Peer review: Trevor Birch
Partner, PA Consulting Group
This article raises many implicit questions, and I’m going to address a few of the most important:
Are we building with the right technology?
Why is it taking so long for smart ticketing to roll out in rail?
Is government providing the right leadership?
I’ve spent the past few years working closely with the DfT, trying to drive SEFT forward and articulate how it fits into an emerging national strategy for smart ticketing. SEFT is implementing an ITSO scheme in the South East, but is also looking more widely at the national context for smart ticketing on rail, options for contactless payments, requirements for Transport for the North, and how rail interacts with other modes. It’s a complex landscape, and many of the arguments are simplified too much.
Are we building with the right technology?
The article seems to suggest that ITSO is obsolete, stresses a lot of the benefits of contactless, and points towards the adoption of mobile technologies. It recognises that the majority of journeys are made in an urban environment, but skips over the realities of national rail and the (very) differing needs of the people who travel on it (commuters, infrequent travellers, cities, rural environments and long-distance travel). There has been significant debate over the past 12 months, largely within the Rail Delivery Group, and the emerging consensus is that the future will not be a single technology, but multi-media:
- Card based tickets in urban/city areas - because cards are physically resilient and fast processing, and cities have good connectivity.
- Barcode tickets - for long-distance travel and potentially rural areas where there is little connectivity.
‘Mobile’ is misleading as an option. Functionally, mobile replicates a card (contactless or ITSO) or barcode, so it makes little difference. The advantage of mobile is its ability to link internet access (for information and payment) with the same device that can carry your ‘ticket’. The functional advantage is its potential for geo-location to record the start and end of your journey, replacing ‘taps’ and the need for costly infrastructure in stations, such as validators.
Before consigning any technology to the bin, or declaring one the best solution for rail, we should consider the maturity of the different technologies and their advantages/disadvantages.
ITSO is mature, well-established on buses and exists on parts of rail, but its deployment has been fragmented. Its biggest advantages are interoperability (it is designed so different systems can talk to each other), products are held on the card (which means you don’t need WiFi on trains or 3G for revenue protection), and it’s good for high-value products (long journeys and seasons). Downsides include the need for lots of infrastructure to collect ‘taps’ at the start and end of journeys, and customers having to purchase cards in advance (so it’s not great for turn up and go travel).
Contactless is a massive success in London and offers great potential. The advantage is that many people have cards, and it’s easy for turn-up travel. Disadvantages include reach (not everyone has a bank account), it’s not great for high-value fares (customers are uneasy ‘tapping’ if they don’t know how much they will pay), and there is no agreement yet on interoperability (journeys starting and ending in locations that are not connected to the same back office).
Barcode has been proven to work in trials on national rail, but is not yet rolled out at scale. Nor will slow processing speeds work well for large volumes of passengers arriving at busy stations during peak. It offers good advantages for infrequent travellers, long-distance travel, and potentially in rural areas.
Mobile offers great potential where payment and tickets can be put on one device. The downsides include reach (many people don’t have smartphones, large portions of the population don’t download apps, and only small number of phones can be used to make payments), and the lack of established standard for carrying ‘tickets’ on phones or processes and equipment for geo-tagging.
As such, I don’t think we are building the wrong system - we are trying a number. ITSO has a head start and offers immediate interoperability, but contactless is developing quickly and will be a big part of the future. The ambition is ‘account-based ticketing’ where the technology is less important - it acts as a ‘token’ to pass through gates while your account registers your right to travel (ticket), proof that you have paid, and enables payment to be checked (revenue protection). Link an account to an ‘engine’ that calculates fares and you can offer Pay As You Go, price capping, delay repay or flexible pricing to incentivise travel at different times of day or days of the week. ITSO can support this, but is only one option on the journey.
Why is it taking so long to implement smart on rail?
Yes, progress on rail has been slow, and John Verity makes some good observations on the reasons why. London has been able to implement its systems quickly because it is in control - of fares and of the bulk of transport modes. National rail in the UK is much more complex
- The industry is fragmented - with multiple, competitive operators who have different (at times divergent) commercial interests. Legal and commercial frameworks are essential to bring operators together and create financial settlement, but can take years to agree.
- The fares structures are complicated - with over 350 million permutations
- Everything is contractual - change has to be managed through new franchise commitments or amendments to existing franchises. TOCs are incentivised to meet their contractual obligations and not much more
The positive news is that momentum is building. There is £150 million of funding for Smart on Rail in the North, the Payment Cards Association is co-ordinating thinking on how contactless may work on national rail, and ATOC has ideas on the use of barcodes. SEFT provides funding and is bringing together a critical mass of TOCs in the South East who will operate within a common scheme.
Is the Government providing sufficient leadership?
My observation is that the Government has taken a stronger role in recent years because things were moving slowly - it has taken a lead role in SEFT in promoting multi-operator schemes in cities, and is supporting Transport for the North.
There is an argument that government should do less - that rail is a free market economy and that government should not be involved. This is happening. SEFT will hand over to the Rail Settlement Plan, TfN is taking responsibility for solutions in the North, and the RDG has a working group looking at smart.
How do we move forward?
We need to focus on the customer, not the technology. We need to simplify ticketing, rather than replicating it on smart, and use fares to incentivise take-up. Unfortunately for some, the Government has a key role in much of this.
