Earlier this year the European Commission issued a Draft Directive on Electronic Road User Charging. Carol Debell talks to Phil Jeanes of PA Consulting about what the Directive was trying to achieve and how far it succeeded.
When it comes to road user charging, Phil Jeanes is what you’d call well connected. He works for PA Consulting Group who, for the last six years, have been advisers to the UK’s Department for Transport (DfT) on road user charging and telematics issues. In addition, for the last two years PA have been technical advisors to the financial consortium providing project finance to the German HGV scheme which is due to go live this autumn.
Despite these contacts, however, he says the Commission’s draft directive on electronic road user charging, published at the end of April this year, appeared out of the blue. ‘This directive did not appear to be the result of a Europe-wide consultation with informed parties. As far as we can judge there was no detailed consultation with others to understand how they would see things moving forward.’
If the Directive’s sudden arrival was a bit of a surprise, the second one was the contents. The Directive suggests the introduction of a European Electronic Toll Service using specific technologies and obligations that all system operators should adhere to. It sets very tight timescales, with all network managers being required to offer a service for vehicles over 3.5 tonnes by the beginning of 2005 and for all schemes to have been converted to the recommended infrastructure by 2008.
To Phil Jeanes, the timescales quoted are wildly unrealistic, even if all Member States had already indicated their agreement to the draft directive, which they haven’t. So, do we need to take this Directive seriously? It is important, says Phil, to understand what is behind it and he believes that the Commission had become increasingly frustrated by the proliferation of road user charging schemes within Europe which do not have any genuine measure of interoperability between them.
The German HGV scheme is a case in point. Scheduled to come into operation in September 2003 it is not compatible with existing schemes operating in Switzerland and Austria, despite significant transit traffic between the three countries. At the end of July the German Ministry and Toll Collect announced that the scheme would run for two months in a trial mode with tolls only being collected from November
The main reason for the delay was pressure from the EU regarding equal access for the truckers from other countries to the On-Board Units (OBUs). Toll Collect have now committed to deliver 450,000 of these units by November 1, compared to just 150,000 which had been promised by September 1. There has been considerable comment in the German press about the lack of availability of OBUs.
Phil says the Commission has sponsored a number of initiatives over the last few years to address the issue of interoperability but the focus has been on producing detailed technical standards. ‘My own view is that they have started in the wrong place and that this work has not really hit the mark. I think they should be looking at the wider context of the business model rather than focusing on the detail of the road-side technology.’
Phil comments that they might learn something from the UK’s approach. ‘The UK has a unique problem since the legislation allows every Local Authority to introduce road user charging (subject to certain national conditions) so the potential for incompatible systems could be high. This has been addressed by PA working with the DfT to create an interoperability business model which defines the transactions independent of the technology. I think that this approach puts the UK in advance of what is happening anywhere else.’
The business model is important, he says, because it defines the roles and enables costs to be identified. ‘The big problem at the moment is that while interoperability may be highly desirable, from the operators’ point of view there are no clear financial benefits for either the road authority or the service operator from providing the facilities required.’ In the Directive the issue of costs appears to be swept under the carpet.
‘As it stands the Directive talks about a central clearing scheme but without defining how this clearing would work or how it would be funded.’
These are, says Phil, very major issues. ‘The Directive does not address how an operator in one country would process payments through a system installed in another country. In the mobile phone world, this problem is solved by roaming, a service which the user pays for. But in the tolling world, it is illegal to charge nationals of one country more to travel on roads than charged to your own nationals. So there is no tariff uplift to cover the additional costs of processing the transaction and it is not clear, from a scheme operator’s point of view who would pay the extra costs.’
But if the Directive is very vague on the detail of how to manage cross border transactions, it is very clear on one point. The technologies of choice specified in the Directive, are GNSS (Global Navigation Satellite Systems of which GPS is the current standard but which the EU’s Galileo is set to become a player in 2008) and GPRS (General Packet Radio Systems), the current standard for always-on data connect via mobile telecommunications networks. Essentially, says Phil Jeanes, he sees the shadow of Galileo falling across the EU’s intentions. ‘It looks to me as if the Commission is seeking to help support the Galileo business case.’
If he is right, then it means that the Directive has perhaps started in the wrong place and by suggesting that all systems adopt specific technologies, he believes that this will build in longterm obsolescence. ‘This is surely not what is required at the start of a major implementation programme.’
This comes at a critical time for the road user charging industry, the successful implementation of the congestion charging scheme in London and the German ‘LKW Maut’ system about to go live. Another important development is the UK government’s decision to introduce a mileage-based HGV charging system by 2006. Customs & Excise are currently examining plans and are expected to be going out to industry for consultation during the autumn.
Phil Jeanes says that the German scheme is influential for a number of reasons. ‘It is important because of its size and its scope and as the first to use GPS technology for charge identification rather than the current systems of road-side infrastructure.’ He says that Customs & Excise are known to be looking at the German scheme and that there is an expectation within the industry that they will come up with something similar.
Phil Jeanes is not sure this would be appropriate. ‘There are fundamental differences between the German scheme and the proposed UK scheme which, in my view, may make the German option too expensive for implementation in the UK. The German scheme will collect additional income for the German government (destined for transport projects). It is not the same in the UK. Here the scheme is meant to be neutral for transport operators and is essentially an alternative way of collecting excise duty. The only new revenue will come from foreign HGVs which, at the moment, purchase their fuel abroad. I don’t think the amount of “new money” will be enough to fund such a complex scheme.’
Competition issues
Competition is another important issue. The German scheme gained conditional approval from the Commission at the end of April with respect to the potential monopoly for telematics services in Germany. Toll Collect, Phil points out, are the only scheme operators in Europe that use the technologies that have been suggested for Europe-wide introduction in the new Directive. The conditions set by the Commission require Toll Collect to ‘open up’ their OBU platform to enable third parties to access to key components.
Despite this condition, and the requirement to establish an independent telematics gateway company, Phil Jeanes believes a monopoly situation could still develop. ‘There are many suppliers who want to supply Germany’s 750,000 vehicle population, plus all the non-German trucks which will use the system, and they will adopt the specifications needed to supply components for the Toll Collect system. This will provide ready made components for further system procurements, for example in the Czech Republic or Poland, allowing the Toll Collect specifications to establish a critical mass.’ In effect, setting a de facto standard by the back door.
But does it matter? Phil Jeanes says it is important to ensure that any adoption of de-facto standards is not associated with undue market dominance. He points out the UK’s HGV charging scheme may be a case in point. ‘If the UK should decided to go for a look-alike scheme to the German scheme, there would only be one operator in a position to roll out the technology in a short timescale. For this type of scheme to go from drawing board to prototype is going to take at least 20-24 months and take considerable capital. I am not sure that many companies will be prepared to make the necessary investment when they know that there is strong competitor with proven technology. I think this situation raises real issues for governments and system owners about how to establish a level playing field for fair procurement.’
Given that the Directive has, in Phil Jeanes’ view some weaknesses, how would he want the Commission to proceed? He says the first objective should be to define a Europe-wide business model within which standards can be developed to meet business needs. ‘Interoperability is critical and I think it will be necessary to provide incentives for operators. Without incentives I can’t see progress being made.’ And the other thing that in his view which is quite essential – sensible time horizons. ‘The industry needs longer and clearer timescales.’
