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Tolling Agencies Find Efficiency Through Consolidation

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Tolling Agencies Find Efficiency Through Consolidation Tolling Agencies Find Efficiency Through Consolidation Tolling Agencies Find Efficiency Through Consolidation Few services in the United States have grown as steadily as electronic tolling. In the last decade, annual tolling revenues have doubled to reach $12 billion largely driven by the popularity of electronic tolling. At the same time, nineteen new toll agencies have formed, and total mileage on tolled highways has increased by 11 percent. Cashless tolling raises revenue for highways and bridges, cuts down on traffic congestion and greenhouse gas emissions, and allows motorists to drive long distances without stopping or slowing down. With all the convenience it offers, it’s no wonder some 40 million vehicles today are equipped with electronic toll devices, or transponders. Tolling agencies in the United States, Canada and Mexico use radio signals to identify these customers on toll roads automatically and debit their pre-paid accounts. Benefits and Costs of Interoperability Even as cashless tolling has taken hold across the nation’s highways, so have agreements for reciprocity among separate tolling agencies. In many states or regions of the country, drivers may use a single transponder to pay for tolls across different toll authorities, a practice known in the industry as interoperability. The largest area of interoperable electronic tolling is located in the eastern United States. Under the single E-ZPass® brand, 25 toll agencies in 15 states formed a consortium that enables E-ZPass® account holders to travel the US eastern coastline along the I-95 corridor without having to stop at tollbooths. Interoperability allows drivers to pass seamlessly through different tolling authorities. It makes toll roads more convenient, increases revenue and reduces cost. It does, however, pose challenges. It requires industry standard readers and transponders and camera-based automatic license place recognition. Transactions from visiting, or away, drivers must be reconciled, either by settling with the home agency, or by obtaining the visiting driver’s account information and sending a bill directly. These requirements and others necessitate additional staffing and back-office systems. Back Office Consolidation Represents the Next Phase of ETC Evolution Electronic tolling began as discrete groups of independent agencies offered cashless tolling exclusively to their own registered customers. Then agencies began to form regional or statewide groups to offer reciprocity for their customers, with each agency continuing to operate its own account database, front-end customer delivery and back office systems. Today, these interoperable groups are beginning to outsource the design and operation of customer service centers (CSCs) that consolidate services for multiple agencies. These regional CSCs represent the next phase in electronic tolling’s evolution. Capable of providing front-end delivery and equipped with advanced back- office systems, CSCs achieve economies of scale by allowing several agencies to share resources. A consolidated back office system must be robust enough to handle multiple agencies while supporting the following systems: Choice of Back Office Platforms Is Critical to CSCs System Function Emerging technologies that offer • CAMS (Customer Account Management • Account setup and maintenance greater convenience to drivers and Subsystem) operational efficiencies to tolling • DIMS (Device Inventory Management • Transponder inventory and authorities have spurred the rapid Subsystem) distribution growth of electronic tolling. As the • FPMS (Financial Processing • Financial and reporting requirements pace of innovation is likely to continue, Management Subsystem) of the ETC application. a CSCs choice of back office platform is critical. The system architecture must • TPMS (Transaction Processing • Toll posting activity including have the scalability to handle increases Management Subsystem) interfacing to all away agencies in volume and the modularity to • VEMS (Violation Enforcement • Violation processing such as image manage requirements such as Management Subsystem) review, DMV look up requests and differences in the business rules of notice generation. participating agencies. • SAMS (System Administration • System management such as job Management System) scheduling and event logging • LPMS and LCMS • Interfaces to the lane systems. Service Centers Provide Economies of Scale While Allowing Agency Autonomy CSCs house a central database comprised of the accounts of all the agencies put together. Consolidation eliminates unnecessary duplication as agencies share technology, such as servers and software, and staff for ongoing operations and maintenance. The CSC can operate a comprehensive front end system with customer service representatives that enroll new customers, maintain and update accounts, distribute and exchanges transponders, process payments and address questions and complaints. The backend system handles enrollment processing, payment processing, receiving transponder file transmissions from the lanes, financial management, violations processing and customer mailings. Generally speaking, the more agencies can pull together and consolidate business functions and rules, the more costs can be reduced and the simpler it is for the end user who receives one bill and can expect one set of rules everywhere. Agencies, however, can still maintain their autonomy in a consolidated CSC model, for instance, preserving brand names and websites and distinct business rules. Where business rules differ, customer service representatives at the CSC act according to an agency’s specific direction. Violations or refunds, for instance, can be handled according to particular agency policy. Because the cost of a CSC is shared, often agencies can afford to invest in state-of-the- art back office systems with advanced applications. Newer systems, for instance, offer mobile applications that enable customers to check balances, set up accounts and make payments on smart phones. Mobile apps help attract younger customers who are accustomed to performing these tasks on smart phones. CSCs also offer the opportunity for data analytics; with aggregated data pertaining to traffic flows and revenue throughout a state or region, agencies can optimize planning and better coordinate roadway construction and maintenance. Consolidated Customer Service Centers for E-ZPass® and California FasTrak® As the fastest growing electronic tolling brand, E-ZPass® also became the first to take advantage of the benefits of consolidation. Seven tolling agencies from three states – New York, New Jersey, Pennsylvania – formed the Interagency Group and adopted the brand E-ZPass® in 1990. With more than $6 billion in tolls collected and 24 million devices in circulation, E-ZPass® is now a world leader in electronic tolling. The nation’s two largest consolidated CSCs deliver front and backend services to 11 E- ZPass® tolling agencies that oversee highways, bridges and tunnels in the Northeast. The New Jersey E-ZPass® customer service center in Newark serves six agencies with annual toll revenue of approximately $2 billion. Of its 763 million toll transactions, 567million, or 74%, are collected electronically. The New York E-ZPass® center in Staten Island serves five agencies with annual toll revenue of approximately $3.4 billion. Of its 711 million toll transactions, 528 million are collected electronically. On the west coast, the Bay Area Toll Authority (BATA) operates a consolidated, regional CSC that includes seven state owned toll bridges, the Golden Gate Bridge and the Bay Area express lanes. The regional center, which collects $755 million in toll revenue, distributes transponders, conducts account maintenance, handles motorist inquires and processes violations under the California FasTrak® brand. Of its 143 million transactions, 88 million, or 63% are collected electronically. One other large state is now in the process of building a consolidated Customer Service Center. The proposal would combine 4 agencies that together average 1.2 billion transactions per year, of which 892 million are electronic tolling. Agencies in this state previously collaborated to share ideas concerning toll road operations, roadway and tollbooth design, financing, acquisition and marketing. The proposed consolidation is supported by a cost saving report that recommends a centralized service center with a single point of contact for customers. The proposed service center would support the processing and account management of electronic tolling transactions for four major agencies and is projected to save millions of dollars a year. Consolidation Lends Itself to Growth of Electronic Tolling. Consolidation presents a compelling case for tolling agencies that anticipate growth. Customer service centers that serve multiple agencies provide economies of scale that drive down the total cost of processing a toll transaction. Most agencies undergoing consolidation expect to drive down operations cost by at least 15 percent to 20 percent. With a robust and flexible back-office system that can scale to growth, CSCs can bolster the financial viability of agency operations while providing the organizational framework for quality customer service. Some agencies preserve their distinct brands and business rules and simply share expenses by outsourcing the major financial, customer service, and operations functions. These agencies may maintain their own website and brands. Others, such as E-ZPass®,
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