I welcome delegates from the Integrated Ticketing Project Board. I will not delay them for too long. I welcome Mr. David O'Callaghan, chairman, and Mr. Tim Gaston, director. I sincerely apologise to them for fouling up their evening. We agreed a time schedule at the beginning of the meeting, meaning we had to ask them to come in at this point.
Integrated Ticketing: Discussion with Integrated Ticketing Project Board.
They will end up in the Guinness Book of Records.
That is not my fault. We have been doing our best. We will meet briefly with the Integrated Ticketing Project Board because we know it has a good story to tell at long last.
I draw the attention of witnesses to the fact that members of the committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. Members of the committee are reminded of the parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
Mr. Tim Gaston
I thank the joint committee for the opportunity to speak about the integrated ticketing project. I will briefly set out the background and context of the project. It is important that members understand what we are planning for Dublin, given that various schemes around the world have different meanings. The intention is to deliver an integrated smart card ticketing system for all public transport customers. I will explain smart card ticketing, describe schemes used elsewhere in the world from which we tried to learn lessons, set out the context in Dublin and how the system works and update the committee on progress made in our programme.
The vision for smart card ticketing is a common payment mechanism that is simple, intuitive and works in a similar manner, regardless of location on the network. In many other cities, including Hong Kong, Singapore and London, the payment mechanism has almost become second nature. Passengers simply wave their cards at a reader and pass through the gate or board the bus. The anxiety of deciding on the best ticket to use is removed.
The market in Dublin is competitive. Therefore, the scheme must support competition between operators. Speed is essential, especially in the context of Transport 21 and the millions of additional passenger journeys which will result from it, and the means of payment have to be fast and reliable. Issues will arise in regard to fraud because I am not aware of any public transport system which does not have an element of revenue leakage or fraud. The system needs to be better than what is in place. It is, therefore, a matter of giving confidence to customers, staff and transport operators. Clearly, speed and reliability are important to the success of schemes elsewhere. Integration is encouraged by the nature of the ticket in a passenger's pocket. Although it will not bring a huge increase in passengers on the network, they will be encouraged to take more integrated journeys if they are not concerned about the tickets they use. It is important to be able to purchase a card and top it up. The most effective approach is by providing reusable cards. A range of options should be available to customers to suit differing needs and financial concerns.
Branding has been important elsewhere. Visa is an example of branding in that there is nothing worse than sitting in a restaurant and suddenly realising it does not accept a Visa card. While the brand may not be huge, it is important that people have confidence regarding where they can use it.
It is increasingly apparent around the world that people are attracted to public transport because of convenience. If convenience ensues from not using cash to buy tickets on successive parts of a journey, public transport becomes even more attractive. Some authorities are using price differentials between smart cards and other tickets to encourage intermodal travel.
I have circulated members with a slide of the underground system in Hong Kong. The little yellow reader sits on top of the gate and customers walk past it without breaking stride at the rate of one per second at peak hours. The lady shown in the slide does not take her smart card out of her handbag. We hope to apply the same technology here because some customers prefer it for security reasons. It is a secure way to travel because it is not necessary to take out one's wallet, unless a ticket inspector asks to see the ticket. It is about ease of transfer between the modes of travel and through the stations. It is important to be able to get off a train, on to the street, cross the street, do one's business, board a bus and so on in a convenient manner.
We are attracted to a number of schemes, including the use of corner shops and small stalls. In the underground in Hong Kong the little blue reader scheme is called Octopus, the orange symbol. One can go to the corner shop there, put one's card in the reader, give $10 to the operator and walk away with one's card. As an attractive add-on to the scheme in Hong Kong, one can return to that shop later and use that same value that one has put on one's smart card to buy some chewing gum, a bottle of water, a magazine or a cup of coffee. It is a low value retail. It reminds us that the transport area is now also using the same stored value purse as a means of trade.
In London the scheme is called Oyster. It is very effectively branded. When one travels on the underground or on the buses in London one can see very clearly where Oyster can be used. The little yellow reader is where one holds one's card while moving through the network.
I wish to make three main points in regard to Dublin. There are two schemes in operation. They are limited and have a single operator. Morton's Circle Line, which was the first to launch smart cards, has about 3,000 cardholders which, in the context of Mortons, is the majority of its customers. Luas launched its scheme in 2005 and has almost 40,000 cards in circulation. More than 10% of its customers are using smart cards. Those schemes are limited. They are only available in Mortons and Luas. Clearly, what is needed is a much more effective scheme that integrates those services with all the other service providers in Dublin.
The second major impact in Dublin is Transport 21 which will, in RPA's model over the next ten years, show a doubling of the number of people using public transport. By 2015 we will have in the order of 500 million passenger journeys per year. That underpins the case for an easy, effective and efficient manner of paying for that travel.
The third factor that changed my life was the appointment of the integrated ticketing project board in 2006, which brought together the chief executives of all the main stakeholder bodies, chaired by my colleague, Mr. David O'Callaghan, who is present. That brought the issues to the fore and gave us a forum where we could move forward rapidly, which we have managed to do.
As Transport 21 increases intermodal travel, customers should not have to worry about having cash in their pocket as they travel, with speed of boarding and ease of payment. What is an integrated ticketing system? At a basic level, it is a back office system. It is like a huge bank of computers that process millions of small value transactions in a way that gives confidence to operators and customers that their money is being protected and the operator gets the appropriate value to which he or she is entitled because people have used its services
It is rather like a bank. We all use banks and put small value transactions through them with the confidence that the correct amount is deducted from the bank account, the correct amount is forwarded to the shops and so on. Our system is no different. The green box is the back office system. It has a connection through to the headquarters of each of the individual public transport operators who, in turn, have their own infrastructure, their own smart card readers. Shops are added to the network where customers can top up their card. That could just as easily be on the Internet, at stations and so on. Having got a card with good value on it, the customer uses a tram or travels on a bus. We collect those transactions. Overnight we do the wash-up, the clearing house fund settlement, and the next morning the operator receives the money to which he is entitled, net of commission. In a nutshell that is what an integrated ticketing system is about. The programme we have in place——
Will the back office system and the integrated ticketing project board always be in place or will the DTA have a role? Who will do this work in the longer term? What are the staffing levels required, the costs and so on?
Mr. Tim Gaston
From its inception the project was configured to be a stand-alone unit. Therefore, even within the RPA, my project team is a stand-alone unit which could be transferred to a regulator, the DTA.
The overall architecture has within it what we call a scheme authority, which could be any body. At present the scheme authority is the RPA, as the statutory body, with the project board providing for the steering of the activity. The Deputy was correct to point out that there would always need to be an organisation with overall responsibility for that green box which would be independent of its elements. In a sense a bank provides the independent clearing house in which shops, customers and others participate.
I take it the back office operation is up and running. I note from the interesting timeframe set out in the presentation for quarters three and four in 2007 that, effectively, the programme is ready to operate. Is that the case?
Mr. Tim Gaston
No. The breakdown of the programme is shown on the next slide. There are five sections. The back office bar covers the launch of the procurement process to obtain a back office with a design we have completed through to its delivery. We are part of the way down the line. We are engaged in discussions with bidders on the shortlist to provide that back office with an objective of having it in place by the middle of 2009.
The next activity, which is mostly happening in parallel and has commenced, is to provide the ticketing equipment. Some operators are further ahead than others. Luas has smartcard reading equipment, as does Mortons. It needs to be modified to read the scheme card, but the core equipment is in place. Dublin Bus has finished equipping its buses with ticketing equipment. It will roll out an interim scheme shortly, which we will include in the integrated scheme when we have everything else in place. Ticketing equipment is an important element of the scheme. Clearly, without equipment that can read cards, we do not have a scheme. Therefore, it is as important to have the equipment in place as it to have a back office.
The testing period will start as soon as we have elements of the back office in place against which we can start testing. We will test the scheme in an iterative fashion; the intention is to test and test. It is a testing process involving numbers. The scheme, when fully operational, may well be processing hundreds of millions of euros each year. Therefore, it is essential it does this with a very high of level of integrity. We are using people who have experience of working in banks and the telecoms industry to carry out the integration testing to ensure that when a person uses a card on a bus in a remote part of Dublin, the transaction will be recorded in the back office, the bus company will be paid for that service and the appropriate fare will be deducted from the person's card. That is the testing we will be carrying out to destruction, so to speak.
It is our intention to go to the market later this year for a business to operate the scheme. The operator will have a contract with the scheme authority and it will be its role to operate the back office and support the transport companies in the running of the scheme. It will also have a role in managing the interface with shops to ensure corner shops and Internet top-up opportunities will be managed by an operating business. Once these elements are in place, we project roll-out of the scheme to customers to start towards the end of 2009. September 2009 is the target date we have set ourselves. That is the high level view of the programme.
I will summarise the current status of the project. We are seeking a supplier for the back office. We have short-listed businesses with which we are engaged in detailed discussions. It is our intention to award the contract in the coming weeks. The next significant event will be Dublin Bus rolling out smartcards on buses this summer to replace some of its existing paper tickets. This is a 27-month programme from when we obtained approval in June 2007, which means we are now nine months into the programme. We are making progress. It is a complex project which involves relatively high values of revenue overall. Therefore, we need to make sure we get it right.
One of the key aspects we are driving towards is the use of an electronic purse which we view as being probably the strongest element of the scheme in that once people start to use stored value or an electronic purse, as we call it, we can start to replace the plethora of ticket types currently available. The operators are working through a difficult process to try to reduce the ticket options currently available to customers and replace them with a purse-based project to ensure they can travel with confidence. An example might be a one-day ticket. Currently, a number of different one-day tickets are available for travelling on the Luas or by bus. One can also buy a bus-Luas ticket which is slightly more expensive. That can be replaced with a purse with a cap on it. The system is intelligent. As one uses it, the value is totted up on one's card. When one hits the value of a one-day purse, the card stops taking money from one's purse and one no longer needs to buy the one-day ticket at the start of the day. If one does enough travel during the day, one will hit the cap and one can continue to travel but no more value will be taken from one's card.
The target for full integration is the end of 2010. This means all the State bodies — Dublin Bus, Bus Éireann, Irish Rail and Luas — integrated into the scheme, along with as many private operators as we can integrate with. We will then be in a position to build a range of other things into the scheme, such as replacement of other product types and so forth. The budget is €49.6 million. We were also able to put a nice arrangement in place. The Department of Social and Family Affairs is in the process of securing a provider for the public services card, which will be a smartcard. I do not yet know who the provider is or what the smartcard is but we have an agreement with the Department that its smartcard will carry our application. This means that when the Department issues public services smartcards to those who are entitled to free travel under the free travel scheme, the card will be capable of being read by the equipment on the transport network. This is clearly an advantage to the people who are entitled to free travel. They can tag on and tag off through railway stations and so forth in the same way as fare paying passengers. It will not be necessary to carry a second card. It is a good collaboration.
Is the cost charged back to the Department?
Mr. Tim Gaston
The opportunity is there to gather better and more accurate information against which to charge the cost of that travel under whatever arrangements are in place between the operators and the Department. The scheme will be the conduit for the information. It is for the operators to agree with the Department of Social and Family Affairs what the charges are for providing free travel.
The Committee of Public Accounts has had discussions about the costs over the years and the debacle that appears to have existed in that area. Has a name been thought of yet?
Mr. Tim Gaston
No. Hong Kong has its Octopus card and London has its Oyster card but we are resisting the Dublin Bay prawn. That is probably not the answer for Dublin. We have not yet come up with a name but it is important for branding to have something that people recognise.
It is a wonderful project and I wish Mr. Gaston well with it. It is good to see that it is being run professionally and that all the strands at last appear to be coming together. Mr. Gaston said the back office operator will be answerable to him. What will be the cost of that? Will that cost be added to fares? Will the punter with the prawn card or whatever it will be called be supporting the back office?
Mr. Tim Gaston
The Department of Finance and the Department of Transport have been clear that there will not be additional funding for the operation of the scheme. The business case the RPA put together in the early part of last year showed that over the life of the scheme there was a net present value benefit to public transport overall. Clearly, that will be most effective when there is a large number of users and the scheme is well established.
There is also the point that the elimination of money on buses would have a profound impact.
Mr. Tim Gaston
It should have an impact. That is one of the aspects one would expect to see in the benefits from an operator's point of view. The particular benefit from my point of view will be in the saving and convenience, and in customers having confidence that they are paying the fare they should be paying. That is not necessarily a benefit the public transport operator captures. They will be looking for time savings on buses at bus stops. Buses should stop less often as they travel down a quality corridor because——
What will be the annual cost of the operation from 2011?
Mr. Tim Gaston
I do not have the figures because a further procurement process is required. We plan to launch the procurement process as soon we have a business in to build the back office. Our next procurement task is to get a business in to operate it and we would very much like to configure that procurement to be attractive to the market in order that companies could see the synergies they could bring from their existing businesses.
How is fraud prevented, for example, if the technology malfunctions or a person's purse is used before he or she travels one third of the way?
Mr. Tim Gaston
The main advantage of a smartcard system is that the chip carries the history of the holder's activity. On Luas, for example, when one puts the card in the vending machine, one has the option of seeing what happened over the previous ten or 15 transactions. When the integrated scheme is launched, that facility will also be available over the Internet. Customers will be able to buy a password because there needs to be security for their personal information. Once they have entered the appropriate password and information, they will be able to view the history of their journeys and query with the authority or the transport operator why they were charged a particular fare. If a customer is concerned he or she is being ripped off or the fare was not correct, he or she will have the opportunity to review the transaction and query it.
The fraud issue, in some respects, comes about on the same basis. For the bus to accept the customer's card or the gate to open, the card must be valid and acceptable. If we become aware that a customer has reported his or her card lost or stolen or a fraudulent credit card has been used to top up a card — this is one of the scams in other cities where somebody steals a credit card and immediately goes to a vending machine to top up smartcards — we can identify the smartcard, hot list it and send a signal to all the other card reading equipment. The next time the card is used, the machine will recognise it is on a hot list and kill it. It can then no longer be used until it is returned to the authority where we undo the switch in the back office. Once that facility is in place, it will allow us to manage lost and stolen cards and deal with stolen credit cards. Public transport operators have suffered from credit card fraud in the past. This will also give us the opportunity to check for unusual travel and usage patterns. We may not necessarily block the card but might encourage the customer to speak to the card operating business to explore what is happening. The free travel scheme is another source of fraud. A chip card cannot be reproduced. It is easy to reproduce a bit of plastic with a photograph on it.
The integrated ticketing scheme will provide transport operators with an additional set of tools with which to tackle fraud. It will not eliminate it completely but will give them tools they do not have currently through a paper or magnetic-based system
I thank the delegation for attending. It is good that we are finally getting closer to D-day. The contingency provision in the budget has increased from €2.2 million to €3.9 million, a 17% increase. Is the ITSPB covering its butt or could issues arise that would need to be built into the budget?
The card presents great opportunities for marketing and sponsorship to generate revenue to offset the €49 million cost of producing the card. Has this been considered?
Mr. Tim Gaston
The increase in contingency was a function of the model we used. We take the remaining expenditure and apply in this case the 10%. The increase in the remaining spend was €39 million, therefore the contingency we needed was €3.9 million.
Are there specific issues which Mr. Gaston thinks may crop up?
Mr. Tim Gaston
No, it is a technology project. We are all aware that the history of technology projects is not good as they have a record of——
I would have thought the delegation would have learned much from past problems so that contingencies would be reduced.
Mr. Tim Gaston
The contingencies are there. We are in the marketplace for a provider for the back office. We will subsequently go out to tender for the operating business. The operators are working with their own equipment providers to modify that equipment. All those are market forces and for that reason and given that we are dealing with technology projects, project managers would always build in a contingency. A figure of 10% is quite modest as some projects have a higher level of contingency.
The Deputy is correct about the marketing of the card. There are two or three areas of what the industry calls "real estate" that are attractive, such as the card itself. One or two schemes have sold the front or the surface of the card to a product. The difficulty is that the cards are widely used by large and different sectors of society. Something that might appeal to teenagers will not really appeal to my generation or to other generations and there would be a danger of segmenting the market. It is a possibility which we hope the operating business will be prepared to take on board. It is an opportunity we share with them. If they came up with a good idea to use what we call the "real estate", we would build into the contract a provision that we would also benefit from it.
One of the other areas of real estate is the chip. The chip we are planning to use has a capacity for more applications than simply the transport application. For example, a sufficiently large office building could use the same smartcard for access control. We have also had discussions with taxi businesses, with the road toll businesses and with retailers about using the electronic purse for other low value transactions. Vending machines could be configured to read the card. The Oyster scheme in London is currently carrying out a trial that brings together fast food, banks, mobile phone operators and the transport card on to one piece of equipment, which is the mobile phone in this instance. The card is really just a carrier, a means of carrying an electronic chip, and the same chip could reside in a phone, on a watch or on a fob. Those are the sorts of opportunities that we hope an operating business might see.
The one note of caution I need to strike is that the scheme in Dublin will never be of the scale of the London scheme. London is now publicising the fact that it has sold over 7 million smartcards and is still going, and Hong Kong is talking about over 10 million. Dublin will never——
Speaking in percentages, how many total ticket journeys are being used in Hong Kong or London?
Mr. Tim Gaston
In Hong Kong it is well over 95%, almost exclusively by smartcard.
No cash is used.
Mr. Tim Gaston
Very little. The cash is used away from the journey, at the point where one tops up one's card. I am not sure what it is but in Hong Kong I know they have a facility called Auto Top-Up which is something we would like to build in. It will not be attractive to all customers but there would be an opportunity to have a direct debit mandate with the necessary authority so that when a card hits a certain minimum value, such as €5, €10 or whatever, this will trigger a direct debit, €30 is automatically added to the card and one would never need to go near a machine for a top-up. This will not appeal to everybody.
It will be like the road tolls.
Mr. Tim Gaston
It will be like the tolls but the difference is that it will only be one option and not the only mechanism available as there will be a range of options to suit all needs.
It sounds like a good business opportunity for the operators down the line.
Mr. Tim Gaston
There will be a business opportunity. It will be a modest scheme as it will never reach 7 million cards unless something dramatic happens in Dublin, but we think there will be business opportunities.
I thank the delegation. This is a good news story. I have two questions, one of which may be a stupid question. I notice with the Oyster card in London that it flashes when used. What happens if it is a bogus card? Who takes what? What happens if there is no money in it?
Mr. Tim Gaston
The system we propose for Dublin will carry one's annual or monthly ticket which one currently buys in paper form and the purse electronically in a chip. Customers will be able to use that one piece of plastic whether they are annual ticket holders, regular customers or visit Dublin infrequently, perhaps once or twice a week or even less. If the card fails——
Will it be a monthly card?
Mr. Tim Gaston
Customers will be able to load a monthly ticket onto the card. They will be able to go to an Irish Rail counter to buy their monthly ticket and instead of receiving a ticket they will hand over their smartcard on which the ticket will be stored electronically. They will use the same card as they go through the gate. If it fails for whatever reason——
What about going on a bus?
Mr. Tim Gaston
The same card may be used on the bus because it will be able to store the monthly ticket as well as the electronic purse. As I travel on the commuter railway line I have a monthly ticket which is valid only on Irish Rail. When I step onto Luas or a bus, I will use the purse for less frequent journeys. They both sit on the same piece of plastic; therefore, it becomes a multi-purpose card.
What if the purse has no money in it?
Mr. Tim Gaston
If either fails through technology failure——
I am referring to fraud.
Mr. Tim Gaston
This is still being finalised with Mr. O'Callaghan and the board, but the plan we hope to put in place is that provided one has some value on one's card, even only 10 cent, one may make a journey. The RPA has put this in place with the Luas SmartCard. Provided one's card has some value on it, even only 10 cent, one can make a journey. There must be some protection for the scheme because it could be a huge drain on revenue. The protection will be that customers will pay a modest deposit for their smartcard in advance at the point of purchase. Therefore, when one first buys one's card one will pay a deposit. The scheme will allow one to go into that deposit for the "last ride home", as we call it, in order that one can make a journey. The next time one uses one's purse one will have to first top up the card to clear the debt and make the balance positive.
What will happen if people use a card that has no money on it? The only way is physically to——
Mr. Tim Gaston
The gate will not open if the card——
I am talking about when one gets on a bus. In London passengers just show their cards to the readers and keep going. Therefore, unless——
Mr. Tim Gaston
The driver receives a signal to indicate the card is valid. Although London buses have two or three doors which we will not have in Dublin, the driver receives a signal that there is a faulty card and has the option of dealing with that customer by asking him or her to provide some other means of payment.
I watched it for a good while in London and perhaps they were all perfect cards but nobody asked any questions.
Mr. Tim Gaston
It is the transport operators' experience that customers quickly get used to the system which is configured in such a way that when the card's value is low, the readers give a different tone. The Luas SmartCard does this.
It is all a good story. Why did it take so long to have some joined-up thinking among all the transport agencies?
Why is the earth round?
Mr. David O’Callaghan
I knew somebody would ask this question.
If Mr. O'Callaghan can give us a good answer, it will help us to square so many circles we are coming up against on joined-up thinking in other areas with the same agencies.
Mr. David O’Callaghan
I received a call in July 2006 to ask if I would chair a board on integrated ticketing. I did not know what an integrated ticket was. I was a regular bus user. I had seen the system in London. I have taken over the board which comprises the CEOs of Iarnród Éireann, Bus Éireann, Dublin Bus, the Department of Transport and representatives of the private operators. They have worked well together. It is a complex system to put together.
There are many business and technical issues to be discussed but they are all being tackling in a very positive way and the Secretary General of the Department of Transport reported as such at the last meeting of the Committee of Public Accounts. I took the view from July 2006 that we were where we were and that we should move forward. I have to thank all the CEOs of the various organisations for their co-operation. We are where we are because of their help and co-operation. I wish this had been first mooted in 2002 — some wish it had been mooted even earlier — but we are where we are. I wish I had more time because it is a complex system. We need all the time we can get to test it before launching it to the public, beginning in September 2009 with full integration by the end of 2010.
Has any book or academic study been written on what happened for many years?
Mr. David O’Callaghan
No.
People are used to annual tickets for Luas, the DART and buses and do not think it should have been a huge jump to include the private operators and adopt electronic cards. The public asks how there was such a gap. Perhaps it was like the ramp for Luas at Connolly Station which seemed to be a simple engineering project but became an incredible saga. It may have a similar echo. Has it?
Mr. David O’Callaghan
My personal opinion is that since governance of the project was pitched at CEO level it concentrated minds. Before that the CEOs of the transport operators were not involved. Integrated ticketing is the only game in town.
I know that. The only reason I asked the question——
Mr. David O’Callaghan
I do not know the answer. I was not there at the time.
I do not wish to be negative, but the biggest challenge this committee has met since we began this series of hearings about trying to move forward bus transport, in particular, knowing rail transport is moving forward, has been the serious lack of joined-up thinking among the agencies involved and the failure during the years to try to work together. We know the issue is complex. If that difficulty could be overcome, we could move the business forward much more quickly and smoothly.
It is my first time to be a member of this committee. There has been no slippage in the timeframe. Mr. O'Callaghan is keeping to it more or less exactly as planned.
Mr. David O’Callaghan
More or less, yes.
In two years he will have subjected the system to trials and people will be getting ready to get their cards in a few months time. Is that correct?
Mr. David O’Callaghan
That is it.
Mr. O'Callaghan used the words "more or less". He was positive in his earlier comments that when he assumed the chair he decided to move forward. The committee and anybody involved in any aspect of transport in the city would say we want it tomorrow, or yesterday. We do not want to hear Mr. O'Callaghan use the words "more or less". We want him to say this will be delivered. It suggests the Chairman might invite the delegates before the committee in another nine months to get an update and ensure we are on schedule. Mr. O'Callaghan correctly said having CEOs in one room concentrated minds.
Mr. David O’Callaghan
I think so.
If we could get other CEOs involved in other aspects, perhaps we could move forward on those problems.
Mr. David O’Callaghan
I am very confident we will roll out integrated ticketing in Dublin in September 2009.
Good. On that positive note, we will adjourn. I thank the delegates for their efforts and again offer our sincere apologies for fouling up their evening.
Mr. David O’Callaghan
Not at all. As residents of Swords and Portrane, we were very interested in the discussion on metro north.
The joint committee adjourned at 6.05 p.m. until 11.30 a.m. on Thursday, 3 April 2008.