JAPAN’s ET:Consensus Politics Spawns Porsche-priced Tag

It’s odd. This is the world’s second largest economy. About as rich and automobilized as north America and western Europe. Virtually all the motorway standard highways there are tolled, so Japan has the world’s largest grossing toll road system, several times the revenue of tollsters in the US, France or Italy. It also has the world’s most impressive consumer electronics and car industries.

The richest toll system plus the world’s premier consumer electronics industry with enormous technical and manufacturing talent. How come then it’s all still magstripe cards, coin machines and collectors. And no electronic toll (ET) collection?

The answer seems to be that Japan’s institutions leave the toll agencies with no room to act independently. Consensus-driven decisionmaking and even centralized planning seem to control this process. This approach is supposed to avoid the problems of incompatible systems, to reduce the difficulty of developing an interoperable system.

However it’s unclear whether the emerging Japanese ET system is viable. Real estate, the cliché has it, is location, location, location. Well for any new consumer good like a toll transponder (tag), the key is price, price, price. The success of ET in North America is surely linked to the fact that transponders are priced in the $20 to $30 range. In Europe, where ET has built a smaller market, tags range between $20 and $100. In Japan the emerging ET tag with a standard known as T55 looks like being priced at over $200, eight times the US price and four or five times the average European tag.

How on earth has the country that brought the world splendid but affordable automobiles, the country that spawned affordable portable radios for teenagers managed to produce a Porsche/Bose priced ET tag?

Part of the problem of Japan’s T55 is 5.8GHz. At 915MHz North American tags can incorporate parts mass-produced for similar frequency cordless phones. But the cost disadvantage of 5.8GHz vs 0.9GHz is shrinking as more wireless gear moves to higher frequencies.

The biggest difference is that the Japanese T55 standard ET tag is feature-goldplated. It has a smart card interface (SCI), a security access module (SAM) to encrypt and de-encrypt financial data, plus a very fancy alphanumeric display. Each of these three items is at least as expensive as a complete north American tag, battery, beepers and all. SAMs alone can cost $50 each. The Japanese have to bundle several SAMs together because their banking system has developed different security systems and motorists may have different smartcards. The SCI costs about $30. This mimics a clunky device that AT&T produced for the TCA on its first toll road in southern California. Motorists found it so frustrating there were a storm of complaints, and TCA decided quickly to scrap its SCI and go with the simpler cheaper Texas Instruments/SIRIT tags that are in use today under the brand name Fastrak.

The $20 to $30 north American ET tag has simple customer indications to register account status – beeps or colored lights, or in the case of the E-ZPass tag, no in-vehicle customer indication at all. A few have tags with an alphanumeric display, but nothing as fancy as the Japanese standard which is designed to provide a variety of traveler information services – warnings of congestion or incidents ahead, suggestions for alternate routes etc. Nice to have but there goes another $20 to $25. The remaining extra cost of the Japanese T55 comes from the processing power needed to coordinate the SCI, the SAM and the display with the basic vehicle-roadside communications and memory. A microprocessor or chip needed to manage a T55 tag is probably $25 by itself, probably ten times the cost of the ASIC that manages a US tag.

A smartcard interface has some advantages. Less need for a central toll management system, customer accounts and billing. Trouble there is that when things go wrong and the tollster gets accused of misbilling (often rightly) there has to be some central trip record system. For the paranoid-about-privacy it may offer some reassurance that big brother at the toll agency is not keeping track of your trips to a lover in a central computer, but few Americans seem to worry about that stuff beyond the occasional righteous and over-articulate civil libertarian. The public roads are public after all, and we have long accepted license plates on our cars.

The promoters of ITS or telematics have talked since the 1980s of bringing all manner of real-time information to the driver – directions, incident warnings, email, even access to the internet. No less a company than Microsoft made a big splash January 1998 with Auto PC running Windows CE, which it said was going to be a platform to tie together in-vehicle information and communication systems and which was going to be the standard for pocket or handbag held personal digital assistants (PDAs). Microsoft got an impressive array of car accessory manufacturers together who announced they would work to Auto PC/Windows CE standards.

It could just conceivably still happen, but 24 months later it looks very unlikely. Windows CE handhelds have been slaughtered in the marketplace by Palm Pilots which interface directly with Windows and Mac PCs. And after all the hype of Microsoft’s launch of Auto PC it has hardly been heard of again.

The simple truth may be that not many motorists want all these multiple information services sufficiently often to be prepared to pay for their integration into one neat system. Many motorists already have a radio, CD player and a wireless (cellular) phone. A little caution is in order about more communications devices that distract the driver from the road. In any case the ET transponder isn’t needed to gain alphanumeric messages. Handheld PDAs and even cellular phones are now being sold with communications links and a display for people who want to receive text messages. And these have the advantage over a vehicle mounted transponder of being able to be carried along on the person.

The Japanese T55 approach bundles a heap of other services than ET in with the transponder. The worry is that at $200-plus for the T55 it will be difficult to gain the critical mass of users to make ET a success. Even in the price range $0 to $30 there has been radically different uptake of ET tags in the US. With $30 down in Texas, and no discount it took 10 years to get ET usage to 40%. By contrast in New York where the price down was effectively zero (if you established an automatic replenishment account and returned the transponder if you leave town) and they got to 60% in three years.

With the costly T55 Japan’s tollways face a major challenge getting sufficient ET usage sufficiently fast to justify dedicated ET lanes. Yet without dedicated toll lanes it is difficult to demonstrate to motorists the power of ET. There is no more powerful marketing tool for a transponder than for customers to be queueing to throw coins or pay cash to a collector in one lane, while beside in an ET-only lane, transponder-equipped cars zip by... zip, zip, zip. If you’ve got toll plazas with plenty of capacity it’s easy to take one lane and dedicate it to ET. But where there’s already congestion in the toll plaza, especially if it is a small toll plaza, it is very difficult to take away a lane from manual/coin. Japan faces the danger of doing a systemwide Throg’s Neck, so named after the Triborough authority’s June 1996 mis-step in New York City (TRnl#5 July 1996 p1) when their premature conversion of toll lanes to dedicated-ET set off a storm of criticism and bad publicity. Weaving motorists caused backups into the throat of the plaza blocking access to the ET-only lanes. Everyone was angry at the NYC Triborough authority (MTA B&T).

The safe policy for Japanese tollsters then will be to start off with no dedicated ET-lanes to let ET-usage build gradually. But in combination with the Porsche-priced tags the danger is the uptake of tags by motorists will be very slow and it will take years to reach the numbers sufficient to justify ET-only toll lanes. And the zip, zip, zip-bys won’t be available to work their marketing wonders. So there is now pressure on the toll authorities to offer discounted e-tolls and to subsidize T55 tags to make them ‘affordable.’