A new public and private sector initiative is creating new possibilities in road traffic services. Eemil Rauma and Elis Pöyry reveal all.
New possibilities are arising from the emerging revolution in personal transport. The efficiency leap brought by IT to other sectors of society has yet to be experienced in road traffic, which is one of the largest businesses in the world. The Finnish authorities and companies together with international companies are looking to bridge this market gap with an innovative project.
The Finnish Ministry of Transport and Communications has launched an experimental project on electronic transport services for 2014–2015 together with industry players, a pilot to activate the market for applications and services in road traffic, which goes under the name Traffic lab. Here the role of IT is to integrate road traffic more strongly with other transport modes and to embed it in a smart environment and infrastructure.
The change towards “Traffic as a service”
The value of Finnish transport markets alone is €50 billion from which households and companies are paying the lion’s share. Given this huge market, even small efficiency improvements can bring substantial savings to companies, consumers and to the public sector. For example in the metropolitan area of Helsinki almost 40 per cent of the time the delivery cars and trucks are is consumed by searching for unloading and loading places. The rising costs of transport services guaranteed in the law to the elderly, handicapped and other groups are increasing constantly whereas the solvency of the public sector is diminishing. This causes a dire need to improve the efficiency of these services. The best way to do this is by bringing novel solutions from the IT side to road traffic.
By introducing the Traffic lab project, the ministry aims to tests new electronic services and new operating models for road transport in cooperation with other authorities and the private sector. This paves the way for a change towards “traffic as a service”, a model based on a new kind of demand by consumers. This is an inevitable path of traffic evolution as services are moving towards a “pay how you drive principle”. Market forecasts predict that up to 50 per cent of vehicle insurance payment schemes in 2020 will be based on actual use and at the same time usage-based pricing will be adopted for both vehicle leasing charges and car loans.
A Moving Revolution
As mobile Internet, positioning systems and a host of services and applications are becoming an integral part of road traffic, they also open doors for a larger paradigm shift. This enables the consumers to choose the best way to move from place to place and the companies to provide these services. All this is enabled by the “Internet of Traffic” that is the key to new services. Whilst the setup and technology are simple and foreseeable, the Internet of traffic will revolutionize the way we move. It will include
- Mobile broadband
- New handy interfaces
- New services
As the technology is evolving, so are our experiences as consumers. We demand more and more from our cars and nowadays the most important factor in selecting a new car isn’t the old power and acceleration figures or energy efficiency, but vehicle connectivity to the outside world and the onboard technology options1. Cars are evolving into an important media consumption channel and becoming a new part of our everyday connected devices. We spend around 90 minutes a day in traffic and as new technologies make the interaction between users, vehicle and environment possible, it grants the users the access to social media, games and interactivity with the surroundings. This brings entertainment in cars to a whole new level and is part of the more general trend of gamification. Connected cars are gaining growing market shares in western counties. This is also backed up by government regulation, which requires cars to be fitted with e-Call or positioning systems depending on the country and region.
Goals of Traffic lab
Traffic lab combines the best of both worlds by bringing the private and the public sector to work together in creating something new and valuable – services that make your personal transportation easy, smart and ecological. Finland has a long history in successful “public-private-partnership” and this is a definite advantage in making the phrase “Finland is Traffic lab” come true.
The project has four goals:
- Ignition of the consumer market for traffic applications.
The project aims to promote consumer markets in electronic transport services and to analyze impacts the services will have. The pilot acts as the first push for electronic user services in vehicle transport in Finland. The goal of the market demonstration is to pilot the model in the consumer market.
- Common platform for commercial and public mobile services
Private and public sector services will be provided within the same service package. This requires specification of interfaces, procedures and technological requirements.
- Enhancing the know-how of public offices
During the trial the public authority will develop a capability to procure, use and produce information over ” the ecosystem services model” (Designated project of the authority)
- Support the market through innovative procurement
Participation is limited to companies or company groups that:
- Are able to produce road pricing data to public authorities
- Enable traffic apps
- Commit to the operating model and preconditions
Preconditions may include for example vehicle classes and types, price level of data, privacy protection, technical capability (SLA), etc. Conditions do not include specific technologies, company size or scope of operations, etc. The authorities are open for any technological approaches from the industry.
Role of authorities and example services from the market
The authorities are at the same time performing the roles of a customer and a provider. This means that on one hand authorities are buying information from the companies who gather this from their fleets and on the other hand they are also providers as they give their own data for companies to use. Companies gather their data from their fleets that are fitted with data collecting devices. The customers who allow this device to be installed to their cars receive compensation from the authorities and can immediately access the new services. In accordance with the Finnish government decision in spring 2013, the project will also test technology solutions, readiness and applications of transport pricing systems. No actual taxation or obligatory information disclosure from private people to the authorities is related to the project at this stage
Examples of novel products born in the pilot include remote maintenance and repair services, an automatic driving diary, which automatically produces report for the tax authorities if needed, different kinds of fleet management programs, parking slot booking services and many more.
How to get aboard?
Traffic lab is open to all kinds of companies and consortiums who wish to take part in developing new kind of traffic services. Businesses can test and develop their own services and applications in a real market ecosystem. The state has the role of a customer and a provider of opportunities and the businesses themselves will invest in the development of their operations. The estimated budget for the entire project is €5-8m. The market demonstration was launched in spring 2014 and it will last until the end of 2015. At the end of the project its effectiveness and user experiences will be examined. The project will be presented at the ITS Europe 2014 Congress in Helsinki in June. After the test period, the market is supposed to continue on its own without government intervention. Government or municipalities may still want to buy services or traffic data from the companies involved after the test period.
A pilot of commercial actors and the authorities is divided into two projects that will be carried out at different stages:
- A service pilot project that creates rules and necessary definitions for the provision of both public and private sector services on the same service platform. The authorities will develop their activities so that they can buy both real-time and distance-based information on charge criteria, and businesses will develop their ability to provide services on a so-called multiservice platform.
- A market demonstration project, under which companies sell their services that have been provided under the multiservice principle to end users and other businesses. The services in the project are market-based and the authority creates opportunities for new markets by buying information and services from commercial actors. In order to participate in the market demonstration project, the actor/consortium must be able to deliver information or service that the authority needs in accordance with the requirement level and service and pricing levels following the multi service principle. The aim at the market demonstration stage is to create a service ecosystem that enhances the chances of small and medium-sized service providers to offer their services.
Eemil Rauma is an analyst with EERA
Elias Pöyry is coordinator of the Traffic Lab initiative and executive director of Electric Traffic
1 Forrester research 29.02.2014