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Insurance Telematics USA 2014

03/09/2014 - 04/09/2014, Radisson Aqua Blu, Chicago

Pricing Becomes a Commodity: Insurers Enhance the Consumer UBI Proposition by Integrating Complimentary Services for Product Differentiation

The impact of eCall, EETS and ITP on fleet telematics, part III

In the third of a three-part series, Jan Stojaspal looks deeper into the impact of EETS on fleet telematics

Imagine yourself traveling around the European Union with a suitcase full of mobile phones. You need one phone for Poland, another for Germany, and so forth for the other 25 member states.

As hard as this is to conceive at a time of seamless roaming and ubiquitous Internet access, it is still a daily reality for the hundreds of thousands of truckers crisscrossing the continent every year—except they don’t pack mobile phones but on-board units that are required in many countries to pay for road tolls.

Looking to go from Poland to Portugal? Depending on your route, you will need anywhere between five and seven different units, says Eva Tzoneva, global card services development manager at Shell, one of eight co-founders of the Association for Electronic Tolling and Interoperable Services (AETIS). In some cases, the windshields, where many on-board units are placed, grow so cluttered that it is hard to see the road. “We really have pictures taken of windshields and you would be amazed,” Tzoneva says.

But help is on the way.

Interoperable electronic toll schemes

Last year, Germany and Austria launched TOLL2GO, one of Europe’s first interoperable electronic toll schemes, where a single on-board unit is used for payment in both countries. If all goes well, France, Italy and Spain, and possibly also Denmark and Poland, will join Germany and Austria within the next three years as part of a European initiative to widen the circle of countries involved.

The European Electronic Toll Service (EETS), an ambitious plan to bring all of Europe under the umbrella of one on-board device, one contract and one invoice, is also gaining traction now that the European Commission is finally in position to force member states into compliance.

To be sure, there are still many questions over technical specifications, business models and even demand for interoperable toll systems, particularly when it comes to a pan-European solution like EETS. But the momentum is building, and the budding project covering Germany, Austria, France, Italy and Spain and referred to as regional EETS is seen as an important stepping stone.

Restoring economic growth

The need for electronic toll interoperability grows ever more pressing, according to Charles Surmont, a policy officer in the land transport unit of the European Commission’s directorate-general for mobility and transport, as the EU tries to accommodate the steadily increasing international truck traffic through better integration of transport networks.

According to Tzoneva, this traffic is growing at rate of over 10% per year. What’s more, as Europe’s fiscal woes deepen, pay-per-use road tolls are becoming an increasingly important source of income for the maintenance and expansion of these networks.

“There is a growing awareness in member states that the restoration of economic growth needs a better integration of European transport networks, which would lead to a more efficient single market,” Surmont says. “The dense and efficient road network has long been a major advantage of the European economy. However, international competition is tough, and Europe may see this competitive advantage eroded if our road networks are not able to address the growth in the demand for transport.”

When Germany and Austria launched TOLL2GO in 2011, they had little idea as to how well aninteroperable toll service would do, says Martin Rickmann, head of communications at Toll Collect, a public-private partnership in charge of toll collection along Germany’s 15,000 kilometers of Autobahn and express roads. “We really didn’t know how many hauliers would show up and make use of the new service; we had no clue,” he says.

TOLL2GO uses Toll Collect’s hybrid on-board unit that works with both Germany’s GPS-based toll infrastructure and Austria’s dedicated short-range communications (DSRC) system using tollgates and microwave technology.

To Rickmann’s surprise, between 25,000 and 30,000 vehicles registered for the new service within the first couple of months, and the number today is at around 53,000. “That’s a very good number,” he says. “What we are asked [now] time and again by the haulage companies is, Could you also do it with other European countries? Our answer is always, Well, it needs a political consensus among the governments involved.”

Is EETS another eCall?

The success of TOLL2GO convinced many doubters of interoperable toll charging, and it is now also accepted that there might be a business case for the regional EETS. According to Surmont, the Commission will finance up to 50% of the system’s start-up costs.

But skepticism still runs high when it comes to building the pan-European EETS.“In my opinion, [EETS] is never going to happen, at least not in my life in telematics,” says European sales director for MiX Telematics Jaap Groot. “It’s almost like eCall. How long has that been on the agenda? Ten, fifteen years?”

The main argument is that there is no demand for such a wide-ranging service and therefore no business case. “This will never exist, it is just theoretical,” says Kallistratos Dionelis, general secretary of the European Association of Operators of Tolled Road Infrastructures (ASECAP). “No guy from Ireland will take his vehicle to Crete in order to circulate in the small Crete corridor in an interoperable way.”

Still, the Commission is not about to abandon the idea. “The regional  EETS approach is a strategy to start the ball rolling and to have something operational,” Surmont says.

Also working in EETS’ favor is the fact that last year the Council of the European Union approved the European Parliament’s amendments to a draft directive on road use charges for heavy goods vehicles (Eurovignette), which stipulates that from September 2013 all new electronic road charging schemes must be EETS compatible. And, last but not least, there is the incentive of the ever-growing clutter in the driver’s cab and the administrative burden that comes with it.

“It definitely makes sense,” Toll Collect’s Rickmann says of EETS. “It makes sense the same way it made sense to have one mobile phone that works anywhere in the world. And the vision of the European Commission has always been to use that pattern for the tolling industry. But the vision is one thing, implementation is another.”

A diverse ecosystem

The challenge is hardly technological, as Germany and Austria have demonstrated with TOLL2GO, though it will not be easy to bring the as many as 200 individual toll chargers in Europe under one roof. While some countries like Germany have a single national toll charger, other countries like Spain have dozens.

A far bigger challenge will be paying for setting up and maintaining such a diverse ecosystem, particularly in far-flung corners of the European Union, where EETS will scarcely be used.

And then there is also the difficult task of aligning the various political agendas, contractual obligations that guarantee a number of toll chargers monopolies over their local concessions, and things like service levels, liability and border crossing enforcement.

Take level of service as an example of the challenges involved.

The German government requires Toll Collect to perform with at least a 99% success rate when collecting tolls, to hand over the tolls collected on a daily basis, and to submit itself to regular checks that ensure all quality requirements are met. According to Rickmann, Toll Collect is currently performing with 99.9% precision, and any other toll collector will be held up to the same standard.

Under EETS, a provider will also have to meet local service level requirements for all the other member states. “If you have to allow other providers from France or Austria or Spain, you expect that they perform at the same level; otherwise you are not inclined to allow them to enter into Germany,” Rickmann says. “So the question is what is the minimum quality that you expect from a service provider so that you as a state or private concession holder get the money to refinance your business model for 30, 40 years. And you have to solve this in 27 EU countries. Good luck.”

France’s Eurotoll

Still, at least eight companies—including Shell, which sees EETS as a complementary service to its euroShell fuel card—have already declared their intention to become EETS providers. Many others, including Toll Collect, are considering whether to get on board.

The success of France’s Eurotoll, which already issues and manages subscription contracts to a number of electronic toll systems in Europe, proves that truckers are willing to pay a small premium to have someone else shoulder the administrative burden connected with managing multiple e-toll subscriptions. It likewise proves that toll chargers are willing to pay a small percentage of collected tolls to have someone else guarantee payment and to take on some of the customer relationship management responsibilities.

The company currently covers Germany, Austria, Poland, Slovakia, France, Spain, Italy and Switzerland, andhas contracts with some 115,000 vehicles.

But even Eurotol is not sure if it can pull off the service on a pan-European basis. Philippe Duthoit, the company’s general director, says the biggest obstacle is the requirement that any newly established EETS provider be fully operational in all 27 member states within 24 months. “Within 24 months we are supposed to have covered all of Europe, and if any toll charger changes anything in the system, we are supposed to have made the change in six months,” he says. “It’s simply not possible for a company like Eurotoll to do it.”

According to Duthoit, a few customers are currently asking Eurotol to start offering subscriptions for Portugal, customers Eurotol is now free to ignore because of the high cost of setting up the system and low income potential. Under EETS, it would not have this option.

Still, that doesn’t necessarily mean that no EETS providers will come forward if the scheme ever becomes operational. It more likely means that future providers will need to enhance their incomes through other value-added services, such as remote diagnostics or fleet management solutions.

According to Surmont, the EETS on-board unit with its built-in GPS and cellular communications will be an excellent vehicle for such services. The unit could even replace parking meters one day, he says.

“You can determine if the car is a parking meter area, stopped and parked, and all you have to do is to do is inform the driver, ‘You are parked in a tolling zone. Do you agree that it is charged by EETS?’” he says. “You push a yes button and that’s it. You don’t have to look for a coin or a nearby parking machine.”

Jan Stojaspal is a regular contributor to TU.

Read The impact of eCall, EETS and ITP on fleet telematics, part I and The impact of eCall, EETS and ITP on fleet telematics, part II.

For more on fleets, see Industry insight: Fleet telematics.

For the latest on fleets, visit Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam.

For all the latest telematics trends, check out V2X for Auto Safety and Mobility Europe 2013 on February 20-21 in Frankfurt, Telematics India and South Asia 2013 on April 16-17 in India, Insurance Telematics Europe 2013 on May 8-9 in London, Telematics Russia 2013 on May 14-15 in Moscow, Telematics Detroit 2013 on June 5-6 and Content & Apps for Automotive Europe 2013 on June 17-21.

 

For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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Insurance Telematics USA 2014

03/09/2014 - 04/09/2014, Radisson Aqua Blu, Chicago

Pricing Becomes a Commodity: Insurers Enhance the Consumer UBI Proposition by Integrating Complimentary Services for Product Differentiation