There was a lively panel session at the Transport Card Forum meeting in London recently, which I had the pleasure of moderating. I won’t name names but the panel members represented the mobile industry (an operator and the GSMA), a digital money expert, the DfT, and a consumer champion. The session was entitled: Public transport ticketing & payment on mobiles – To what extent will mobiles be used in the entire journey process, from initiation through to ticketing and payment? What will the future hold and how might it work? The audience asking the questions were largely from the Transport industry.
The central question I was trying to get the panel to address was: If I am a UK Transport operator, and I want to accept NFC phones for payment or ticketing in my network, what do I do? In other words what are the steps, who do I talk to? This is not academic – I have been talking to Transport operators which are in precisely this situation. The very fact that they are asking the question rather sets them apart, and tells me they are fairly clued up. They think it will be easy – yet they have no idea of the hurdles and stumbling blocks in front of them. They don’t know what they don’t know.
As soon as you start to drill into the detail, questions pop up. Let’s start with what kind of product an Operator might want to accept on passengers’ NFC phones. In the UK, this could be:
- An existing proprietary fare product
- ITSO Stored Travel Rights (STR)
- An ITSO ticket product
- A Contactless Payment Card (CPC) app
Taking these one by one, to offer a proprietary fare product, the Operator needs to have a suitable app developed, which passengers can download to their phones. To do this securely, and then to load value onto it over the air, it is necessary to have access to the “Secure Element” (SE) on the passenger’s phone. In most phones currently the SE is the SIM card, and is owned and controlled by the passenger’s Mobile Network Operator (MNO). So – the Operator has to get the agreement – on some commercial basis to be determined – to be given this access. In the UK there are five MNOs, so if the Operator wants to have his fare product on all his passengers’ phones, irrespective of which MNO they subscribe to, he will have to do a separate deal with each of them.
Next, ITSO STR is like an electronic purse – you add value to your phone and then spend it on any compliant ITSO reader. There are almost no such schemes in the UK currently, but this might change in the future. In any case this, and the third option of an ITSO ticket product, should be the responsibility of ITSO to present a solution. In fairness to ITSO, I believe they are stepping up to the plate on this one, but it’s still early days.
Then, if the Operator wants to accept a CPC app on a passenger’s phone, first of all the app has to get there. Currently in the UK this is only available from Barclaycard on a Samsung Tocco Lite phone on the Orange network (known as “Quick Tap”). So even though I have a long standing Barclaycard account, it’s not available to me on my beautiful Samsung Galaxy Nexus NFC phone running on O2. Expansion by Barclaycard to other phones will be measured in months and to other networks in years – and Barclaycard is the market leader!
So what is our Transport Operator to do? Say to passengers, “You can have this really cool way of paying for your bus ride – but only if you have this credit card on this phone and this network?” What kind of message does this send to his other customers, and why would he bother? No solutions to this were offered at the TCF, and I wasn’t surprised.
What there needs to be is an engagement by the mobile industry with Transport. There’s no doubt they want this, because they see Transport as the “low hanging fruit” – the “killer app” that will drive transaction volumes and get subscribers using their phones for more new functions. The GSMA has kick started this, but so far their efforts are necessarily very global. They have some way to go before they have practical advice and support on a roadmap to implementation for Transport Operators in individual countries.
The consumer champion at the TCF capped it all by questioning why any passenger would want any of this. The jury’s out…
Fenbrook Consulting advises businesses about the commercial opportunities and technical requirements of Near Field Communications and Smart Ticketing
A little while ago I wrote on this blog about what was likely to happen to smart ticketing as a result of the UK coalition government’s spending review. So what did we get, compared to what could have happened?
There was support for a number of major road, rail, and tram schemes, and a tightening of belts through efficiency and cutting waste. There was a raising of the cap on fare increases to help pay for improvements.
On smart ticketing, the statutory entitlement for concessionary bus travel has been protected, “ensuring that older people can maintain greater freedom and independence”. This was a little surprising, as there had been talk of raising further the qualification age, and means testing the benefit. The biggest impact on bus operators could be the 20% reduction in BSOG. The Government says it wants to work with bus operators and local government to examine smarter ways of administering this subsidy to get better results for passengers and taxpayers. Great play was made of “localism” – giving local authorities more freedom to decide how to spend their money, although there will be less of it to spend.
The week after the Chancellor’s spending review statement, the Department for Transport issued a press notice giving more detail on the announcements. It confirmed the campaign to eliminate waste, but put it in a context of public transport’s role in also reducing carbon emissions. And it confirmed there was no intention to remove the 8% incentive that bus operators get for implementing smart ticketing. DfT also said it is considering options for the long-term future distribution of bus subsidy and will make an announcement in due course. This could address the concerns of concession authorities in destination areas, such as Devon and Cornwall, or Blackpool. Under current rules, these authorities have to pay for concessionary journeys starting in their areas, rather than the authority that has issued the card to the passenger.
All in all, transport ticketing has been relatively unscathed by this spending review, so we should continue to look forward to smart cards in transport growing – both in the public and private sector.
By Trevor Crotch-Harvey, Fenbrook Consulting
We have all heard the stories about the cuts in public spending the new Coalition government is considering. Every government department is being asked to identify significant cost savings, and the Department for Transport (DfT) is no exception. We’re expecting a White Paper on spending in October – so could changes be on the menu for smart ticketing?
There is currently a head of steam behind smart ticketing in the UK. The Oyster scheme in London is considered to be one of the most successful smart ticketing schemes in the world; smart ticketing schemes (both ITSO and non-ITSO) have been implemented in Cheshire, Nottinghamshire, Southampton, Yorkshire, and the NoWcard area of north west England. Planning for Centro’s scheme in the West Midlands is at an advanced stage, and the devolved administrations of Scotland and Wales have also been active. 12 million Concessionary Travel cards have been issued, and ITSO is now a requirement in all new rail franchises.
However, there are still no commercial smart ticketing schemes, and no integration of bus and rail ticketing. DfT considers this to be a “market failure”. It is disappointed in the lack of progress because it sees clear benefits to be had from smart and integrated ticketing. (It commissioned the “Detica Report” which detailed these.) It sees encouraging the use of public transport (“modal shift”) to be to the benefit of the economy and the environment.
In 2010 DfT has substantially oiled the wheels. It is investing substantially in the integration of Oyster and ITSO. It has provided grants totalling £20m to the 9 largest conurbations in England, and is paying an extra 8% Bus Service Operators’ Grant (BSOG) to commercial operators installing smart card readers on buses. Prompted by this, the 9 urban areas in question have sprung into action and have all submitted plans to DfT for how they will spend the money. Their circumstances are all different, but we can expect to see several HOPS systems implemented in the next year, in some cases being shared by many Transport Authorities. In addition, the BSOG grant appears to be encouraging certain commercial operators to participate at a higher level of willingness than previously, with Go Ahead leading the way.
The 9 English cities believe this funding is secure and is not subject to the new government’s spending review. But what can we expect from a process in which DfT has been asked to find a headline £683m of savings? Conservative transport priorities include:
• No third runway at Heathrow or further runways at Gatwick or Stansted
• High speed rail lines, construction beginning 2015
• Reform railways to provide a better focus on tackling problems that matter most to passengers, like overcrowding
• Grant longer, more flexible franchises to incentivise private sector investment in improvements like longer trains and better stations
• Support Crossrail and electrification of the Great Western line to South Wales
• Introduce a moratorium on building on disused rail lines
Any reading of the news since the election in May will see the reaction to these proposals. There is heavy lobbying going on, related to projects which people and organisations see under threat from cost savings. These focus especially on rail projects; very little lobbying is bus focused, and there is a complete silence on the subject of smart ticketing.
The new Secretary of State for Transport, Philip Hammond spent the last 3 years in opposition as Shadow Chief Secretary to the Treasury. He is considered to be a numbers man and has had a steep learning curve in his unexpected Transport portfolio. We can expect that he will be determined that DfT plays its full part in achieving the government’s required cost savings. We might expect the Liberal Democrat Secretary of State for Energy & Climate Change, Chris Huhne, to press hard for transport initiatives that encourage people out of their cars. However, his focus so far has been on plugging the country’s looming energy gap without relying on fossil fuel and nuclear power stations.
So what legislative changes might we expect following the October spending review? Transport will not be immune from the spending cut pain. Here are some personal predictions for what will come:
• The qualification age for Concessionary Travel cards will be raised from the current 60
• Concessionary Travel cards will become means tested
• There could be changes to the way travel authorities are reimbursed for concessionary travel, leading to winners and losers
• The 8% BSOG differential to bus operators for smart ticketing will be reduced or removed, along with other BSOG elements
• Encouragement of greater competition in bus services at the local level, perhaps with a threat to the Block Exemption agreement for Multi-operator travel card schemes, at least for smart cards
Otherwise there is nothing too scary in what we have heard announced or discussed so far. Compared to the mega cost of rail projects, smart cards for transport ticketing is small fry; benefits to be gained are limited and potentially conflict with the goal of a greener society. But like everyone else, we’re all holding our breath…
By Trevor Crotch-Harvey, Fenbrook Consulting
We have all heard the stories about the cuts in public spending the new Coalition government is considering. Every government department is being asked to identify significant cost savings, and the Department for Transport (DfT) is no exception. We’re expecting a White Paper on spending in October – so could changes be on the menu for smart ticketing?
There is currently a head of steam behind smart ticketing in the UK. The Oyster scheme in London is considered to be one of the most successful smart ticketing schemes in the world; smart ticketing schemes (both ITSO and non-ITSO) have been implemented in Cheshire, Nottinghamshire, Southampton, Yorkshire, and the NoWcard area of north west England. Planning for Centro’s scheme in the West Midlands is at an advanced stage, and the devolved administrations of Scotland and Wales have also been active. 12 million Concessionary Travel cards have been issued, and ITSO is now a requirement in all new rail franchises.
However, there are still no commercial smart ticketing schemes, and no integration of bus and rail ticketing. DfT considers this to be a “market failure”. It is disappointed in the lack of progress because it sees clear benefits to be had from smart and integrated ticketing. (It commissioned the “Detica Report” which detailed these.) It sees encouraging the use of public transport (“modal shift”) to be to the benefit of the economy and the environment.
In 2010 DfT has substantially oiled the wheels. It is investing substantially in the integration of Oyster and ITSO. It has provided grants totalling £20m to the 9 largest conurbations in England, and is paying an extra 8% Bus Service Operators’ Grant (BSOG) to commercial operators installing smart card readers on buses. Prompted by this, the 9 urban areas in question have sprung into action and have all submitted plans to DfT for how they will spend the money. Their circumstances are all different, but we can expect to see several HOPS systems implemented in the next year, in some cases being shared by many Transport Authorities. In addition, the BSOG grant appears to be encouraging certain commercial operators to participate at a higher level of willingness than previously, with Go Ahead leading the way.
The 9 English cities believe this funding is secure and is not subject to the new government’s spending review. But what can we expect from a process in which DfT has been asked to find a headline £683m of savings? Conservative transport priorities include:
• No third runway at Heathrow or further runways at Gatwick or Stansted
• High speed rail lines, construction beginning 2015
• Reform railways to provide a better focus on tackling problems that matter most to passengers, like overcrowding
• Grant longer, more flexible franchises to incentivise private sector investment in improvements like longer trains and better stations
• Support Crossrail and electrification of the Great Western line to South Wales
• Introduce a moratorium on building on disused rail lines
Any reading of the news since the election in May will see the reaction to these proposals. There is heavy lobbying going on, related to projects which people and organisations see under threat from cost savings. These focus especially on rail projects; very little lobbying is bus focused, and there is a complete silence on the subject of smart ticketing.
The new Secretary of State for Transport, Philip Hammond spent the last 3 years in opposition as Shadow Chief Secretary to the Treasury. He is considered to be a numbers man and has had a steep learning curve in his unexpected Transport portfolio. We can expect that he will be determined that DfT plays its full part in achieving the government’s required cost savings. We might expect the Liberal Democrat Secretary of State for Energy & Climate Change, Chris Huhne, to press hard for transport initiatives that encourage people out of their cars. However, his focus so far has been on plugging the country’s looming energy gap without relying on fossil fuel and nuclear power stations.
So what legislative changes might we expect following the October spending review? Transport will not be immune from the spending cut pain. Here are some personal predictions for what will come:
• The qualification age for Concessionary Travel cards will be raised from the current 60
• Concessionary Travel cards will become means tested
• There could be changes to the way travel authorities are reimbursed for concessionary travel, leading to winners and losers
• The 8% BSOG differential to bus operators for smart ticketing will be reduced or removed, along with other BSOG elements
• Encouragement of greater competition in bus services at the local level, perhaps with a threat to the Block Exemption agreement for Multi-operator travel card schemes, at least for smart cards
Otherwise there is nothing too scary in what we have heard announced or discussed so far. Compared to the mega cost of rail projects, smart cards for transport ticketing is small fry; benefits to be gained are limited and potentially conflict with the goal of a greener society. But like everyone else, we’re all holding our breath…