Electronic Tolling Interoperability: Setting the Record Straight and Preparing for the Future

What You Need to Know From This Article:

• Despite misunderstandings, the toll industry has produced an interoperability solution that is working today. 
• The ability of individual toll operators to employ different business rules meets local needs, satisfies institutional and statutory requirements, and allows interoperable toll programs to expand and flourish. 
• Multi-protocol solutions, not a single universal transponder, are the wave of the future. Interoperable regions are on schedule to deliver a multi-protocol environment within the next couple of years. 
• Leakage is a cost of doing business, and is rooted in customer behavior, not system issues or technology. 
• Toll transponders and today’s tolling protocols are an interim bridge to a future that will migrate to new vehicle communications capabilities and expanded partnerships. 

National electronic tolling interoperability has continued to captivate the attention of Americans from all walks of life. Motorists, travelers, businesses, policymakers, elected officials, media interests, academia, transportation operators and many others have all expressed a strong interest in achieving a simple, understandable, and fair means of common tolling practices across the country.

It makes all the sense in the world. Before the days of toll transponders, video tolling, toll payment apps, and the elimination of cash payments at toll booths, tolling was interoperable, and cash was the way it was accomplished. Drivers at any toll facility in the U.S. could pull up to a toll booth, roll down the window, and tender a toll payment to an attendant in cold hard cash which was acceptable everywhere. Today’s modern toll facilities offer the speed of non-stop tolling, the safety of eliminating toll plazas, the reduced emissions from free-flow traffic, time savings from removing toll plaza congestion, the convenience of not having to scramble for cash at toll booths, and clear accounting of toll payments through a toll account statement. Yet this additional value has also introduced more complexity to the system.

Debunking the Misconceptions

As with any complex technological solution, there are many myths, distorted facts, misunderstandings, and misrepresentations of the industry’s actions and plans that confuse the issue. Misunderstandings range from unfamiliar travelers trying to navigate a multi-state trip, to knowledgeable transportation professionals who simply do not have all the correct information and facts. The latest example comes from the Reason Foundation in an article entitled “A New Approach to Tolling Interoperability” in their Surface Transportation Newsletter #224. Reason is a strong supporter of tolling, road pricing, and user-based transportation finance, and has a knowledgeable and influential staff on transportation policy issues. All the more reason for us to correct inaccuracies and tell the story of what our industry has done and continues to do to ensure a fully interoperable national electronic tolling system.

This year marks the tenth anniversary of the landmark federal MAP-21 legislation that put a simple mandate to the toll industry, requiring that all federal-aid highway toll facilities implement technologies or business practices that provide for the interoperability of electronic toll collection by October 1, 2016 (four years after the enactment of the legislation). Since that time, the toll industry has addressed the issue of interoperable electronic toll transactions, while balancing the hard realities of project economics, responsible public investment, intellectual property rights, competitive business interests, and new private sector roles. A cadre of dedicated volunteers has worked tirelessly to establish technology standards, common business practices, equipment and system testing and certification processes, data interface and exchange conventions with little support from the federal government.

Despite the challenges posed by limited funding and a complex set of business, technological and financial issues, the industry produced a solution that is working today. The effort has resulted in national business rules and interface controls which govern the customer experience and open exchange of toll transactions. In fact, IBTTA's interoperability work led to regionally interoperable tolling hubs in four regions of the U.S.: the Northeast, Southeast, Central U.S., and Western States. This has provided a means of interoperable tolling transactions among regional jurisdictions that share common customers through a single transportation payment account. This regional framework is serving the largest demands for interoperable toll transactions. For those travelers that truly need a coast-to-coast interoperable solution today (i.e., primarily commercial carriers and fleet operators), the emerging and growing market of private account providers is serving these needs today and hub-to-hub transaction processing augment this capability in the future.

The first hub-to-hub interoperable toll transactions are set to begin very soon, with the scheduled implementation in mid-2022. The National Electronic Tolling Interoperability Hub regions continue to meet monthly, maintaining up-to-date business rules and interface controls and addressing emerging issues including private operators, third-party account managers, financial payments, master transponder ID codes, and customer communications needs.

Flexibility Is Key to Interoperability

IBTTA and its partners were able to gain approval from U.S. toll operators across the country on a unified set of business rules and the interchange control specifications governing data exchange standards and protocols. While these accomplishments did not garner the attention that major infrastructure project ribbon cuttings often receive, they were at least as deserving and monumental in establishing the foundation required for electronic toll payment interoperability. Gaining the approval of 130 toll operating organizations nationally and balancing competing institutional and regional interests, required difficult tradeoffs and compromise. This was not an easy undertaking, but the endurance, perseverance, and unity of purpose of those that voluntarily served on IBTTA’s National Interoperability Committee and working groups should be commended and celebrated as a groundbreaking step for tolling and road pricing.

The ability of individual toll operators to employ different business rules is a key to the success of interoperable toll technologies and operations. Electronic toll interoperability has not required toll operators to change their toll rates, bond covenants, or local financial/operational/policy objectives to harmonize all aspects of a toll program. This flexibility to meet local needs and satisfy a range of institutional and statutory requirements has allowed interoperable toll programs to expand and flourish.

So, while electronic tolling accounts do employ differing business rules, the basic premise has been simple and easy to understand. Electronic toll accounts are primarily pre-paid accounts that allow motorists to maintain a balance of funds available to be debited when passing through a toll point on the road network. Most toll account holders tend to back their toll account with a credit card or bank account (ACH), which allows an automatic replenishment to ensure accounts are maintained with a positive balance. To address equity and concerns of the unbanked or under-banked populations, toll operators are increasingly offering pay-as-you-go options that allow cash replenishment options in small amounts through retail networks and payment apps. It has become easier for motorists to open an electronic tolling account and maintain it in good standing.

The Technology is on Track, but the Solution is Not a Single Transponder

Critics of today’s state of toll interoperability often point to a “confusing” array of up to six toll technology protocols. In fact, there are really only three predominant electronic tolling protocols used in practice: TDM (E‑ZPass), 6C, and SeGo. Increasingly, toll operators are modernizing their electronic tolling roadside equipment with multi-protocol readers that allow for any of these three protocols to be used in electronic toll transactions. The transition will take time because it is costly and time-consuming to replace all single protocol tolling equipment throughout the U.S. Such undertakings often strain limited capital budgets for replacement of deployed systems that might not yet be fully amortized. Nonetheless, multi-protocol solutions are the wave of the future and interoperable regions, such as E‑ZPass, are on a schedule to deliver a multi-protocol environment among its members within the next couple of years. That will mean no matter what type of on-board unit a motorist’s electronic toll account employs, transactions will be processed seamlessly for the customer.

The Reason Foundation article and other critics of electronic tolling cite “political” barriers to the acceptance of a “universal transponder.” The “political” barrier cited is not political at all, but an economic consideration. Toll operators have invested hundreds of millions of dollars in toll transponders and other technologies that have not yet reached their full useful life. For instance, the early retirement of the 49 million E‑ZPass transponders in circulation in 2021 simply does not make economic sense. As more multi-protocol roadside readers are deployed, the economics will dictate a shift to less expensive transponder technology.

Those who say that there is a political barrier to the swift achievement of toll interoperability believe a single transponder technology is the best course of action to achieve national interoperability. This approach seems logical to inexperienced observers but in fact would limit competition, market-based solutions, innovation, and customer choice. Its effect would stifle the effective economics and true interoperability of solutions that are rooted in functional and technical requirements, rather than technological winners and losers. Congress was savvy enough in its MAP-21 tolling interoperability language to avoid the trap of focusing on a singular technological solution by specifying: “Federal-aid highways shall implement technologies or business practices that provide for the interoperability of electronic toll collection programs.” (Emphasis added.)

The Reason Foundation newsletter article wades into a morass of technology issues that are not germane to interoperability and misrepresent the technologies in question. Technological sophistication of transponders is not assessed by their size or age of the brand, such as E‑ZPass, but on its ability to meet functional and technical requirements. The E‑ZPass transponder has been upgraded since its inception in the 1990s to keep pace with current technological developments. The E‑ZPass transponder is larger than a sticker tag because it is a battery-powered device, which provides capabilities to not only be read, but to be written to as well, which is not true for non-battery powered sticker tags. The E‑ZPass transponder’s battery has enabled sophisticated handshakes with roadside equipment, acknowledgments of data transmission, voting logic, and assignments of tags to vehicles. This sophistication drives high accuracy levels of electronic toll transactions and some of the best performance in the industry. These technology characteristics lie behind one of the most positively viewed brands in the U.S., with decades of proven customer confidence and satisfaction.

Regarding the growth and membership of the E‑ZPass Group, a few fact corrections are worthy of note from those presented in the Reason Foundation article. The Central Florida Expressway was the first Florida toll operator to join the E‑ZPass network, being an E-ZPass member since November 2017. Florida’s Turnpike Enterprise joined the E‑ZPass Group in July 2020 and became interoperable in May 2021. The Georgia State Road and Tollway Authority has also administratively joined the E-ZPass Group and is in the process of making changes to their systems to accept E‑ZPass in their toll lanes later this year. Just last week, at the E‑ZPass Executive Management Committee’s meeting, it was noted that the membership now extends to 19 states, representing 50 individual toll operating organizations and remaining the largest interoperable toll system in the world.

Leakage is a Cost of Doing Business

The Reason Foundation article links customer confusion to an industry average for toll revenue leakage of about 5% and casts this in a negative light as lost revenue of millions of dollars. While there is no definitive study of toll revenue collection performance at the industry level, 5% leakage is not a bad estimate. The data that has been collected by IBTTA suggests customer confusion is a very small portion of nonpayment. In general, non-collection of toll revenue is a managed and stable situation, in line with agencies’ projected financial performance prior to cashless all-electronic tolling (AET) conversions. It is important to distinguish between revenue “leakage” and “loss.” Leakage is a cost of doing business rather than a loss, not unlike retail businesses’ costs of providing goods to the marketplace. Leakage is included in the traffic and revenue forecasts used for financial and operational planning and is also factored into toll rate structures to offset losses.

Leakage is a customer-behavior issue, not a system issue. Toll operators are taking multifaceted approaches to tackling leakage, establishing new payment channels and applications, engaging debt-collection firms, and stiffening enforcement measures for egregious toll violators. IBTTA has established a Lost Revenue Task Force among its members to exchange best practices and improve collection performance, seeking practices that manage risks and identify products and services that enhance revenue collection certainty.

Partnerships and Vehicle Communications are the Future

The Reason Foundation article suggests that the private sector take the lead in tolling interoperability but with no indications of what would be done differently and who would foot the bill. Toll facility infrastructure will certainly not change from public to private ownership overnight. The real opportunity is to find the right partnerships among public and private organizations in the toll collection business. Much of today’s electronic tolling back-office operations and toll collection services are already provided by private operators, and the entry of private third-party toll account providers is gaining attention and adoption. The real question is how the public and private sectors can collaborate to improve today’s value proposition by ensuring sustainable infrastructure investment, quality transportation and mobility solutions, equitable options, and an improved customer experience.

IBTTA encourages the long view of the future of tolling and road pricing. Toll transponders and today’s tolling protocols are only an interim bridge to a future that will migrate to new vehicle communications capabilities. V2X and 5G/6G technologies will render RFID toll transponder protocols obsolete in the future. The industry must focus more of its interoperability attention on building a future of functional and technical requirements, standards, data exchange practices, certification processes, and business rules that position the industry to ensure true interoperability, scale economies, competitive markets, and open designs. The toll industry has the know-how and expertise, the partnerships between the public and private sectors, as well as lessons learned from electronic tolling, to help drive towards a future business environment that promotes interoperability, reciprocity, and adaptability to technological change and innovation. IBTTA stands ready to embrace the future and enable these partnerships to drive sustainable transportation revenue and user-based project finance.