Toll Insight spoke with Richard Arce, Executive Director of VINCI Highways ETC Solutions, and Chief Operations Officer & Chief Commercial Officer of TollPlus LLC.
1. You have had a long history in the tolling industry from both a public agency and private company perspective. Please share some highlights of your professional career and how you ended up at TollPlus and VINCI Highways.
It’s pretty amazing to think that I’ve been in the tolling industry for almost twenty-eight years. Interestingly enough, I came from the oil industry working as a regional manager for independent dealers of Shell Oil Company. I stumbled into the tolling industry during a transition move to Florida. I figured I’d take a temporary job until I settled my move. I responded to an advertisement for an assistant manager with the Florida Department of Transportation – Office of Toll Operations. I remember telling the hiring manager that I was looking for a job for only a couple of months to keep me busy. Well, seventeen years later and I was still working with that agency and had progressed through six different management positions. It was an exciting period to see us transition from manual toll collections to Electronic Toll Collection (ETC), and finally to All-Electronic Tolling (AET). One of my career highlights was receiving a Leadership Award for transforming a region into an internal metrics leader. I could not have achieved that without the support of all those that worked with and supported me, as well as those that mentored me along the way.
I then got an opportunity to work on the other side of the table as a service and solution provider with companies like Kapsch, CAI, and Conduent – each time getting a chance to build and lead organizations. This gave me exposure on an international scale, where I have also been a key contributor in assisting organizations in pushing for the transformation of technology and services to enhance the road user experience. Most recently, I was recruited by VINCI Highways, a subsidiary of VINCI Concessions, to take a leadership role in TollPlus. This was a big surprise to me, as I knew TollPlus' capabilities very well, especially those of the founder, Suresh Kakarla. It has been an amazing collaboration with Suresh to drive his vision for a paradigm shift in the tolling industry, focused on innovation and execution. I’m now also responsible for the ETC & Mobility division of VINCI Highways and related ETC companies, where the focus is on adding value to road users by leveraging technology and associated payment technologies to provide seamless access in the mobility ecosystem.
2. How important is innovation through the use of technology at your company?
We pride ourselves on being a technology-forward company, leveraging advanced technologies to provide a remarkable user experience for those using our solutions. Therefore, we are always researching ways that we can integrate new technologies into our product offerings that will ultimately help to make our clients’ jobs easier while reducing their operating expenses and maximizing their revenue capture. In order to accomplish this, we have a proactive team constantly examining and evaluating technology trends, so we remain relevant and up-to-date with our offerings. Yet, we are still quite picky on the ‘what’ and ‘when’. We make sure we don’t invest in the “flavor of the month” technologies, but rather we focus on those technologies that add sustainable and real value to our clients. Our clients want to decouple from platforms that don’t allow them to evolve with the demands and requirements of their constituents as they relate to efficient travel and associated services. Hence, our modular technology allows for growth and independence compared to systems that are tightly coupled, which typically require major change efforts.
We see technology from two client perspectives. Our direct clients tend to approach technology as a venue to enhance services and for revenue assurance. We also have the indirect client, road users, who want to leverage technologies to make informed travel decisions, have options on the roads they choose to travel, have a seamless travel experience across the transportation ecosystem, potentially use multiple modes of transport, and finally, to have a format to easily pay for such services via a single platform. If you think about the evolution of the tolling industry at the most basic level, we used to collect tolls to pay for bonds, operational costs, road maintenance, etc. Technology quickly became the common factor to add efficiencies and proper controls, and ultimately, to enhance a user experience.
3. Can you provide some more background into your newest back-office implementation for NTTA?
We were formally awarded the contract in 2018 with a notice-to-proceed date of September 7, 2018. We were able to get through the full system design and the completion of development by the end of 2019. Then, in early 2020, the COVID-19 global pandemic hit, which necessitated us to react quickly to adapt to the changing work conditions and move our multiple project teams to a remote working environment. We performed all testing, including SIT (System Integration Testing), QA (Quality Assurance), and LPT (Limited Parallel Testing) remotely to ensure the continued health and safety of our staff, our client, and our third-party partners.
Meticulous planning took place prior to Go-Live to ensure that all components were considered. Load/performance testing was conducted to simulate approximately 7,000 customers, 700 CSC staff, and 300 image review staff all using the system concurrently. On December 31, 2020, all NTTA walk-in customer service centers were closed, and the legacy system was taken offline. On January 6 of the new year, NTTA staff began the transition to the new system, and on January 11, the walk-in customer service centers reopened, and our new back-office system was operational.
The production implementation included the successful migration of data from the legacy system – consisting of 17.6 million accounts (3.3 million tag and 14.3 million ZipCash), 2.34 billion trips comprised of NTTA, TSA (Tolling Services Agreements), and IOP (Interoperability), and 500 million payments.
Within the first 24-hours of Go-Live, over 10 million trips were processed; and within the first 72-hours of Go-Live, all backlogs were processed. The success of this transition was even more significant since it took place during the global COVID-19 pandemic. TollPlus and NTTA worked together closely to ensure a smooth and seamless implementation – managing all the moving parts, including a substantial number of third-party integration points. The success of this implementation was driven by the commitment of all stakeholders to succeed as one team and understand that a project of this magnitude had to be managed in an agile environment. As we have seen in the industry, traditional delivery methods are not optimal. When I get asked what led to our successful implementation, and looking back at how we got here, there were three clear characteristics: a customer that trusted us, a customer that let us do what we do best, and a real interest for all parties to succeed (agency, consultants, contractors, and vendors). We’re humbled by all the factors that led to a successful implementation of one of the largest back-office system transitions in the Americas.
4. What do you see as the biggest challenges in the tolling industry over the next 5-10 years?
There are common themes that seem to resonate year after year.
For example, the lack of funding due to gas tax shortfalls will remain an issue as automobile manufacturers continue to ramp up the production of more electric vehicles.
Privacy concerns continue to be key; protecting customers’ personal data must be a primary focus for tolling agencies. With stories in the news on almost a daily basis about a company’s or government agency’s infrastructure being hacked and then held up for a ransomware demand, agencies must continue to harden their IT environments to make it more difficult for them to be penetrated and compromised.
Another issue that we see is a challenge to the equity of tolling, where some hold the view that tolls are a regressive tax that often disproportionately negatively impact lower income drivers. With congestion pricing schemes starting to become more prevalent in the U.S., this concept will only be exacerbated.
Also, we contend with the challenges of developing infrastructures and schemes that have minimal impact on the eco-footprint.
Interoperability and enforcement schemes, without a legal framework to collect or guarantee a payment of tolls in an equitable manner across lines, is one of the main barriers of investments towards interoperable frameworks. Users of toll road systems are becoming savvier and want access on their terms, with a clear value to their choice.
Finally, I believe an important challenge in our industry will be in realizing that no one “owns” the customer. This does not mean that individual brands get diluted, but that in order to transform the customer experience, we need to provide links to services that might be outside our brand. Think from the perspective of the Amazon Marketplace, where we could potentially buy bundled services from multiple providers in a one-stop-shop. Hence, we are looking at a shift from customer “ownership” to providing an open service. At VINCI Highways, we are closely aligning to how technology and road user services are tightly linked to customer behavior and choices; consequently, it’s a key factor to enhancing the customer experience.
5. What new technologies or innovations do you see becoming more mainstream in the tolling industry?
We are in a mobile era, where we make decisions and associated purchases at the tips of our fingers. I can update all my mobile payments, pay for gas from my smartphone, and check-in to board a flight with my smartwatch. Therefore, technology from an end-user perspective will be driven by a mobile/wireless environment. Our wallets have become digital. For example, when my son became a teenager, I bought him a wallet that he could use to carry ID, credit cards, money, and other important documents. Today, in his 20s, he carries only a smart phone and a digital wallet. We need to be able to understand that our customer base is changing. They don’t want to stop at a lane, pay cash, and wait for a gate to go up. They want efficient choices and an easy way to attain services.
I see mobile technologies evolving into a virtual environment to make informed choices on travel preference and beyond, through to full trip management. For that digital transformation to impact the mobility ecosystem, infrastructure will also have to evolve. Most likely, we will see more capabilities in the devices we use to wirelessly communicate with infrastructure. Whether via GPS/GNSS solutions, vehicle-embedded radio frequencies or other mobility vehicles, traditional toll collection methods will need less physical interaction with roadside systems. Data dumps are a thing of the past, as we are in an age where we want to filter out useless data and receive data specifically tailored to our preferences and characteristics.
Therefore, technology innovations will come, expanding artificial intelligence with machine learning algorithms. Yes, I see electric vehicles and self-driving vehicles becoming increasingly mainstream, but until the financial value matches the environmental value, critical mass adoption is still years away. But at the end of the day, we provide an experience for a particular journey. I can’t predict which specific technology will gain more ground over another, but it’s clear that technology will evolve around that journey.
Thank you, TollPlus, for sponsoring Toll Insight!