By Sampo Hietanen, CEO and Founder of MaaS Global
The US and China are calling the shots in the digital age. Europe has lost its edge and become insignificant, a test market at best. We keep hearing this and while some of it maybe true, a lot is optics. Europe’s hardly out of the game. The EU is the world’s largest single market area and the current Commission is working harder than any of its predecessors to digitize it.
Efforts on this are very welcome. Europe’s challenge is not lack of innovation, not lack of education, not lack of money or lack of curious customers. The problem is that in the digital realm the European Union has so far failed to deliver on its core promise, a single market. The whole idea behind digital economy is that services can scale fast and for practically zero marginal cost. The volume drives prices down and the value of the network up (each new user makes the whole more valuable for everybody). If you cannot scale, you do not have a digital economy. In Europe’s case digital services run into obstacles at every border and national markets are too small for the network benefits to fully materialize. That is why we have fallen behind.
Mobility-as-a-Service (MaaS) offers us our best chance to get back in the game. Transportation is the world’s second biggest market after real estate and it will soon go through a massive disruption. The drivers are climate change, congestion and digitalization. The future belongs to digitally accessible mobility services that are easily available whenever, wherever the customer wants them.
To estimate the size of the consumer market just think that in telecommunications the average revenue per user is around 30 euros a month, in transportation it is easily around 300 euros. In all, the world-wide transportation market presents a 10 trillion-euro opportunity.
Europe is the best prepared region in the world to benefit from all of this. We have the best public transport systems in the world. They are the backbone of well-functioning MaaS. New transportation systems rely on the Internet. Generally the connections in Europe are the best in the world, as is our roaming. The trailblazing companies and initiatives in MaaS are currently in Europe. The US is far behind because the culture is built around car ownership. In Asia the digital and societal change has been fast, but so far mobility has not been a priority.
So, the game is rigged in our favor. But if we repeat some of the mistakes made during the telecommunications revolution, we lose. Europe was first to introduce standards and build well-functioning infrastructure, but the great companies providing services were born in the US or Asia. There’s no European Amazon, Google, Alibaba or TikTok.
So, what should we do? Here’s the list:
- Open all public transportation services for innovations (this means open interfaces and fair reselling agreements)
- Make sure all other transportation providers do the same
- Police this to guarantee that markets are truly open and entry barriers low
- Open transportation data for all to see
- See that all services honor all payment methods
And this isn’t just a digital disruptor talking, this is what European consumers want. In a fresh FIA survey conducted in 10 European countries, an overwhelming 69,5% of the respondents said they’d prefer a single app to book all their transportation.
If we took the measures described above, an insane burst in creativity and development would follow. Remember what happened when Apple opened its App Store to developers and anyone with the skills and the smarts had a chance to jump in? A new global market and an innovation ecosystem was created almost overnight. Imagine if the APIs in the world of transport were open for any engineer, today working on games, to build European mobility apps. Innovation would explode, the best apps could scale European wide – and then take the world.
And now I am not only talking about customer facing apps like Whim. Transportation is an extremely complex and heterogeneous network and solutions to boost integration and efficiency are needed at every level and at every node. Possibilities for improvement and businesses built on those are limitless.
In a market like MaaS, we could also find a competitive advantage in European values. Respectful treatment of personal data, open ecosystems, inclusion and sustainable public private cooperation are at the core of the MaaS concept. This is a different approach than that of the Silicon Valley or Asian giants, and an approach probably much appreciated by consumers also outside of the EU.
Europe is superior in its public transportation and communications infrastructure and this gives us a huge competitive edge. But whether we decide to benefit from it is a bit like asking if a bottle is half full or half empty. The focus should not be where we are now, but what we will do next. If we hold onto local mindset and think regulation means more restrictions, our chance is gone. But if we use regulation to create an open, low entry, well-functioning single European market for mobility, we honor the fundamental idea of the European Union: we create prosperity, safety, inclusion and stay relevant.
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