Open Highways

  As electronic payments technologies have spread to tollway systems across the United States and Southern Canada during the past decade, they have evolved regionally but with no standard, compatible communication protocols. Federal mandates for safer vehicles could unify electronic tolling technology, but the process may take more than a decade.
  The question for tolling agencies now is what payment collection equipment to use until then.
  Electronic tolling technology got its start in the 1970s. Scientists at Los Alamos Laboratories developed radio frequency identification, or RFID, devices for the U.S. Department of Energy to track nuclear materials and for the U.S. Department of Agriculture to track cattle. In 1989, the Dallas North Turnpike installed the first electronic payment lanes to read RFID transponders placed in vehicles. Many other tolling authorities have since adopted similar systems and have expanded electronic toll accounts to pay for parking at airports and for fast food at drive-through lanes.
  When consumers register for the transponders, they typically are given the option to provide payment card information that is used to prepay an account that is tapped into each time they pass a toll. Once the account reaches a certain minimum, the tolling agency uses the card data to replenish the account.
  Four companies have emerged as leading manufacturers of toll payment transponders and in-lane reading equipment in North America. Amherst, N.Y.-based Mark IV Industries boasts the largest single contract for transponders, with 11 million for the Interagency Group, a confederacy of 21 tolling agencies in 10 northeastern states plus Illinois. Dallas-based TransCore, a manufacturer and vendor of tolling equipment, software and back-office services, provides transponders for most of the electronic tolling in the south-central U.S. and some in California. Transponders by Mississauga, Ontario-based Sirit Inc. are popular in California and Colorado, and Waltham, Mass.-based Raytheon Co. has transponders deployed in Toronto and Minnesota.
  The Interagency Group, or IAG, uses Mark IV RFID transponders that are battery powered and work like miniature walkie-talkies to communicate with lane readers. Transponders used in most of the U.S. use passive RFID, which means they "reflect" relevant information back to lane readers.
  All transponders in the U.S. communicate with readers using frequencies between 902 and 928 megahertz. But many operate on different communication protocols that are incompatible with protocols of different regions: the Interagency Group protocol in the Northeast, the American Trucking Associations protocol in the south-central region, and the "California Title 21" protocol, named after a California law and used mainly in California and Colorado, are three examples. Some in-lane readers can read up to four protocols but only two at a time.
  "Everything is the same frequency, but the technology is different and the build-up of the message is different," says Dick Schnacke, TransCore vice president of industry relations. "It's like four languages and then dialects around those four."
  When toll authorities started to electronify their lanes, many cared little about working with their neighbors, Schnacke says. "Dallas and Houston are a good example," he says. "We're both in the same state, but neither cared very much about the other. The feeling was that we're servicing our local patrons, and people won't necessarily drive from Dallas to Houston."
  Roadside surveyors hired in 2003 by a consulting firm eyeballed transponders in vehicle windshields and found that many drivers were traveling between those two cities, and tolling agencies in both decided to work toward interoperable equipment.
  Texas tollways are now interoperable within the state, and Texas agencies are discussing interoperability agreements with tollers in Florida, Mississippi and other nearby states. It is not an easy discussion.
  "Let's say that I want to be interoperable in Oklahoma and Florida," says Fred Philipson, information technology director for the Harris County Toll Road Authority in Houston. "Then my two protocols would be the ATA and the Allegro, which is Florida and Oklahoma. But if I wanted to be interoperable with Texas and IAG, I would have to choose IAG and ATA."
  Indeed, while most drivers only care about locally or regionally interoperable electronic toll systems, national interoperability would benefit long-haul truck drivers and firms, says Walter Kristlibas, director of electronic toll collection for the New Jersey Turnpike Authority, a member of the Interagency Group. "Let's say a truck driver is hauling produce from California," he says. "If that truck were to drive across the country and come into one of the EZ Pass states, that truck would not be valid. What that trucker would have to do is have two transponders in their windshield, one for Title 21 in California and the other for EZ Pass, which is silly."
  Martin Capper, president of the Transportation Technologies Division of Mark IV Industries, agrees that although trucking fleet companies want to see interoperability, tolling agencies do not always care about what their colleagues in other regions are installing. "There isn't anything really in the electronic toll collection that's driving toward interoperability," he says.
  Decision Factors
  Schnacke says that larger agencies or agency groups naturally have more power in determining what compatible technology will spread to other agencies. "If there's a gorilla and a mouse, the gorilla beats the mouse into submission. If there are two gorillas, they'd rather beat it out to see who wins."
  The biggest tolling gorilla is the Northeast's Interagency Group, and manufacturers are preparing to duke it out for their business when Mark IV's transponder contract with them expires in August 2007.
  One factor complicating tolling agencies' purchasing decisions is a mandate by the U.S. Department of Transportation Federal Highway Administration for the development of standard devices that would enable cars to communicate their locations with roadside readers and with each other to help avoid collisions.
  The Federal Communications Commission in 1999 set aside the 5.9 gigahertz frequency (specifically the 5.850 GHz to 5.925 GHz range) for this purpose. TransCore, Mark IV, Raytheon and Sirit together are working to develop equipment prototypes for the system.
  Manufacturers would integrate the transponders into vehicles, so toll authorities would have to decide only what in-lane reading equipment and back-office processing and billing services to purchase. Manufacturers would pitch their interoperable transponders to vehicle manufacturers instead of local toll agencies.
  Though traffic safety and homeland security (trucks crossing international borders, for instance) would be driving forces behind government funding of the 5.9 GHz tags, truckers could use one transponder rather than multiple ones for identification and for use in weigh stations and at toll lanes. Toll authorities could extract payments from motorists from anywhere in the United States either by using pre-established toll payment accounts or their vehicle information for mailing a bill.
  But it could take at least a decade before enough vehicles have the 5.9 GHz transponders for critical mass, and toll authorities have a lot of tolls to collect and process until then.
  Mark IV's pitch to the Interagency Group is to stay the course with proven technology. "When you're collecting something like $2 billion a year using electronic toll-collection equipment with extremely high accuracy and reliability, you've got to think of the risk of change," says Capper.
  TransCore, though, argues for switching transponders to save money while the market waits for the 5.9 GHz standard to become a reality. The price of the company's thin, sticker-like passive transponders varies by volume ordered, but they generally cost less than $10 each (less than half of the average Mark IV transponder price). "IAG is sort of agonizing about what to do next," Schnacke says. "And part of the agony is, when is this 5.9 thing coming on, and will it be soon enough to save us money, or is there going to be a gap in the middle to worry about."
  Kristlibas, however, who chairs the Interagency Group's executive committee, says he would not categorize the IAG as "agonizing" over technology issues. "We're very aware that the contract with IAG is expiring, and we're also aware that the 5.9 technology is not on the street," he says.
  Kristlibas says the Interagency Group is gathering information and will solicit a request for proposals from vendors for the best ways to fill the gap between old and new systems. "Public agencies are very careful," he says. "They don't want to jump on the bleeding edge of this thing."
  In the interim, individual tolling agencies might have to install multiple readers to read multiple transponder protocols in each lane, especially if they decide to switch from one transponder type to another.
  Interoperability is less of an issue for back-office payments processing and billing, but that does not mean passing transactions between several agencies is an easy task. "It's complicated and it's all manageable," says Michael Huerta, managing director for the Transportation Solutions Division of Dallas-based Affiliated Computer Services Inc. Affiliated provides various services to tolling agencies, from front-end integration of equipment and its software to back-office data management, billing and customer service.
  Affiliated has first-hand experience moving toll payments and fines between members of the Interagency Group, primarily in New York, New Jersey and Delaware. Each agency in the Interagency Group owns the accounts of its subscribers.
  Collection Tolls
  "So if you are an EZ Pass holder, you are an accountholder with the agency that owns your account," Huerta says. "Where it gets a little more complicated is, let's say you are a violator in Massachusetts on a Maryland account. It's up to Maryland to diligently pursue payment for that toll in Massachusetts and to make sure that your account is properly debited."
  Interagency Group members have an extensive list of rules covering such reciprocity situations. Sifting through those variables is a challenge for billers and customer service providers within the group.
  For example, one tolling authority may offer a different discount program from that of a neighboring authority to encourage travel during off-peak hours. Affiliated Computer Services customer-service agents or automated interactive voice recognition or Web-based programs try to determine not just where drivers live but where they travel most.
  "If they live in New Jersey but all of their [tollway] travel is in New York, it probably makes sense for them to open a New York Port Authority account rather than a New Jersey Turnpike account," Huerta says. "It really relies on our customer-service representatives to understand how the programs work in relation to one another."
  Some tollways, such as Highway 407 near Toronto, are entirely electronic. Agencies can bill drivers without transponders by snapping photos of their license plates, finding their addresses from state licensing facilities, and sending vehicle owners souvenir photos of their plates with corresponding bills for services rendered. Video tolling, as it is often called, also can serve as a backup when there are problems with transponder readings or customer accounts.
  But video tolling also faces issues of uniformity. "We use video tolling on the enforcement side," Huerta says. "There's still a lot of work to be done on basic stuff like license plate protocols. Some states have identical nomenclature systems. You have the real issue that the state is often in very small letters, often in a decorative fashion, and it may be covered up by a frame."
  Huerta does not consider such challenges obstacles to national electronic tolling interoperability. "They're all complicated, but they're solvable," he says. "The bigger issue that everyone needs to recognize that it's going to take time to get there."
  NEWS FLASH
  To offer financial institutions more freedom to design their cards, MasterCard International is giving issuers more space on the front of their cards to do as they please. MasterCard is giving issuers 10.5% more space by decoupling its brand mark, hologram and surrounding retaining line on the right side of the card. Issuers now can replace the MasterCard hologram on the card front with a combination hologram/magnetic strip, or a "HoloMag," on the back of the card. The MasterCard logo still must be on the front. "This is about flexibility and choice," says Larry Flanagan, MasterCard chief marketing officer. "By doing this we are delivering flexible options that will allow customer financial institutions the opportunity to customize and differentiate their payment programs." The new card layout is available now, but there is no mandate to switch formats or designs, he says.
  (c) 2005 Cards&Payments and SourceMedia, Inc. All Rights Reserved.
  http://www.cardforum.com http://www.sourcemedia.com