Last week, the ORR published some intermediate results from their market study in automatic ticket gates (ATG) and ticket vending machines (TVM). It surprised me not much that in the UK the situation from a demand-monopoly switched almost fully to a supply-monopoly where with designed market entry barriers the competition could have been kept at bay so far.
In this supplier driven market, price premiums are high, flexibility and dynamics are costly or not possible at all. This creates a significant disadvantage for the system of railways against other modes of transportation. Unless the UK takes significant action, the attractiveness of the rail system will deteriorate and capacity problems on the road system will manifest even more drastically.
In my opinion, the problem could have been seen from the far by applying a systematic view on fare collection with a tool such as a Warldey Map – like the UK did for the entire HS2 system. Now they are in dis market monopoly (or oligopoly) situation and need to reinstate market competition. For this, I see two options: lowering market entry barriers (that’s what they are proposing) or changing the game entirely.
Changing the game entirely could mean that from the next contract onwards all IPRs of the software as well as the hardware system fully go over to the TOC or metro system. This includes source code and design drawings. With this approach, the owner of the fare collection system becomes the actual owner again.
This means that the owner also becomes responsible for the system integration – a task that can be outsourced – but has therefore also the control on each system and subsystem. The market could begin to operate on the sub-components markets as well as on higher order value markets – demanding again innovation from its suppliers.