Government and the new mobility ecosystem

Tony Canavan

This paper is a summary of an invited talk presented at the inaugural iMOVE Transport of Tomorrow Symposium, 26-27 March 2019, in Melbourne, Australia. To find out more about Tony Canavan, his work, and his background, read iMOVE’s interview with him, Tony Canavan: lives local, thinks global.

Recently, I sat down and watched Four Corners. It was examining Uber. The show investigated the various means by which Uber ignored or subverted – depending on your point of view – the regulatory regimes it encountered as it set about mass deployment of its ground-breaking, ride-sharing app.

I am not going to concentrate on that today. What I am going to concentrate on is how the discussion on that program focused on the role played by government. As various academics and former regulators put their views forward, I noticed a theme coming through. Or more to the point – a theme that wasn’t. Each commentator gave their opinion on what Uber did or didn’t do, how the government stood by, how taxis were forced to do this or that, how competitors were treated – but not one person seemed to think that the massive take up by the public of ride sharing services from a standing start was an important consideration.

Four million Australians are using Uber regularly, and in places like New York, ride sharing has gone past the ubiquitous yellow cabs in volume of trips.

Whatever you might think about the ways and means through which Uber or other disruptors go about launching their services, it cannot be denied that many of the new mobility service delivery options emerging in the new mobility ecosystem are striking a chord with people.

People are exercising choice, and in great numbers, that choice has been to make ride sharing part and parcel of the way they move around. That’s pretty important isn’t it?

My topic today is Government and the Mobility Ecosystem. And as the name implies, I want to share with you a few points in my mind that have led me to conclude that the role of government in transport – until now one of supreme authority – is one it is going to have to learn to share with others.

The government ecosystem

Let’s go back a few steps.

Our ability to move around as we choose is one of the most basic expressions of our freedom. Jumping in our car or hopping on our bike, and taking to the road in whatever direction we choose is a basic part of life.

But by necessity, public transport doesn’t quite work that way. When it comes to public transport, central planners in government use models to predict where and when we all want to travel and schedule services to fit that model. We build the train lines, the tram lines and set the bus routes. Government sets the timetables as well and say to us – adapt around that.

But in recent times, that has begun to change. In recent times, people have been given the opportunity to express something they probably always wanted – real time, individualised preferences and travel needs.

The new tech and players

And in recent times, thanks to technology and a plethora of start-ups, technology companies, entrepreneurs and other disruptors, a range of new mobility service models have emerged that meets that latent demand in ways that are flexible and responsive that our public transport system – with its in-built rigidity – can only look at with envy.

In other words, instead of us adapting around the services, now there are services adapting around us. It’s becoming a demand-led transport market.

Of course, this sudden outburst of people power isn’t universally welcome. Despite the oft repeated mission statements about customer centricity, this emergence of a vibrant, dynamic and customer-created mobility ecosystem is subversive to the notions of centralised order and control.

And that is what brings me to my topic – the role of government. What is the role of government in this brave new world of smart mobility?

When you think about the increasing role being played by new mobility service providers, the definitions of what we regard as public and private transport are blurring at the edges. Certainly, taxis and ride sharing are occupying very similar space, and before too long, the role played by buses may become similarly blurred.

The question government must ask itself is, does it embrace new mobility service delivery models, or does it seek to contain those types of services so as not to risk undermining the critical role that public transport plays in our cities and regions?

The role government plays in transport is not straightforward. While the earliest forms of public transport were privately initiated – think of the stagecoaches and early private railways and cable car companies – as cities grew and consolidation of services were required, public transport became government funded and government run. With only a small number of exceptions, public transport is subsidised, and that subsidy is justified by a greater good.

The public good

What is the public good? The concept of “public good” is obviously subjective. But it’s exactly the sort of thing we look to government to lead on. In the world of mobility, the “public good” means universal accessibility, fairness, good air quality, low or zero emissions and managing demand to minimise congestion.

The big question looms therefore, at what point does the emergence of the new mobility ecosystem harm the public good?

There are a number of ways that might happen.

In New York, the enormous take up of ride sharing and car sharing has come at the expense of mass transit. As many as 50 percent of car and ride sharing trips cannibalized journeys that would otherwise have used the subway or bus services.

In addition, there are a large number of additional vehicles on Manhattan’s already crowded streets, adding to the congestion. Bus journey times have increased and the average speed for everyone on the road has decreased by 7 miles per hour.

You can see where this ends. As personalised forms of smart mobility offer attractive options, everyone else becomes worse off because congestion gets worse, the bus has slowed down and subway patronage has reduced, making it more expensive to run.

And then if you look within the public transport funding model itself, the widespread use of fare concessions is an accepted way to make public transport fairer and more accessible to all. But if new mobility service providers start cherry picking full fare payers, then the funding model is weakened and the cost of running mass transit systems increases.

And there are many other ways that our socialised form of public transport might be subverted by these new service offerings.

Setting up an environment for competition and innovation

How does the government choose? How does the government strike the right balance between adopting its own customer-centric mantra by enabling greater choice for individuals against its other responsibilities to promote the public good and manage congestion?

Before I attempt to answer that question, let me say something else about the new mobility ecosystem. I have met and talked with many new players in mobility, many of whom are in the room today. Uber, Lime, GoGet, Lyft, Liftango, Bridj, the automotive companies, the auto clubs, universities – I could go on.

The thing I have noticed is not a desire that government deregulate or vacate the field. Quite the opposite. What I have observed is a strong desire for certainty. A standardised, uniform, nationally consistent set of rules that legitimise this new industry and sets the rules by which competition and innovation can occur.

And not open slather competition. Competition within regulatory constraints that reduce the tendency for any initiative to be ultra-high risk and more likely to fail than succeed.

It doesn’t suit many new or aspiring players in the mobility ecosystem to be in constant survival mode in a sector where data is controlled by a select few and power is wielded to remove rather than encourage competition.

My point here is that much of the new mobility ecosystem want government involvement and engagement in the new ecosystem, as opposed to the presumption one quite often hears that they want government to get out of the way.

A government’s role in transport

So back to the question I posed earlier – how does government strike a balance between embracing, facilitating and enabling the explosion of new choices and delivery models to the benefit of us as individuals, against the responsibilities government has to ensure and protect the public good?

To do that, let’s pull apart the government’s role in transport.

In mid-2017, the NSW Minister for Transport attracted a lot of attention, and a fair share of criticism, when he said. ‘We won’t need train drivers or bus drivers.’ He said he saw a day when government would not deliver public transport.

I can understand why a statement like that would capture a lot of attention. At face value, it seems to be heralding the day when new mobility service models and automated services replace public transport. And maybe that is what he meant.

But on closer examination, we know the truth is far more complicated than that.
When you look at what government actually does in transport, it is a lot more than directly providing train, tram and bus services.

I have come up with a few broad headings:

  • Strategy, policy and planning
  • Regulation and compliance
  • Network provision
  • Network management
  • Service delivery, including fare collection, passenger information and customer service

Over the years, different institutional arrangements have been tried in different places in order to perform these functions. Often, all of these functions exist within the one entity, and often these functions are modally-based – think of different rail and road entities.

But in a world where a burgeoning and dynamic mobility ecosystem is available, is this the right approach?

The entry of, and domination by, private operators

Here in Melbourne, we are already familiar with the concept of distinguishing between planning and regulating the provision of services from the decision about who is best placed to actually deliver them. For many years now, our train, tram and bus services have been dominated by private providers.

As the world of public and private transport blurs at the edges, one can now imagine a world where that blurring becomes so prevalent as to make the distinction irrelevant, instead replaced by a distinction between shared and personalised mobility.

To my mind, there is a considerable distinction between the policy-setting and regulatory roles played by government, and the actual provision of services.

The policies and regulations we expect government to have in place and oversee is a role that is unchanged by the recent explosion of smart mobility. Those policies and regulations reflect what is needed to achieve certain high objectives that are in many ways constant – economic, social and environmental goals that we want as a society.

What has changed dramatically, is the broad spectrum of choice we now have in service provision. To our existing list of train, tram, bus, taxi, bicycle and private motor vehicle – we now have car-share, ride-share, on demand bus, bike hire, e-scooters, and who knows, perhaps soon driverless cars, personal drones and even jet packs.

Balancing community and individual goals

This is not a threat to our collective mobility as a community – this is an opportunity.

The thing that appears to be missing right now however, is a serious attempt by governments to embrace this expanded choice and look for the optimisation across a multiplicity of modes that delivers the perfect balance between shared and personalised mobility – the balance between community and individual goals.

What we need now are programs that integrate new service delivery models with our conventional modes of public transport – and there is absolutely no reason why this cannot exist within the publicly subsidised and priced public transport system if it helps us achieve the public good – better accessibility and fairness, less congestion and lower emissions.

In Germany, the government-owned Deutsche Bahn has created Deutsche Bahn Connect, which combines individual mobility services such as car sharing, call-a-bike, and corporate car sharing with local and long-distance train services.

This makes sense. To not embrace new modal options into the framework of public transport risks a trend away from shared mobility we simply cannot afford.

Instead, it opens up new options for modal optimisation that have never existed before. New tools in the toolbox such as on-demand coach or mini-bus services to regional towns or outer suburban communities currently poorly served by infrequent and inconvenient fixed timetable services.

Government and Mobility as a Service

Of course, we must realise that such a concept opens up a wide variety of new issues to be resolved. We hear a lot about the concept of Mobility as a Service (MaaS), and what I am saying may be interpreted to mean that government must itself offer such a thing.

But of course, that needn’t be the case. MaaS offerings that aggregate different service delivery models to create a convenient end-to-end journey could be private or government initiated. Some types of end-to-end journeys would be more aligned with the public good than others, and that could easily determine the extent to which it is supported within the subsidised public transport system.

The other big question that arises is data. The integration of new mobility services with public transport requires data sharing across customers, government and the ecosystem that doesn’t exist today. But sharing data in order to obtain a level of government support through the public transport system might be a small price to pay for many new players.

And of course, the level of collaboration this world requires from government may be the greatest challenge of them all. From supreme authority to a partner and collaborator in the ecosystem is a sea change that goes to culture, capability, mindset and everyday behavioural change. That is no small thing.

Models for the future

A new, clear-eyed policy posture is needed from government for these times. One that clearly separates in concept the role government plays in setting the rules and the policies from service provision.

One that embraces new modal choice, aligning with clearly stated customer preferences, but in a way that balances that individual choice with achieving the greater good. After all, while we each have our personal preferences, we are all also part of the community. We all want less congestion, and we all – well most of us I’m sure – also want to live in a fairer society with accessibility for all at minimum cost to the environment.

The model I see for the government in the new mobility ecosystem places its service delivery arms firmly among the new players, collaborating to offer end-to-end mobility solutions that could be offered as a subscription service or trip by trip.

But the model also separates its policy and regulators as the rule setters who balance several key goals:

  • Individual choice
  • The public good, including accessibility, fairness and congestion

It also requires a similar approach to the network itself, where the network is managed with the same balance in mind.

What we have today is uncertainty and hesitation in resolving what are potentially competing goals. In my view, the opportunity afforded by combining and integrating new service delivery models with existing services isn’t being explored proactively because of anxiety at the pace and impact of change.

Some clear thinking and focus on the real core of the government’s role – policy and regulation – should free up innovation and enable positive change to occur.

Let’s get on with it. There is much to be gained!

Author: Tony Canavan

Tony Canavan is EY’s Global GPS Transport Leader, overseeing the work EY undertakes in the government sector on transport across the world. He joined EY from the Victorian Government where he had significant leadership roles in strategic transport planning, transport project delivery, commercial developments, public private partnerships, and public infrastructure generally. Tony remains involved in many of the large transport issues facing Australia today. He is leading the Commonwealth Government’s advisor team for the Western Sydney Airport and is playing a senior role on Melbourne’s level crossing removal program and the Sydney Metro project. He has assisted several states with their transport strategies and also completed recent policy development work for the Commonwealth on freight issues.

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