SMART PUBLIC TRANSPORT New Digital Ecosystems Unlock the Growth Potential of the Smart City
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CONNECTED THINGS 2017: SMART PUBLIC TRANSPORT New digital ecosystems unlock the growth potential of the smart city KEY TO SOLVING THE URBAN CHALLENGE Transportation is one of the toughest challenges that cities and regions across the globe are WHAT IS SMART PUBLIC facing. Already today, 50 percent of the world’s TRANSPORT? population lives in urban areas. By 2050 this number is expected to increase to 70 percent. The Connected solutions for shared passenger Nordic region is no exception to this megatrend. transport services such as buses, trains and The share of Nordic inhabitants residing in urban ferries. Includes applications for connected areas increased from 25 percent in 2005 to almost vehicles and related infrastructure, such as 35 percent in 2015. passenger information, ticketing & payment systems, cloud & analytics services as well Urbanization creates significant economic, social as traffic management & control. and environmental challenges, in both the long term and for the everyday lives of businesses and people. For example, the average commuting €200 million for the development of new and time in Stockholm increased by over 20 percent smart public transport. In order to reach these between 1995 and 2013. As a consequence, the targets, the systems need to become easier urban and regional public transport systems of to access and increasingly passenger-centric, tomorrow must become smarter. as well as more efficient and with lowered environmental impact. Regions and cities in the Nordics have set ambitious goals for public transport. The goal At the same time, leading public-transport is to make public transport more efficient, while operators in the Nordics, such as Nobina and increasing its share of the transportation sector MTR, are exploring new opportunities created as a whole. For example, the city of Copenhagen by digital technology to increase their efficiency has set a target of having 75 percent of all trips and differentiate the passenger experience. in 2025 by public transport, bike or by foot. The Investments made in fleet management, predictive public transport sector in Sweden has set the and preventive maintenance as well as on-board common goal of doubling the number of public- services can help decrease operational costs and transport trips between 2006 and 2020. Also, make public transport journeys more convenient in 2015 the Swedish government earmarked and attractive for passengers. BENEFITS OF SMARTER PUBLIC TRANSPORT Life quality Increased efficiency Improved society Travelers will experience higher safety Public transport operators can Cities will be able to increase the share of and punctuality, clearer and more relevant increase their profitability through public transport as well as improving the information, increased comfort, simpler higher operational efficiency and new environment and traffic safety and more universal ways to pay revenue streams Improved public transport will help cities The environmental impact of traveling will Information flows will improve leading increase their competitiveness and decrease, and access to other services to more efficient communication and attract more competence in society will increase environmental reporting Passengers Operators Society 3 FÄLTCOM – CONNECTING THE TRAFFIC LIGHTS OF NEW YORK Smart public transport is In order to create a better and more secure essential to meet the challenges traffic flow in New York, the Swedish company Fältcom has been tasked to of urbanization connect 475 traffic lights, in a first step towards connecting all 13,000 of them. Early moves are now being made to integrate Fältcom, who is a wholly owned subsidiary public transport into other services such as to Telia Company, has emerged in recent connected infrastructure (e.g. traffic lights, traffic years as a leading player and innovator in monitoring and parking). The inner-city buses IoT, in particular when it comes to connected in Stockholm communicate with traffic lights public transportation. This is the third project to be granted priority if they are running late Fältcom has conducted in cooperation and information boards provide travelers with with the New York City Department of information about delays and alternate routes. Transportation – including connecting some Similarly, car pools such as Volvo’s Sunfleet and 16,000 bus stops. BMW’s DriveNow are creating new alternatives to both individual car ownership and public transport. Through the release of the Whim app Digitalization also drives the increasing importance in late 2016, the start-up company MaaS Global of Information and Communication Technology now offers citizens in Helsinki multimodal means of (ICT) providers and tech-startups to enable smarter transportation including car pools, bikes and taxis. public transport. These players are developing Swedish operator Västtrafik is working on similar new solutions by using digital infrastructure and solutions in the south-western parts of Sweden, as platforms. Their innovations are used to create a step towards the smart city. new services for authorities, operators, vehicle manufacturers and passengers. 4 PUBLIC POLICIES AND IoT DRIVES SMARTIZATION IN THE NORDICS In the Nordics, implementation of smart services An important driver of this development is in public transport fleets has been ongoing since changing customer behavior and expectations. the early 2000s. A majority of the vehicles across Customers expect connectivity in public transport the region are already equipped with one or more to improve at the same rate as in their homes connected solutions. The smart public transport and offices. When purchasing tickets, customers market was worth around €500 million in 2016 and expect flexible and smooth transactions as in is expected to reach almost €1 billion by 2021, with other services such as Uber. Commuters expect an annual growth of around 14 percent. to be able to work from the train or bus traveling to and back from work. As the time spent traveling Passenger information is the largest segment at continues to increase, being able to utilize this around €200 million. This includes smart screens time for, e.g. working or shopping, becomes and trip planners such as the RuterReise app in more important. Oslo, allowing passengers to plan their trips using both bus and local trains, operated by different The rapid expansion of IoT in the Nordics has parties. The second largest segment is ticketing also driven the development of smarter public systems at around €100 million. Driven by an transportation. An increasing share of vehicles increasing need for real time analysis of traffic data, and infrastructure have become connected. cloud and analytics services is the fastest growing Roadside sensors and positioning technologies segment at around 19 percent, expected to reach a have increased the amount of traffic information size of almost €80 million in 2021. that is gathered. Improvements in software services such as cloud and analytics tools have Traffic management and control systems is the enabled better analysis of data. Combined with third largest segment at close to €80 million. increasing connectivity, such as 4G and the Investments in this segment have enabled widespread prevalence of smartphones, this has operators to increase punctuality, for example enabled a fast development of new transportation through driver information and connected services. Advancements in passenger counting traffic lights giving priority to buses. Despite a has helped both operators and authorities to high potential, connected service and repair is more efficient route planning, and enabled volume the smallest and slowest growing segment at based contracts. Driver information application, €15 million and 10% respectively. helps operators to lower fuel costs and gives the SMART PUBLIC TRANSPORT MARKET SIZE IN THE NORDICS (€m) CAGR + % 963 Ticketing 840 Connected 14 services & repair & payment 733 systems 654 573 499 Cloud & analytics Passenger services information Traffic Management & Control 2016 2017 2018 2019 2020 2021 Source: Markets and Markets, Arthur D. Little analysis 5 passengers a smoother ride. Fleet management customer satisfaction and safety, such as Wi-Fi and systems has allowed operators to handle their surveillance cameras onboard. In Norway, a new fleets more efficiently. national standardization of the requirements for buses from Standard Norge, with particular focus on Another key driving force is public policy to increase decreased environmental impact and cost efficiency, the share of public transport. Authorities have is expected to come into force in 2018. Following realized the importance of digitalization as a means successful examples from the Swedish market, to increase the attractiveness of public transport. the Danish Public Transport Authorities formalized An increasing share of contracts are volume- new goals, predominantly focused on increased based, which incentivizes operators to invest in connectivity, availability and eco driving, in 2009. digitalization as this improves customer satisfaction Also, the city of Helsinki has set a goal, to provide a and contributes to growth. More and more contracts mobility-as-a-service concept by 2025, that makes it now also include specific clauses regarding quite unnecessary to own a car. INTERVIEW PETER VIINAPUU, CEO, MTR NORDIC MTR is one of largest railway operators in the time to failure and providing information to service world, transporting millions of passengers every