By Andy Boenau, Founder, Speakeasy Media
If Mobility as a Service (MaaS) is such a great idea, how come it’s not a thriving business model yet? There are two types of transport technology professionals: those who have asked that question, and those who don’t admit they’ve asked that question.
Mobility pundits and industry outsiders have offered gross mischaracterizations about the core business function and financial models of app-based transport offerings. Industry insiders don’t do themselves any favors by giving longwinded, complex descriptions of various mobilty-on-demand capabilities.
Occam’s razor is a problem-solving philosophy dating back 700 years. “The simplest explanation is usually the correct one.” This is how people tend to react when presented with new information. So it should be no surprise that claims about MaaS delivered in simple and clear language are absorbed and repeated, even when the claims are misleading or uninformed.
As one example of the communication breakdown, consider the many software startups around the world building, testing, and deploying MaaS platforms at various scales. Some are structured as Business-to-Consumer (B2C), some Business-to-Business (B2B), and some Business-to-Government (B2G). Each has merits, but they solve different pain points. They aren’t equals, and blogging or speaking about them interchangeably adds to the cultural confusion of MaaS.
The MaaS confusion builds momentum when software developers and consultants stretch their business capabilities in website blurbs and marketing material. Hear me now and believe me later: building a thriving and sustainable MaaS business begins with a clear and simple description of the problem you’re solving.
So let’s consider the simplicity of a MaaS offering, followed by a deeper consideration of business models.
The MaaS Offering Defined
The best way to start a discussion about a business of any kind is to identify the purpose. Why does a business even exist? Think on this before you consider how a business will operate, the key performance indicators, or the scalability. Let’s explore a business developing a MaaS platform.
MaaS is a digital platform where you can plan, book, and pay for a journey all at once.
You can choose to schedule multiple modes within one platform without having to open up several transport and payment apps. Three key elements: plan, book, pay.
MaaS: Painkiller for Travel Headaches
You might compare Mobility-as-a-Service to Movies-as-a-Service. Or as normal people might say – Netflix. Netflix is a platform where you can search for available movies, select one or more genres you want to watch, and pay for it — all in the same platform without having to jump to another app or website.
Imagine if you had to deal with each and every movie studio separately. Dealing with their terms and conditions separately. Imagine some required PayPal while others required Stripe. Some might require a minimum rental amount. You just want to watch a movie, not deal with the hassles of various brand platforms.
But that’s how it is when you and I want to access transport services. We have to deal with each production house separately. All the fleets are separate. Airplanes, trains, the local bus, on-demand shuttles, ride-hailing, electric scooters, bikes, loaner cars and rental cars.
What a pain! You have to download new apps for each brand, which means you have to even know they exist in order to download them. You’ve got to uninstall apps on your phone to make room for the new mobility apps. Then go through a registration and onboarding process. Prove you’re who you say you are. Connect a bank or credit card, and then prove the bank or credit card belongs to you.
A MaaS platform combines all the steps in one place to give customers a seamless experience. Brand loyalty will exist to the extent that the customer experience is convenient and intuitive. Otherwise, what’s the point of integrated mobility?
Uber and Lyft have dabbled with the MaaS idea. They each bought bike share companies and integrated the bikes into their apps. So if you open the Lyft app in Washington, DC, you’ll see options for bike share stations nearby, dockless scooters, and ride-hailing cars.
But that’s just the beginning. The powers behind those household names want your attention on their own brand because they’re making a play for the “too big to fail” protection of government agencies. The brilliance of Uber and Lyft was solving a pain point for personal car ride-hailing, not integrated mobility.
Software development companies are deploying platforms right now that let users see all the nearby choices, book the type of modes they want, and pay. All in one platform. We’re in a remarkable period of transport innovation.
Business Ownership & Rights
Who should own a Mobility-as-a-Service platform? That’s a reasonable and frequent question, especially because subsidized services like the local bus are often part of the integrated mobility mix. MaaS will thrive as a business, rather than a division of a government agency.
A city or town or bus operator may purchase or lease the software solution, but that’s no different than the public sector purchasing a certain brand of shirt for its employees or leasing a certain brand of cloud computing software.
Customers will not be well served if there’s a government monopoly on transport. Government can either have a monopoly on transport, or it can serve the public interest. The two options are mutually exclusive.
“MaaS will thrive as a business, rather than a division of a government agency.“
Transit agencies and local government both need to be customer-driven. But transit operators and government staff have two different roles to help grow mobility freedom. High-occupancy transit should be a primary feature in urbanized areas. Think of it as the trunk of the mobility tree, with other modes as the branches. Out in rural areas, on-demand mobility will be the primary feature.
One MaaS brand may just connect two modes: an airport shuttle and a bike share system. Another brand may offer access to airplanes, fixed-route bus, on-demand ride hailing, skateboards, and jet skis. Perhaps one day there will be a handful of dominant MaaS brands, and that’s fine as long as small brands are permitted to exist. In other words, don’t regulate away competition with a “too big too fail” bailout mentality. Promote competition at every policy and permitting stage.
Here’s the best role for local government: stop blocking progress. Take away the barriers and let the private sector innovate.
A great way for public administrations to advance customer access and choice is to get to work repealing zoning and parking regulations. At the same time, stop building infrastructure that forces more single-occupant vehicle trips. Nobody’s going to take the bus or use an integrated mobility platform when Government makes solo driving the most convenient choice for local and regional journeys.
Big Data Risk and Reward
Big Data is a topic that will be magnified as a direct outcome of COVID-19 because of all the interest in tracking sick people. Our industry needs to be aware and concerned about it. Data is part of the business ownership question.
Risk of Public Sector Ownership
In China, residents have been forced to install coronavirus apps that track their movements and give a health score of red, yellow, or green. They block people from using public transit based on the health score. Chinese residents and guests aren’t able to decide for themselves if they should work, go to school, or buy groceries. Even worse, we know when authorities have that type of control, they track political dissidents, social outcasts, and religious minorities.
In this period of civil unrest, it should be clearer than ever that we shouldn’t hand over extra personal data to the authorities.
“Does the MaaS platform own and protect your personal information, or do you hand it over to the authorities to own and manage?“
Let individuals decide how much of their personal lives should be monitored by authorities. If governments own the treasure trove of personal data, you will lose mobility freedom.
Reward of Private Sector Ownership
A business needs to know as much as possible about its customers in order to deliver the products and services that keep selling.
If I know where people tend to congregate, which neighborhoods have the most commuters, and which entertainment districts have the most activity, then I’ll have a good idea which types of mobility operators I need to pursue as partners for my digital platform.
Profit & Utility
Profit is often mislabeled as the villain of the transport industry. Critics of private enterprise argue profit is selfish and doesn’t serve the public interest.
Transport policy should be loose enough to let the market create and adapt. Embrace the fact that private industry has a profit motive. If competition is encouraged, then the customer wins. Think of eBay, where each seller is motivated to choose a price based on the value of the product while considering customer reviews. If a seller misleads customers or puts them in danger, they’ll lose business.
Governments don’t have a profit motive, which is partly why they didn’t invent the bus, roller skates, the bicycle, or even the wheel. Understanding the societal benefits of a profit motive will lead to a better use of government staff resources.
“MaaS as utility” is an alternative to multiple, standalone platforms each pursuing market share. In the United States, we have regional utility providers for natural gas and electricity. Transport could also be treated as a utility.
One role of the government in this case would be to prevent a utility monopoly. That means assuring the local government rules encourage private enterprise to deploy profitable businesses without favoring one brand over another. When agencies roll back regulations that make single-occupant vehicle trips so attractive, customers will accelerate the shift to MaaS.
Any successful business owner evaluates customer acquisition. They start out with nothing and need to have a plan to convince people to buy the product or service.
One of the common concerns about MaaS is that nobody in North America will give up their car. I’ve got news for you. People in Copenhagen said the same thing in the 1960s about downtown traffic. 60 percent of city residents commuted by bike to work or school in 2020. But back in the 1960s, the streets looked like Anywhere, USA: personal cars everywhere.
“The truth is that a profit motive drives innovation.“
Copenhagen changed their infrastructure to be inconvenient for solo car journeys, and people opted out of the car. Bicycling became the obvious and convenient choice. And a bicycling-friendly city opens up options for high-occupancy transit.
Government agencies in North America have a tremendous opportunity to accelerate the deployment of MaaS as a way to meet their sustainability goals, congestion management goals, equity goals, and mass transit ridership goals.
MaaS businesses will have customers in three major sectors: commuter travel, corporate travel, and leisure travel.
Commutes to and from work make up half the trips in the U.S. The percentage may go down as people get accustomed to working remotely following COVID-19, but commuting is still the bulk of personal travel.
Corporate travel will be a smaller but steady customer base. MaaS can replace the old corporate fleet of cars. It reduces corporate overhead and increases options for transporting staff for short or long journeys. A corporate MaaS option gives employers the assurance that their employees are safe and healthy in shared vehicles.
Leisure travel will return as travel bans are lifted. The tourism and entertainment industry has been hit hard by the coronavirus, but they’re already seeing bookings return for 2021.
Future of Mobility
I have no idea what the future holds for innovative mobility, and I know exactly what the future holds.
It’s impossible to predict how people will travel in Spring 2021, once governments allow people to travel across borders. Society is still learning about the coronavirus. We now know the virus is nowhere near as deadly as we were led to believe in Spring 2020. We’ll continue to learn more about the virus, the effects of herd immunity, and vaccination capabilities in the coming months.
But car-oriented communities worldwide (particularly the U.S.) are observing swift returns in vehicle traffic. Even without the freedom to travel long distances, residents are driving to and from offices, shops, and homes of friends and family.
The fate of shared mobility – especially high-occupancy transit – will depend on the average customer’s risk tolerance. Consider that in a 10-year period, less than 15 people died of peanut allergies in the U.S. In the same period, 400,000 died in traffic crashes.
Society banned the peanut, but not the car.
It’s impossible to predict how many people will continue riding in a small car with strangers or use MaaS shared fleets because it will come down to each person’s tolerance for risk.
I own hundreds of CDs and DVDs. Ever since I started earning money pushing a lawnmower, I was spending it on music and movies that I was convinced needed to be at my fingertips. Then along came Music-as-a-Service and Movies-as-a-Service. Customers like me were asked to pay a monthly subscription for access to a huge catalog to consume anytime, rather than purchasing each and every release.
I converted. My options were expanded to a scale I still can’t comprehend. Any genre, any time. I connect to shared libraries without dealing with the cost and inconvenience of personal storage space.
Give customers good value for their subscription, and they’ll happily reduce personal car ownership. A MaaS platform can convert a 3-car household to a 2-car household for starters. A family can have access to large vans to help with kids moving out, bicycles for short trips during the day, electric scooters for hot days, and autonomous shuttles to connect to the airport.
MaaS can and should be about choice for customers. Many people will opt for a scooter, a bicycle, or a moped. And those same customers will sometimes want to use high-occupancy transit.
With or without a pandemic, we need businesses to develop and deploy digital platforms that let us plan, book, and pay for journeys.
Customers are standing by for Mobility-as-a-Service.
MaaS is one of the main sectoral themes of Autonomy Digital 2.0 (19 – 20 May). See here to learn more about how your organisation can participate.