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The tolling industry will be disrupted beyond recognition - just as the television industry was

Are toll road operators like network television executives? I admit that it’s an odd question, but please allow me to explain why I ask it. To do so, we’ll need to roll back the clock several decades to what some of us nostalgically refer to as ‘the golden age of television’.

For a long time, broadcast TV truly ruled the entertainment industry roost. The top shows had enormous audiences and sponsors paid dearly for coveted spots during the most popular shows. Television benefited from two factors. The first was that stations each operated under a hard-to-obtain government license. There were not many issued, so TV stations had a captive audience and, as a viewer, you had limited choice.

The second was that they had a technology that required you to watch the shows as well as the commercials in real time. The advertisers who paid for the shows had guaranteed eyeballs.

After decades of essentially an oligopoly, the first crack in the wall was the introduction of video recording that allowed for both time shifting and skipping commercials. The subsequent cracks were the expansion of broadcast outlets to cable television, followed by streaming. Network TV has managed to survive, but companies have had large-scale disruptions and have had to make major changes to their business model.

How are toll roads similar? They depend on government-issued permissions to build and operate toll facilities and they rely on technology, tags and readers to exclusively collect the tolls. Both of these foundations are far from solid and we are already starting to see cracks.

As states talk more and more openly about road user charging as a replacement for the gas tax, toll roads will become little more than roads with a different price structure. They will no longer be unique entities and states may think about simply acquiring them. Not hard to imagine as they operate today under state approval. It’s already happened in several states and this trend could accelerate.

But another threat, like that which faced broadcast TV, is from advancing technology. Toll roads, in part, maintain their independence because toll collection traditionally relies on a tag and reader system, overseen by the operator. If that link is broken and others can also accurately identify and collect from drivers, then operators will be faced with a huge dilemma – this scenario is now emerging in various guises.

First, video tolling is getting so good that tags are being supplanted and third-party services are offering Mobility as a Service. When the alternative to a tag was a small startup company they were easy to ignore, but what will happen when a major bank or car company approaches a toll road and says, “We have thousands of your customers in our system and we want to send you their tolls.” I think the governor’s office will direct them to accept it.

We are now at a point when tolling is threatened by both government and technology. Will toll roads survive? Surely not as we know them.

 

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