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Sampo Hietanen’s mobility mission

First publishedin ITS International
May June 2016
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ITS Interview Sampo Hietanen
Sampo Hietanen

For a decade Sampo Hietanen harboured a vision of an alternative form of mobility, now as CEO of MaaS Finland he is putting theory into practice.

Sampo Hietanen has become the embodiment of Mobility as a Service (MaaS) – a concept he created 10 years ago while working for Finnish civil engineering giant Destia. “I had been working with the mobile sector on traffic information and started thinking what will happen when this becomes bigger,” he says.

“What if things go the same way as the telecoms market where state monopolies have been devolved to numerous competitors in private industry? It would become a consumer-led business with a layer of operators. And if you consider what the consumer wants from transportation – to get people or goods from A to B – the whole scenario takes on a different dimension.”

Even a decade ago it was becoming evident that the younger generations, in particular, are not wedded to car ownership. “All they are interested in is getting to where they want to go. So I began to think, what if they bought transport in the same way as they buy their telecoms: on a monthly contract. They will not have to worry about how this is achieved, or if their car needs a service or is due an annual test or even how roads and infrastructure is financed.

“So if you consider people buying mobility packages from a service provider, those service providers will compete to offer the best and cheapest service. In the digital world, those service providers tend to consolidate into global service brands – something we don’t really have in the transport sector. Uber was the first service brand to go global in the transport sector.”

Time passed and it wasn’t until the Finnish government brought together academics and practitioners to reassess its future transport policy that the MaaS concept was ‘reawakened’. It was during those discussions that government official Minna Kivimäki recognised how fundamental such a change would be and coined the phrase Mobility as a Service.

So what is needed for MaaS to become a reality?

“To a certain extent it can be done now with the services and infrastructure currently available in most countries - but it is a ‘chicken and egg’ situation. Everybody perceives a feasible and lucrative market but until an example is up and running to demonstrate it will work in practice, it is difficult to move government departments and big transportation departments out of their big silos.

“What’s required is for all the players including bus, train and metro operators, taxi companies and car-sharing services and local authorities to work as a network and take the first step at the same time. In Finland we have managed to get that eco-system onboard and are confident we can launch the services on a commercial basis this year.”

He likens this process to roaming charges with mobile operators; third party providers can tap into different modes of transport and use them as part of their offering.

“This not only requires getting out of silos but also a complete change of mindset in order to consider their service as part of the end user’s needs rather than as running a bus, train or taxi service  – just as the hotel industry has done.

“It also needs a lot of technical changes - take for instance public transport. For MaaS to work, third-party service providers must be able to reserve seats in a bus or a tram or a metro. Many public transport providers think open data is just publishing information about their routes and services – that’s of no value; the real value is in getting people to their destination.”
He says governments need to start regulating for this type of market if they want to see it happen and the regulations must be drafted without acknowledging the silos, as currently happens.

While saying it would be great if travellers could use a single card for all forms of public transport throughout Europe, he says insisting that all service providers accept one card or another only leads to arguments and stifles progress. “Instead transportation should adopt the telecom approach where within, say, six months all public transport operations should publish an API that will enable any app or service provider to obtain tickets as part of their standard offering.
“I bet that within weeks we would have a European-wide travel card,” he asserts.

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MaaS graph changes for transportation
MaaS could form the centre and be the trigger for massive changes in the transportation market.
“The traditional approach of identifying a problem, planning a solution, designing infrastructure and putting out tenders - works when that solution is a new road but not where you want to use services as part of the solution. Why would an authority make a service when they can have multiple third-party players offering different services and then let the consumer decide?

The magnitude of such changes should not be underestimated. “I’ve heard a lot from the authorities in Finland that it is mind-blowing how big the change needs to be and the different competences required within public authorities. There is a lot to being an enabler; you need to look at the markets and make those markets work in your favour - we don’t have too many of those people in the transport sector.”

So why should a bus or taxi company buy into MaaS?

Think of it this way,” says Hietanen, “the consumer transport market is the second largest and in Europe the monthly spend is around €300 per person. Out of that €300, €120 goes to the capital cost of a car, another €120 is spent on fuel, insurance and maintenance to run the car and only €60 is spent on all other modes. So transport providers need to ask themselves where their business operates and where growth will come from.

“Bus operators may think ‘I’m not going to give away any of my margin by allowing other organisations to sell tickets for my services’. But they should appreciate that MaaS could give them access to a far bigger market and ask themselves ‘from the end-users’ point of view what will it take for a person not to run a car’?  The answer is that you have to provide the same service level as car ownership so the next question is ‘can I as a bus company do it alone? is the coverage big enough and regular enough for them to let go of their car’?

“The answer is no. Not even the likes of Transport for London can do that - they are close but their coverage is too small.

“No single entity in the transportation sector can offer the freedom of mobility that owning a car can deliver. But if you put them all together – public transport, car share, car rental, bike share, taxi, ride share and home deliveries – then you start to get there. With digitalisation this always happens and it will definitely happen with transportation.”
He envisages an aggregator level giving the end user access to all transport assets. “This will happen whether the transit operator wants it or not. So the question is do they want to be involved in this movement from the beginning or not?

“If MaaS is successful in offering an alternative to car ownership there will be a lot more money going into the transport system and for MaaS, putting people in a bus is always a good cost-effective option. We are not just ticket sales agents that takes the margins away from bus companies, we are actually combining all those transport modes into something that will be an alternative to car ownership. If we are successful there will be a lot more money coming into public transport and the travelling public will have more money to spend elsewhere in the economy.”

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Mobility as a service framework
MaaS operators will make all forms of mobility available to users.

Another vital element of MaaS is access to taxi services as these offer coverage to rival the private car – anywhere, any time. “It is the any time, anywhere element that makes it difficult for people to give up their cars. Many people, especially the millennials, don’t want to own a car; it is a hassle but they are pushed to it because nobody is catering for their transport needs. Cater for their needs and take away those availability concerns, and people are far more willing to go without cars.”

According to Hietanen, once as little as 5-10% of urban dwellers are using MaaS, it will allow the aggregators to start taking advantage of productivity gains.

So what is in it for the individual?

Hietanen: “Of the €300 monthly spend, €240 is being spent on the car which is only used 4% of the time, we believe that for one half of that sum we could provide similar levels of mobility. And experience from the telecoms sector shows that 70% of the cost savings through productivity gains goes to the individual to spend on other goods and services. 

“Whenever I ask ‘if I gave you full access to public services and taxis throughout your country for €125 per month would you take it?’ at least 20% of people say ‘yes’. If you take that over the population of a country like the UK then more than 10 million people would be subscribing at £100 [€125] per month – that’s £1billion [€1.25bn] per month and I can buy a lot of taxis with that money.”

While saying that access to all modes of transport enables the best and cheapest service, he acknowledges that some options, such as ride sharing, may not be to everybody’s tastes. “It is a good addition but offers no promises like a taxi service. If the user will accept ride sharing their monthly cost may be lower but if they don’t want that they may pay a little more.”

Once operational it will become evident where a number of people in one area travel regularly, at roughly the same time, enabling the aggregators to pre-position taxis to take those users to their destination or the train station. “If we identify two people making similar or identical commutes, we might suggest they ride share and get discount.”

Equally, it would be easy to detect larger groups of people making similar journeys at the same time and it may be viable to arrange a bus to take them directly to their destination rather than needing to drop them at the metro station in a taxi.

 “I can start amazing you with the service level we could provide,” he says, adding “it is still very early stages and many things are yet unproven but at least the math works.”

It is not difficult to imagine such services in urban areas but what about rural locations where the population is relatively small and scattered?

While acknowledging that it will be difficult to reach the critical mass in rural areas, Hietanen says: “People in the city will want to visit the country. So if I want to offer the service to city dwellers in order that they don’t need to own a car, I also need to enable them to visit the countryside. That might mean a taxi but MaaS does not preclude users having access to a car. So if the best way to make a particular journey is by car, then we will give them access to a car either through car share, car hire or even ride sharing.

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 Mobile phones for travel options
Users will use their mobile phones to call up the various travel options for their journey.

“We had an interesting example in Ylläs, a really rural area of Lapland with a very small scattered population, where Swedish telecoms company TeliaSonera backed a version of MaaS and made the case work even there.

“Once more than 5% -10% of the population in urban areas are MaaS users, they will bring the service to rural areas because they will want to visit those rural areas. That will add capacity to those living in those rural areas – so there is a chance it can work but it is really hard to predict. My feeling is that for 10-20 years the best bet for people in rural areas is to continue owning a car.”  

Later this year MaaS Finland, of which Hietanen is CEO, is starting a trial covering at least the southern part of the country and he hopes it may cover the whole of Finland. This is not a research project but a market trial with a company that aims to disrupt the whole market.

Hietanen says the trial needs to show four things: “that MaaS can provide access to transportation and that we can do this without huge integration of providers. We also have to show that we have ways to get our message to the people and that people want to buy their mobility this way.

“If we can prove that, it shouldn’t be too difficult to get the funding.”

He is also looking to set up operations in two other areas outside – probably on a regional rather than national scale.
The key to success will be achieving that critical mass and as quickly as possible. While MaaS Finland does not own any vehicles, infrastructure or rolling stock, setting up the service will require a large-scale investment, as he explains: “The access to taxis and other services for €125 per month works with big numbers but in the initial stages when numbers are low I will have to pay what the taxi meter shows - so we have to subsidise the early users.”

If MaaS succeeds, what would the modal split look like in 10 years’ time?

“It would go away from private cars into public transport in different modes: car share, taxi, buses of all sizes – all of which are good for a city’s policy. Many MaaS users will come out of owning cars and there will be an incentive to switch to cycling and walking as this will lower monthly payments. Currently cities have no way of rewarding those who use the most environmentally friendly transport modes – with MaaS they can.”

That is not to say MaaS can be achieved without structural changes – albeit such changes may well happen anyway - such as cities switching transport from corridor-based to hub-based in order to facilitate multimodal transport.
What about those with disabilities?

“We would be able to give them the same amount of mobility as other people,” says Hietanen. “In Finland the government is already spending €1bn/year on mobility for disabled people and the suggestion is that this money can allocate to the individual to spend on Maas on a package that best suits their needs.” 

He finds the prospect of autonomous vehicles interesting but does not think their introduction would negate the need for MaaS. “Autonomous vehicles are the ultimate enabler of MaaS but they are a technical solution which don’t in themselves bring anything new. If they reach a critical mass autonomous vehicles could bring the typical monthly cost down to €50.

“The transportation sector is being hit by a digital tsunami and we have only started to scratch the surface. There will be lots of changes and now is the time for city authorities to decide what kind of transport they want and to regulate to enable that to happen.”

Companies in this article

MaaS

maas.fi

Transport for London
www.TFL.gov.uk

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