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The evolution of E-ZPass

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I’ve been musing lately about E-ZPass on the occasion of its 20th anniversary and – because I think they still have relevance today – I wanted to share a few of the early ‘war stories’.

For starters how do seven agencies buy the same thing? They can’t have a single, seven-agency procurement, and they may not all have the legal ability to buy against each other’s contract. We needed to invent a procurement approach, so we created the ‘irrevocable offer’. One agency conducted the procurement under its rules, and all seven agencies participated in the selection process. The lead agency issued a contract but as a part of that contract the technology provider agreed to make an irrevocable offer to all current and future E-ZPass agencies.

The offer contained some interesting clauses. E-ZPass would determine who was a member and able to use the contract. The provider had to offer E-ZPass its best price and if they subsequently offered lower prices to a new customer anywhere, they had to make those prices available to E-ZPass. They needed to provide a guaranteed second source to avoid monopoly pricing, a clause that was negotiated away after I left (and I still think it was a bad idea to do so). The irrevocable offer pointed the way for ATI to procure a video hub and is a way today for agencies to work together.

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Another big debate at the time was between read-only versus read-write technology. Read-only tags would just identify a vehicle with calculation of toll rates to occur at the back-end. Read-write tags would be able to capture entry and exit data on toll roads and allow the patron to see their toll when leaving a tolled highway, but they were more expensive.

I never believed that read-write was necessary but since I saw my role as managing the process and not necessarily getting my own way, I deferred to read-write. However the trend over these past years has been for the processing to move from the lanes to the back-office and so today all tags, even though they are read-write, function as read-only devices.

The broader issue is that 20 years ago the focus in toll systems was on the point of sale – the token or cash. If all you were collecting was cash or cash equivalents, such as tokens, then all you needed to do was count the quarters or tokens that you collected in the coin machine. Check the counter against what the employee handed in and you were done. The accounting system was an afterthought.

Today the point-of-sale terminal can accept RFID tags or license plate reads, or even phone calls. No longer is counting the tolls simple. We should be putting our focus on the back-end financial transaction processing, a subject about which I’ll be writing in the New Year.

 

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