Navigating future for road charges (satellite road-user tax charging and tolling)

Europe's motorists are driving towards new pricing structures Motorists are already beginning to embrace the idea of satellite-navigation units in cars.

And in a few years, sat-nav will be doing far more than simply telling drivers how to get to their destination.

This week, the first test satellite in Europe's 3.4bn-euro (£2.3bn; $4bn) Galileo satellite-navigation system blasted off on a Soyuz rocket from Baikonur Cosmodrome in Kazakhstan.

The final global network of 30 Galileo satellites is crucial to providing the high volumes of time- and location-based data needed for new services such as advanced sat-nav, mobile location data, natural disaster surveillance and air traffic control.

Powerful applications are expected on the roads; the Galileo network would allow a vehicle's exact movements to be tracked, presenting new possibilities for road-user charging and tolling.

The precision and availability of the Galileo signal would facilitate the application of charges according to the distance travelled by a vehicle, along with other parameters.

"For example, you might want to vary the charge according to speed, or whether someone is travelling through a city centre," Hans-Peter Marchlewski, general counsellor for the Galileo Joint Undertaking, told the BBC News website.

The time signal produced by Galileo would also allow different charges for driving at different times of the day.

"This we are able to do without any support from bridges or ground stations. You can do everything with the [Galileo] signal," explained Mr Marchlewski.

Each motorist would, of course, need to carry a satellite-linked "smart box" in their car, but Galileo-based systems would also dispense with much of the roadside infrastructure to collect tolls and charges.

There have been quite significant studies which show that revenue-neutral road-user charging would give you quite significant gains in congestion reduction

Prof Mike McDonald, University of Southampton Galileo sat-nav could potentially form the basis for general "pay-as-you-go" road pricing proposed for the UK as a replacement for road tax and petrol duty.

However, transport policy expert Professor Stephen Glaister, from Imperial College London, says that "tag and beacon" systems are also under consideration.

They are used in a distance-related charging scheme for heavy goods vehicles in Austria and a congestion charging scheme underway in Trondheim, Norway.

The American Global Positioning System (GPS) is used for distance-related heavy-goods-vehicle charging in Germany.

These current schemes reveal pros and cons for sat-nav and beacon-based systems in road-user charging.

"As you pass the beacon you have a more solid communication link, allowing you to pass information both ways. The satellite system has some problems with continuous communication when you get shadowing by buildings," Professor Mike McDonald, director of the Transport Research Group at the University of Southampton, told the BBC News website.

"With satellite navigation, you don't get a totally continuous signal but you get a much better understanding of where the vehicles are and how they are being driven."

'Smart box' would automatically transmit location of vehicle Emergency request could be triggered at airbag inflation Message might contain details of passengers, e.g. in coaches Real-time traffic data would guide others away from scene Future systems could warn of road dangers and take control of vehicle, e.g. limiting speed With Galileo and GPS, the satellite signal can be supplemented where it drops out by ground stations, although these must have a line of sight with the vehicle.

European road users pay 330bn euros (£230bn; $390bn) to governments through taxes each year. But along with its importance in raising revenue, road-user charging can play an important role in reducing congestion.

"In Brussels, we have the same transport situation as we have in London. In Germany, it is the same situation," lamented Mr Marchlewski. "Galileo will not reduce congestion directly, but it can be used for a more intelligent distribution of vehicles."

Professor McDonald adds: "There have been quite significant studies which show that revenue-neutral road-user charging would give you quite significant gains in congestion reduction."

By the same token, it could also be a powerful tool for tackling carbon emissions, say some experts. But environmentalists warn that shifting money away from fuel duty would remove the incentive for motorists to use greener vehicles.

Currently, the UK is the only EU member state proposing pay-as-you-go charging. But this could change.

"As Galileo comes in it is quite likely to be acquired for road-user charging. The issues are political rather than technical," Professor McDonald commented.

...if you get a bill for a road you haven't driven on at a time of day you weren't there, what's the recourse for getting your money back?

UK's Automobile Association Exactly how Galileo might be used in electronic fee collection (EFC) - a catch-all term describing any toll or charge applied electronically - will in large part be left up to the individual member states, which will continue to set their own policies.

Some Galileo initiatives for the road sector are, however, being coordinated at the European level.

The European Commission is undertaking studies into the idea of equipping heavy goods vehicles and coaches with onboard terminals offering Galileo-based services, especially in EFC.

The system might work something like this: hauliers and coach operators would sign a contract with one or more operators to use the services offered through the onboard units.

The terminals would then be used to track the charges and tolls collected by vehicles on their travels. These would be issued to clients as a list of expenses much like a monthly credit card bill.

Initial versions of the terminals will need to work with three key technologies: Galileo, GPS and the microwave system used for tolling in France and Spain.

A spokeswoman for the AA motoring trust in the UK said there was still some way to go in working out exactly how such systems might work in practice.

Navigation for navigation's sake will not drive applications Uptake pushed forward by services that add value to data Huge potential for internet-linked services run off mobiles E.g. finding a restaurant, and directing you to nearest ATM Multimedia delivered to tourists' mobiles as they walk around 'Guardian angel' services will locate separated children Possibilities are endless; mobile firms already brainstorming Database and billing companies planning for large markets

Europe lofts Galileo satellite Q&A: Europe's Galileo project Galileo puts UK on map "It's fine having a company process all the data from each country and tell you how much you owe; but if you get a bill for a road you haven't driven on at a time of day you weren't there, what's the recourse for getting your money back?"

In addition to EFC, the European Commission wants these units to be used for fleet and freight management and to launch emergency calls.

Drivers would use a small keyboard to enter certain parameters at the beginning of a journey, such as how many passengers were on a coach, or whether a lorry was carrying hazardous chemicals.

In the event of an accident, the terminal would launch an emergency call - perhaps triggered by the activation of airbags. The call would also send the information entered by the driver, allowing emergency services to adapt their response to the situation.

Using the Galileo signal, the terminal message would also pinpoint the precise location of the stricken vehicle.

The price of one of these onboard units is currently estimated at 400 euros (£270; $480), although it is hoped that this could drop to 100 euros by 2010.

Eventually, new trucks and coaches in Europe would be sold with the equipment already installed.

"If this system works for commercial vehicles, that same technology will be readily available for use in vehicle charging," says Mike McDonald.

Regardless of whether member states propose their own Galileo-based road-user charging schemes, onboard units offering Galileo-based services for ordinary motorists could be available by 2015.

These could offer route-guidance, incorporating up-to-date traffic information, but would also be enabled for insurance pay-as-you-drive schemes.

"There are drivers that would encourage people to buy systems in vehicles that have location-based data, communications and mapping," Professor McDonald explains.

"As they become universal, the incremental costs for putting in road-user charging and other applications will become very much lower."

AMERICA’S TRANSPORTATION
INFRASTRUCTURE CHALLENGE

Remarks of

Jeffrey N. Shane
Under Secretary for Policy
U.S. Department of Transportation

U.S. Chamber of Commerce
Committee on Transportation Infrastructure and Logistics

St. Regis Hotel
Washington, DC
November 3, 2005

I am very pleased to have this opportunity to speak to the U.S. Chamber’s Committee on Transportation Infrastructure and Logistics. The Department of Transportation has a very close and productive working relationship with the Chamber. That’s because of the Chamber’s superb work on the areas we care most about and because of the quality of the people who staff its programs. Ed Mortimer has done a really terrific job of representing your interests in the Congress and in projects that assist our Department in its mission. In 2003, this Committee delivered a Report on Trade and Transportation – A Study of the North American Intermodal System. Later today, you will be briefed on another cutting edge report from the Chamber, “The Future of Highway and Public Transportation Financing.”

Two things are clear:

• The Chamber steps right up to the plate in identifying the hard questions and then pushing the hard deliberations that must occur around those questions.

• As the title of your newest report indicates, the world of transportation financing has changed, and it’s time to take a good hard look at where we go moving forward.

Some of you may be familiar with Malcolm Gladwell’s best-selling book, The Tipping Point, in which he argues that little changes can have big consequences and that when small numbers of people start behaving differently, that behavior can ripple outward until a critical mass or "tipping point" is reached, changing the world. I believe that we are currently approaching such a tipping point in the supply, the financing and the management of the U.S. transportation system. Perhaps the Chamber study will provide the final nudge that is required to give the conversation the momentum it needs.

These are no small issues, and therefore the Department is grateful to have the Chamber as one of many voices that will assist us in finding a new path forward. Here are a few observations that this group knows better than I – observations that attest to the need for re-tooling the transportation activities as we know them today. I would argue that we have reached that famous tipping point, and we have already begun a course correction.

The transportation sector is transitioning from a public works mentality to managing a transportation enterprise, and managing that enterprise to be optimally performing, optimally priced, and optimally responsive to moving people and goods economically.

Times are changing in the United States

We are currently in the midst of what might be considered the third major phase of transportation innovation in the last 50 years. The first major innovation came in 1955 with the creation of the Eisenhower and Interstate Highway System, which we carried out through a traditional public works approach. Twenty-five years later came the second major innovation – transportation deregulation – which freed markets to produce lower cost and more efficient transportation. Each of these innovations transformed the transportation sector, allowing goods to move more freely, quickly, and cost-effectively.

Today – another quarter-century later – an enormous confluence of events has created the potential for a third great period of innovation.

• A mature capital plant. Now that our capital plant is mature in many areas, there is a need to leverage technology to maintain and manage our existing system more effectively. New information technologies, such as EZ-Pass, PierPass, wireless communications, GPS/GIS systems, and other supply chain logistics innovations, hold great promise in this area.

• Global economic change. Some may dispute exactly how “new” global economic change is – in many ways it’s something that we’ve always had to deal with. But it is clear that the global economy is now moving at a ferocious pace and with stunning inter-connectivity. China and India are formidable new players in the game, increasing their involvement in global economic markets to levels that we’ve rarely seen before. And with a population of over 2 billion, their actions are having a huge impact on us. Exports from China to the U.S. and Europe represent more than 40 percent of China’s total export value, compared with less than 20% in 1990.

• Domestic economic change. In the 1970’s the U.S. had approximately 200 million citizens who together owned 130 million vehicles. Today our nation has about 300 million residents, who together own 230 million vehicles. Our airports currently process nearly 700 million passengers per year, up from 300 million prior to airline deregulation. Looking ahead, we’re bracing for the billion passengers per year that we expect by 2025.

• The Highway Trust Fund was a powerful mechanism for financing much of the transportation system that we enjoy today as far as highways and transit are concerned. But today we have new issues and some particularly acute ones relating to the need to finance expanded infrastructure at freight gateways – at our ports and border crossing points. Very clearly, the Highway Trust fund needs re-tooling. It is no longer sufficient to address today’s challenges. That’s why we are so pleased that the Chamber Study is kicking off the discussion of what will follow the Highway Trust Fund.

A Global Response

In the face of these changes, many organizations – both in the U.S. and around the world – have advanced innovative responses to transportation challenges.

On highway segments throughout the United States, states and localities are analyzing – and in some cases implementing – toll and congestion charges to finance the construction of infrastructure and to manage demand as we’ve never done before. Cities and states have begun to pursue the sales of transportation assets. Asset sales – The Chicago Skyway, the New Jersey Turnpike, the Dulles Greenway and now the Dulles Toll Road – to name just a few – are unfolding almost weekly. Freight railroads are squeezing more cars and intermodal units into a scaled-back route network than ever before, and – some noticeable glitches aside – are doing so with historically quicker turnaround and higher reliability than anytime in their history. And the PierPass initiative at the Ports of Los Angeles and Long Beach has been successful in diverting some peak period port trucking operations to less-congested nighttime hours.

With the release of the Future Highway and Public Transportation Finance Study Final Report, the Chamber of Commerce shows it is on the vanguard when it comes to policy change. This report, which identifies highway funding needs more clearly than ever before, reflects a very solid understanding of the problem and initial proposals as to how we get from the “public works” era to a “transportation system” era.

Other nations are also advancing innovative transportation solutions. London has instituted a system of cordon pricing within its urban center – a system that many cynics thought wouldn’t work. However, to their surprise, cordon pricing has been quite successful in downtown London, and officials are investigating the possibility of expanding it further throughout the city. The U.K.’s Transport Secretary, Alistair Darling, has come out in strong support of road pricing mechanisms, and the United Kingdom is moving forward toward testing a nationwide system of road pricing.

India has been pursuing pricing strategies for both its road and maritime systems, is linking road development to seaport development, and is seeking significant privatization of its transportation system. Germany is currently testing a system that would allow for satellite-based tolling of trucks.

Canada, Mexico, and a number of countries throughout Europe, Asia, and Latin America are currently restructuring their port and freight operations and policies. Several Mexican ports are poised to accommodate a portion of U.S. west coast import traffic, and a major port expansion is underway in Vancouver, Canada.

So this brings us to the crux of today’s discussion, what’s the next wave of transportation policy, and most important to this group, what’s the next wave for freight system improvements?

The scope of the challenge

The challenge in the United States is serious and calls for further private sector engagement in improving the physical capacity of the supply chain.

In the near-term, expect continued growth in demand for port throughput – around 10 percent a year – as well as an increase in new vessel capacity as carriers respond to growing demand. The intermodal network will continue to experience lack of capacity and erratic service reliability, and intermodal congestion will continue to get worse. There is no light at the end of the tunnel. We expect LA/Long Beach to remain the primary west coast trade gateway, though there will be some diversion to other ports. And we assume that growing capacity constraints will slow the ability of the transportation network to recover from any adverse events.

In the mid-term, we expect that supply chain velocity will continue to slow. Shippers and importers will rethink and adjust their supply chains, but much of their capital investment has been made and resources have already been committed – and unfortunately not necessarily in places where they will need to be going forward. In time, higher costs will begin to flow through to consumers and the U.S economy.

Given this forecast, the consequences of inaction are significant:

• Infrastructure congestion at freight gateways is not temporary – the challenges will become greater and be with the U.S. for years.
• Similar challenges outside the U.S. will exacerbate the problems in the U.S.
• Market growth is currently far outpacing infrastructure development and will continue to do so.
• Transport and supply chain costs will continue to increase and flow through to U.S. consumers.
• The U.S. is exposed to a potential breakdown in the flow of commerce that would have a significant impact on the U.S. economy.

A collaborative public-private approach to freight system productivity

SAFETEA-LU provided some of the tools we need, but there is still much to be done, and there are many differences of opinion on what is wrong and how to fix it.

Historically the response of the Department of Transportation to transportation challenges has been to step forward with a big open checkbook. But the days of big spending are quickly coming to an end. Looking forward, projected Highway Trust Fund revenues are unlikely to be sufficient to meet our Nation’s transportation infrastructure funding needs, and the Federal budgetary landscape does not look particularly promising in the years ahead. Every one of the programs within the Department of Transportation falls within the category of Federal “discretionary funding,” so we’re looking forward to the likelihood of flat budgets during good years and declining budgets during bad years.

The bottom line is that we won’t simply be able to buy our way out of our problems. Recognizing this, DOT is working creatively and innovatively to broaden the set of policy tools at our disposal and to develop new approaches for meeting transportation challenges. The private sector obviously has a big role to play in all of this, and as we go forward we plan to reach out to our private partners – including the Chamber – to further engage in our responses.

So, first, what are the elements of a collaborative public private approach to freight system productivity? I know that earlier today, Sam Crane gave you an update on the activities of the Marine Transportation System National Advisory Council (MTSNAC), and I further understand that MTSNAC intends to deliver a White Paper to Secretary Mineta. We look forward to that Report and applaud MTSNAC for preparing it. Sam also briefed you on another effort on which my office is collaborating with the Transportation Research Board -- the TRB Freight Industry Roundtable. In that Roundtable we are seeking industry comment and guidance on an emerging freight policy to guide the Department’s future collaborative efforts on improving freight capacity and freight velocity at our gateways.

DOT’s policy response will focus on seven objectives:

• Improve the operations of the existing freight transportation system.
• Improve the physical capacity of the freight transportation system.
• Expand the use of pricing to cover costs of maintenance and expansion, manage capacity, and address equity issues…there has to be a reasoned discussion about user fees to improve freight systems, especially at our ports.
• Consider regulatory and institutional changes to improve freight transportation performance.
• Proactively identify and address emerging transportation needs.
• Maximize the safety and security of the freight transportation system.
• Mitigate and better manage environmental consequences of freight transportation.

My question to this group is: Are we on the right track? Are these seven policy platforms responsive to challenges you experience in moving your products to market? We hope to hear feedback from you.

I can’t stress enough how much we value the input from the U.S. Chamber, MTSNAC, and the anticipated guidance from the TRB Freight Industry Roundtable. Frankly, the Department needs your voices and your help in three ways.

1. We need you to keep telling the freight story to the Department, Capitol Hill, Executive Branch leadership, and your local business communities.

2. Private sector input into our National Freight Policy development process is critical, and far outweighs our role of facilitation and promotion. We welcome your feedback and look forward to working with you to further refine this policy.

3. Most importantly, we need the Chamber’s membership to work with the Department to take advantage of SAFETEA-LU’s new tools for financing transportation infrastructure. We have a freight implementation team ready to discuss these programs with your companies.

Highways, ports, rail yards, airports and border crossings have profound significance for your bottom line costs for distribution; and they have national strategic significance for the Nation’s continued leadership as the world’s largest global trader. I started by suggesting that we have indeed reached a tipping point in how we manage, plan, and finance the transportation capital plant. This strikes me as being particularly true for the nation’s intermodal freight system. As Gladwell writes, we are indeed at the moment of critical mass, the threshold, the boiling point, a place where the unexpected becomes expected, where radical change is more than possibility. Future generations will judge us to a large extent based on whether we respond effectively to this historic challenge.

Thank you for inviting me to be with you today.

E-tracking, coming to a DMV near you

CNet | December 05, 2005
By Declan McCullagh

Trust federal bureaucrats to take a good idea and transform it into a frightening proposal to track Americans wherever they drive.
The U.S. Department of Transportation has been handing millions of dollars to state governments for GPS-tracking pilot projects designed to track vehicles wherever they go. So far, Washington state and Oregon have received fat federal checks to figure out how to levy these "mileage-based road user fees."

Now electronic tracking and taxing may be coming to a DMV near you. The Office of Transportation Policy Studies, part of the Federal Highway Administration, is about to announce another round of grants totaling some $11 million. A spokeswoman on Friday said the office is "shooting for the end of the year" for the announcement, and more money is expected for GPS (Global Positioning System) tracking efforts.

In principle, the idea of what bureaucrats like to call "value pricing" for cars makes sound economic sense.

No policy bans police from automatically sending out speeding tickets based on what the GPS data say. Airlines and hotels have long charged less for off-peak use. Toll roads would be more efficient--in particular, less congested--if they could follow the same model and charge virtually nothing in the middle of the night but high prices during rush hour.

That price structure would encourage drivers to take public transportation, use alternate routes, or leave earlier or later in the day.

The problem, though, is that these "road user fee" systems are being designed and built in a way that strips drivers of their privacy and invites constant surveillance by police, the FBI and the Department of Homeland Security.

Zero privacy protections
Details of the tracking systems vary. But the general idea is that a small GPS device, which knows its location by receiving satellite signals, is placed inside the vehicle.

Some GPS trackers constantly communicate their location back to the state DMV, while others record the location information for later retrieval. (In the Oregon pilot project, it's beamed out wirelessly when the driver pulls into a gas station.)

The problem, though, is that no privacy protections exist. No restrictions prevent police from continually monitoring, without a court order, the whereabouts of every vehicle on the road.

No rule prohibits that massive database of GPS trails from being subpoenaed by curious divorce attorneys, or handed to insurance companies that might raise rates for someone who spent too much time at a neighborhood bar. No policy bans police from automatically sending out speeding tickets based on what the GPS data say.

The Fourth Amendment provides no protection. The U.S. Supreme Court said in two cases, U.S. v. Knotts and U.S. v. Karo, that Americans have no reasonable expectation of privacy when they're driving on a public street.

The PR offensive
Even more shocking are additional ideas that bureaucrats are hatching. A report prepared by a Transportation Department-funded program in Washington state says the GPS bugs must be made "tamper proof" and the vehicle should be disabled if the bugs are disconnected.

"This can be achieved by building in connections to the vehicle ignition circuit so that failure to receive a moving GPS signal after some default period of vehicle operation indicates attempts to defeat the GPS antenna," the report says.

It doesn't mention the worrisome scenario of someone driving a vehicle with a broken GPS bug--and an engine that suddenly quits half an hour later. But it does outline a public relations strategy (with "press releases and/or editorials" at a "very early stage") to persuade the American public that this kind of contraption would be, contrary to common sense, in their best interest.

One study prepared for the Transportation Department predicts a PR success. "Less than 7 percent of the respondents expressed concerns about recording their vehicle's movements," it says.

That whiff of victory, coupled with a windfall of new GPS-enabled tax dollars, has emboldened DMV bureaucrats. A proposal from the Oregon DMV, also funded by the Transportation Department, says that such a tracking system should be mandatory for all "newly purchased vehicles and newly registered vehicles."

The sad reality is that there are ways to perform "value pricing" for roads while preserving anonymity. You could pay cash for prepaid travel cards, like store gift cards, that would be debited when read by roadside sensors. Computer scientists have long known how to create electronic wallets--using a technique called blind signatures--that can be debited without privacy concerns.

The Transportation Department could require privacy-protective features when handing out grants for pilot projects that may eventually become mandatory. It's now even more important because a new U.S. law ups the size of the grants; the U.K. is planning GPS tracking and per-mile fees ranging between 3 cents and $2.

We'll see. But given the privacy hostility that the Transportation Department and state DMVs have demonstrated so far, don't be too optimistic.

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