Smart Card Wars (Part IV, Updated)

The Star reports that the Ontario NDP has asked the Provincial Auditor to review the contract with Accenture for the development of the Presto smart card system.  An explanation of the background for this request is on the NDP’s website, and it goes into details of past contracts between Ontario and Accenture.

John Lorinc reports in the Globe that a system to be developed for Vancouver will use similar technology to that proposed by the TTC for its own smart card system, and come in at a fraction of the expected price for Presto.

Updated: Royson James weighs in on smart cards in the Star, and John Lorinc has an article on spacing.

In the case of the NDP request, the scope should look more widely than just Accenture which provides system development and operation.  However, some of the capital and ongoing staffing costs for the Presto project are carried in other budgets.  Any review needs to look at the whole picture, not just one contract.

Comparisons with Vancouver will be intriguing, but it will likewise be necessary to ensure an apples-to-apples comparison.  For example, the new system is to be implemented as part of a conversion of the Skytrain rapid transit stations from their current barrier-free design to use turnstiles.  This is intended to reduce fare evasion.  One big cost in Toronto is  for providing existing turnstiles with power and network links to handle Presto.  It is entirely possible that some components of the Toronto smart card budget will be covered by Vancouver’s turnstile retrofit budget.  (Similar burying of costs in multiple accounts occurs quite commonly in TTC budgets, notably for subway station renovations.)

Presto needs to be held to account for what it has produced and the expected cost of system expansion.  The fog of “commercial confidentiality” used, for example, to prevent revelation of the cost of a new city’s rollout (Ottawa) means that we have no way predict long term spending requirements, or to compare these with projects in other cities.

Ontario has just, thankfully, ended its relationship with SNC Lavalin for the Air Rail Link to Pearson Airport, and with this change we should have greater transparency and accountability for the project.

The same openness must apply to Presto.  If it is a demonstrably good and competitive system, then show us.

15 thoughts on “Smart Card Wars (Part IV, Updated)

  1. Another difference is that Vancouver’s current system of magnetic-stripe tickets is far in advance of Toronto’s current technology. It also covers the entire region, and integrates with West Coast Express (even though, like GO, the trains charge a premium fare), as well as accommodating proof-of-payment on the SkyTrain and some buses.

    Spending the money to develop a smart card for Vancouver actually seems a bit wasteful to me, although I suppose the need to pass through barriers will increase the convenience of tapping a card rather than scanning it.


  2. The fare gates will cost $90m… and I bet those fare gates have to be installed smartcard-compatible, possibly to the extent installing wiring between the gates and a hub nearby. That would make $80m+$90m = $170m, for a system about a third the size of Presto’s.

    Steve: Yes, but you can’t count the cost of the gates themselves in a comparison as our fare gates already exist.


  3. It appears as though Vancouver is moving away from an honour system toward turnstile entrances.
    Toronto is moving the opposite way (at least with streetcars), from a turnstile (or it might as well be as people file past the opperator) to an honour system.


  4. My prediction is that the honour system on the new streetcars won’t last longer than Lower Bay did. With the frequent stops it will be far too easy to avoid the inspectors. GO Transit caters to the business traveller, and fare evasion there is naturally much lower than it would be on the downtown streetcar system. Still, when I rode GO, they used to nail people EVERY time. Some would hide out in the washrooms — it was always funny to watch one of the Bay St. suits get nailed.

    Besides, how would they handle streetcar-subway thoroughfare points like Bathurst, St. Clair, Broadview … ? Would those go back to the way Islington was configured when BD opened?

    Steve: They don’t need to change fare collection at transfer stations. If it’s by distance, the only important point is where you get off, not which vehicles you used enroute. If by time, well, that only matters if an inspector shows up to check. Rather like the way things work today.


  5. “In the case of the NDP request, the scope should look more widely than just Accenture which provides system development and operation. However, some of the capital and ongoing staffing costs for the Presto project are carried in other budgets. Any review needs to look at the whole picture, not just one contract.”

    Why is it necessary to look at the whole picture? According to the NDP link there have been issues with Accenture previously so why not place them under additional scrutiny in this case? Isn’t possible that there could be problems with “just one contract”? If so aren’t they worth discovering?

    Steve: The question is whether we are investigating Accenture or Presto. Both may be worthwhile, but the purpose of the announcement was to review spending on Presto. Looking only at Accenture won’t catch all of that.


  6. Steve … what I meant was if the streetcar routes move to the honor system and the subway system does not, then there is a huge fare evasion loophole where the streetcar routes currently enter the fare-paid areas of subway stations like Bathurst, St. Clair W., etc.

    When Islington Stn. opened, all of the bus bays were outside of the fare-paid area, and so I was wondering if they would have to revert to that kind of configuration at stations like Broadview to close any potential loophole that makes it easy to sneak into the subway system.

    I don’t think the TTC has thought this through, and I can just see the fare evasion reports they’ll come up with to justify moving back to one-door loading. For example, there is no reason why they can’t do POP on all the streetcar routes now to speed up boarding times. Why don’t they do it now with the existing fleet? Well if your answer is that the new streetcars will force them into it, and they won’t do it until they’re forced to … well, that just proves my point.


  7. Digressing slightly, but if TTC retains its current fare system and allows all-door boarding on the new streetcars, then all streetcar routes become proof-of-payment. Further, if some of those streetcars enter the fare paid zone of a subway station, then that means the subway system effectively becomes a proof-of-payment area. (Oh, and ditto all bus routes that enter the fare paid area of a subway station.)


  8. Well, they could require the bus or streetcar passengers to tap in again or show a transfer before entering the subway system then. If the system is integrated well, it’s a minor hassle that can preserve POP on those routes.


  9. Why look to Vancouver when Montréal and most Québec cities implemented a smart card system recently? It had hiccups at first, but works really well. We have zoning, plus you can recharge your cards for use in other cities as Opus is the card for most transit systems in the province.

    From one of your previous posts:

    The total implementation cost was $148-million of which $98-million was for the system itself and an additional $50.5-million went to replace the antique fareboxes previously on the system. An estimated $20-million in reduced fare fraud offsets these costs, although this will depend on good enforcement.

    And further:
    … the infrastructure of station and onboard equipment will handle that coming technology change avoiding huge retrofit costs and conversion problems. This will also permit the OPUS infrastructure to interact with devices from other partners for co-marketing transit with other services.


  10. Harry … that would mean that turnstiles would have to be installed where currently there are none — similar to the configuration at Islington in 1968.


  11. It seems to be that they best system is where there is a provider, who supplies the cards, the equipment the data handling and charges a small fee to the transit agencies to do the processing. Just like Presto, but without the huge investment by the transit agencies. I think that this should not be a private contractor, but rather a provincial crown corporation, that the transit agencies can then sign on with. The crown corporation then supplies the readers, the networking, and charges the customer $2 for a card, and you can refill that card as much as you like.

    With zone based fares, why not by real distance, for example you get on bus X and tap your card, when you get off you tap your card again, they charge say 5¢ per km, with a minimum of 50¢. So I get on bus number 874 and travel 3km, then get on bus number 706 and go 10km, a total distance of 13km or 65¢. The transfer is time based, if the time from getting off to getting on is less then 30 minutes it’s considered part of the same trip, even if it’s the same bus going the opposite way. Distances that are part of a km are rounded to the nearest full km.

    Yes a long 70km trip would mean that your paying $3.50, but so? The agency looking after it gets a percentage of the fare, say 5% so the TTC picks 5¢, the agency takes a .25¢ commission. Each transit agency can pick their own per km rate, and their own minimum charge. A trip that crosses a municipal boarder, simply gets charged the higher minimum and the distance rate for the appropriate agency. So if YRT has a minimum of 75¢ and a per km rate of 6¢ and you get on a bus and go 8km in York and 2kmkm in Toronto, you would pay 48¢ for the York portion and 10¢ for the Toronto portion, but it’s less then the 75¢ so you pay 75¢. This would encourage short trips and out and back short time trips, because the fare is so low.


  12. Those who would advocate strongly for zone based fares to encourage short trips should reflect on the fact that when pay-by-bin-size came out in Toronto, those who picked the smallest possible bin (probably about 1/6 or less of the previous 6 bag maximum) received only a token net discount. We should proceed on the assumption that zone fares will essentially mean higher fares for longer riders, virtually the status quo for short trippers and a poor reception from both, until proven otherwise.


  13. “The question is whether we are investigating Accenture or Presto.”

    The NDP, as a more or less socialist party, has more of an interest in making a big corporation look bad then making a government agency look bad.


  14. This is obviously a political deadline matter. It could perhaps be dealt with politically – by quiet re-consideration. TTC needs to address a Total Solution rather than addressing just one segment of payment method — just Bank Card solution.

    The schedule is extremely aggressive and may get TTC mired in legal/contractual challenges.

    Fare collection is not just about Bank Card acceptance. It is often more about dealing with mundane issues such as — the daily cash users (Unbanked/Uncarded persons), how the transfer will work, how will the bookkeeping and auditing affect TTC’s internal people + many external stakeholder issues. There is a whole body of experience based knowledge there from other transit agencies.

    Yes we want to be a cashless society, but then we also wanted to be a paperless society about 10 years ago. It won’t happen for a few decades.

    In short, think not just Bank Cards or just the TTC Subway. Think a Total TTC “system” solution with regional alliance. Do not forget consideration of having bus/streetcar fareboxes that electronically count money — not just a drop box as today.

    IT TAKES TIME — There are many stakeholders who would have to review many, many details of the Proposal to sort out foggy promises from true deliverables that can be enforced. It always takes time for due diligence process to sort out the “vaporware” from realities. Often it is not technolgy driven, but mostly CONTRACT LEGALESE driven. That has been the experience elsewhere south of the border.

    It seems odd that after full-blown studies done by the TTC – and TTC’s dialog with several transit agencies in the US over past 3-4 years, this procurement springs out on a Fast Track. Could it be the third track (rail)?

    Perhaps a third rail?

    Steve: Yes, I believe that at best the TTC Chair’s actions in advancing this proposal will be useful only in forcing Presto to be somewhat more forthcoming about how they will handle a variety of payment systems, and in forcing the TTC staff to move away from indefinitely perpetuating the current fare system. The TTC’s transfer rules make it almost impossible to automate fare calculations, and will considerably interfere with a system wide move to proof-of-payment, regardless of the technology.

    There are far too many unanswered questions here, even if we were not on the verge of change in municipal government, and I hope that there is enough will on the current Commission to stop this scheme before it is too advanced. We still need a major discussion of fare structure, of future regional integration and of how the existing and new systems will co-exist during a rollout period.

    To much of the debate focusses on technology, and that’s only part of the overall design.


  15. Steve: — I note per reports in the papers that a letter was sent by the Minister of Transport on the matter related to the selection of the potential contractor for Open Payments System Contract for TTC. But, with the direction that the Contract should be awarded only after the new, incoming administration has taken a good look at the potential selection and they approve it. Perhaps calm will prevail and some more soul searching will be done before awarding the Contract.

    I note in reading various Comments from the readers that there is a lingering fascination about using Bank Cards. Some people still think that it is the panacea. This is understandable – technology has sex appeal. But one should not get sucked into that euphoria as many simpler things need attention. The public needs to know that homework was done. And then to explain many things to the riders – where “change will occur”:

    (1) Policy Issues – how will transfers be structured, their rule and limitations. Policies need to be addressed for fare enforcement on different modes: inspection rules and logistics for enforcement.
    (2) People Issues — How will reduced fare customers be included in the program? These are the E/H, Students, and other eligible persons.
    (3) Payment issues – Need to allow at least three “options” – (a) Cash, (b) Bank Cards and (c) Transit Smart Cards (PRESTO is already available). One must recognize that a significant segment of the riders will be poor, unbanked and underbanked – it is just the structure of any metropolitan society today in North America. Perhaps 25 to 30% re in the unbaked and/or underbanked segment.
    (4) Politics – Nothing will be possible without political savvy. Ribbon cutting ceremonies and focus groups are just as essential part of life as life as Contractors Deliverables /Schedule – the former usually dictates.

    In summary, it seems to me that the notion that cash will be gone and we may move to NFC (phone based payments) and Bank Card based payments is a leaky proposition. The option for in-house (TTC staff with Contractor based staff support) fare system processing should also not be excluded. Bank Card/Back End Aggregation services are not necessarily cheaper.

    The old belief that “banks are safe” – is no longer valid. Just consider a few items in the news – this week:
    • Card Companies VISA and MasterCard admitted to some irregularity in overcharges –they agree to pay fines in the millions
    • Communications Service Providers – Verizon agreed many un-substantiated over-charges
    • Card Processing Companies/Banks — misplacing card data raises many privacy concerns
    Not all is wonderful in the Bank Card/OPEN PAYMENT SYSTEM land. All such things can be addressed, but not rushed to judgment.

    Does this make sense?

    Steve: Yes, your analysis does make sense. It was clear from the presentation and comments at the recent TTC meeting (I will write this up as I dig may way out of the backlog), that the economic “advantage” of Open Payment lies more in a willingness by vendors (banks, etc) to capitalize part of the project as a way of getting their foot in the door, than with an inherent advantage of this approach. The argument sounded a lot like “Buy It Now! Limited Time Offer!”, not like a proper business plan.

    All of the points you raise about fare policies, concession fares, etc., apply regardless of the technology chosen, although there are differences in the back end depending on whether one is using a stored value card with real-time calculations of fares and discounts rather than simply an identity card (which might be a bank card, but doesn’t have to be) to link your ride to an account “somewhere” to which a monthly charge is made based on actual usage (like a phone bill).

    I was particularly disappointed to learn how much the “benefit” depended on the short term willingness of the payment industry to subsidize the TTC’s entry because this means that a wider rollout (not to mention future changes, upgrades, maintenance, etc) will not benefit from such largesse. While I am unimpressed by the amount Presto has spent with so little to show for it ($250m for a user base barely over 10k), I am equally unimpressed by the fast talk surrounding the TTC’s “open payment” scheme. With luck, a new Commission and Council will take a hard nosed look at the idea.


Comments are closed.