Silicon Valley Research Group

Technology Disruption in Transportation & Tolling November 2015

The NIOP ( National Interoperability Program) to standardize ABOUT VIEWPOINTS SERIESTM RESEARCH toll facilities throughout the country began when Frank Silicon Valley Research Groupʼs Viewpoints Series™ McCartney, then president of the International Bridge, research studies and reports are designed to provide Tunnel, and Turnpike Association (IBTTA), talked the US in depth analysis and strategic directions too some of House Transportation Committee into committing the toll the most important decisions technology executives need to make in their respective fields. We do not seek industry to delivering IOP and offering up the mid-2016 to replicate or disrupt the work done by syndicated deadline that subsequently was written into federal law. research firms like Gartner, IDC and Forrester. Rather, we delve deeper into the trends using qualitative in- Three toll industry heavyweights the E-ZPass Interagency depth interview techniques that typically comprise Group (IAG), the Alliance for Toll Interoperability and IBTTA smaller sample sizes, and long form exploratory have come together and have begun working toward the goal conversations versus short form surveys.

of national toll interoperability. Where possible, we include a global panel, working with a great team of simultaneous translators to enable The IBTTA took the lead on ETC (Electronic Toll Charging) our interviews to take place in multiple languages. One and NIOP and has narrowed the protocol selection down to way to view or work is that while the syndicated firm three options: EZPass TDM/TDMA, TransCoreʼs SeGo, and research that defines WHAT (what is the overall trend), 6C. we seek to answer the HOW (how the industry is adapting and how are players creating market success). While the timeline for selecting and testing of a national protocol is progressing, IBTTA must also address back office We carefully select the topic areas for our studies by technical approaches, marketing, and governance in order to looking at what is trending in social media and what support interoperability. are some of the questions being asked in technology blogs and discussion forums as well what we learn Ultimately, many issues still require resolution before NIOP from attending various conferences and trade-shows. These reports are complementary to those that can be adopted. We study the current status of the NIOP participate in our studies. In addition, our principal legislation (MAP21), discuss the role and activities of the analysts also conduct complementary executive major players, the technology issues and political inertia strategy sessions on our research findings to qualified impacting the initiativeʼs progress. prospective and existing clients and may be arranged by contacting

Lee Clements, [email protected].

For more information, please contact: Silicon Valley Research Group Inc. 95 South Market St. Suite 300 San Jose CA 95113 www.siliconvalleyrg.com Silicon Valley Research Group

Silicon Valley Research Group Current Landscape of Tolling Technologies

Electronic tolling systems currently consist of in-vehicle transponders and license-plate (video) toll recognition systems throughout the United States and Canada.

For the last 20 years local, state and regional tolling agencies have been removing cash toll booths and adding overhead gantries with in- vehicle transponder and video detection technology to identify vehicles and process toll payments. These electronic toll payment methods have the advantage of lower costs, reduced congestion and increases convenience by enabling drivers to pass through without stopping.

For the interstate traveler and commercial vehicles, however, there is no universal standard technology that extends beyond a regional basis. The frequent interstate traveler must carry multiple transponders and have different payment accounts with the various How did Electronic Toll Collection Evolve? tolling authorities in the areas they travel. And According to IBTTA Electronic Toll Collection began when each the violations for toll charge avoidance are state began building system suited to their specific needs, with substantial; $50 and higher. the price and maintenance being the most important criteria

The situation of incompatible tolling systems The first electronic toll system in the U.S., Toll Tag, was installed precipitated the national initiative and in Texas in 1989. Subsequently, New York and New Jersey got legislation to deploy tolling technology that will started with E-ZPass as they were adjacent to each other and facilitate interoperability. The national there was a continuous flow between the locations. Next, requirement calls for all toll facilities on the California and Washington State adopted different systems. Federal-aid highways to implement Florida next picked a technology that become SunPass. Today technologies or business practices that provide thirty-five states have toll roads, bridges, tunnels or causeways. for this interoperability of electronic toll collection programs. Twenty years ago, there was no reason to believe a driver in California would want to use their toll tag in New York. In the The 2012 MAP-21 legislation established a cities, most traffic was only local. Commuters took the place of calendar target (July 2016) by which national long distance travelers that were prevalent in the '50s, '60s and interoperability for electronic toll collection '70s. should exist. The legislation did not address how this should be accomplished, which IBTTA interpreted this as passing the responsibility to the tolling agencies, associations and organizations. Silicon Valley Research Group Goals for North American Toll Interoperability

The Law under MAP-21. MAP-21, the Moving Ahead for Progress in the 21st Century Act (PL 112-141), enacted in July 2012, established new Federal legislative language regarding Electronic Toll Collection (ETC) interoperability as follows; ….all toll facilities on the Federal-aid highways shall implement technologies or business practices that provide for the interoperability of electronic toll collection programs.*

IBTTA has stated that North American interoperability will allow drivers to traverse the continent with only a single ETC account with a choice of how to make the payment. The goal is to make interstate travel no more inconvenient that purchasing a meal or making a phone call with their credit card.

The initial focus of the national interoperable effort will target registered toll customers that have pre-paid accounts. This will simplify the collection systems and speed up the adoption of participating authorities. The collection organizations would be either based upon peer to peer networks or centralized /regional Hubs. To make *STATUS OF TOLL INTEROPERABILITY Report to this initial effort successful, the limitation of registered the Government Oversight and Reform Committee by customers only is critical. IBTTA IBTTA emphasizes that a registered toll customer of a participating toll agency has the freedom to drive through another toll facility when using their valid pre-paid account regardless of the collection technology; a transponder read or a camera for the license plate.

All the participating toll agencies will insure payments for each customer associated with these prepaid accounts. Agencies are responsible for informing the customer that “your toll account works here.” The drivers will be required to have valid account and registered with the IOP participating agency to take advantage of the system. Silicon Valley Research Group The Gantry Infrastructure

The Gantry Infrastructure Gantry‐structure: Is used for mounting the transponder‐reader antennas, violation enforcement cameras (rear and sometimes front), camera light fixtures, and vehicle identification lasers. ‐The roadway pavement contains the detection loops, used for vehicle classification and axle counting. ‐The Building: houses the roadside equipment including; lane controllers, servers, DVRs, fiber communications equipment, UPS and the SCADA monitoring equipment. Sometimes they may have an exterior cabinet to house the transponder readers. The site will also have a back‐up emergency generator in case of primary power outages.

Source: Electronic Tolling Point Design by FTE Toll Systems and Facilities Silicon Valley Research Group

The ETC (Electronic Toll Collection) Systems

Electronic toll collection systems rely on four major components: automated vehicle identification, automated vehicle classification, transaction processing, and violation enforcement.

1.Automated vehicle identification

Automated vehicle identification (AVI) is the process of determining the identity of a vehicle subject to tolls. The majority of toll facilities record the passage of vehicles through a limited number of toll gates. At such facilities, the task is then to identify the vehicle in the gate area.

2. Automated vehicle classification Automated vehicle classification is closely related to automated vehicle identification (AVI). Most toll facilities charge different rates for different types of vehicles, making it necessary to distinguish the vehicles passing through the toll facility.

3. Transaction processing Transaction processing deals with maintaining customer accounts, posting toll transactions and customer payments to the accounts, and handling customer inquiries. The transaction processing component of some systems is referred to as a "customer service center". In many respects, the transaction processing function resembles banking, and several toll agencies have contracted out transaction processing to a bank.

4. Violation enforcement A violation enforcement system (VES) is useful in reducing unpaid tolls, as an unmanned toll gate otherwise represents a tempting target for toll evasion. Several methods can be used to deter toll violators *

* Source: Wikipedia: Electronic toll collection Silicon Valley Research Group IBTTA NIOP Status Report to Congress

The primary impediments

The Congressional report indicated that toll operators that are not already part of the four major regional programs (E-ZPass in the Northeast US, SunPass in Florida, TxTag in Texas and FasTrak in California) might elect either to join a regional program or submit their interoperable transactions directly to a central exchange hub. Toll road customers could then drive on any participating toll facility and be accurately identified by a transponder. Once properly identified, their toll transaction would be applied to their existing account, and all transactions would be managed through a single account.

The Cornerstone: Accurate Identification

The Congressional House report stated that most critical to the above process is correctly identifying the specific vehicle and linking it to a valid account registered in a different tolling system. The major regional toll systems today use different types of transponder tags. Each regionʼs hardware was originally designed to meet the business requirements and performance criteria of the members of that regional toll system.

Achieving widespread interoperability requires that a toll operator can read both its “local” customersʼ tags as well as those being used by travelers from other systems, without reducing reliability or accuracy or jeopardizing revenue collections. To address this issue, the IBTTA IOP Committee has analyzed the different transponder protocols in use with the intention of recommending either a single protocol or a limited number of protocols that could function as a select set of common national standards. To be considered for the national standard, a transponder protocol must meet the following two requirements: (1)

The candidate protocol(s) must employ “open” technical and design standards – i.e. non-proprietary protocols available for use in devices and related equipment that can be built and sold by any entity that meets testing and certification requirements.

This will promote market competition while ensuring interoperability. (2) The candidate protocol(s) must meet a minimum set of operating requirements and message data formats that have been established by the IBTTA IOP.*

* STATUS OF TOLL INTEROPERABILITY Report to the Government Oversight and Reform Committee by IBTTA Silicon Valley Research Group

Silicon Valley Research Group Open Standard ISO18000-6C Protocol

Proprietary Patent Claims on 6C Technology

One unresolved issued with Californiaʼs likely endorsement and deployment of the 6C standard is the proprietary claims over the ISO 18000-6C intellectual property. Kapsch ( a major transponder manufacturer) is currently challenging the validity and enforceability of certain patents held by Neology, Inc. in Federal court, and at the United States Patent Office (USPTO) that purport to cover the application of ISO 18000-6C to tolling. Importantly, the USPTO already determined that the validity of four of the asserted Neology patents is questionable, either in large part or in their entirety, and instituted Inter Partes Reviews (PRs), stating that Kapsch had demonstrated a “reasonable likelihood” that certain Neologyʼs challenged patents were invalid. In addition to the USPTO reviews, the Federal court will also evaluate the validity and applicability of all Neologyʼs asserted patents.

Kapsch maintains that ISO 18000-6C is an open standard in the same vein as TDM, and that therefore the Neology patents are invalid and/or inapplicable to electronic tolling applications. Silicon Valley Research Group

Legal Ruling to Impact ISO18000-6C National Standard Protocol

Proprietary vs Open Controversy

Neology is a U.S. based high technology company headquartered in San Diego, California, with manufacturing facilities in the U.S. and Mexico City. Founded in 1986, the company has been a developer of passive Radio Frequency Identification (RFID) technology, owning some of the intellectual property (IP) in the industry.

On September 22, 2015, Neology released a statement suggesting that the validity of certain Neology patents in relation to ISO 18000-6C had been "confirmed" by the US Patent Office.

In its release, Neology refers to a recent decision according to which the US Patent Office has accepted petitions filed by a third party for so called Inter Partes Reviews ("IPRs") of four patents held by Neology (for two of the patents, all challenged claims will An inter partes review (IPR) is a procedure for be reviewed; for the other two, some of the challenged claims will challenging the validity of a United States be reviewed). patent before the United States Patent and Trademark Office. The procedure is An IPR may result in the complete or partial invalidation of the conducted by the Patent Trial and Appeal patent being reviewed. The decision by the US Patent Office not to Board (PTAB). accept petitions filed against two of Neology's other patents (as well as its decision not to review some of the challenged claims in two of the four patents that are being reviewed) does not in any way signify a "confirmation" of the validity of these patents, as suggested by Neology. Moreover, the US Patent Office has not in any way opined on the applicability of any of Neology's patents in relation to ISO 18000-6C. *

*STAR Systems Statement Regarding ISO 18000-6C Standard Silicon Valley Research Group ISO18000-6C Technology Summary

Advantages of 6C Technology The Evaluation of 6C by E-ZPass*

The E-ZPass Group is currently evaluating the 6C 1. Mature Open Standard and comparing the results to the TDM/TDMA technology used in the northeast. 2. Worldwide applicability The preliminary conclusions are the following: 3. Cost Effectiveness

• $1.50 or less per tag • 6C is low cost but uses a passive technology vs. active technology of TDM/TDMA that is used by the • Readers: $5-7 E-ZPass group. Less infrastructure is needed to 4. Performance support active technology. Active Technology is more versatile (More functions allowed), Longer • Fast reads and writes range (> 100 m)., and supports higher data rates • Can work in single lane or multi-lane tolls • 6C requires staggered antennas vs. inline antennas • Good fit for tolls with TDM/TDMA -bigger footprint with the gantries needed for 6C. The East coast is predominantly • Significant interest from many toll operators in US, Canada, Mexico, Brazil and other countries using the E-Zpass TDM/TDMA technology.

5. Robust Marketplace • TDM/TDMA uses hard case tag vs. sticker for 6C. It is easier to move the hard case from vehicle to • There are over 30 „6C‟ RFID suppliers with 60+ devices (tags and/or readers) vehicle

6. Customer base • 6C requires spacing between antennas that will mean changes in the toll facility infrastructure if • Toll operators in Mexico, Canada and Brazil use or plan to use 6C adopted nationwide.

• Other interested customers include parking, transit, airport, retail

* Source interview with Agency Planner responsible for testing and comparing protocol technologies: ISO18000-6C and TDM/TDMA. Silicon Valley Research Group Major Player TransCore Flexes it Muscle

TransCore Gains Support

Early in the NIO program there seemed to be a consensus among toll agencies that only fully open standard protocols should be considered for national interoperability and The TransCore Dilemma TransCore, with proprietary technology, was being told: "Either renounce property rights to eGo SeGo as Kapsch is with the TDM/TDMA IAG, or you don't get on the List of TransCore has transportation installations around the Eligible Protocols.” world. They develop and maintain nearly half of all U.S. A couple of leading figures branded TransCore the major toll lanes; and are the nation's largest firm providing obstacle to national interoperability. Intelligent Transportation Systems (ITS) solutions. TransCore seems to have softened these critics recently with The Toll Roads as they are branded in Orange County the quiet discussion of their willingness to license use of eGo California are due to go cashless and all-electronic and SeGo protocols in competitors' readers. (AET) according to announcement of contracts the boards of the Transportation Corridors Agencies have TransCore says it owns proprietary rights for the encryption approved with TransCore. algorithms incorporated in the eGo and SeGo protocols which in other respects are based on the open ISO 18000-6B The contract is for $36.42m and provides for provision standard. of a new toll system that is regular AET mix of RFID transponder tolling and based license plate reads in an They make the argument that encryption is so important to open road setting. Plus TransCore will have to maintain preventing hacking into electronic toll systems that it is best the system for ten years. secured by the developer keeping close control over its design. No Support for ISO18000-6C They say this is best achieved via However, TransCore has said it will not support 6C in property rights and licensing with any of its readers in a move designed to eliminate 6C provision for closely holding from consideration for IOP. TransCore readers are encryption codes and updates. widely deployed in Texas, Florida, Oklahoma and California. How far that threat to 6C holds up remains This argument is capturing national to be seen. attention and enabling TransCore to gain traction vs. the more open The Tolling Agency in Orange County California say protocols like 6C their new contract with TransCore is unambiguous in requiring TransCore to read 6C protocols because of And they have gained some traction with the argument that the strong possibility 6C will succeed Title 21 in that there is a security advantage to closely held encryption.* state. * Article: TransCore prepared to license use of patented encryption protocols in competitors readers to support interoperability (IOP) Silicon Valley Research Group

Silicon Valley Research Group Technology Disruption in Connected Vehicles

Connecting To The Future

The IoT movement on the road will also usher in more V2V (vehicle-to-vehicle) connectivity, which is one of the biggest tech breakthroughs in recent times.

Automobiles, using designated wireless networks for short- range communications, will allow cars to broadcast their position, speed and other data to nearby vehicles. Connected cars will be more aware of road hazards in real time, better able to avoid collisions, TransCore has unveiled the new technology, the minimize traffic Universal Toll Module (UTM), which will provide congestion and motorists with access to any toll road throughout the offer better fuel USA, and is designed to be integrated into the vehicle efficiency. manufacturing process rather than an after-market A 2016 Audi application. model will be equipped with the carmaker's version of With advances in connected car and V2I technology, integrated navigation, Internet database and internal Wi-Fi the traditional windshield-mounted toll tag can now be system. The vehicle will connect through the cellular carrier's built directly into vehicles and offered as a new 3G or 4G LTE network. feature, much as GPS, HomeLink and satellite radio The way drivers access information will change.. Say goodbye were first introduced * to traditional dashboard instrument clusters, and get ready for AR (Augmented Reality) navigation. Some companies are pursuing projects like dashboard apps or heads-up displays. * http://www.traffictechnologytoday.com/ With connected cars, the focus will be on the driver. In-car systems will collect valuable insights and provide personalized information based on driving habits and vehicle performance— with important data like mileage, fuel economy and favorite routes conveyed in new ways. *

*http://www.spirent.com/ Silicon Valley Research Group

Automobile industry is embedding technology in the new vehicles that will facilitate vehicle identification. Wireless technology equipment contains payment information for tolls or parking garage. Parking lots , parking spots and toll roads will read your wired vehicle information. Going from pre pay and post pay to point of pay. it possible to reduce congestion and earn revenue roughly proportional to how much drivers value each particular highway. Connected car technology enables on-board units to record mileage and charge drivers for using all roads, not just limited-access highways. The U.S. Department of Transportation’s National Surface Transportation Infrastructure Financing Commission (appointed to propose solutions for highway funding problems) also recommends this approach.*

* Funding the Department of Transportation in a Connected-Car Era- The Hill By Tracy C. Miller Silicon Valley Research Group

Vehicle-miles Traveled (VMT) Fee Pilot

Pilot Program COULD HELP DETERMINE THE VIABILITY OF MILEAGE FEES FOR CERTAIN VEHICLES Experts have proposed alternative means of raising revenues by charging drivers fees based on their miles traveled. Several states have tested systems that gather vehicle mileage and location data, which has raised privacy concerns. GAO examined:

(1)the benefits and challenges of mileage fee initiatives in the United States and other selected nations,

(2) mileage fee rates necessary to replace and supplement current Highway Trust Fund revenues and the effect these fees would have on users' costs, and

(3)state DOTs' views on future revenue demands and mileage fees.*

*http://www.gao.gov/ Silicon Valley Research Group Driverless Vehicles - Trucks

Nevada is trying driverless trucks on long stretches of road - not in the cies. Regulatory and technological obstacles may hold back the The technology already exists to make those trucks self-driving. There's Google's self-driving car, of course, but "according to Googleʼs experience, the driverless car for greater danger lies within cities and not freeways, and driving between cities decades. But one of involves even fewer technological barriers than within them. Therefore, itʼs the first driverless probably pretty safe to say driverless freeway travel is even closer to our future horizon of driverless transportation." In fact, the first self driving trucks are now semi-trucks is already on the road. Apple and Uber and loads of other companies are also working on driving, legally, on the self-driving technology, which will obviously speed up the process of highways of Nevada. development. *

*Bloomberg View Silicon Valley Research Group

Relieving Congestions: Convert HOV to HOT

HOT Lanes: A Better Way to Attack Urban Highway Congestion

High-occupancy vehicle (HOV ) lanes were once seen as innovative and beneficial. It was claimed that HOV lanes would encourage ride sharing and thereby reduce highway congestion, travel delays, and air pollution. But drivers, environmentalists, and transportation researchers increasingly question whether the benefits of HOV lanes exceed their costs. Underused HOV lanes irritate most drivers; environmental groups do not believe that HOV lanes reduce auto traffic; transportation researchers find that HOV lanes do little to relieve congestion; and elected officials are under increasing pressure to convert HOV lanes to general-purpose lanes. As a result of disenchantment with HOV lanes, several metropolitan areas are experimenting with a new way of using Hot lanes promise to make better use of existing HOV lanes, to provide the lanes: opening them to paying capacity more efficiently than either conventional HOV lanes or general- customers as high occupancy toll (hot) purpose lanes, and to reduce the number of lanes needed on new lanes. As of 2000, two such projects were freeways by limiting peak-hour demand. In most cases, toll revenues in operation in California and another in should more than pay for the conversion of an HOV lane to a HOT lane. Texas.* The addition of a HOT lane on the same grade as other lanes may also be self supporting if no major interchanges need to be rebuilt. *

* www.cato.org/ Silicon Valley Research Group

Conclusion

IBTTA and its members have been working to achieving nationwide interoperability of electronic toll collection systems. Over the past five years, hundreds of volunteers have invested thousands of hours of time – in volunteer roles on committees and subcommittees of IBTTA, separate and apart from their regular jobs in their companies and agencies – to make nationwide interoperability a reality.

They are making progress but lots still needs to be accomplished. This task of National Interoperability is extremely complex and requires communication and collaboration among many agencies, associations and government planning committees. Achieving nationwide interoperability requires a huge effort to make sure that back office systems and business rules work together so that all of the tolling entities involved not only recognize a transponder but can also recognize a financial transaction.

Tolling is an essential tool to supplement the revenues for the nations transportation infrastructure. The work to date by the IBTTA and associated organizations has been substantial. Plans are underway for achieving InterRegional Interoperability as the initial phase to a full national deployment.

There are a vast number of local, state and regional authorities that must cooperate and eventually reach consensus on technologies, business policies, payment transaction processes, and geographic consolidation of back office functionality. This presents a challenge that is both extremely complex and costly in terms of man-hours invested, and capital expenses to replace obsolete and incompatible tolling equipment. But given the invaluable benefits to all stakeholders ( business, government and citizens), we expect the effort will gain greater visibility and further national support as IBTTA and affiliated organizations begin a phased implementation. Silicon Valley Research Group

Technology Disruption in Transportation & Tolling

Silicon Valley Research Group

email: [email protected].

For more information, please contact: Silicon Valley Research Group Inc. 95 South Market St. Suite 300 San Jose CA 95113 Silicon Valley Research Group

Notes: