Another miracle from Finland

Minister Anne Berner Kuva: Tomi Parkkonen

Minister of transport and communications Anne Berner Kuva: Tomi Parkkonen

By Merina Salminen

The Nokia-phones are history, but Finland has another miracle coming. In a small country where all the political and business decision-makers know each other by first name, it has been possible to develop a totally new infrastructure for transportation. Uber has transformed urban moving but MaaS – mobility as a service – can make a huge difference in rural areas. MaaS may also be a game changer for children’s and teenagers’ parents.

The ministry for transportation is situated in Etelä-Esplanadi in the core of Helsinki. Minister Anne Berner is spending her last weeks as minister, because there’s a parliamentary election coming up in Finland. In April the parliamentary seats are redistributed and at least some of the ministers are saying goodbye to their black cars with chauffeurs. One of them is Berner who represents the center party. She is an ex-businesswoman who used to lead a successful family-owned interior design company called Vallila Interior before her political career. She is also a national hero, because she gathered tens of millions of euros of funding for a new children’s hospital that the politicians had failed to gather money for. The hospital started in the autumn 2018. Because of Berner’s business background she understands better than most Finnish politicians that in order to create a genuinely functioning new ecosystem, companies must be included too. Now we sit in her ministry office and talk about the next big thing from Finland. MaaS – Mobility as a Service – is Berner’s beloved child.

“MaaS influences two structural issues that are crucial for Finland: It brings back services to rural areas and it is the most effective and sustainable means to affect the climate change. It is hard to estimate the results on the national economy, but it is easy to understand that just effects on climate have huge potential for savings. In addition to that one must consider the employment impacts that digitalization creates. Plus, savings of time and energy. MaaS has an effect, because it influences people’s behavior, how they use transportation. That is the most sustainable solution. Bio fuels and electrification of transport are important, but they don’t have impact on how much and in what way people are moving”, says Berner.

Berner is a contradictory politician who doesn’t have to worry about being voted to the parliament again. When she started as Minister, she said that she’s going to serve just one term. That’s why she has done what she wants, which is something that most politicians can’t afford. Four years ago, when she started as minister for transportation her dream was to leave a fingerprint on the Finnish transportation system. Without concerns about being re-elected and a clear view of the future of transport, Berner could concentrate on what needs to be done.

“No other country has taken MaaS as far as Finland. We have accomplished a transportation reform in three years, which is a big achievement. MaaS has been taken into legislation and in addition to that, official structures have been changed. Two traffic agencies have been joined together and we have moved away from licence-oriented thinking to market-oriented thinking”, minister tells.

Berner has managed to make the transportation transformation happen in three years. She talks about “the social and healthcare reform of traffic” with which she refers to another reform that the Finnish government has tried to accomplish during the current reign. It has been this government’s huge political endeavor which is not finished yet even though it has been processed for years. The next government must finish the job.

“We succeeded with the transportation reform, because we proceeded with determination. The other reason was that the service providers in transportation are mostly private and not public like in healthcare and social sector. Transportation is a 30-billion-euro market in Finland”, she says.

Pekka Möttö

Pekka Möttö

Disrupting public transport is Möttö’s dream

One of Berner’s partners in the traffic transformation project has been Pekka Möttö who also has a dream: to disrupt bus and train traffic in Finland. In December 2013 Helsinki Times -newspaper wrote that “Onnibus plans to become Finland’s largest public transport operator”. Möttö had inherited a company of three buses from his father and in 2011 he founded a bus company of his own. It was called Onnibus (translates in English as “happy bus”). Pekka Möttö had started his crusade against what he calls “legal cartels” in Finland’s public transport sector in 2009. That’s when the legislation was revised to deregulate public road and railway transport services, and that’s when Möttö pumped the gas. Onnibus started operations in Finland in 2012 and helped to introduce dynamic pricing schemes that based on dates and times of travel offered passengers a range of prices from which to choose. Onnibus bus fares for long-distance journeys started at around two euros which was revolutionary in a country where the national state-owned railway company VR charges 30 times more for the same route. Onnibus became an instant hit and grew into a company with a 30 million euros turnover, 230 employees, 300 000 passengers per month and its buses serving customers in more than 120 cities and towns across Finland. Therefore, the railway monopoly VR and the competing bus companies had to lower the ticker prices. The next step in disrupting the public traffic is opening railways for competition that happens in 2025. Some Helsinki regional train routes have already been opened in the beginning of 2018. Onnibus was planning to venture into the tracks but Pekka Möttö is not planning on that anymore. He sold his share of the company to his partner Sir Brian Souter in 2016.

Missing piece between taxi and public transportation

Since then Pekka Möttö’s dreams have grown much bigger. Disrupting public bus and train traffic is not enough anymore for him. Möttö wants to change the way we use public transport. He plans to do it globally. The next phase of Möttö’s dream started to be concretized in the travel trade fair in the Helsinki convention center in February 2016. That’s when Möttö met with Sampo Hietanen, the founder of MaaS Global, the world’s first ever mobility as a service provider, professor Jorma Mäntynen and entrepreneur Johanna Taskinen. Mäntynen and Taskinen had been working with sustainable traffic and traffic modeling for a long time. Taskinen had created an application called Tuup which was a service integrator for traffic service providers, and with which routes could be organized. In the end of 2016 Pekka Möttö left his position as CEO of Onnibus and he started to work for Tuup which soon changed its name into Kyyti Group. Kyyti means “ride” or “lift” in English.

“We developed a new kind of system that is something between taxi and public transport. It is a flexible element in between the existing forms of transportation. The application itself has existed for a long time but it operated only as a route planner. The app itself is free of charge. You pay for using the services. We are a platform provider. Our clients which are cities, municipalities, authorities and transport service operators pay for our solution concurrently”, says Pekka Möttö, CEO of Kyyti Group.

Kyyti covers the whole travel chain: if I go with a citybike to the subway station and from there by train to Jyväskylä in the middle Finland and from the Jyväskylä train station to my mother’s in the rural Jyväskylä. On the way I can share the ride with others, if I want to. I can use public transport, taxis, rental cars or flights. Planning, reserving and paying for the trip is taken care by one application.

All this is possible, because the Finnish legislation for transportation was changed in July 2018 so that the traffic service providers are obliged to open their interfaces so that anybody can access the basic transport data. The quickest consequence was the opening of the taxi market. In practice it meant that private taxi companies and taxi entrepreneurs started to flood into the market. From the consumer’s point of view the situation was not only positive. There were side effects: shady pricing and unreliable drivers. Unlike in other parts of the world, Finnish people are used to reliable taxi drivers. Another consequence of the legislative change was that Uber arrived in Finland for the second time. It had arrived already in 2014 but retreated from the market because in order to deliver professional transport services, a taxi permission was needed. Uber didn’t have it. The third and bigger result of the legislation change was the emerging of new digital traffic solutions that are based on open transport data. Kyyti-application is one of them. Another Finnish company that utilizes open data and MaaS as a foundation of its technology, is MaaS Global. The company’s application that competes with Kyyti Group’s Kyyti is called “Whim”.

Möttö says several times during the interview that Kyyti Group is not challenging private motoring or existing public transport. Instead Kyyti wants to link the existing ways of transport to each other in a way that has not been possible before.

“We want to improve the usability of public transport and make public transport as simple to use as possible. It is not realistic to think that a sustainable transportation system would be exclusive for any player, like private cars. There’s not one without the other. The idea is to provide a mixture of private transport and private cars. Intelligent use of private vehicles is included”, Möttö claims.

There’s also a downside for increasing the usage of private cars, says Roger Teal, who has worked with urban transportation matters for 40 years. Teal worked as professor at the university of California and left academia 25 years ago to go to software development. The result was a tech platform for the metro trans agency in the Denver region used for numerous on-demand services it provides. Currently Teal is working with a new MaaS implementation that will encompass fixed route service, demand responsive transit and other mobility services such as car sharing, bike sharing and a volunteer driver program. The Valley Flex system is going to be implemented in an area near Stockton California. This MaaS-based solution is funded by the Californian Air Resources Board, the most influential air quality regulatory organization in the USA.

“95 percent of the cars are not in motion. I wonder if it is really better for the climate if more of those cars would be moving”, he asks.

However according to Teal, MaaS could be a more climate-friendly system than the current one.

“We could do the things we need to do in a more efficient way by providing urban travelers with an easy way to see what options are conveniently available to them and then enabling them to easily obtain and pay for the services they want. MaaS has the same potential to be a game changer for consumers as the online travel agencies like Orbitz and Expedia have been for inter-city travel.”

Roger Teal

Roger Teal

Who’s going to make money?

Despite his skepticism that MaaS will revolutionize urban travel, Roger Teal shares Anne Berner’s and Pekka Möttö’s dream. Roger Teal reminds us that MaaS is no magic bullet solution to urban transportation issues. But it has lots of potential.

“There’s a clear analogy to the airline industry. If you wanted to take an airline trip 20 years ago you had to go to a travel agent. Only travel agents had access to software and the data that provided the information you needed. Once the data door was opened via consumer-friendly web applications by companies such as Orbitz, markets opened to other players and what consumers could accomplish for their own travel increased dramatically, as well as putting downward pressure on prices The current system, which we are all now so used to that we don’t even think about the old travel-agent based systems, is 100 times easier to engage and provides far more value for your money. But I think the same kind of development with MaaS will take a while, some of this is about actually changing travel behavior, not just making it easier to engage services”, Teal says

But who’s going to make money in MaaS?

“Much money is being spent to develop MaaS platforms and capabilities, but the current reality is that nobody is making money in this “new mobility” space. Uber is still losing money. Electric scooters are losing money. Venture fund investors and large automobile companies like Daimler are financing the new mobility system, including MaaS platform providers One vision is that a commission-based system for MaaS can succeed financially, but you also need to provide a sophisticated planning approach in the application and it isn’t clear how that will get paid for. We’re just in the early stages of this, business models are evolving, and whether any will be successful is not clear. It is important to remember that Google is funded by its ad placement business, its search engine per se never made any money. I’m sure Larry Page and Sergei Brin didn’t plan that. The advertising model could be incorporated into MaaS too. In map-based services and ad based social media business models people’s time has been monetized. But linking advertising models to these services may also turn consumers off. But cities are not going to directly pay for these MaaS systems, they are mere beneficiaries”, Teal claims.

Teal’s Danish colleague agrees. Niels Tvilling Larsen is a transport and policy specialist that has worked for decades in creating innovative and fully integrated transport solutions for lower density areas. He has degrees in structure economic and politics and industrial IT from Aalborg University.

“A trip planner is a key issue in making MaaS relevant to the user. We have one national trip planner in Denmark that in 2018 got MaaS -element with car sharing and share ride”, tells Larsen.

Niels Tvilling Larsen

Niels Tvilling Larsen

Lifeline for lower density areas

Roger Teal takes note that in the US transportation companies like Uber have created new kinds of mobility in big cities. For example, teenagers who don’t have cars available are suddenly able to move about more easily. The same kind of lifeline can now be created in rural and non-metropolitan areas where MaaS technology platforms are able to provide a service for carless people that can better link available transportation resources to consumer needs.

“MaaS is an interesting possibility. The mechanism can create services that don’t exist today. It’s an opportunity for rural and semi-rural areas”, says Roger Teal.

Niels Tvilling Larsen started 25 years ago in Denmark by creating a replacement for buses in rural areas. Flex Denmark is a public company owned by public transport organizations. It was built on top of existing system, Swedish software meant for community service for disabled people. The result was a co-riding service for disabled people, but it also became a general co-ride in rural areas for half a price of taxi.

“It was kind of an optimized taxi driving, what Uber is trying to do these days. There were 400 companies integrated in the system and a huge amount of service providers. It really was a MaaS-service. It was not a threat to taxis, because it was slower and a co-ride, but it was a replacement for buses”, Larsen says.

Denmark is a small country. In Danish perspective Flex Denmark is a huge system. In 2016 the system passed one billion rides which equals 150 million euros. Larsen has an explanation why Finland is so strong in MaaS.

“Finland has a unique setup. There’s a lot of demand for demand-driven traffic and there’s open source access to data. Government enforcement has been critical. Finland has very high costs in transport and that can motivate politicians to save money”, he says.

In Finland the state and private companies have piloted in rural MaaS. There’s a service called Village ride (Kyläkyyti) in small towns of Porvoo and Loviisa. There’s willingness to scale up the same system in all of Finland. The Village ride is an on-demand ride service that is based on the taxis that are already driving in the area. The costs for the system are marginal, because the taxis are already there – driving half empty most of the time. And the payer for the half-empty taxis is the state. Most of the taxis in a sparsely-inhabited Finland are paid by social security or municipalities for disabled, elderly or school children.

”It is a magic trick. We are creating a public transport service outside Helsinki area and only with a marginal cost”, tells Pekka Möttö.

According to Larsen, the Danish model was good 20 years ago, but it does not work anymore.

“There’s a lot of work to do in creating standards. Finland is most advanced in mixing public and private services” explains Larsen.

Better life quality for parents

Larsen reminds us that many young people don’t want a car anymore. Many of them do not even have a driver’s license. Still they have children. And children have hobbies. How to solve this difficult equation? In Iceland the solution has been a MaaS-based ride system, which takes children to hobbies straight from school. There’s no hobby-ride hassle for parents in the evening.

“Maas could be a really big step forward. Parents are paying to get more leisure time. If you’re living in a small city or in countryside, you must pay for these services anyway”, Larsen says.

So how about the visions? Where is MaaS in five or ten years?

“The most important thing is to prevent the silos. If everybody fights for himself, it only makes the problems worse. In Finland we have chosen a way in which the legislation coerces all the players to cooperate. The prerequisite for success is that everybody trusts each other. In Finland there’s a mutual willingness to succeed in this. It is also critical that no one player dominates the market”, says Pekka Möttö from Kyyti Group.

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