“There are only two ways I know of to make money: Bundling and Unbundling” — James Barksdale
The concept of Mobility-as-a-Service (MaaS) involves integrating various transport services, such as public transport, ride-hailing, car-sharing, and bike-sharing, into a single, “user-friendly” platform, (an app) typically with a monthly subscription for the bundle of pre-defined services. The goal is to provide a seamless, multi-modal transport experience, reducing the need for multiple subscriptions, multiple apps, and more broadly reducing the number of personal vehicles and vehicle kilometres travelled.
Is this likely to be here in 10 years time, or is it another example of faddism in the transport sector, as people look for solutions that don’t require real political pain (like pricing and taxing policies)? With the assistance of ChatGPT (which is to say, everything that was published before 2021 online compressed into a massive neural network) I (we?) formulate the case in favour and against. Here is what we came up with.
Thesis: MaaS-tering the Future: The Case for Mobility-as-a-Service
MaaS has been gaining traction as a potential solution to address the transport challenges faced by rapidly urbanising populations. Despite some concerns about its sustainability, there are compelling reasons to believe that MaaS can revolutionise urban transport and provide significant benefits to users, cities, and the environment.
Enhanced User Experience and Convenience: One of the main advantages of MaaS is its ability to offer a superior user experience. By integrating various transport options, such as public transit, ride-hailing, car-sharing, and bike-sharing, MaaS platforms enable users to plan, book, and pay for their trips using a single app. This seamless experience can make public transport more appealing and encourage a shift away from private vehicle ownership.
Reduced Traffic Congestion and Parking Pressure: MaaS has the potential to significantly reduce traffic congestion and parking pressure in urban areas. By encouraging the use of shared and public transport options, MaaS can decrease the number of single-occupancy vehicles on the roads, thereby reducing traffic jams and the need for parking spaces.1 As a result, cities can repurpose parking spaces for other uses, such as green spaces or pedestrian zones, improving overall urban liveability.
Environmental Benefits: MaaS can contribute to a reduction in greenhouse gas emissions and air pollution by promoting a shift from private vehicle use to more sustainable modes of transport. By integrating options like electric bikes, scooters, and electric vehicle-sharing services into the MaaS ecosystem, the platform can encourage users to adopt low-emission transport alternatives, reducing the overall environmental impact of urban transport.
Improved Accessibility and Equity: MaaS platforms can improve transport accessibility and equity by offering a wide range of mobility options that cater to diverse user needs. By including services such as wheelchair-accessible vehicles, discounted fares for low-income users, and user-friendly interfaces, MaaS can help ensure that urban transport systems are more inclusive and accessible to all.
Economic Benefits and Job Creation: MaaS can stimulate economic growth and job creation by fostering innovation within the transport sector. The development of new services, technologies, and infrastructure to support MaaS can create employment opportunities in research, engineering, data analytics, and customer service. Additionally, MaaS platforms can help optimize the use of existing transport resources, leading to cost savings for cities and transport providers.
Antithesis: SaaM: Service-as-a- Mirage - The Inevitable Demise of Mobility as a Service
MaaS has emerged as a potential solution to address the ever-growing transport challenges in urban environments. However, despite its seemingly progressive nature, there are several factors that indicate MaaS may be more of a Service-as-a-Mirage (SaaM) than a sustainable solution.
Inadequate Infrastructure and Integration: A major challenge in implementing MaaS is the lack of adequate infrastructure and integration among transport providers. Many cities are still grappling with outdated infrastructure, which is ill-equipped to support the high-tech requirements of MaaS. Additionally, the need for seamless integration among various transport services is crucial, but is often hindered by competition and lack of standardisation.2
Monopolisation and Lack of Competition: One of the significant risks associated with MaaS is the potential for monopolisation. As larger companies seek to dominate the market, they may buy out or outcompete smaller providers. This lack of competition could lead to higher prices and reduced innovation, ultimately undermining the very principles that MaaS was intended to promote.
Data Privacy and Security Concerns: As MaaS relies heavily on user data, the issue of data privacy and security comes to the forefront. Users need to trust that their personal information, location data, and payment details are secure. However, with high-profile cases of data breaches and misuse of user information, it is increasingly difficult to guarantee that MaaS platforms can maintain privacy and security standards.
Environmental Impact: Although MaaS is often touted as an environmentally friendly solution, its overall impact on the environment is uncertain. The increased use of ride-hailing services, for example, can contribute to greater congestion and emissions. Additionally, the production and disposal of electric scooters and bikes used in shared mobility services can generate significant waste and pollution.
Unsustainable Business Models: Many MaaS providers rely on venture capital funding to stay afloat, as they have yet to establish sustainable revenue streams. As investors eventually seek returns on their investments, these services could become unaffordable for the average user or cease to exist altogether, leaving consumers with fewer transport options. Remember, none of these services were profitable before bundling, why would they be profitable after?
Synthesis: MaaS Hysteria: Navigating the Traffic Between Utopian Dreams and Gridlock Realities
My view is that Visa and Mastercard and their ilk will come to play and put out-of-business all these specialised payment systems that public transport use. That will help. The problem then gets down to the Business Model. As none of the components are profitable now, it will require public subsidy. Will the subsidy be larger for these programs? How are they going to be tailored?
One assumes a monthly subscription program looks like this:
Unlimited Public Transport.
Unlimited Bike Sharing.
X Car shares per month of under W hours.
Y Taxi/Uber riders per month of under Z km.
Will this bundle be better for consumers than the current pay-as-you-go (and in many places there already are Season Tickets for public transport)? Y taxis will cost some amount of money. If I use less than Y per month now, I risk overpaying for the subscription (or will take unnecessary taxi trips (substituting taxi for public transport, walking, or bike sharing to maximise value). If I use more than Y, the subscription might be a bit of a discount, but I will still have to pay for the overages (hopefully no worse than standard fare now — but who knows, look at your Mobile Phone data plans — especially if you live in the United States — to see how tricky this is, and how pissed consumers get).
The idea is to encourage members to forego vehicle ownership, a step function change, that will be better in the long run for society, so some subsidy may be warranted. But I look at the Opal+ plans that my local public transport service provider, TfNSW, offers, and it is extremely unappealing. If you are not very careful, and very certain of your travel plans, you pay more than you would now — the current fares are fairly generous, and if you take more than 8 trips per week, subsequent trips are half fare, and there are off-peak discounts. (I know I would have paid more under this plan, so didn’t sign up). The agency apparently wasn’t willing to give up any revenue to induce more usage.
Shh, don’t mention induced demand
This is the reason it is technically difficult to implement, there is still no standard payment system for public transport. I can’t use a smart card from one city in another. I can often however use a Credit Card (or ApplePay surrogate), but then the locality loses a lot of information. So until Visa and Mastercard seriously play in this space, (they might, it’s not clear, See Visa’s Global Urban Mobility Program and Mastercard’s MaaS Solutions) it isn’t going to get going. Once they do, I think #5 is the main problem.
BG Writes:
Thanks for the essay David.
I think we are headed in the wrong direction if we see MaaS as a way of bundling the sustainable transport options with the unsustainable ones such as the car. The built-in distortions of the present system will simply be amplified as people continue to game the system for their personal advantage.
What we fundamentally lack is a robust road-user charging system that takes full account of the externalities, including the limited capacity of the atmosphere to safely absorb CO2 emissions. The "right to drive" is as endemic to Australian culture as that and so many other "rights" are in the USA. We need not elaborate.I should pay to drive my car on the roads, just as I pay for food from the supermarket, electricity from the grid, or water from the tap.
Even if we can't bring ourselves to support comprehensive road-user-charging, we should at least be mandating the means to collect that data in all new vehicles. It's not necessary to encroach on people's privacy to do that. We do not need to track the detailed movement of every vehicle as a GPS based system might do. I envisage a simple on-board odometer that can be read using wireless technology. This is well within our technological capacity, and would not add significantly to the cost of a vehicle. It would be no more invasive of one's privacy than it is to read a gas or electricity meter.
The beauty of such an approach is that roadside odometer readers could be placed at cordon locations and jurisdictional boundaries in the same way that e-tag readers are currently deployed on toll roads. Motorist and Truck owners could be charged directly by the local authorities for the wear and tear as well as the congestion and emissions they cause within that jurisdiction. A simple, fair and neat way around all the gas-tax arguments. Lots more benefits if we use that for pay-as-you-drive insurance, eliminating annual car registration charges and tracking stolen vehicles.
The data doesn't lie. Whim itself has found that taxi demand is indeed increased, walking and cycling decrease and PT barely changes. People do use shared cars a bit more as well. That is not a conceptual problem as you rightly say. It is a markets execution problem. Public transport is a market failure in which governments provide the difference between cost and demand. Supplements to public transport clearly struggle to make coin. The collapsing micromobility market in the absence of unthinking venture capital IPO potential demonstrates the mirage. The question that the managers of our public monies must then ask - what is the public benefit that micromobility options bring, what are the options to deliver those benefits and how much are we willing to pay to have those benefits? We may well end up with publicly tendered service models again. That said, the venture capitalist disruption shook people from their sleep and opened eyes to thinking about access and mobility. Even if most of it fails, it succeeded in breaking apart corrupted old models. As every business becomes some sort of data/financial services provider the big players will as you suggest be waiting to strike, to hover up at bargain prices any viable market. But the pickings may be slim! I regret everyday that the Minister of the day in New South Wales would not take the Visa/Mastercard offer and insisted that we enable cash. That cost the State more than a billion dollars for no additional service. It would have been cheaper to offer free travel for those considered reliant on cash (benefits recipients).