WORKSHOP 1: MULTI LANE FREE FLOW

Zaida Abdul AzizMalaysian Highway

Authority22 April 2011

OBJECTIVESOBJECTIVES

• To share the experiences and perspectives of Multi lane Free Flow Tolling implementation in Malaysia

• Migration To Multi lane Free Flow Tolling System In The Malaysian Toll Highways: Critical Success Factor, Issues and Challenges.

EXPERIENCES AND PERSPECTIVES OF MULTI LANE FREE FLOW

IMPLEMENTATION IN MALAYSIA

BACKGROUNDBACKGROUND

• Expressways in Malaysia• Total length: 1,740 km• 27 Highway in operations• 5 in construction stage

• Two type of Highway Operation:• Closed System• Open System

• Payment Method: • Cash • Electronic

ETC ChronologyETC Chronology

Microwave 2.45 Ghz(PLUStag, KESASTag)

Microwave 5.8 Ghz

(FASTRAK, EXPRESSTAG,

SAGATAG)

CONTACTLESS SMARTCARD(BRIDGEKad, Touch ‘n Go)

2004 - Current

1998 - 2003

1994 - 1997

Infra-red

(Two-piece SmartTAG)

Infra-red

(Two-piece SmartTAG)

Microwave 2.45 Ghz(PLUStag)

MLFF2015 onwards

• Single and Common ETC System based on pre-paid electronic purse concept

• The same contactless smartcard can be used for other transportation needs such as parking and public transport (bus and LRT)

• For non-stop ETC, a two-piece OBU system is introduced in 1998.

CURRENT ETC SYSTEM IN MALAYSIACURRENT ETC SYSTEM IN MALAYSIA

PIARC 14-16 AUGUST 2006PIARC 14-16 AUGUST 2006

CONTACTLESS SMARTCARD CONTACTLESS SMARTCARD APPLICATIONAPPLICATION

• Enable non-stop toll payment capabilities

– Infra-red transponder with smartcard reader

• Two piece unit; SmartTag function as transponder (On Board Unit) and Touch ‘n Go card provides the e-purse function

NON STOP ETC SYSTEM IN MALAYSIANON STOP ETC SYSTEM IN MALAYSIA

Needs for MLFF ImplementationNeeds for MLFF Implementation

Based on current capacity, toll plaza congestion is not a big problem today, however, 20% of toll plazas will be congested in 5 years

There is a need to plan for MLFF today

• SmartTAG is not the solution for the long term

There is a long lead time to address the challenges involved in moving to MLFF, in particular, the legal and enforcement challenges

MLFF is a fully electronic tolling system MLFF is a fully electronic tolling system which features an overhead gantry, with which features an overhead gantry, with no lane barriers, to transact the users toll no lane barriers, to transact the users toll charges accordingly.charges accordingly.

Tolling at highway speedTolling at highway speed

Definition of Multi Lane Free Flow Definition of Multi Lane Free Flow ETC(MLFF)ETC(MLFF)

1111

DEDICATED SHORT RANGE COMMUNICATIONS• Most common solution in most scenarios when used with Video ALPR• Exceptions:

• Few users and large road network• When legislation needs something else

VIDEO AUTOMATIC LICENSE PLATE RECOGNITION (ALPR) ONLY• Solution when license plates are very good, update to date license plate registry• Limited number of license plate types & fonts• Native traffic subject to toll• When legislation prevents DSRC

GLOBAL NAVIGATION SATELLITE SYSTEM (GNSS) • Large road networks and few vehicles• Still very high OBU cost and installation cost• Need for enforcement means roadside installations are still required

Technology ConsiderationTechnology Consideration

RakyatHighway operators

Government

Some questions whether Malaysia is ready for MLFF

Operator perception that driving penetration of existing

solutions can alleviate congestion in near to mid term

Electronic tolling has proven value

Cost per transaction for TnG / SmartTAG lanes significantly

lower than cash lanes

Need to address systems as well as business / operating model

issuesPoor perceptions of reliability and

security will impact customer adoption and operator support

MLFF brings additional benefits (e.g. speed, safety, lower

costs to build new highways)Investment can also be leveraged

for other applications e.g. congestion pricing, parking

payment

Critical to make migration to MLFF as painless as possible for customers

Address issues limiting adoption of current solutions (e.g. cost of tag,

reload convenience)

Legal and enforcement model most critical concern

Need reassurance over ability to enforce and manage impact of

leakage and disruptions to cashflow and existing concession

agreements; govt role is key

Cost Benefit for MLFFCost Benefit for MLFF

Phase 1: Achieve MLFF readiness (2011-2015)

Phase 2: Full MLFF rollout(~2015 onwards)

DE

SC

RIP

TIO

N

Cash

Touch & Go

Cash

New tag

Traffic flow Traffic flow

All MLFF

• Distribute new microwave tag to users with 1-to-1 replacement for SmartTAG owners

• Convert ~1000 lanes to new tag, beginning with SmartTAG lanes; barrier stays

• Close all but 2 cash lanes/plaza by 2015• Establish legal and enforcement model

• Increase toll plaza capacity, reduce congestion, improve user experience in cost-effective way

• Drive penetration to 90% by closing cash lanes

• Lower operating costs • Allow time to agree and establish legal

and enforcement model

• Progressively lift barrier and convert selective toll plazas to SLFF or MLFF based on need

• Implement enforcement model

• Provide "free flow" benefits to consumers• Virtually eliminate toll plaza congestion• Lower operating costs• Lower construction costs for new

highwaysOB

JEC

TIV

E

Two Phased Implementation of MLFF Two Phased Implementation of MLFF ProposedProposed

...But pricing and security concerns quickly follow...

...But pricing and security concerns quickly follow...

...Along with questions of value add and

enforceability

...Along with questions of value add and

enforceability

Free flow concept appeals to drivers...Free flow concept

appeals to drivers...

Positive reaction to MLFF concept board and pictures

"This would be awesome to use" – TnG user

"OBU is so stylish" – Cash user

Customers see potential benefits of speed, convenience and security

"It is more convenient because I don't need to slow down"

– SmartTAG user

"Better than SmartTAG because of free flow" - SmartTAG user

"Smaller size makes it easier to keep and carry around"

– TnG user

Immediate concerns of how much extra cost for added benefits

"Number one concern is price, It has to be value for money"

– SmartTAG user

"We must know how much you’re going to charge for it"

– Cash user

"Is it free for us?" – TnG user

And other questions around capabilities and security

"The question is, how good is this thing first?"

– SmartTAG user

"What about security? Someone can steal it right?"

– TnG user

? ?Value add of MLFF questioned by some users

"Many times congestion is after the Toll so what's the point of this new system"

– TnG user

High scepticism regarding enforceability

"You must remember, this is Malaysia. If we can have free lunches, we’ll go for it. How are they going to control?"

-SmartTAG

"You cannot even serve summons, how are you going to enforce MLFF?"

–SmartTAG

Despite concerns, high acceptance amongst users towards idea of Mandatory MLFF

Malaysian like MLFF concept but quick Malaysian like MLFF concept but quick to express concerns and question valueto express concerns and question value

MIGRATION TO MULTI LANE FREE FLOW IN THE MALAYSIAN TOLL HIGHWAYS:

CRITICAL SUCCESS FACTOR, CHALLENGES AND ISSUES

Critical Success Factors to MLFF Critical Success Factors to MLFF ImplementationImplementation

• There is typically one company managing e-tolling • Key drivers: economies of scale, simple co-ordination, ensure that ETC operator has singular

focus on driving penetration

• Pricing differential sometimes used to encourage people to adopt

DescriptionDescription

• Governments have typically supported the implementation of MLFF – several social benefits (congestion, convenience, safety, environment)

• OBU and systems capabilities supports extension into other govt applications e.g. congestion pricing

• E-tolling operators typically do not guarantee tolls, only responsible for violation and evidence mgt

• Legal and enforcement infrastructure must be in place before launching MLFF

• MLFF typically implemented on new or previously un-tolled roads, or as part of major upgrade - very few examples of replacing systems

• Systems, including reload infrastructure are user-friendly, reliable and secure• Convenient sales, reload and service channels

Four Key Challenges to MLFF Four Key Challenges to MLFF ImplementationImplementation

Technology & Operation

Technology & Operation

SmartTAG in use today is not MLFF ready

• Works on infra-red which requires line of sight

• Microwave tag is needed for MLFF

Along with new tag, a proven MLFF backend needs to be installed

• New backend will also address other known weakness of existing system

Business model

Business model

New capex Under proposed model, TnG will fund, own, operate and maintain all roadside as well as backend equipment

• Higher commission rate to cover investment

• Full control of end-to-end infrastructure to ensure system integrity (equipment malfunctions, blacklist updates etc)

Operators will need time to plan and manage operational impact

Legal & Enforcement

Legal & Enforcement

Moving to MLFF has inherent risks of leakage

Multiple agreements involving multiple stakeholders impacted

• Highway concession agreements

• Financing agreements between operators and bondholders

• TnG service agreements

Lead time required to:• Agree on

enforcement models, roles and responsibilities

• Change necessary laws and regulations

• Set-up enforcement infrastructure and processes

Customer adoptionCustomer adoption

Combination of push and pull factors needed to drive customer adoption

Push factors:• Convert all lanes to

new tag• Close down cash

lanes

Pull factors:• 1-for-1 replacement

for SmartTAG users• Incentives / rebate

for new tag users• Higher price for cash

vs. e-payment• Cross-sector e-

payment capability

Prerequisites for MLFF OperationPrerequisites for MLFF Operation

Many legal considerations..

Many legal considerations..

... with implications on existing agreements involving multiple parties

... with implications on existing agreements involving multiple parties

Agreement on enforcement model, roles

and responsibilities

Increased risks of leakage of toll collections

Changes to laws and regulations needed

Set-up of the enforcement infrastructure and

processes

Government

Highway concessionaire

MLFF Operator

Financing agreements• Impact on

cashflows• Consents

required

Bondholders

Concession agreements

• Mode of toll collection

• Toll rates• ...

Service agreements• Scope of

services• Commercial

terms• SmartTAG arrangements

Need to work jointly with stakeholders to develop legal & enforcement model before barrier can be lifted

Prerequisites for MLFF EnforcementPrerequisites for MLFF Enforcement

Recovery

Prevention

Provide support to users to minimise the risk of involuntary violations

• e.g. Reminders to top-up prepaid accounts, check OBUs working

Detects patterns of behaviour that may indicate tendency to violate

Mobile and portable detection of potential violations

Approach users before violations occur

Detection & Evidence Mgmt

Captures and stores all vehicle images including registration number for vehicles performing violations

Identifies vehicle owner performing violation from Vehicle Ownership Database

Detects and identifies all types of violations performed by vehicles

Maintains central database recording transactions, image captures, payments and violations

Infringement Mgmt

Collates all information of vehicle performing violations

• Violation type• Image captured• Registration

number• Vehicle class• Vehicle owner• Time and date of

violation, etc.

Calculates charge to be imposed

Issues notice of overdue payment required to vehicle owners

Collection & Recovery

Trace violators

Tracks recovered and non-recovered payments

Performs collection processes

• e.g. phone calls, follow-up letters, etc.

Identifies enforcement and legislation activities going forward

Enforcement & Legislation

Performs necessary enforcement and legislative actions to recover unpaid violation payments

• e.g. blacklist, license denial, court prosecution, etc.

Applicable when toll is not paid at toll plaza

Prevention

1 2 3 4 5

Operational Issues IdentifiedOperational Issues Identified•  Migration issues

• Lane downtime• Lane configurations – hybrid or new systems• OBU replacements• Take up rate • Asset transfers

•Possible impact of traffic revenue due to change in vehicle classification method.

• Accuracy of MLFF’s vehicle classification method. Classification of motorcycles as well.

• Transponder shall be based on the class of vehicle and the requirements to access Jabatan Pengangkutan Jalan (JPJ) database to associate transponder with vehicle’s owner.

•Intense and considerable backend processing at MLFF’s Back Office’s Server system due to various type of reconciliations (financial, classes, license plates, etc)

•Change of vehicle classification method due to MLFF implementation. Affects Concession Agreement and

possibility of effect on toll revenue due to change from axle-based to vehicle size/shape.

•License plate issues (non-standard license plates such as ‘Putrajaya, Proton, etc’ and unapproved material).

Impact To Toll OperatorsImpact To Toll OperatorsChanging roles and responsibilities

• Possibility of roadside infrastructure and certain operations being passed to MLFF operator (CAPEX, OPEX, maintenance) and third party

• Rollout should minimise disruption to existing traffic low• Confusion to highway users• Driving the MLFF adoption rate and phasing out existing

ETC/cash users

Leakage in toll payment

Compensation for CAPEX investment that have been made/planned

MLFF implementation impact on existing traffic flow

Incentives to migrate to new MLFF Tag need to be provided for each user group

•Issue of who is responsible for leakage (MLFF operator/Toll Operators/Government)

•Issue of who is responsible for collection and recovery of leakage (MLFF operator/Toll Operators/Government

• Free tag replacement for existing SmartTag users• Government Frequent Travelers Plan (GFTP) rebates to

extend to the new Tag users• Mechanism to convert/induce cash users to Tag users

(fare differential, etc)

•Issue of whether ETC capex already invested by Toll Operator shall be compensated by MLFF operator

•Design issues for new toll operators and new highways

Impact To UsersImpact To UsersFree flow concept is appealing to drivers

• Toll users like the speed and convenience of free flow • MLFF viewed favorably compared to SmartTAG (no need to slow

down, no fear of getting stuck at barrier, smaller, less bulky OBU)

• Immediate concerns raised over how much the new tag will cost – users need to see value for money

• SmartTAG users expect a free 1-to-1 replacement• Non SmartTAG users expect discount to SmartTAG price

However, some drivers questioned value ...

... and cited pain points limiting adoption of TnG / SmartTAG

Cost will be a key consideration in adopting MLFF

Enforceability identified as a key implementation challenge, migration plan needs to be convenient for users

• Users make distinction between congestion at the toll plaza (addressable by MLFF), and congestion before/after toll plaza (MLFF cannot address); perception that congestion frequently due to latter

• Longest queues typically at cash lanes

• Key pain points in terms of reload inconvenience, issues of insufficient balance, and perceptions around system reliability/security

• For SmartTAG, additional issues are price of the tag and fear of theft • Segment of customers that are sensitive to prepayment

• Poor track record in enforcing traffic violations raised as issue• Concerns also want to be able to easily check their account balances

and amount deducted• MLFF pilot users felt that MLFF lanes should be dedicated during the

migration period to reduce confusion and avoid SmartTAG issues

THANK YOUTHANK YOU