Achieving the necessary level of trust and cooperation across different organizations, however, is as hard today as it was 20 years ago. When E-ZPass first began, there were several engineers at the Triborough Bridge and Tunnel Authority testing an emerging technology called AVI, Automatic Vehicle Identification. They were in communication with staff at the Port Authority of NY and NJ, who were doing similar work. Those engineers could not imagine the two agencies cooperating on a single system. No one had ever done that before. They had the idea that two different systems would be installed, each with its own unique tag, but that tag communication with the lane would support both with no interference. At the time, I thought, “Wouldn’t it be a good idea if they cooperated with one another. How about just one tag for the entire region?”
I got Tom Downs, my boss, to assign the project internally to me and then I invited the other regional agencies to a meeting at the IBTTA International Symposium on AVI that was being held in New York City. Seven agencies showed up and agreed with me that we ought to work together for “one region, one tag.” E-ZPass was born.
Getting seven independent public agencies to work in concert was no easy task. I often thought that the award that was most appropriate for the project was the Nobel Peace Prize. Every issue was debated and a consensus was miraculously agreed upon. Even now 20 years later I marvel at how it came together.
Some of the issues are not only of historic interest, but offer lessons for emerging payment systems. Some that we tackled were: procurement method, tag features, technology selection, financial transaction processing and settlement, tag placement on windshield, and even the name of the tag.
How do seven agencies buy the same thing? They can’t have a single, seven-agency procurement, and they may not all have the legal ability to buy against each other’s contract. We needed to invent a procurement approach, so we created the Irrevocable Offer. One agency conducted the procurement under its rules, and all seven agencies participated in the selection process. The lead agency issued a contract, but as a part of that contract the technology provider agreed to make an irrevocable offer to all current and future E-ZPass agencies.
The offer contained some interesting clauses. E-ZPass would determine who was a member and able to use the contract. The provider had to offer E-ZPass its best price and if they subsequently offered lower prices to a new customer anywhere they had to make those prices available to E-ZPass. They needed to provide a guaranteed second source to avoid monopoly pricing. This clause was negotiated away after I left and I still think it was a bad idea to do so.
The big debate at the time was between read-only versus read-write technology. Read-only tags would just identify a vehicle with calculation of toll rates to occur at the back end. Read-write tags would be able to capture entry and exit data on toll roads and allow the patron to see their toll when leaving a tolled highway, but they were more expensive.
I never believed that read-write was necessary but since I saw my role as managing the process and not necessarily getting my own way, I deferred to read-write. The trend over these past years has been for the processing to move from the lanes to the back office and so today all tags, even though they are read-write, function as read-only devices.
Financial Transaction Processing
This is one that we did not get right. We were unable for political reasons to contract with a single back office provider. Consequently agencies needed to settle up bilaterally with each other’s agency. To facilitate this an interface specification was developed so that everybody recorded transactions in the same way, but since there was no automated clearing house function, agencies were only able to settle every 30 days. Today’s multi-agency systems clear and settle every night.
Fortunately for transportation industries moving toward account-based interoperable systems today, the payment technology and industry has matured significantly, creating very attractive capabilities to get the financial transaction processing component right in new implementations.
This was the only easy one. We had a meeting with Department of Motor Vehicle representatives from three states to determine where on the windshield to place the tag. One state used the upper left for registration stickers, another the lower right; however, in a mere 20 minutes they all agreed that the center line from the roof to the bumper was clear. Done and done.
The E-ZPass Name