Mon, Mar 13, 2006 page12

• Far Eastern Co in danger of killing the golden goose

  MONEY-SPINNER If implemented correctly, the electronic toll collection system has the potential to generate NT$1 billion per annum

  • By Jackie Lin / STAFF REPORTER
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  By mobilizing employees of its parent company, Far Eastern Electronic Toll Collection Co (遠通電收) managed last Thursday to secure 104,466 users of on-board units (OBUs) for the nation's freeway electronic toll collection (ETC) system, surpassing just in time the government-mandated 100,000-user threshold.

  While arguments remain as to which technology -- microwave or infrared -- should have been adopted for the ETC system, experts said that most of the recent negative reportage in relation to the system is a result of poor implementation on the part of Far Eastern Electronic Toll Collection, the winning bidder under the build-operate-transfer (BOT) system.

  "Installing the ETC system was definitely the correct decision and is in line with international trends," said Chen Wu-cheng (陳武正), dean of the school of management at Chung Hua University.

  "But the manner in which Far Eastern is managing the process is in dire need of adjustment and improvement," he said in a seminar held by the Chinese Institute of Transportation (中華民國運輸學會) and the Intelligent Transportation Society of Taiwan (中華智慧型運輸系統協會) last week.

  Since the formal launch of the ETC system early last month, disputes, public complaints and allegations of impropriety have been rife, undermining people's confidence in the system.

  Controversies include allegedly unreasonable OBU prices, inconvenient OBU installation due to insufficient service locations, inadequate incentive packages to boost the usage rate, and the speed limitation applied to OBU-equipped vehicles when passing through toll stations.

  When Far Eastern Electronic Toll Collection Co first introduced the OBUs late last year, they retailed at NT$1,350 (US$41.5). Although the company felt that the unit price was fair, relative to that in other countries, it was forced to discount the units to NT$680 after the government applied pressure.

  But this pricing problem should not have occurred in the first place, said Chang Sheng-hsiung (張勝雄), associate professor and chair of the transportation management department at Tamkang University.

  "Prices for the OBUs would have been stated in the bidders' proposals. The Taiwan Area National Freeway Bureau cannot claim ignorance now in an attempt to absolve itself of responsibility," he said.

  Faced with waves of doubt and skepticism, the Ministry of Transportation and Communications should make public the main contents of the contract it signed with Far Eastern and clearly explain its decision-making process, he said.

  If the government finds the contract improper, it should conduct a new round of negotiations with the contractor to safeguard consumer rights and interests, Chang noted, adding that this would then conform to the BOT principle by which the authorities and the contractor are partners, he said.

  Chung Hua University's Chen strongly advised that Far Eastern increase the number of venues at which consumers can have OBUs installed. Currently, prospective users have to seek out service locations along the freeway, certain contracted gas stations and auto care centers.

  "Why not allow all gas stations and parking lots to install OBUs? Making the installation process more convenient would attract far more new users than those boring TV commercials that trumpet the advantages of ETC all day long," he said.

  Chen, who is also a former chief of the Taipei City Government's transportation department, suggested that discounts for the stored-value cards be provided as an incentive, as was the case when the city government pushed the use of EasyCards for the mass rapid transit system.

  While some argued that Far Eastern should allow users to rent OBUs, the non-profit Consumers' Foundation (消基會) suggested that the units be provided free-of-charge, as relevant regulations do not stipulate that drivers have to pay extra to use freeways.

  This suggestion, albeit satisfactory to the public, is impractical, and Far Eastern could instead consider giving frequent users discounts, suggested Wang Jin-yuan (王晉元), associate professor of transportation technology and management at National Chiao Tung University.

  For instance, Far Eastern could rebate OBU fees to consumers who have passed toll stations a certain number of times, he said. It should also absorb the handling fees consumers are charged by banks when they add value to the ETC cards via automated teller machines, he said.

  "Since the ETC system could usher in massive benefits in the long run, Far Eastern should not be greedy at this point and risk tarnishing its image," Wang said, adding that "arrogant" would be the most appropriate word to describe the company, which has shown little sincerity to serve the interests of the public.

  Observers estimate that Far Eastern could rake in revenues of nearly NT$1 billion per annum if half of the annual 560 million toll collection transactions (according to the government's figures for last year) were conducted via OBUs.

  Bearing in mind the system's extensive potential, the contractor should be willing to absorb short-term losses to raise the penetration rate, and do everything it can to increase efficiency, said Chen Dun-ji (陳敦基), dean of the college of management at Tamkang University.

  He said with the ETC system in place, Taiwan can gradually introduce the distance-based toll collection scheme to further reduce congestion and fully reflect the "users pay" concept.

  Moreover, this is a good opportunity for the government to foster the ETC-related sector, rather than just benefiting the single contractor, and make Taiwan known for exports of OBUs and ETC technology, he said.
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