a vehicle either at a toll plaza or at the start of a tolled roadway and to classify vehicles according to type. In a monolane system, it is necessary to ensure that vehicles have paid the correct fee in order to activate the barrier. In nonstop systems, it is important to capture details of any vehicles violating the system for later enforcement. The type of sensors in use include in-road inductive loops, video and CCTV cameras, and piezoelectric and infrared sensors.
Communications equipment.One-directional communications are used in simple read-only systems, whereas bidirectional communications are essential for read-write functionality. Communications equipment includes in-vehicle transponders and roadside readers and smart cards, as well as the means to transmit this information to a central processing center via wireless or cable networks.
Data processing and distribution.A variety of data needs to be processed in an ETC system, ranging from payment transactions, if postpayment or direct debit payment options are in place, to collecting and storing video enforcement data.

Market Description
The market for ETC systems in all geographic regions is boing driven by opportunities to raise revenues through tolls on roads currently with no tolls, to increase revenue-collection efficiency on current toll roads, and to reduce congestion on many existing toll bridges, highways, and tunnels. Long queues at selected toll plazas, combined with the physical (and environmental) restrictions that are preventing the addition of new booths, have encouraged toll operators to implement ETC on existing toll infrastructure as a means of increasing throughput, generating additional revenue, reducing operating costs, and improving customer service. On both new and retrofit facilities, ETC provides the opportunity to collect toll revenue in a nonstop environment.

At present, the market for road tolling falls into two categories: toll facilities on highways and freeways and those facilities on local urban roads, for example to control access to bridges and tunnels. In terms of future market assessment, a distinction needs to exist between systems that are being designed to upgrade existing toll infrastructure and those which are being proposed for new tolling facilities. ETC technology has moved forward to the point where for both new and existing toll facilities an opportunity exists to provide nonstop traffic conditions. This nonstop tolling market divides into systems that cater to separation between individual lanes and those that provide multilane capability and systems that still provide barrier enforcement and those that do not.

So far, the majority of installed ETC systems are read-only systems with simple but effective enforcement barriers that will not raise unless the correct toll is paid. In these configurations' patrons must stop or slow down. These fairly basic but cheap systems have been and will continue to be successful where a reasonably high percentage of daily traffic is local and the toll facility is isolatedóthat is, where no obvious requirement exists for the system to be interoperable with an adjacent toll facility.

However, as new tolling facilities become necessary and as existing implementations need replacingóthe average life of a toll infrastructure is some ten yearsóthe trend will move toward nonstop systems that incorporate read-write and smart card functionalities. Despite the higher cost of these technologies , they are in creasingly essential to provide the sophisticated mechanisms necessary for exchanging and storing information as traffic management infrastructures and services grow. The timing of the implementation of new installations and the level of sophistication of these systems will depend on the balance of a number of market development issues.

MARKET DEVELOPMENT ISSUES

The implementation of simple read-only electronic systems for isolated facilities has grown where low-cost tolling solutions are the most suitable solution. On tolled freeways and highways, in urban locations, and on newly constructed toll roads, nonstop monolane systems using readwrite technology are seeing gradual and successful introduction to improve traffic flow. However, the implementation of more sophisticated multilane systems for new facilitiesó especially previously untolled freewaysówill continue to be constrained by such factors as the lack of political commitment to the principle of road use charging in some countries, a lack of common communications standards, no agreement on data protocols, unresolved legal issues, lack of government funding, minimal cooperation between suppliers, and the technical limitations of enforcement systems. On the positive side for the development of the industry are such factors as the commitment in the United States, Japan, and Europe to the adoption of common national standards; the European Union' s commitment to implement ETC for trucks by the turn of the century and its funding for a variety of ETC projects; a political commitment in some countries to the use of ETC for traffic demand management, particularly in urban environments; significant improvements in traffic flow for drivers when ETC is in operation; and a genuine need for toll operators of existing facilities to reduce their operating costs, combined with their interest in improving services to customers.

Benefits
Toll collecting agencies are moving toward the implementation of ETC systems in order to obtain substantial cost benefits. On a new road, the ETC equipment portion of a highway construction contract is often relatively quite small. Retrofitting an existing toll facility with ETC is even more cost-effective. Often, basic components such as a computer and concrete infrastructure to house ETC equipment are already in place. For example, an existing manual or coin-operated toll lane might have a lane controllerówhich is typically a general-purpose, 486type computer with an Ethernet networking card and specialized features such as power surge suppressersóalready up and running. A toll collection authority can thus retrofit an existing toll lane with ETC electronicsóincluding a reader, antenna, computer interface, and electronic cablesófor a reasonable amount (an average $100 000 per lane, and often much less).

Because ETC toll lanes are more efficient to operate than are other forms of toll collection, a toll authority can also maximize ongoing revenue for an implementation cost that will see early return. Operating a purely free-flow ETC lane is far less expensive than operating a manual toll collection lane, a coin-operated lane, or even a lane that contains a mixture of automatic vehicle identification (AVI) and other methods . For example, transportation authorities in the United States estimate that the annual cost of operating a manual lane can be some $150 000 to $180 000 per lane, whereas a dedicated AVI lane costs less than $5000 to operate per year. A lane with coin and AVI systems costs some $50 000 to operate, and a lane that includes all options (which is a frequent configuration on retrofit projects) costs some $120 000 per lane to operate. Even the mixed lane reduces costs for the toll operator in comparison with costs of a manual lane.

Dedicated ETC lanes can process toll transactions more quickly than can manual or coin systems; thus, ETC lanes can improve the speed and efficiency of traffic flow. A manual lane generally processes 300 to 500 vehicles an hour. An automated coin lane processes 600 to 900 vehicles per hour. In contrast, a dedicated AVI lane can average 1000 to 1500 vehicles per hour. Improving lane capacity by 100% to 200% results in benefits such as increased efficiency of roads, reduced accident rates, improved service, reduced congestion and pollution (because of reduced idling times while waiting in toll lines), and improved fuel economy. Politically, the ancillary benefit of reducing exhaust emissions by 30% can often gain the toll authority support for ETC from environmental groups, assuming that the toll project does not infringe upon an environmentally sensitive area.

However, the most persuasive benefit to toll operators is that ETC enables authorities to collect more tolls in less time. Also, efficiently operated roadways may encourage additional users while still maintaining reduced congestion. When combined with congestion pricing schemes that charge drivers more for using the toll road during peak times rather than off-peak times, the toll collection business can beóif managed properlyólucrative. Currently, the global annual toll business (including non-ETC facilities) amounts to several billion dollars. Eventually, toll collection information may yield additional benefits when authorities integrate it into traffic management systems. In addition to providing ETC, future ITS systems will likely communicate traffic patterns and travel information to drivers via a display-based smart transponder.

Funding
Significant regional differences are under adoption in the funding for ITS systems. For example, ITS applications receive far greater government and public support in Japan and many European countries than they do in the United States. Japan will soon devote substantial funding to implementing a nationwide ETC infrastructure, with national pilot implementations due to start at the beginning of 1997. Tolls already figure prominently on Japanese roadways, with 100% of freewaysóincluding major inter- and intracity thruwaysódesignated as toll roads, compared with less than 10% in the United States and an average of more than 75% in those European countries with toll freeways. Once the Japanese government approves and implements electronic toll collection equipment, that country will operate the largest ETC system in the world. In contrast to Japan where the government provides financial support for ETC, the United States and Europe increasingly are relying on private funding to supplement the shortfall in government funding for the introduction of ETC.

In the United States, state highway authorities build most highways with fuel-tax funding or with funding from state and local government-owned toll authorities. Toll authorities may raise funding through high-grade bonds that are paid back using toll revenues. Funding is generally not a significant inhibitor of toll projects. Most toll authorities in the United States that want to launch ETC facilities can raise funds from private and public initiatives. Project funding for implementing ETC ranges from a few million dollars for a retrofit project to $100 million or more (including basic infrastructure costs such as laying concrete) for implementing new, exclusive ETC roadways. A limited amount of support can also come from national programs. For example, in 1994, the New Jersey Garden State Parkway, the New Jersey Turnpike Authority, and Atlantic City Expressway were granted $25 million by the U.S. Department of Transportation (DOT) under ISTEA to fund ETC systems planned for launch in 1997.

The 1991 passage of ISTEA was a milestone in the funding of the transport sector in the United States because it enabled the use of some federal funds to finance public-private highways. The result has been local governments' working with private groups to enact laws and propose creative financing packages for new toll projects. For example, the California legislature passed a bill authorizing the awarding of four demonstration projects to private groups. Some 12 additional states have enacted similar legislation. Typically, public-private financing schemes include a combination of bonds, loans, and other state government financing contributions. Assuming that current privatization efforts are successful, such alternative sources of funding will increasingly play a role in implementing ETC in the United States and Canada.

In Europe, funding for research into ETC technology is a key element of the European Union's Transport Telematics Applications Program. Of the total budget of $282 millionóof which $165 million is available for road-related ITS projectsómore than $13.6 million has so far been allocated to projects that are either totally dedicated to or that incorporate research on toll collection. This figure will likely increase as budget allocations continue. The EC is also playing a fundamental role in securing agreements on the key issues of interoperability and standards and is funding one project, MOVE-IT (Motorway Operators Validate EFC for Interoperable Transport), and one initiative, CARDME (Concerted Action for Research on Demand Management in Europe), which will prepare the groundwork for the requirements of the 93/89/EC Directiveórequiring Member States of the EU who intend to introduce electronic toll systems to bear in mind the desirability of interoperability between systemsóto be met by 1998.

At a national level in Europe, funding for ETC varies from country to country, and in countries with no history of road use charging, funding availability is very often influenced by political considerations. It is commonplace for the funding of ETC systems to form part of a local government decision to build a new road, bridge, or tunnel, where tolls then generate the revenue to repay long-term loans. The right to collect this revenue is sometimes granted on the understanding that the tolls will cease as soon as the loan for the facility has been repaid. In Sweden, this process is being proposed for ETC systems on ring roads around Stockholm and Gothenburg. In Norway, which is already at the forefront in Europe for using road pricing systems to finance new road infrastructure, an ETC system has been in operation since 1990 for motorists entering Oslo. And in the United Kingdom, several bridges and tunnels have been built and financed in this way.

In countries such as France, Italy, and Portugal, with an established freeway tolling infrastructure, the decision to implement ETC is made by the toll operators, primarily as an aide to reducing operating costs, increasing toll revenue by maximizing throughput at toll plazas, and providing improved customer service. Funding for retrofits or upgrades is normally made by the toll operators from toll revenue. The status of toll operatorsógovernment backed, semigovernment, and privateóvaries from country to country. In Spain, all the toll authorities are private companies, whereas in France only one (Cofiroute) is a private company - the rest are quasi-government operations. In France, although the toll operators are responsible for the implementation and funding of ETC installations, the government is particularly keen for them to implement a standard national system - TÈlÈpÈage Inter SociÈtÈ (TIS). Under this initiative, one lane - possibly two - on the French freeway network will be equipped with an ETC system by the year 2001. In other European countries, toll operators operate as private companies, but receive the majority of their capital from the State in order to function.