Electronic Toll Systems: Connectivity, Convenience, and . . . Collections?
Electronic toll collections have revolutionized the highway driving experience.
On October 28, 2016, Massachusetts Department of Transportation (MassDOT) toll collectors worked their final day in toll booths, marking the conclusion of almost thirty years of digital transformation in the Massachusetts toll industry.[1] The elimination of toll booths in favor of electronic toll collections (ETC) created value for both driver and MassDOT. Drivers benefited from improved convenience, the elimination of toll-related traffic and wait times, and reduced traffic congestion. However, digital transformation introduced new challenges to MassDOT’s business and operating models that require vision and future investment to resolve.
By building highways, tunnels, and bridges across the state, MassDOT’s business model provided drivers with unmatched personal mobility by automobile, bus, or motorcycle at little cost. MassDOT created significant value for its constituents. MassDOT financed infrastructure projects with bonds, with toll revenues collected to pay bond interest and operating expenses. Fulfilling the MassDOT’s promise to consumers—convenience, speed of travel, and safety to many other communities—meant purchasing construction equipment to maintain the Pike, weather equipment to keep the roads open in winter, and compensating a large work force to man both toll booths and equipment. MassDOT utilized a labor-intensive process where drivers stopped to pay tolls in cash, which MassDOT employees later transported to secure holding facilities.
In the mid-1980s, technology advances led toll authorities to research ETC, which reduced the cost to operate toll roads by eliminating the labor required to collect tolls manually. In order to track and bill drivers, the toll authority issued an active radio frequency identification (RFID) transponder with a unique signature to each driver. Sensors installed at road entrances detected the entrance and/or exit of drivers and stored the time and distance data, which was used to calculate rates and bill drivers. Another advance made ETC possible: network connectivity. Sonnet fiber optic cable, laid along highways, created networks allowing RFID sensors to communicate with data centers that could monitor and bill customers in real time.[2] The proliferation of credit cards later allowed ETC authorities to charge customers directly for payment, substantially reducing the storage, labor, and transportation costs of handling cash. ETC was proven in Europe and some U.S. states, and was subsequently adopted by MassDOT in 1998 as the “MassPass” (later renamed “Fast Lane” and “E-ZPass”) program.[3]
Instead of having to stop at a toll booth, consuming time and often creating traffic backups, at full utilization, ETC saved drivers more than 800 hours of time every day, or 280,000 hours per year.[4] The reduction in traffic and congestion also saved drivers up to 875,000 gallons of gasoline per year.[5] MassDOT later decided to eliminate cash toll booths entirely by 2016 by installing new gantry-mounted RFID sensors and cameras.[6] Instead of employing toll collectors, motion-activated cameras took photos of vehicle license plates. License plates corresponding to those vehicles without RFID transponders were tracked to addresses provided at vehicle registration, and bills for the tolls due were mailed to those addresses.
Although RFID, fiber optic, and internet technology revolutionized MassDOT’s toll system, they introduced new challenges. First, they required a large upfront capital expenditure. Second, the elimination of the labor force in a slow growing state economy was publicly controversial.[7] Third, government collection and storage of driver location information and pattern of life was also controversial due to privacy concerns, and facilitating cash toll collections provided an “opt-out” mechanism for concerned drivers. Lastly, ETC introduced higher risk of fraud; RFID transponders and license plates alike could be stolen.[8] Although ETC introduced noticeable cost savings, it increased mailing costs for drivers who had to be manually billed and led to both debt collection and bad debt expenses that were previously minimal or nonexistent.
In order to overcome these challenges, MassDOT must consider technology and the future. First, instead of relying on the current 16-state E-ZPass Interagency Group and registration databases to bill out-of-state drivers, it should seek to expand the interagency group to all states and territories. Second, and most importantly, MassDOT must invest in the next generation of technology that can tie toll bills to individual drivers rather than RFID transponders or license plates. To do this, MassDOT should utilize the existing technology platform that almost all drivers possess—mobile devices. Transponders built into devices or cellular and Bluetooth signals could replace RFID, and mobile applications could be used to identify drivers versus passengers. Devices also offer significantly more security than simple transponders, which have no protections.
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[1] Nicole Dungca, “Collectors Pay a Fond Farewell to Mass. Pike Tollbooths,” Boston Globe, October 29, 2016, https://www.bostonglobe.com/metro/2016/10/28/tolls/IyHxV3TlC1hFMT25pYBIfL/story.html, accessed November 2016.
[2] Don Flint, “Electronic Toll Collection,” SANS Institute, April 27, 2004, p. 6, https://www.sans.org/reading-room/whitepapers/threats/electronic-toll-collection-1424, accessed November 2016.
[3] Economic Development Research Group, Inc., “Economic Impact of the Massachusetts Turnpike Authority & Related Projects,” February 2006, p. 8, http://www.edrgroup.com/pdf/mta-economic-v1.pdf, accessed November 2016.
[4] EZDriveMA, Massachusetts Department of Transportation, https://www.ezdrivema.com/AboutEZDriveMA, accessed November 2016.
[5] Ibid.
[6] EZDriveMA, supra note 5.
[7] Dungca, supra note 1.
[8] http://wjla.com/features/7-on-your-side/new-ez-pass-scam-costs-local-business-for-52000
Hi Phil,
This article highlighted to me how digital technology can have a major impact on the minor annoyances of living in civilized society (i.e. tolls, parking meters, payment of T fares, etc.). Do you have a sense of the percentage of total cars going through tolls that DON”T have an ETC system that then require direct billing? If it’s a large percentage this could be potentially quite problematic. Oftentimes addresses on registration forms are inaccurate and if people are billed, do not receive the bill, and are then “punished” for not paying their toll bills this could be extremely problematic both for drivers and the state. Given that pretty much everybody carries a smartphone, it seems technologically possible for a toll system to be based on an app on your phone that charges you when you pass through certain gates on the highway (thus obviating the need to purchase an ETC transponder). That said, there are major privacy concerns with the government tracking people’s smartphone movement and I would be concerned that the government could start using this data for other purposes (i.e. fining people for “speeding”) when on the highway.
Taki
Tolls have come a long way in their evolution from the ancient bridge troll who collected money through force when helpless travelers were constricted to narrow passageways such as bridges. I know much technology exists to disguise cars from police laser detectors, surely someone is working on technology to spoof toll transponders.
Nice post, Phil. In your research, did you come across any information about what happened to the toll workers? Were they provided any resources to retrain and look for new jobs? This is just one example of an area where technology is directly replacing human labor, and I believe this is an issue we are all going to have to grapple with as leaders going forward. I hope that as manual jobs are disrupted and replaced by technology, we as a society can agree that it is important to help the people impacted transition to new livelihoods. There’s no doubt that the benefits of ETC are huge – but let’s not forget that some people did probably get hurt by the change through no fault of their own.
Phil – Thanks a lot for sharing this post. As you point out, one of the keys to success here is on the collection side. I have some exposure to the electronic tolling systems. The adoption of EZPass by drivers is going to be a crucial component of realizing the cost saving efficiency of switching to electronic tolling. The MassDOT is lucky that EZPass is so prevalent and highly adopted on the East Cost. There is limited training required for drivers to realize that these roads are not free just because there isn’t a physical toll booth. In other parts of the country where electronic tolling is newer and primarily done through a pay-by-plate system, the results have been a disaster for those roads because collections are so hard [1]. In fact, from personal experience with one pay-by-plate toll bridge I worked with in Virginia, they do not even bother sending invoices to cars with out of state plates. Being a first mover with electronic tolling without local experience or expectations around tolling can make for a lot of lost collections. However, I think given the prevalence of EZPass in the area, MassDOT should be net better off with electronic tolling.
[1] http://abc7news.com/technology/7-on-your-side-fastrak-customers-unfairly-hit-with-penalties/515536/
Interesting topic. I would be curious to see how to integrate the system in markets that have yet to adopt ETC. It seems to me that the whole system is highly reliant on an important amount of bandwidth. In areas where broadband is not yet a cheap commodity would this business model be viable. I also question the job loss but understand that the efficiency gains are quite massive. Perhaps there could be a program to reintegrate that lost labor force into jobs such as device sales and car registration. This could help avoid wrong address issues for billing and collection purposes.