By Pekka Möttö, Kyyti Group CEO
2020 will be a year when MaaS starts to materialize. This can clearly be seen from the increasing amount of actual deals and opportunities in the sales pipeline. For many companies in the MaaS business, deployment resourcing has become the sore point after successful hype creation. This is how I see the market developing in January 2020.
MaaS is not a magic wand. The time has passed, when there was a misconception that MaaS in a miraculous way will solve the mobility problems once and for all.
Two years ago I was in a meeting at the local Transport Ministry. When the leading transport modeling agencies had given their view on the future development, I was asked to tell what actually will happen when MaaS is deployed. I could sense the disappointment when I answered, that there is no other way than a crystal ball to answer that question. About the same time, a similar disappointment was obvious, when I told a full room of rural area transport experts that there will not be a solution that solves the rural issues without public subsidies. These examples do not mean that MaaS is a hoax. There have been some reality checks and MaaS is now actually starting to materialize on several fronts.
Rural, Corporate, Urban and Inter-Regional. These are the solutions I see actually worked on today, so I call them the four driving wheels of MaaS.
Rural is a low hanging fruit, because there is a clear problem and obvious solution to that problem. The problem is poor or non existing public transport service resulting from low density of people living in the rural areas. Solution is demand responsive service with preferably a sharing element attached to it. Someone will need to subsidize the rural services, but there are many possible ways of subsidising.
One way, like we do it in Finland, is utilising the vehicles already operating in the rural areas, paid by the government or communities typically to transport only one person at a time based on the legal requirement to provide the service for a special group. Using these vehicles to serve also self paying customers is a no brainer. Everybody wins. Modern technology makes this model possible in real time, but the real-life fact is that such service can be cost effective and still provide a good enough service level, when flexibility of the service offering is related to density of the people living in the service area. In understandable words, less people in the area more flexibility in departure times. People in the rural areas do not expect a service level where someone would pick them up in 15 minutes. Such service already exists in many places, it is an old invention called taxi.
Corporations are active in MaaS. Large employers are seeking solutions for their employees to enable more sustainable home to work and workday mobility. Especially in Europe employers are actually interested in sustainability and willing to pay for the solutions. Another benefit for the employers is smoother administration which results from using digital tools enabling the automated processes in mobility related administration.
Employers are fighting for the best employees and providing a mobility service for one’s employees is a way to build the employer brand. There are also material cost saving opportunities for the employers when the corporate fleets are managed more effectively and work related mobility is organised with shared rides when possible.
Thinking of the driving wheels of MaaS, Rural and Corporate MaaS are rolling on steady force, because there are clear challenges to be solved. Urban MaaS is way more complex.
There are challenges in urban mobility, that’s clear. There are also mixed interests of several players trying to get into the game. Big players want their share of the urban mobility and are willing and able to invest heavily to get what they want. We have seen the rise of e-hailing and micromobility and the interest of these players towards integrating public transit into their service ecosystems. Investors are backing these new players heavily because they have been able to create substantial traction in the market. It is obvious that a battle of owning the customer is going on. The customer in this case is the commuter, who presently is dealing directly with the local public transit provider.
I am not aware of any major player openly admitting that they are fighting to own the end user, but obviously that is exactly the case. We have learned to assume that in every market there will be a dominant player who rules the world. Will this happen in transport? In my opinion that is highly unlikely.
What I see is cities waking up to the challenge. Cities, transport authorities and public transport operators are investing in technology for a good reason: They want to maintain their dominant position in the market and yes, the fundamental reason is to own their customers also in the future. Public entities are the likely winners in this battle for two very good reasons. Firstly, they have the regulatory power and secondly, they are paying for the public transport system. That is a position from which a series of bad mistakes should be done to end up losing the access to the end users. Time will show, but odds are against the private money in this game.
What about the business models in urban MaaS? Pay as you go and bundled subscription models are worked on, as well as data monetisation schemes. What I find interesting are the models based on commercial cooperation with retailers and other commercial players to create new value by utilising the daily access to a large number of users. These cooperation models can be seen as a new business opportunity for the public transport operators or as a new innovative way of subsidising the public transport. Combining this with the Asian way of transport operators actually being real estate developers opens up a whole new view on the business logic of mobility.
Urban mobility has huge numbers of users and thus a major business opportunity for MaaS, no doubt about that. Players in the MaaS business are dividing into two categories. The boldest and best financed are battling in the end user market while an increasing amount of technology driven companies are taking a position as a platform provider. Government funded MaaS pilots are an interesting hybrid case, since they allow access to end users for companies that probably would not have the necessary resources without these pilots.
Platform providers will not be zillionaires compared to the unlikely winners of the global MaaS end user market, but there is a major business opportunity for them when public transport is upgrading itself into the new digital era. This era is what I refer to as MaaS.
If the Rural and Corporate wheels of MaaS are rolling on a steady force, the Urban wheel seems to be more or less out of control and spinning at wild speed. Placing the urban wheel on the same axle with the Inter-Regional wheel puts the differential gear into high stress.
There are several projects ongoing to enable Inter-Regional roaming of MaaS. I have first hand experience on the NOMAD project in the Nordics. In the Nordics we believe that we have the necessary inbuilt capability to cooperate in the spirit of NMT – the world’s first mobile telephone standard created in the Nordics. Sweden, Finland, Norway and Denmark agreed to build a Nordic Mobile Telephony standard in 1969. The official decision to adopt NMT as a standard was made in 1975. NMT was deployed in 1981. Finally, the mobile phones came to market on a large scale one decade later. I am hopeful that MaaS roaming will be available on a tighter schedule. Time will tell.
If you have any further questions regarding this topic please contact Kyyti Group MaaS experts.