Tough Times Call for Smart Technologies

February, 2009

The past few years have seen the evolution of pay-by-cell technology from small-scale trials to cost-effective revenue control solution deployed in major cities around the world. It is estimated that more than 25 million on-street parking sessions were paid by phone in 2008, worth an approximate $55 million, with more than half of these transactions originating from Europe but with rapid growth in North America.
Major U.S. cities such as Miami, San Francisco have either fully deployed or are in trials with pay-by-cell technology. It is interesting that tough economic times led to the last significant change in on-street revenue control; the introduction of the coin-operated parking meter in 1935, and that the current economic climate will spur similar demand for cost-effective solutions to on-street revenue control.
Some verifiable results that illustrate the economic benefits of pay-by-cell phone can be observed in these major deployments:
• Westminster, London, UK – Net revenue increase of $12 million per year from eliminating coin losses and lower operating and capital expenses. 80% parking payments by cell phone.
• Vancouver, BC, Canada – Some 4,000 daily transactions paid by cell phone across 8,000 coin-only meters. Average payment by cell is 44% higher than coin payment ($2.60 vs. $1.80).
• Miami –Citywide deployment across 12,000 on-street parking spaces without significant capital investment or changes to current meter installations.
In common with many new technologies, early pay-by-cell service providers competed to establish different operating platforms and systems. There are still some significant variations, but the differences are narrowing as the industry settles around the successful and practical methodologies. However, the commonly accepted approach to pay-by-cell service is now:
Parking and payment is activated by using a cell phone to send a short message service (SMS), call an automated voice system (AVS) or by mobile web browser. Research has shown that more than 90% of drivers in major cities carry cell phones.
The service is usually deployed as an alternative that can lead to a phased reduction of current systems, allowing drivers to make the transition when they choose to.
There is no need to upgrade or integrate with the current meters. The cell phone system does not update the meter with payment information, since this would be costly and incur ongoing connectivity costs for every meter.
Payment status is determined by issuing staff with web-enabled cell phones or PDAs or by using existing ticket-writers. Officers can list paid license plates space numbers for a particular zone or by individual vehicle/space.
There are of course variations; some systems issue drivers a bar code or RFID tag that is queried, rather than tracking by vehicle plate or space. Some modern multi-space/pay-and-display back-office systems have the ability to integrate with pay-by-cell systems so that transaction information can be shared across both systems. However, there is an obvious complexity and cost to these variations; the “standard” service requires no integration or supply of devices to the driver.
The increasing expansion of pay-by-cell usage by both municipalities and private parking operators has been driven by a number of key factors:
1. Capital Budget Savings: Typically pay-by-cell services require no capital budget. Revenue for the pay-by-cell operator is generated on a per transaction basis, paid by either the driver as part of a value-added service or the municipality from higher revenues and lower costs.
2. Operational Savings: Reducing or eliminating the use of coins lowers collection and maintenance costs, and losses from coin theft.
3. Revenue Increase: Many cities have seen the average pay-by-cell payments 30% higher than the average coin payment. This statistic is shared with many industry studies that show a card payment option creates higher dollar-value payments. Make it easy and drivers pay more.
4. Flexible Tariffs: A growing aspect of pay-by-cell technology is the ability to set different tariffs for different drivers. Since every user on a pay-by-cell system has a unique profile, they also can have unique payment profiles based, for example, on whether they are residents or businesses from a specific area. In some cities, drivers of low-emission vehicles can pay lower parking tariffs. It is not just tariffs that can be tweaked; by-laws can vary for different users such as disabled or elderly drivers.
The ability to generate meaningful information is a powerful benefit of modern parking revenue control systems. Analysis of street-level parking activity on a transaction by transaction basis is a core component of any pay-by-cell system that can be used to guide the informed decision making needed for framing and updating parking policies.
The features of pay-by-cell systems vary more widely than the operating methodology or benefits that are largely common to all. Apart from the obvious aspects of reliability, reputation and value, the feature-set is an area that municipalities should look at closely to see which best meets their requirements. At a minimum, these features should be part of the overall service platform:
• Remind drivers by SMS text message before parking time expires and enable parking time to be added without returning to the car, subject to stay restrictions. It’s an open argument as to whether reminding drivers before parking expires reduces the number of parking infractions. But making it easier for drivers to follow and comply with the parking and transport policies is undoubtedly key to allowing the effects of the policy to be realized. Excessive parking infractions are typically a sign of a policy that has failed, unless it was specifically designed to maximize the number of infractions (and I hope that we have moved beyond that approach).
• By-law and rate support: The system needs to support the rate structure and by-laws, such as maximum stays and restricted parking hours, so that payment by cell phone is subject to the same limits in place for metered transactions. In many ways, compliance is improved. For example a pay-by-cell service should block a driver from adding more time by phone once the maximum stay period has expired or purchasing time into a commuter lane restriction time period.
• Real-time enforcement data: The payment data must be available in real time for enforcement officers.
• Back-office systems: Typically, accounting and operational reports, rates and by-law administration and customer-service interfaces are available via a secure web browser interface so the only IT requirement is to have Internet access, there is no need to install software or servers in the local offices.
• The future looks promising for pay-by-cell and electronic parking payments in general, and it is now feasible to envisage, as some cites have done, the elimination of the parking meter.
The advent of drivers and vehicles that can “connect” easily and reliably to a remote payment system is clearly the end of the traditional parking meter system, just as surely as the Internet has eroded the concept of the retail travel agent. “What do you mean I have to walk down the street to book my flight?” is a short step from “What do you mean I have to walk down the street to pay for my parking?”
The parallels are stronger by the day. It’s even possible to envisage that if the street is half empty, you will get a better price; and the opposite: if there is only one space left, expect to pay a bit more. It’s partly about yield management, but for municipalities, it’s also about using smart pricing to influence parking behavior.

Neil Podmore is a Vice President with Verrus Mobile Technologies and can be reached at npodmore@verrus.com.