What’s a government to do?

I have been describing satellite (GPS)-based multi-function payment telematics that encompass road-tolling, parking metering and pay-as-you-drive insurance since 2003. First in patents filings, then at EU conferences then, starting in 2005 in the EU trade press, and in my blog (grushhour.com) since 2007 (this one is fun) and now in keynote speeches at transportation conferences and workshops in North America.

A reader recently asked: “How best can the government facilitate the development of private sector ‘multi-function payment telematics’?” A critical question, indeed.

The Government has two critical roles to play.

The first is to support standards in order to protect consumers, which in this case of road-use payment telematics encompasses users (drivers) and payment operators (toll operators, parking operators, insurance companies). This will include interoperability, communication interfaces, privacy, charging reliability, security, and evidentiary weight for non-repudiation. The International Standards Organization via its European partner, CEN, is addressing these standards now. Only one American regularly participates. More are needed.

The second is encourage voluntary use of telemetric devices for parking and insurance, ostensibly while waiting for policy and planning to be ready for GNSS-based road-tolling. One way this can be done is to encourage municipalities to permit programs for voluntary parking payment via GNSS meters. More detail on this, below.

Another way voluntary use can be encouraged is by permitting PAYD insurance programs in jurisdictions where legislation still lags, or by mandating that a gradually increasing percentage of insurance files be converted to PAYD. There are also a significant number of ways to meter and charge for PAYD insurance and the ones that use pay-by-use telematics are the most fair. These can be encouraged through subsidies to municipalities that partner with insurance companies to bundle parking and insurance on the same meter. The attraction here is that once a few thousand vehicles in a municipality or megaregion are equipped for parking, then an insurance company can offer PAYD premiums to those motorists without consideration for developing a telematics system, since it would already be in place.

Still another way to encourage use is to permit users of these new devices to pay existing RFID tolls on the same bill, since these systems can be set to identify the identical tolling amounts. Those highways for which the tolling authority is a government could consider a small discount, as further motivation.

Of course, if these municipalities and megaregions were to offer rewards of, say, parking-payment credits, to vehicles that did not move during peak hours, or were small, or were electric, or were driven very efficiently (hypermiling), or were driven less often, and if municipalities permitted local business improvement associations (BIAs) to offer loyalty rewards to frequent shoppers in the form of parking credits, this would further develop this new metering sector as it would reward users who subscribe to metering services.

So the short answer to the question “How best can the government facilitate the development of private sector ‘multi-function payment telematics’?” is simple to permit demand to be created by removing restrictions and encouraging the shift. Soon after would follow numerous competitors. Here is what some of them would look like.


Now to return to parking – by far my favorite congestion-related subject.

The advantages of satellite-based parking for a municipality are:
  1. Infrastructure costs are reduced which enables expansion of managed parking.
  2. Enforcement costs are reduced permitting the same parking officers to manage an expanded area of municipal parking.
  3. Citations for meter violations can be replaced with graduated pricing, reducing enforcement labor per parking spot, court backlogs and court services costs, while raising revenue and net revenue.
  4. The reduction of underpriced or unpriced parking reduces urban street congestion.

The advantages of satellite-based parking for a driver are:
  1. No need to pay each time you park.
  2. Pay only for the minutes used.
  3. Can overstay without ticket-anxiety.
  4. No parking tickets for expired meters.
  5. Expense management for business users (note that parking payments may be a business expense, while a parking citation is generally not).
  6. Able to purchase PAYD insurance (to save money).
  7. Able to pay existing (and new!) road-tolls with the same device.

The steps a municipal government must take to permit satellite-based parking:
  1. Permit one or more satellite-parking operators to meter and collect payment for your municipal parking spaces, lots and garages.
  2. Prepare pricemaps of the parking facilities. These are geographic locations (labeled polygons) with associated times and prices. Give these to the satellite-parking operator(s).
  3. Promote the service to your residents, especially to those receiving parking tickets, since those drivers generally find parking payment systems (which include payment of citations) to be bothersome. (Stick a service offer under the wiper with the ticket!)
  4. Do not ticket satellite-parking users for meter violations. Use graduated pricing instead. This should be set for the municipality to be able to encourage short-term parking to remain short, while appreciating the same net revenue as before.
  5. Offer a startup incentive such a credit on account for the first several hundred users.
  6. Design rewards for drivers to encourage both less driving and the use of satellite-based, in-car meters.
The advantage to Departments of Transportation is that voluntary adoption of road-use/parking-use meters permits governments to watch the technology develop and ascertain its reliability at very little risk, while users become accustomed to its fairness, convenience and privacy protection.

Everyone wins. No political suicide.


Here is an sample roadmap for a megaregion to introduce Pay-As-You-Go (PAYG) metering for a million or more vehicles. Click on image to enlarge.


Breaking the mold

Thinking about universal road tolling for those who are not planning, designing, or making policy for it, is often very simple. Most opinions are one of: “not-on-my-roads”, “big-brother” or “it’s inevitable”.

For those working or thinking about this all day, issues range from acceptance, cost containment, economic effects, economic efficiency, enforcement, fairness, how to get started, privacy protection, what prices to set, what technology to use, when to start, which roads/areas to price, and many more. The considerations that need to be addressed are even more numerous and far more nuanced than this, and as with any program that meets with social and political resistance, one can imagine how difficult a mandated transition could become.

So far the history of GNSS-tolling has been government driven. A few EU countries have mandated countrywide truck tolling, usually on limited access highways. Germany’s GNSS-based truck-tolling system is the most matured example, although we can expect three more countries to join them during the 2010-12 period.

In the United States, the history of GNSS-tolling systems has been one of pilots and trials, such as in Oregon, Puget Sound and the current Iowa trial set in several US cities. More government initiatives.

To date, a government writes a request for proposals (RFP), companies submit tenders and an operational system (Germany) or a pilot (Oregon, etc) results. This government-led approach has four effects:
  1. Established companies wait in anticipation for large government contracts; but during that wait, the impetus for innovation is non-existent.
  2. Innovation, when it is unleashed, is bounded by the RFPs, which are generally written by consultants or bureaucrats familiar, perhaps, with knowledge of past pilots or something tried by one or more EU countries. Imagination may be bounded by the catalogue of work completed.
  3. Solutions are limited to single-functions because bureaucracies are stove-piped (road and parking people exchange few ideas, for example).
  4. Governments view transportation as a core economic management function upon which rests productivity-related movements of goods and people, and for which taxes must be raised and managed; hence, the requirements of collection and enforcement will trump the opportunities for service and value to the motorist. (This last point is becoming an increasingly sensitive issue as the social view of motorists begins to degrade as did the social perception of the smoker during the past 2 decades.* This effect, generally overlooked, will make migration to per-use payment more difficult as drivers will tend to feel harassed rather than served.)


* Notice that automotive manufacturers generally address motorists in one way, while toll collection authorities do so in another. It does not have to be this way. Road Authorities provide critical and valuable services – why not sell them as a benefit? At least two European manufacturers of multi-function tolling and payment systems, Kapsch and Q-Free, pitch lifestyle choices of convenience, and non-stop driving.
What would happen if a private company started to offer GNSS-based road-use meters for parking and PAYD-insurance, and what if these same meters could be used to collect existing tolls now handled by RFID or DSRC systems? What if they could also enable rewards, loyalty points and discounts? What if motorists found such a payment and reward platforms to be attractive?

We have started providing road-use meters to drivers in Winnipeg for use as parking meters a couple of weeks ago. This commercial approach is a first in the world. By that I mean, a private company is deploying satellite-based metering and fee collection on a voluntary basis for automobiles without government mandate (as was the case in Germany) or without a disposable and expensive pilot (as in Oregon, PSRC or Iowa). This system is a commercial system that will stay and grow if successful or wither and die if not. The government helps by providing parking pricemaps (locations and payment rules), telling its residents it is available (this marketing expense is perhaps the most substantial expense) and providing a few weeks of free parking and helping early adopters with a device down payment to get the project kicked off. We are able to keep some of the parking revenues which is expected to be more than offset by the City's ability to reduce enforcement costs and expand the range of parking-enforced areas.

The result is happier drivers, lower operating and enforcement cost per metered spot, enablement of expanded parking management at little cost, and most importantly experience with GNSS-based payment telematics that both governments and drivers sorely need to overcome fears and to see benefits. Our users are drivers who seek the convenience of not paying at a parking meter and the guarantee of no "parking tickets" (we simply graduate the fee upward as their stay overruns).

Here is one way to think about this approach to reduce or remove system costs for tolling the United States (this will be published in a month or so).

Here is how I thought Steve Jobs might approach the problem of an in-car meter.


The road to proper pricing is not as bumpy as you think

On Wednesday, December 16, 2009, Maarten van Biezen and Chris Nobel from The Netherlands Society for Nature and Environment, who would be certain advocates for the Dutch intention to price all road use, reported some concerns in an article called “The road to good charging can often be bumpy

Their article, reprinted here without permission, is important and needs comment. I usually comment on articles from journalists that do not understand the importance and fairness of this tax-shift, but Messers van Biezen and Nobel do understand, but have provided some undue admonishment to their government.
The idea of basing motoring taxation on the distance a vehicle is driven – generally known these days as a 'kilometre charge' – is in principle a good one which environmental groups have advocated for years. But as recent developments in the Netherlands have shown, the road to good charging can often be a bumpy one.

A number of countries have talked about a kilometre charge, and some – notably Germany and Switzerland – have introduced charging for goods transported by road. But the Netherlands want to become the first European country to implement such a charge for private car drivers following last month's proposals put to the Dutch parliament. This is indeed a historic move that should be welcomed.

But, the devil is in the detail. There are four significant things that should change in the proposed Dutch charge.

Firstly, the kilometre charge will replace the existing road tax and vehicle registration (or purchase) tax, and the amount of money raised by the kilometre charge must not exceed the combined income of the two taxes being replaced. The idea is that motorists will pay for using their vehicles rather than owning them, but registration or purchase taxes encourage the introduction of low-CO2 technology. Therefore the unacceptable effect of abolishing the registration tax will be that cars become less fuel-efficient. If the expected 15% reduction in kilometres driven does not materialise, we end up emitting more CO2.
The statement that “the unacceptable effect of abolishing the registration tax will be that cars become less fuel-efficient” is most likely a typo. The authors likely meant “the unacceptable effect of abolishing the road tax will be that cars become less fuel-efficient”. However, the Dutch government has wisely left the fuel tax in place (I think that is what the authors refer to as “road tax”, with apologies if I am wrong). So this fear of drivers reverting to gas guzzlers because of this tax-shift is completely unfounded. The opposite will occur. To consider further, the registration tax, which is quite high in most EU countries including the Netherlands is paid regardless of distance-traveled. A high fixed tax would require that a person thinking to extract the maximum value from his or her purchase would then drive as much as possible. Hence the economic argument (proven correct many times) is that charging by usage instead of by vehicle purchase price reduces driving. What a high purchase price means is that fewer people can afford a vehicle, but those that can will prefer to drive over almost any other alternative.
Secondly, the prospect of having regionally differentiated congestion fees is still unclear. The proposal makes a congestion charge possible after the full introduction of the kilometre charge (2018-2020), but it does not specify how such a charge should diminish congestion and new road building. If you don't charge people more for where their vehicles do most damage - and congestion is one of the negative impacts of too many vehicles on the road - then the charging system does not achieve its objective of steering mobility in an environmentally, and economically, better direction.
The authors are correct that charging by time and place of use is critical to congestion management. The Dutch government knows this and intends to introduce time-distance-place charging (TDP). “Charge maps” will not have been disclosed, because this takes time and negotiation. Since I have not seen these maps I cannot comment on them, but if the Dutch government charges a single flat rate and does not move to TDP charging shortly into the program, I will eat my hat as well as those of Messers van Biezen and Nobel. What needs to be done now is to guard that the charge maps will be designed in a transparent and easy-to-understand manner. Drivers need to be able to easily see how much a trip will cost in advance (similar to ask a taxi driver before you get in) and to not be surprised at the final calculation. Drivers also need to easily determine the cost difference of taking a trip at various times of the day, so that they may plan to avoid high tolls. Avoiding high tolls is the whole point of the program!
Thirdly, the government proposes to cap the total revenue at €6.6bn (2007 price levels). This has been much less widely reported than the proposed maximum charge of €0.067 per km. If the current proposal becomes law, the charge will begin at €0.03 in 2012 and rise steadily to its maximum by 2018. The capping of total revenue means that if mobility increases, the price per kilometre will fall! This would undermine the core objective of the law – a more conscious use of mobility - and will make environmental objectives harder to achieve. It should change.
Capping total revenue makes sense on a relative basis. These programs are about congestion cessation and collecting more than is needed for that purpose or for fair-funding purposes is inappropriate for nurturing user acceptance and trust. However, because we might guess that the underlying demand for mobility will increase, and because of normal inflation, an absolute fixed ceiling would indeed be an error. The reason that the United States has Highway finding problems now is that fuel-taxes are unindexed so that they are an increasingly smaller pool for funding our highways. I realize that the authors are congestion/emission focused rather than funding focused, but the analogy holds AND the two issues (congestion and funding) are strongly correlated.
Finally, the government proposes lower charges for trucks than for cars. As a result of the pledge not to raise average taxes for each category of vehicles, the proposed maximum charge for trucks will be only 2.4 cents per kilometre. In other countries trucks pay rates of 15 to 80 cents per km. You would pay less for driving a truck to the beach than driving your car.
This is most likely a temporary measure requiring the logistics industry to adjust its prices. Truck tolls should rise, as well, which have a very positive effect on fleet efficiency. The number of trucks that have been replaced or updated in Germany because of lower tolls for cleaner vehicles is astounding (this needs reference!) Remember, the person who is really paying truck tolls is the person eating the food or using the iPod that was transported by the truck. Raising both at the same time would cause additional economic ripples that a private vehicle driver may not want. You don't want to pay more for road use AND more when you eat at the same time! This kind of driver-thinking shows an anti-truck bias, which is not different from drivers who display anti-bicycle bias. We are all in this together.
There are times when we have to accept some Realpolitik, and when a new form of charging is being introduced, perhaps this is one time. But the danger of accepting a compromise to get a new form of taxation through the legislative process is that, when it comes into effect, it does not solve the problems it is supposed to solve, which can give the public a negative view of what should be a positive form of charging. That's why the Dutch government better try to get the scheme right, rather than make political concessions that could ruin it in the long term.
I think that the Dutch Government is VERY sensitive to “getting the scheme right”. I predict they will be very close, and with intelligent program design will be able to adjust in the first couple of years. They cannot be expected to make large changes after the first week any more that they can be expected to optimize perfectly for every driver type and every vehicle type and every trip type. I applaud the Dutch Government for its tenacity, diligence and courage.


Smart Mobility getting noticed as Cleantech

2009 is the year that smart mobility got noticed as a clean technology. I have complained here before that technology to reduce consumption (things such as road use at congested times, repeated circling to find cheap parking, or pay-as-you-drive insurance), had been overlooked until recently. This is changing.

At the Canadian Innovation Exchange (CIX), in the first week of December 2009, Skymeter placed in the CIX Top 20 and took top spot in the Clean Tech Individual Heat.

Below, you can see Skymeter’s CEO, Kamal Hassan (unrelated to the famous Bollywood star!), is looking the part, too. His firm was named twice earlier in the year. In March, IDC Canada named Skymeter one of '10 Canadian Green IT Companies to Watch', and in October, the Corporate Knights named Skymeter as one of the Cleantech 'Next 10' Emerging Companies.

These awards and mentions were hard-won by Hassan, who was repeatedly rebuffed by clean-tech venture throughout 2006-2008, because there had been no ‘category’ for technologies that mitigate travel demand, rather only for technologies that made the same or more happen more cleanly. According to Justin Horner, transportation policy analyst for the Natural Resources Defense Council, 14% of total (US) emissions come from light duty vehicles. Reducing that number, he said in a discussion about PAYD insurance requires three critical components for cleaner automotive travel: lower emission cars, cleaner fuels, and fewer miles traveled. The third leg, demand reduction, has been missing from green-investor baskets until now.

So how does Hassan’s Skymeter technology do this? By enabling governments to make road use payments and parking use payments visible to drivers rather than hidden in other forms of taxes such as property, income, sales or fuel, pay-as-you-go technology permits a shift in awareness which is well known to translate into avoidance of travel at congested times and places. Such a shift reduces single-occupancy-vehicle travel at rush hour and replaces it with other modalities such as time shifting, carpooling, transit, walking, biking, telework, trip chaining, and even moving closer to work. The drop in traffic volume and emissions level is usually around 15-25%, depending on price levels and available alternatives.


Pundit, Nicholas Parker, Executive Chairman of,
Cleantech Group, predicted 10 new trends for 2010:

One of these trends describes exactly where Skymeter plays:
Electric cars take the back seat to smart mobility
In 2009, electric vehicles and hybrids eclipsed fuel cell vehicles as the undeniable new center of gravity of the auto industry. Virtually every car company in Asia, Europe and North America announced ambitious clean car strategies, and many brought new models to market, in addition to startups funded by venture capitalists.

In 2010, clean cars will form part of a broader shift to smart mobility. Smart mobility will quickly permeate beyond simply the transport sector, and will be integrated into the new energy paradigm and influence the design of urban systems, even shipping ports. Look increasingly in 2010 for eco-city designs based on concepts such as “new urbanism.” Leading governments around the world will rethink tax systems, fiscal incentives and budgets to encourage greener forms of work and transport based on smart mobility concepts (SNCF, the French state-owned rail operator, set up a fund in 2009 specifically to invest in e-mobility.) [emphasis added]


How to toll a country for free

It is now possible to address all user fees, charges, taxes and insurance premiums paid by motorists for road and parking use in a single, transparent payment management system. This permits a government that employs this technology to obtain road tolling as a free service riding on a broader service suite of GNSS-mediated parking management, pay-as-you-go insurance and mobility credits and rewards. In other words, allow profitable, value-added services to fund system operational costs of road tolling, on the same business model that Google funds certain free services to Internet users from its advertising services. Here is how.

Increasingly, countries, states, regions and cities are considering tolling all or most roads in their jurisdiction. Why they wish to do this may be related to congestion, pollution, or sustainable funding and is discussed in many other articles and reports. Here, we assume the reader knows this process has started and will likely complete, worldwide, between 2020 and 2025. There are many commitments to deploy related systems in the next 3 to 5 years, some already legislated or in progress.

There are three usage-based, mobility-related payments that motorists must make when using their vehicles: parking payments, insurance payments and road-use payments.

Parking payments, when a payment is due, may be made at the beginning or end of a parking event, with the assistance of a person or a machine and sometimes only monthly in the form of the purchase of a monthly pass near a work location. Parking payments are variable, a nuisance to make, and costly to collect. They are managed with petty a
nd annoying fines for non-payment or meter expiry. Parking payment management is a complex, costly, wasteful, frequently mismanaged and a somewhat absurd municipal activity. Underpriced parking is common, a principle cause of undersupply and, in consequence, a leading contributor to traffic congestion in our cities as drivers circle streets repeatedly to find an available spot. In many circumstances, the act of payment of street-curb parking is far more painful to drivers than is the actual expenditure itself. Drivers would do well to be relieved of this nuisance. Cities would do well to increase the volume of such revenues collected while simultaneously reducing the expense of its collection. A halving of this expense ratio, often calculated at well over 50%, would retain large sums already paid by motorists in municipal coffers in most cities worldwide.

Automobile insurance payments are made annually, monthly and sometimes occasionally when renting a car. Premiums m
ay be determined by address, driving record, gender, self-declaration of average distance traveled, and possibly other demographic variables, but almost never by the most important indicator of risk – actual distance traveled. While a more costly payment than a single parking payment for urban dwellers, the usually overpriced insurance payment amounts to a lesser total annual expense than the usually underpriced parking expense. There are many reason for this odd payment misbalance, again well discussed in many other articles and papers. A critical problem in automotive insurance is that over-payers, who drive less than they pay for, subsidize under-payers, who drive more than they pay for. The recommended solution to this problem, known as pay-as-you-drive insurance ideally charges motorists an amount equitably measured to the amount of distance traveled and weighted by effective demographic variables and/or driving record). It is repeatedly reported that PAYD insurance, reduces mileage traveled, saves households money, improves safety, assigns risk more equitably, rewards non-SOV mobility and reduces congestion.

Road use payments are made in a variety of ways: fuel taxes, vehicle registration taxes, tire taxes and road tolls may be supplemented in many jurisdictions by property taxes, sales
taxes and monies allocated from general public funds. The number and amount of these payments are hardly understood by most motorists. In some European jurisdictions, taxes charged against fuel use and ownership of an automobile overpay road expenses, while in North American jurisdictions, these taxes are too little to pay road expenses. In Canada, there is a 29% shortfall in these taxes for its highway systems, while urban streets and roads in Ontario’s cities, such as Toronto, are largely paid by property taxes generating unfairness and some animosity between internal residents with high property taxes and residents of surrounding municipalities with lower property taxes who use Toronto’s streets to drive in for work. In the US states, collection of fuel taxes pay between 50% and 90% of the expense creating what many consider a pressing funding crisis. There is a more fundamental problem in the way motorists make road-use payments: most of it is invisible to motorists and many payments (such as property tax paid by someone who uses non-SOV modalities) form cross-subsidies. These payments are essentially unrelated to how much, where or when a driver chooses to drive and is a principle contributor to emission volumes and congestion on all road types.

Transparent, simple and frequent pricing signals would alter motorists perception of the social cost of driving at certain times and in certain places. The point made here is that the parking, insurance, and road-use payments we make, whether sufficient in aggregate or not, are remarkably inefficient economically. They provide no signal to motorists as to the social cost incurred by choosing when and where to drive. The act of driving a motorized vehicle, which has innumerable social, personal and commercial benefits is confounded by the choice and when and where to drive so that the social and personal benefits are partially and sometimes completely negated by an equivalent set of social, personal and commercial harms. If these three payment categories – parking, insurance and roads – were each fairly calculated relative to use, transparently visible to the motorist and with payment made effortlessly (debt and credit) and frequently (monthly), this would have the greatest single impact on decisions contributing to automotive usage demand.

There is now a single, unified, payment technology, based on in-car telematics, that measures exact use of parking, insurance and roads, scaled to vehicle type as well as to time and place of usage that permits governments and insurance companies to set and collect per-use charges in this fairer, more transparent way. This technology, standardized by ISO/CEN and under development in both Europe and North America, is a new generation of tolling technology that can be deployed wirelessly and requires no ground or curb-side infrastructure. Mobile spot-checking is still needed, but can be done far more cheaply than now because cost is shareable over all three sectors.

I opened this article pointing out that many governments are considering tolling all or most roads in their jurisdiction. These governments are correctly focused on the immediate culprit in transport demand problems: transport demand due to mispricing. Unfortunately, the effects of underpriced parking and mispriced insurance, while harder to fathom, are also not only underappreciated as causes of congestion, but form an opportunity for demand management via price correction far greater than does price correction to road pricing.

Gradually correcting all three payment regimes, even if expense-neutral in aggregate to each motorist, would generate powerful economic signals to that motorist. There are few things that garner attention like money.

Managing all three payments via a single system reduces the cost of that payment system. The cost of consumer-banking credit and debit systems is under 2% or 3% of money exchanged because of optimized system management, risk management, payment security, and payment volume. The current cost of road tolling payment management systems range from 20% to 40% of revenues and the cost of parking payment management systems can be twice that. Optimizing collection management, even ignoring the benefits of travel demand management, would conserve, in aggregate, many millions and for larger countries billions, of dollars per year for national, regional and municipal treasuries. Even leaving every motorist expense neutral would leave governments revenue positive. The extent of current system waste, redundancy and pricing misallocation is that high.

Where can we get started? Because motorists are more accustomed to parking payment than to road tolling, a program to redress urban parking underpayment over two or three years would meet with less motorist (voter!) resistance than a program of tolling existing roads or highways. If politicians were to apply market economics, this is an easier place to do so.

Driver behaviour is influenced by parking payment. Large payment differentials between on-street and off-street parking prices causes drivers to seek to minimize payment. Availability of free or under-priced street parking means avoidance of correctly-priced off-street parking. This alone generates a significant amount of inner-urban congestion as cars circle repeatedly to find cheap parking spots while passing up nearby garages that are priced higher. This also reduces incentive to invest in garage construction that would move these cars off street making room for pedestrians and bikes.

Market-priced management of urban street parking also reduces inter-urban and arterial congestion since it removes under-priced parking. Until now parking management systems have made this impossible because curb-side parking management is expensive, it can only be provided in area of greatest demand. This is a “long-tail” phenomena and works as follows.

Certain areas of a city experience high demand for parking. In those areas, the cost of parking management systems is less than the revenue that can be demanded for parking there. A municipal decision to charge for street parking is a local demand management decision predicated on charging slightly more that the amount needed to be able to pay the expenses of the requisite management system. A small surplus is taken to be sure the system expense does not become a financial burden to the city.

This is less of a profit-decision than could be taken by many municipal authorities. Rather many of these authorities are simply asking: “Can we afford to deploy a system to restrict parking to two-hours by charging a small amount that is sufficient to pay for meters so that we can in turn force compliance via issuing citations for meter violations?”

The answer for high-demand areas is: “yes!” Hence those areas get meters, but prices are set lower than market value because commercial interests argue that parking pricing hurts business. While this is demonstrably not always true (in fact the opposite is true in some circumstances), it can be true when free or cheaper parking is available in the next business district – i.e., when a motorist has an equally satisfying shopping, dining or entertainment choice away from priced parking.

Hence to make market-pricing work we need pricing management to be far more pervasive than now. Unfortunately, the per-spot expense of metering becomes prohibitive as soon as demand drops off. Hence while we can price modestly, or in rare circumstances, even sensibly in some high-demand urban areas, we cannot do so economically on the shoulders of those areas. This creates real or perceived disadvantages for commercial interests in competition with businesses outside of those shoulders, and suppresses parking payments that could be sensibly demanded, making it infeasible to deploy parking demand management systems outside relatively dense municipal areas, leaving these areas for free-parking, sign limited parking and tire-marking. Hence under-priced parking is baked in as a consequence of high management-system costs. Demand density dictates feasibility in the same way that density influences transit feasibility.

If the per-spot expense-ratio for parking payment management were the same for every parking spot in a city or region, and was a small fraction of current costs, these disparities would disappear. New in-car telematics-based payment systems do this.

More important than the simple argument that lower system costs would make parking management more available to municipalities, this technology unlocks a vast pent-up demand for parking management, which has associated with it the revenue that would fund system costs for region-wide and country-wide road tolling.

The net, combined expense to a motorist for paying for parking, road-use and insurance, on a single system can be arranged to leave a motorist expense-neutral, while providing cost transparency, privacy and convenience.

The net savings in payment management systems for all three can leave an increased revenue margin to governments that can be used to neutralize the expense of new country-wide road tolling programs.

How can we get started? Begin by tolling for parking, under a regime wherein there is a gradual schedule of growth in number of spots-under-management. Use the technology advantages to simultaneously reduce manage expenses and to manage areas that were not feasible to manage before. This program and technology combination allows the same enforcement staff compliment to manage two or three times more spots. There is no need to reduce staff in circumstances where parking management will expand.

Permit the payment system operator who is servicing a voluntary population of motorists to sell additional value-added services such as PAYD insurance, parking services for private parking operators and parking finders and the like.

Arrange for this payment service provider to provide road-tolling billing services for those voluntary motorists who would be billed for variable (TDP) road-tolls while receiving credits for fuel taxes (or other taxes) as calculated by the same telematics system. Specifically, this payment services program would be set up so that sufficient revenues are generated from value-added services to permit the payment system operator to provide the road-use billing-feed free of charge to a tolling authority.

This system would first attract users for whom the value of the additional services and fairness of the balancing tax rebates would permit the shift to be perceived as valuable. As value added services increase in value, costs decline, and this approach becomes more acceptable, more motorists will join voluntarily.

The schedule to move the motorist population to this new system could be expected to take three to five years. As the service suite expands the service becomes increasingly attractive until such point that the government can announce a final rollout to all vehicles.

This approach leaves government in control of the switchover schedule, allows motorists to subscribe voluntarily, and allows system revenues to self-fund the system, meaning that government needs very little investment to get the system seeded and has the option to allocate zero operational expenses to the road-tolling portion of the system.


What would Steve Jobs do?

If Steve Jobs decided to design a stick-on-your-windshield gizmo to handle payment of road tolls, what would he do so that people would line up outside the Apple store starting the night before to be the first to get one?

You’re probably thinking he wouldn’t be caught dead doing that, right?

But what if he knew there is talk
of putting one on every car in the US after 2015? And every car in Europe in that same time-frame? And on every car in several Asian countries, as well? You know, for when we finally start doing something about congestion like we keep talking about, or start using alternative power vehicles and the gas tax dries up? Yeah. Then.

Well, first of all he would envision his customer looking like this fellow who just bought an iPhone. You know that, for sure.

Then he would figure, there is not a single person on the planet that wants to pay road tolls. Not even the people saying we need to start paying road tolls actually want to pay road tolls. He’d know that there will be competition and that his will have to do dozens of cool things that the competitors’ don’t.

So he would have his device let you park your car and forget getting out to pay a meter on the curb. An
d he’d find a way to end the need for parking tickets just like he ended the need for music CDs. He'd do that by providing for graduated pricing instead of a $30 ticket when you are 5 minutes late. And he would have it handle pay-as-you-go insurance to have those people who drive less than average save some money. He’d throw in an emergency call button, a carbon meter (or not).

He’d allow a credit exchange system so that your city could reward you with a couple of hours of free parking for leaving your car home once or twice a week. Or even provide y
ou with some road use credits as a form of tax credit. He’d allow it to handle loyalty programs so if you kept using the same parking garage, you could get a few free hours once in a while. That would let you skip the monthly parking pass, because you’re thinking about teleworking more often anyway.

I doubt he’d stop there. He probably put in an wireless interface to your iPhone so you could download your parking and tolling bills and maybe sort them out for your expense reports. He’d add in a parking finder and reservation system – and maybe a way to guide you right to the spot using y
our iPhone. He would put in a program that optimizes your time or route of travel to minimize your cost of tolls.

I’m sure he’d have lots more ideas, as well. And
if these saved you time and trouble and money – perhaps even as much money as you spend on tolls – then maybe you’d line up for it. I would.

Last week our meter was described in a few articles and on television. Several callers asked: “where can I get one?”

One person wrote: “I plug two dollars into a parking meter only to return to my car a few minutes late and I have a $20 or $30 dollar ticket waiting for me. I had $360 in such tickets last year! Sign me up. Not having to buy, maintain and collect and count coins from par
king meters is money saved that can be put towards improving the transit system.”

Acceptability and other things about road pricing

The acceptability of road pricing is as much of a concern here in Prague, as it is back home in Toronto. Here is what a leading German authority has to say

If you are a transit advocate

If you are an advocate of market pricing for parking

Here is a possible reason to give away parking (temporarily, of course)

If you entertain objections about road tolling in your city, here are some thoughts to help you though that


Insane Dane car give-away?

According to “The official Website of Denmark” the Danish government is intending to forgive the 180% registration tax, knock 40% off of the automotive insurance premium, and proposing free parking – in downtown Copenhagen, no less for buyers of electric cars, according to a Streetsblog post by Charles Komanoff.

This is a stunning give-away. The 180% registration tax, alone is worth about $40,000. And after a few years free-parking would be worth even more.

Perhaps they can provide a driver, too.

This can’t be happening as alarmingly reported. The Danes are just not that stupid. This has to be time limited and meant to incentivize early adopters. Just like the US quadrabizzillion dollar CARS give-away was a temporary bail-out for Detroit's (now the American taxpayer's) internal combustion industry.

Somebody, please tell me I've got this part right.


Looking a bit further, according to this article, it appears that electric cars have been registration tax-free in Denmark for 25 years. And according to the same article, in spite of this $40,000 tax-relief there are only 500 electric cars registered in Denmark. Out of 2.7M vehicles, that is 0.02% of the fleet, I suspect similar to the stats in most western countries. The unsurprising reason given is that consumers experience “…a psychological barrier … when their car is dependent on a battery station”. Makes sense.

But the government and some partners, notably Shai Agassi’s “Better Place” are outfitting the country with charging and battery-swap stations, at $100M. Hence, the tax-parking-insurance breaks are only half of the picture.

So, given that large investment, the Danes need a rapid uptake of the new cars and the new infrastructure. They need people to switch from ic-cars to e-cars, NOT from transit or bikes to e-cars.

I think they need to incentivize people to switch. But better if they mimicked the unfortunate US cash for clunkers program with an e-car for ic-car swap, but leave the parking and insurance bits out of the deal. If they want a rapid rise to 1% of the fleet, they could do this for 27,000 swaps at a cost (ignoring the inferred tax loss) of some 800M, or less if they took some money in the trade. If they did the swap with only vehicles of a certain size or age, they could optimize the impact.

I venture to guess that with the worst 1% of the fleet switched AND with reports of clear workability, fuel-tax savings, few operational problems, and no safety-of-life mishaps because of dead batteries, a 30% switch would follow in the next 5-7 years, without the extreme incentives.

Bribing people to switch is fine – but the parking thing? – that really has to be temporary. There is no possible logic to make it permanent.

The problem with us criticizing a green idea (e-car-bribery) as a congestion inducer (free-parking), without knowing and weighing the full extent of the free-parking program is to lend credence to climategate by quarreling amongst ourselves.

I do not like the reports of free-parking. They seem to indicate some lazy thinking. But I like Agassi’s ideas and people need to be bribed (or threatened) to switch to them. And climategate may be reducing the only threat our democracies allow.