Sampo’s blog: How To Regulate Through the Coming Traffic Tsunami

By MaaS Global • July 16, 2018


By Sampo Hietanen, CEO and Founder of MaaS Global

Whenever it becomes clear to everyone involved that the business they are in is being disrupted, what used to be an organized world turns into uncertain terrain – even chaos. Some trust their size, some are paralyzed with fear, some believe in their speed, some try to use their wits. Heroes are born and fallen, fortunes made and lost. The market is a foggy mess – until one day, things start clearing and we see the new order. Now, blessed with hindsight, we can debate what got us here.

With traffic we are reaching the point of chaos around the corner. Growth of cities, promise of autonomous traffic and growth of the sharing economy all contribute to a revolution that is escalating rapidly. All it takes is for a taxi operator to dump a fleet of self-driving cars into a major city and we enter a whole new era. Yes, it offers fascinating new opportunities, but it may end up being a major mess.

A recent OECD study paints two very different futures depending on how autonomous cars are introduced to our cities. A shared mobility simulation done in Lisbon, Portugal estimates that if autonomous rides are shared, a high-capacity public transport system complements the overall system and we could do with just 10% of the cars we have today. On the other hand, if autonomous cars are used by a single passenger at a time and there’s no high-volume public transport, at peak hours car-kilometers travelled will increase by 103%, which is not manageable.

There is already empirical evidence of similar development from the introduction of Uber to New York City. Streets are packed with Uber, Lyft and Juno cars looking for passengers and, as a result, midtown traffic now moves almost two miles per hour slower than just two years ago.

If the easy answer to getting from A to B is with a manned or autonomous car, using the Uber app, on your phone, you are going to use it. People go for easy, even if it means that the system as a whole becomes dysfunctional.

Although we at MaaS Global are working towards a much smoother future, I see system failure as a very real threat. There are two main reasons for this: (1) the monopolistic and therefore defensive behavior of big traffic operators, and (2) regulators who choose the wrong tools or think they have time to sit back and wait for the storm to blow over. In other words, we should not blame disruptive technologies for the possible mess around the corner, but our inability to react to them in a way that would serve the public good.

Let’s start with the folks needing to get around. What do they want from the new digital mobility services? In all the research we have done and run across, the overwhelming majority wants three things:

  1. They want all the different forms of traffic behind one app;
  2. They want to be able to choose the app they use (no monopolies);
  3. They want to use the same app wherever they are.

To achieve a world the consumers want and one that would not be congested, public transport must be an integral part of the solution, but it cannot be the sole solution. Just like the self-driving cars will be pieces of the puzzle, but not the whole puzzle.

And now we come back to the two potential black clouds on the horizon: current incumbents and regulators.

Many big operators, often current or former government or municipal monopolies, have a hard time accommodating to the age of open platforms and access. Yes, they may welcome other actors behind their own app, but they are not willing to open their services to others. From the customer’s point of view this is a total failure. These local operators are not available when people travel, and they tend to build packages centered  around their services, not around customer needs. They end up losing customers, and customers end up losing the opportunity to use their services. That’s not how you serve the public.

Regulation is often considered a bad word in the world of innovation and digital disruption. Yes, it may suffocate innovation, as some say is happening in old industries like pharmaceuticals, but it can also create a level playing field for progress, as it has done in the mobile communication industry in the Nordic region. The reason Nokia and Ericsson got off to an amazing start in the mobile networks and handsets business was due to common standards like NMT and GSM induced by regulators. Finns are currently enjoying the most bandwidth for the lowest prices in Europe from their telecommunications companies due to regulation that enhances fair competition.

Possibly the worst scenario, and unfortunately sometimes the current state of affairs, is a state or municipal traffic operator that teams up with regulators and tries to force people to use public transportation that is falling behind by making life difficult for everyone else. This is a clear and present danger in Europe. If the public transport systems fail to develop along with the sharing services and autonomous traffic and open up their services for the public to use as they see best, all progress will happen elsewhere and these once valued, and still vital transport systems will deteriorate until they will be shut down as dysfunctional.

The alternative is to create, through innovative regulation, a level playing field that has the benefit of the customers at the centre. In this thinking, no single form of transportation or single operator is the solution, but they are all components in a solution.

As an American venture capitalist recently said to me: “All big problems that a single technology or a company can solve, have already been solved. All major future improvements demand collaboration and to achieve that, we need political leadership.”