Sampo’s Blog: Attacks and Answers about MaaS
By Sampo Hietanen, CEO and Founder of MaaS Global
Since Mobility as a Service (MaaS) evolves and gets onto the radar of more and more people, a lot of questions arise. We get them on the street, in conferences and, of course, through digital channels. Some are inquisitive, some are aggressive, some are outright attacks. All of them are important. I thought that I’d take a few rounds with some of the claims that, on the surface, appear quarrelsome or combative but are actually very good ones and help to clarify what MaaS is and what it isn’t.
1. MaaS operators will push folks to use taxis and rental cars because they get fatter commissions from that than from public transport, bikes, and other green options.
This is not the idea of MaaS, but it is a danger. It will happen if MaaS operators are only allowed to act as digital kiosks and their only revenue comes from commissions. If, however, MaaS operators are given flexibility in pricing and room to innovate, then the market mechanism will start pushing usage into another direction. When a MaaS operator charges a monthly fee and knows how many kilometers a user travels in a month, it has a very strong incentive to direct as much of the travel as possible towards public transport, biking and walking. This is actually the MaaS business model at its purest: the difference between the monthly fee and the price of trips taken is the gross profit, not the commissions from trips.
2. MaaS operators want to own their customers and this will commoditize all transport service providers. They will lose their brands and become bulk.
If you are bulk to begin with, you will stay bulk. But if you have a service and a brand people like, a MaaS operator is dependent on you. A MaaS operator sells value and that means using service providers people appreciate. The customer is co-owned. A true MaaS operator should not be involved in providing the services, because if it is, it has an incentive to push what it has, not the brands people like. Exclusive deals are not a good idea in MaaS. Offering choice, optimizing for efficiency, and letting people enjoy the brands they like as part of the package, is.
3. MaaS is a threat to public transport because the monthly package includes car-based options that are more desirable to use.
Yes, MaaS might kill some of the last mile, fixed-route public transport. But all the data we have supports the idea that arterial transport will rely on public transport. MaaS should actually help to move masses from motorways to mass transit. However, in many cases, when someone who is used to driving around in a private car wakes up to MaaS, the modal split (how much each mode of transit is used) will lean towards taxis and rental cars in the beginning, until this person becomes familiar with the efficiency of good public transport.
4. MaaS strips traffic planners of their power and hands it to the market.
Quite the contrary, I’d say. The dominance of the automobile, highways, multi-lane streets and parking issues have restricted the city and traffic planners’ freedom. In the age of MaaS, they will have much better information on how people move than ever before. Once they are no longer thinking in terms of lanes, they can plan hub-based cities. This opens a variety of new options. MaaS also gives planners a set of new tools to execute active traffic policy, with big data on actual usage, and incentives and tax policies based on modality splits.
5. In a platform economy you must own your customer and customer experience and you should not hand it over to a company like MaaS Global.
First, let’s look at this from customers’ point of view. Do they want to have 20–30 different mobility apps with their credit card information on their phones? Do they want to construct their trips themselves? Some of them may, but not that many of us are transportation geeks. We just want to get where we are going, and therefore a one-stop shop for all mobility needs makes much more sense. The future belongs to ecosystems, APIs and shared customers. The old platform-economy mantra about owning your customer is dead. The sooner you get over it, the better you are equipped to live in the present.
6. A MaaS operator is trying to build a business on commissions, but there’s not enough money to go around.
When you buy a car, the price is not the compounded price of its parts plus commission. It is the promise that comes with the car, the feel, the brand. The sales price reflects the experienced value to the customer. The same is true with a well constructed MaaS service. We design and put together a desirable package and charge for the delight it brings our customers. When we buy the parts that go into the package they have their own, production-based price mechanisms. Think of Netflix. You are paying monthly for your viewing pleasure, and that price has very little to do with the actual production costs of the content. This is how a sound subscription-based business works.
7. Left on its own, every market develops towards a monopoly, and so will Mobility as a Service.
People who say this don’t see the size of things. If you are in the social media business, you play with pennies per customer and you can try to dominate that field. Transportation is very physical, very political and very big. The cost of capital to dominate transportation globally is just unimaginable. You cannot raise that much. The idea that proud nations and cities would let some single company dominate their roads, streets, rails, and airspace is also not credible. It will not happen.
Or, a version of it might happen, locally, before it unbundles again. Disruption does not automatically deliver the desired results. There will be operators that want to take over a whole city or a country, or some cities might be tempted to solve the mess they are in by handing the business over to one operator. But monopolies come and go.
If you are a decision maker you should not, – and I don’t think you can -, stop disruption from happening, but you absolutely should regulate the disruption towards the common good: in this case, a functioning market with enough actors and focused on the users.
8. The only way to get a MaaS market up and functioning is to drop all regulation.
This is the Silicon Valley mantra we hear sometimes: regulation kills innovation. What these guys often don’t say as loudly is that they are trying to blitzscale to get to monopoly. As I said in my previous answer, I don’t believe that in transportation, monopolies are desirable or, in most cases, even possible. Nor do I believe in rivalry between individuality and community. A city is about both. A MaaS operator should do everything it can to cooperate with mass transit and vice versa. Clinging to monopolies or ideologies in the very practical world of transportation is seldom constructive.
9. MaaS operators are communists in startup clothing. They want to take away my car.
”I want my car! I want to keep my stuff in it. I want to drive my kids around! Don’t you dare touch my car!” Yeah, there are those folks, and as someone running a MaaS company, they are not in my focus. You want to keep your car? Keep it. A MaaS operator is there to serve the 38% of the population (according to a recent study by Kantar) that is seeking a way to give up the car.
10. MaaS might be an answer to city folks, but it will never reach small towns or the countryside.
Well, the automobile did. 3G mobile telecommunications networks did, and so did 4G. City dwellers might get the services first but once you’ve switched over to MaaS you want to reach every corner of the world with it. In most places MaaS is a viable answer, the modal split will just vary. While metros, buses and trams rule in the cities, in small towns it might be shuttle buses and taxis.