Toll Insight spoke with Peter Ummenhofer, Founder & Managing Director of GO Consulting.
1. What is your background and what is GO Consulting doing?
I'm an industry expert and former senior executive in the field of ITS and mobility. After working more than 20 years in this industry for companies like Kapsch TrafficCom, PTV and Continental, I decided to found GO Consulting. My work as an independent consultant involves supporting system vendors, service providers, start-ups, as well as investment firms with strategy consulting, market research, innovation, and product management support as well as investment assistance.
Over the course of my professional career, I was able to gain deep insights in Electronic Toll Collection systems, Advanced Traffic Management Systems, road safety systems, mobility solutions and services, smart parking, connected cars/V2X as well as fleet telematics. At Kapsch TrafficCom, for example, I had several management positions during the 15+ years I was working there. I was in charge for Kapsch’s tolling services programs, was heading the solution management division, and was responsible for broadening Kapsch’s activities into the ITS space by adding ATMS as well as other ITS solutions to the portfolio. And when working for PTV in the early 2000s, I was heading the product management team that oversaw early mobility solutions like offboard navigation as well as their famous eServer suite, which supported building of all sorts of customized ITS and mobility solutions.
Due to the long engagement with Kapsch, I naturally have a particularly strong background in tolling starting from the various tolling technologies used around the globe (DSRC, RFID, ANPR, GNSS, apps), to the different tolling schemes (highway tolling, city tolling/congestion charging/low emission zones, all road tolling/road user charging) as well as the global vendor landscape and latest market trends.
2. Talking about market trends: How do you see the tolling world changing?
Tolling is one of the ITS segments proving the biggest growth potential. There are several factors making this market very attractive. At the same time, there are some fundamental changes ongoing to make this market quite challenging for existing system vendors. My personal top 5 trends which are already or will become most relevant for the further development of the tolling market and the respective industry are:
Tolling services: One of the biggest changes the tolling world is currently undergoing is the trend towards tolling services, driven by interoperability but probably even more by the general trend towards mobility services. Although it took some time in Europe for EETS (European Electronic Toll Service) to take off, we now see more and more EETS service providers entering the scene. But also, on a national basis, there are toll service providers allowing road users to pay tolls to different highway concessionaires in countries like France, Italy or Portugal, using a single account they have opened up with a national toll service provider. And in the U.S., we can see an increasing number of toll service providers like EcoToll, GoToll, Paytollo, Uproad, VADO etc. offering mobile apps allowing road users to pay toll conveniently using their smartphone. I do expect that we will see toll service providers popping up globally more and more as it is one way to achieve interoperability but also to reflect the need of end users for digital services supporting them when travelling from A to B. Telepass (Italy) and ViaVerde (Portugal) are good examples of local toll service providers which have evolved into “multi mobility services providers”, allowing end users to pay for toll, parking, fueling, EV charging and public transport using one single account.
Tolling apps: Many toll agencies still struggle to allow road users to pay toll using a smartphone app. And the reasons why toll agencies don’t support app-based toll payment are numerous, starting from user privacy concerns to less control over the tolling technology, which bears the risk of toll leakage in case things are not working properly. I do understand all those arguments, but the widespread use of smartphones by end users plus the trend towards smartphones-based mobility services like navigation, parking payment etc. will lead to an increasing number of tolling schemes in which road user can pay their toll using an app. Agencies cannot neglect any longer that people use their smartphones for accessing to all kind of digital services on a daily basis, which is why they have to be open for app-based toll collection. And there are pioneering, promising examples: Besides the above-mentioned toll app providers in the U.S., Europe with the new e-Toll system in Poland has a first example where users – besides other options -- can pay for driving on tolled roads using their mobile phone. And another example is Indonesia, which just announced the launch of an app-based toll system, which shall go live end of 2022.
City tolling: Another very relevant market development will be an increasing number of cities deploying congestion charging, low emission zones or other forms of pricing-based city access schemes to cope with traffic and environmental problems. For a long time, only a handful of cities like Singapore, London, Stockholm, and Milan had deployed pricing-based city access schemes and one could get the impression that city tolling will not see a breakthrough. However, climate change and air quality problems made these higher up on the agenda of politicians all around the world. More and more cities therefore either deployed a congestion charging system or a pricing-based low emission zone already or do seriously consider the introduction of such a scheme. New York or several cities in the UK are recent examples for this upcoming trend.
Toll replacing motoring taxes: With more efficient combustion engines and the emergence of EVs, income from motoring taxes is declining globally. Governments are therefore starting to consider some form of general road pricing to compensate for the decreasing income from fuel and vehicle taxes. In the U.S., there are several states already setting up VMT/MBUF programs. In Australia, three out of the eight states have introduced a Zero and Low Emission Vehicles (ZLEV) road-user charge for this reason. And, leading countries in Europe like the U.K. are considering replacing today’s fuel tax with Road User Charging, as more and more drivers transition from traditional petrol- and diesel-powered vehicles to greener alternatives.
Toll-based demand management: As more road pricing schemes are deployed, they can provide new ways of managing traffic, especially in urban environments. By applying respective tariff schemes, road users could be incentivized to take certain routes, avoid specific zones, start their trip in off-peak hours or shifting mode. Singapore and Stockholm have used variable tariffs to manage traffic for years. And most recently, London’s major announced to explore the possibility of a “smart congestion charge” to replace their existing congestion charging and low emission zones, charging motorists by distance traveled, time and location – all factoring in air quality and congestion in real-time.
3. How will the ETC vendor landscape be affected by all this?
Short term, we will not see fundamental changes in the way toll systems are being sold, deployed, and operated. Still, if not done already, ETC solution vendors now must think through what all those trends will mean for their business mid to long term and start to adapt.
Out of the various trends listed above, the emergence of toll service providers is probably most disruptive for the industry and is therefore most relevant for ETC solution vendors. Each company has to decide where to play and what parts of the value chain to cover in the future. While some vendors started their own mobility services activities like Abertis with Eurotoll and Bip&Go, T-Systems with Toll4Europe or Kapsch with Uproad and tolltickets, others may decide to focus on providing technology to the emerging toll service providers. As another example, TransCore, in cooperation with partners, is providing in-vehicle equipment allowing car manufacturers to offer a toll payment service to its clients. And a third option is to focus on those parts of an end-to-end solution which will remain in the hands of toll agencies, reducing their delivery scope to systems for compliance checking / toll enforcement or back-office systems, allowing toll agencies to connect to the platforms of the emerging toll service providers.
Furthermore, the trend towards using road pricing for traffic management will require vendors to integrate ETC solutions with advanced traffic management systems. Companies who have both type of solutions in their portfolio are best positioned, as they can start pre-integrating their products – making it easier for them to offer such new demand management solutions at lower cost and with shorter time to market. Companies which will be able to offer “pre-packaged” solutions will have an advantage over companies that just can provide one of the two elements needed to build an integrated suite to manage traffic based on variable or dynamic road pricing.
Finally, we can expect to see further ETC solution vendors adding a GNSS tolling solution to its portfolio (comprising of smartphone apps, map matching functionality, etc.); I would assume that some of the European players may try to use the trend toward GNSS to enter the U.S. market, since in Europe, GNSS tolling is quite common for some time already.
4. So how will toll collection look like then in 20 years from now?
Well, in today’s fast-moving world, it is difficult to precisely predict the future. And since the various regions around the globe each have their nuances, it is likely that we will continue to see differences in how toll collection works from region to region.
However, I do believe that overall toll payment will become more seamless and less explicit for the end user. Toll will not be collected directly by authorities and road agencies any longer but increasingly via service providers, which offer toll payments as one element of their mobility services portfolios. Those service providers may be vehicle manufacturers, fleet services providers, insurance companies, MaaS providers, or today’s toll service providers who will evolve into broader mobility payment service providers. Each of those service providers will focus on selected target groups and provide a complete and fully integrated “fit-for-purpose services bundle” best fulfilling the specific needs of their target clients.
I would guess that by 2040, road users will have to pay some form of road pricing almost everywhere, as today’s motoring taxes will stepwise be replaced by road user charging; and cities will manage traffic more and more based on road pricing, as highway authorities and concessionaires will continue to use tolling for road infrastructure funding. So, tolling will be way more common and therefore being perceived as a “normal” part of daily life without customers being as conscious about it – pretty much like paying a fuel or vehicle tax today.
Finally, we will see a wide-spread use of road pricing for managing traffic by applying variable or truly dynamic toll tariffs. To do so, toll information will have to be made available in navigation systems and travel companions, so that road users can make choices regarding routes, travel times or transport modes. And road pricing will likely be the way how route choices of autonomous vehicles will be managed by road authorities in the future. As manual drivers will be impacted to take certain routes or start trips at certain times because of the variable tariffs, so will routing algorithms of AVs (or of their respective fleet operation centers) consider toll costs when driving from A to B.