Mobility : A New Perspective on Transport Policy and Regulation

© 2016 Fotolia

© 2016 Fotolia

Professor Matthias Finger is Swiss Post Chair in Management of Network Industries at Ecole Polytechnique Fédérale de Lausanne (EPFL) and director of the Transport Area of the Florence School of Regulation at the European University Institute. An expert and thought leader on transport policy and regulation and the transformation of network industries such as telecommunications, energy and transport, Finger spoke to Steve Coomber about the future of transport in the EU, the move to mobility as a defining concept, and the regulatory challenges involved. These are all issues covered by Finger in his contribution to the European Parliament's publication The World is Changing: Transport, Too.

Moving forward, what are the challenges facing the Commission regarding EU transport policy?

People want to move from one place to another, but they do not necessarily care whether it is by car, rail or another mode of transport. They want mobility. The Commission needs to go beyond the modal approach to transport and instead think in terms of mobility networks and intermodal mobility. It is no longer simply a matter of the Commission following up on each of its sectoral polices separately, whether it is air, maritime, rail or road. That, in itself, is a challenge

What factors are driving this this network perspective of mobility?

There are several drivers. One is urbanization. For too many people, transport is becoming a drag. There is too much congestion. It's a common experience. Another fundamental change is the communication technology piece, the prevalence of apps, the so-called “uberization” of the world: accessible, ubiquitous mobility. Uber is just the beginning, a first step.

Presumably, this transition to mobility is accompanied by a change in the way we view transport?

It is a change in mindset. For example, it is changing the way we think about ownership and transport. Traditionally, we need to have a car. It guarantees that we can get somewhere. As part of the new mindset people say: "I just want to get from A to B". Maybe a car is involved, maybe it is rented, maybe it is self-driving or public transport.

This is a shift from the concept of ownership of a mode of transport, to a concept of mobility and the journey from one destination to another. Fulfilment of that journey becomes a solution to that particular mobility challenge.

You talk about integrated mobility platforms?

These are mainly ICT-based or virtual. In the future you won't buy a train ticket. You will go to a mobility platform provider, who will want to know where you want to go, whether it is local, national, or international. They will guarantee you the quickest most efficient service to get you there. They might arrange for you to get a bus, take a bike, be picked up by a car, go to the airport, and so on.

The mobility platform providers interface with the customer, sell them the mobility service, sell the tickets, and guarantee that the passenger arrives. They also make sure that the transport methods are available when required. Behind that are all the transport providers who organize the transport.

So it is an end-to-end, full service experience?

Yes, I think that is the future. There will be new business models that involve the sharing economy, peer-to-peer exchange, and integrated mobility platforms, for example, founded on new technologies, with the public sector as enablers. How this happens depends on the way we develop and implement policy. Policymakers can facilitate this scenario, or end up making it more difficult.

What is the role of regulation with this new networked approach of intermodal mobility, what kinds of challenges are there for the regulator?

The basic challenge is to stop thinking mode by mode – regulating rail, then road, parking and then taxis. It has to be a network approach. Regulators also need to adopt a facilitating mindset. As a regulator you cannot control everything. Whereas it is possible to own a railway and try to get it to operate in just the way that you want, as a policymaker you cannot own the entire mobility system. However, you can facilitate and create the conditions for that system to work effectively.

In your recent contribution to the European Parliament's "The World is Changing: Transport, Too" document you list five elements of the mobility system where you identify specific regulatory challenges.

It's a pragmatic perspective, identifying the regulation needed in order for the whole system to work.

So one area, for example, is customer protection. Mobility platform providers will sell services to customers. Let's say you buy a ticket from London to Milan, but something along the mobility chain goes wrong. Who do you go to for redress? Is it the vendor of the services, for example? Because if the car hire provider in Milan didn't provide the right car, the mobility service vendor may well say it is not their problem. Whether it is for consumer or commercial it is a complex transportation chain, we need to pay attention to protecting the customers.

Equally, there are privacy and data security issues, whether it relates to e-ticketing, pay-as-you drive insurance, traffic data collection or another part of the system. The mobility service provider will know exactly where you have been and are going. What happens to your data? Can they sell it to someone? Consumer protection is important.

Another issue is regulating the mobility solution providers. There needs to be assurance, some sort of accreditation and authorization of the private solution providers, a licensing mechanism or similar. There is also the competition perspective. Businesses such as Uber exist because of market opportunities that are often associated with an existing system that has flaws. Regulators, and indeed city managers, need to enable new mobility business models to co-exist with existing models.

You talk about regulating the newly emerging data layer. What does this mean?

There are issues around governance, standards and the availability of data. For example, real time traffic information is an important element of an efficient mobility network, and the business models of the firms involved. This data needs to be standardized so it can be easily utilized across the EU. The data is often produced by public authorities but also filtered and repackaged by private firms.

At the same time the mobility solutions providers will need to access relevant data. This means the physical transport operators - the train companies, taxi firms, the bus companies – and the infrastructure providers, making the appropriate data, such as timetables, pricing mechanisms, state of infrastructure, accessible via an intermediary platform.

However, this mechanism prompts a number of questions. Who does the data belong to? Who has access to it? What kinds of data must be made available? Inevitably there will be proprietary data involved. What constitutes proprietary data and should remain so, what should be open? There is a need for regulation here.

We also need to avoid cartel type situations where there is some kind of exclusivity tie up between a mobility solutions provider and a transport provider, for example, that restricts accessibility to data.

Where else will regulation be necessary?

We need to promote fair competition between transport modes and transport service providers which, at the moment, are not properly competing with each other. For example, if you look at the train versus the road, in most cases the road infrastructure has been built with public funds. Cars and lorries do not bear the full costs of building and maintaining this infrastructure. Whereas with railways a greater cost burden falls on the train operators in many cases. They are not competing on a level playing field. The train is being substituted by cars and lorries simply because it is cheaper, i.e., not bearing their true costs.

Somehow we need to make the competition and choices across the transport modes fairer than they are currently. We need greater harmonization around mobility pricing if mobility solutions are to extend across the modes. It may require some incentivization and cross-subsidisation, for example, where one form of transport is taxed and the proceeds used to subsidize other modes of transport.

We also need to look across the modes. So intermodal transport hubs, such as ports, airports railway stations, for example, would be grouped together and regulated similarly, rather than treated as parts of a separate transport mode, such as waterborne, air or rail.

There is also a regulatory issue around infrastructure investment, I believe?

Yes, and I think this is a particularly difficult area, as a customer you will no longer pay the train company directly. Instead, you pay the intermediary that sells you the service. There's a disconnect between service provider and infrastructure provider. This is likely to result in a tension between the short-term focus of mobility service providers, and the long term investment needs of infrastructure.

Yet if we are moving towards a mobility network approach, it can only work if there is continued investment in infrastructure. There still needs to be rail or road infrastructure investment for there to be a service in the future. Although there will be some efficiency gains, we still need some of the money that will go to mobility service providers to be invested in infrastructure. And so we will need to construct a framework that ensures the continued investment in infrastructure, and possibly even covers the financing of other aspects of the network such as railway rolling stock, for example.

It is an exciting time for transportation in the EU. What do you think some of the main barriers are to making the transition to this new mobility approach?

One of the main issues is dealing with the fragmentation of the current system – on a number of different levels. There is fragmentation of modes of transport, you can play the car against the train or the bus, the truck against the boat. There are the disparate nation states, that is why we want a European wide networked approach, rather than each country optimizing its transport system to best suit its own interests. Add to this the fragmentation in terms of the geographical reach and mindset of the different transport modes. Airlines think global or regional, taxis think local, bikes think very local.

Overall, coping with the varying levels of fragmentation, will be one of the biggest challenges en route to a total mobility solution in Europe.

Author: Carole Bonardi