MaaS Effect

    The private vehicle is looking costly, wasteful, dirty and plain old passé as more people take advantage of the “mobility-as-a-service” ecosystem. Is it time to welcome our new transportation overlords?

    By Tim Querengesser on March 14, 2017

    Mike Wilson just wanted to visit friends. But Wilson, BSc ’12, was on campus and his friends were in Sherwood Park, 20 kilometres away. And he doesn’t own a car. And this was 2010, when the answers to his alternative transportation needs were three transfers on a bus that runs hourly, or a $40 cab ride.

    So there Wilson stood, in a University of Alberta parking lot, fuming. His hoped-for chariot was one of four Hertz car-shares, essentially a glorified rental that customers reserved long in advance via a glitchy app. But, as Wilson says was normal with those early cars, there was no guarantee he’d be able to painlessly unlock the car, let alone drive it. “Almost half the time I used it, I’d have to phone tech support,” he says.

    Nobody wants to be Wilson. It’s why most of us still pay top dollar to own private automobiles—at an average of $10,456 per year, according to the Canadian Automobile Association—which, aside from likely being the second biggest purchase we make in our lives, sit idle 95 per cent of the time. Moreover, the space, resources and clean air consumed by private cars increasingly make this mobility unsustainable. Madrid is attempting to reduce pollution by temporarily banning half its cars off the road each day, rotating by license plate numbers, a policy copied from São Paulo to combat congestion. Other European cities are slowly introducing partial or full bans downtown, while car-clogged Manhattan recently closed off much of Times Square to personal vehicles. Closer to campus, Edmonton’s 10-year strategic plan calls for more public transit and active transportation (such as biking or walking) to stave off traffic jams, and city officials in Calgary are researching how to introduce autonomous vehicles. Both cities were among Canada’s first to legalize ride-shares like Uber.

    “A lot of people don’t understand why you wouldn’t have a car,” says Wilson, who moved to Edmonton from Red Deer to study computer science and promptly sold his ride. “Or they’ll say, ‘Oh, you don’t have a car, I’ll give you a ride.’” But he doesn’t want a ride. What he wants is a convenient way to live car-free.

    Our urban future is likely one where we cut ties to private cars and build them with public transit and private mobility companies to create a business ecosystem that has been dubbed “mobility-as-a-service,” or MaaS. But what would it mean to go car-free today? And what would this teach us about the possibility and pitfalls of the future? Two graduates of the School of Business differ in their business models but share the belief that privately owned automobiles are nearing a dead end and that industry “disruptors” like them can solve the convenience problem the way the private car always has, as well as the inconveniences it has created.

    Alberta School of Business - UAlberta Business Magazine - Winter 2017 - MaaS Effect

    Photography by Aaron Pedersen.

    Kieran Ryan, BCom ’08, steers a white Hyundai Accent, decaled with Pogo CarShare’s Edmonton skyline, into traffic. Ryan is 31, tall, lean, disarmingly honest and, like the company, proudly homegrown. He started Pogo because he wanted Edmonton to have a service like Calgary’s Car2Go. It wasn’t until he used his own service that he had an “aha” moment about the 1,500 kilogram steel box occupying his duplex’s driveway. “I didn’t really think about selling my car,” he admits. “And then I got into using the services and I was like, ‘Hey, I can probably get rid of it’—and I did.”

    With a background in energy market analysis, Ryan co-launched Pogo with James Kwan (BCom ’10), in 2014, as a point-to-point car-sharing service you book with a smartphone app that shows you all 65 vehicles on a map. GPS guides you there, while a fob gives you access inside and to the keys in the glove compartment. You can leave the Pogo at your destination (as long as it’s within the designated 22-square-km zone in the inner city) rather than having to return it, as you would a traditional rental car.

    As Ryan stops at a traffic light, he says the Hyundai, along with all Pogo vehicles, is driven up to six hours per day and takes roughly 12 private cars off the road. But it’s his views about MaaS—as a complementary network of public transit, Pogo, TappCar, taxis—that are most dramatic. Soon, he says, they’ll render the private car obsolete. “Adding car-sharing to all those services doesn’t add one option—it makes the whole system more workable. I take the bus every day but now have access to this car share, so if I miss the bus, it doesn’t ruin my day—I get to work on time anyway,” he explains.

    Buses, taxis, private cars and pedestrians all jostle for space along Jasper Avenue as Ryan dreams aloud about how these services could all come together. The last gap, he says, is payment. Make all these mobility services available for one monthly fee and you’ll change the world.

    Sound unrealistic? It’s already happening: This year commuters in the metropolitan U.K. county West Midlands will combine all of their modes of transport and payment through an app called Whim, which residents of Helsinki, Finland, have had since 2016. “You have a smartphone, you punch in your credit card and—tada! It works,” explains Ryan.

    There are 104,000 car share vehicles (like Pogo and Car2Go) serving nearly 5 million members in 33 countries, according to University of California, Berkeley’s Innovative Mobility Carsharing Outlook (based on 2014 data). Ryan estimates Canada has about 6,000 car-share vehicles.

    But habits don’t break easily. Something that works and costs less doesn’t necessarily convince the masses to change their behavior, argues Kyle Murray (BSc ’94, PhD ’04). The professor of marketing and Director of the School of Retailing—and Pogo user—points to struggling online grocery start-ups as a cautionary lesson in consumer psychology. “It seems like a natural thing for online shopping and home delivery,” says Murray. Indeed, research shows most people dislike grocery shopping. But, well, habits. “Some of the smartest minds in retail tackled online groceries 10 years ago, and they failed. They had billions in funding, a great model, but just couldn’t convince consumers to change their ways. Those are relatively small habits compared to changing how we get around.”

    The numbers support Murray’s point. There are currently 1.2 billion cars on the planet’s roads, according to energy think tank Navigant Research, which expects the four-wheeled population to grow to 2 billion by 2035, thanks to a predicted supply of affordable electric vehicles and growing middle classes in China and India. The market that mobility disruptors are hoping to change is gigantic. And while people like Wilson and Ryan—young, urban, mostly childless (Ryan has a one-year-old)—may adopt these new services wholesale, Murray says the real test is convincing suburban families that it’s the better option.

    “I have two cars,” says Murray. “But I need to feel secure that if I pick up one of my daughters, or take a trip to the mountains on the weekend, it will be easy. Otherwise it’s difficult to give up the convenience of owning a car. And my guess is, I’m much more willing to do that than most people.”

    Alberta School of Business - UAlberta Business Magazine - Winter 2017 - Pogo Car Share co-founder Kieran Ryan

    Pogo Car Share co-founder Kieran Ryan, BCom ‘08.

    News media write happy headlines when car shares come to town. But when ride-shares like Uber and Lyft arrive, it’s war.

    Compare and contrast Edmonton’s two case studies months apart from each other: Pogo worked with Edmonton officials to arrange ground rules before launching—parking rates, decals, insurance policies, tow-away procedures. Uber extended no open hand—it just barged in with little regard for driver-for-hire laws. Right on script the embedded taxi association dug in, Uber’s share-economy believers cheered, and legislators were stuck between the warring camps and an enlightened public. After protests, failed court injunctions and even a sit-in at city hall that saw some taxi drivers take off their shirts (because Uber, you see, was “taking the shirts right off their backs”), Edmonton bowed to pressure and passed a ride-share bylaw that would legalize the company by March 1, 2016. The caveat? Uber drivers needed better-than-average insurance or commercial vehicle-for-hire licenses. Simple.

    But Uber still refused to comply. The Alberta government was incredibly specific in its criticism as the deadline passed. “It certainly is clear [Uber’s] not a reliable or trustworthy partner for the government,” Infrastructure Minister Brian Mason told reporters. Uber finally cooperated wholly by July 1, when it re-entered Edmonton’s market.

    If ride-shares wish to herald the future of mobility—not just in cosmopolitan cities, but small communities, and at a mainstream scale—they’ll need to learn to play nice for regulators’ buy-in. Much like Shayne Saskiw and co-founder Jonathon Wescott, LLB ’07, did with TappCar.

    Saskiw (BCom ’03, LLB ’06) is handsome, in the vein of a ’90s game-show host, and his title should be something like “the non-disruptive disruptor.” Consider his contradictions: Saskiw is a former Wildrose MLA and a legal counsel to far-right politician Jason Kenney’s Alberta campaign team, yet TappCar is the first unionized ride-share in North America. And that’s by design. Saskiw sees value in diplomatic disruption, enabling governments to phase out cars rather than fight them to do so.

    Uber pushed for a bylaw, then pulled out of Edmonton as a protest against administration’s proposal, allowing TappCar to become the first legit ride-share in Edmonton and Calgary. It was also the first non-taxi company to secure a deal to drop off and pick up passengers at Edmonton International Airport, something Pogo and Uber are still working on.

    TappCar wanted to avoid messy situations, such as in Paris, where Uber poached hordes of taxi drivers, then cut the fares so sharply some said they couldn’t make a living. Civil disobedience and halted services followed. “We thought we would skip that step,” says Saskiw. “We thought a happy driver is a happy customer.”

    Ignoring the union, TappCar’s model replicates Uber’s: You hire a driver using a smartphone app. Payment is automated, too, though TappCar drivers will sometimes take your cash (they’re not allowed to accept street-hails, though drivers have routinely broken this rule, according to Edmonton’s community and public services committee). The company is planning expansion into Vancouver if the apprehensive city changes its bylaws, as Saskiw expects.

    TappCar is also expanding its network of 250 cars in Edmonton and 50 in Calgary, and readying to trial electric cars in its fleet. The plans coincide with the forthcoming installation of 70 charging stations and the Alberta Government’s low-carbon economic policy (see page 16 for story). Saskiw says the decision to add electric vehicles is partly driven by customers and partly by government direction.

    As for the future of taxis, Saskiw offers a grim prognosis: “The old-school taxi industry is going to be obsolete relatively soon.” In fact, TappCar is attempting to buy out Edmonton’s busiest taxi stand in 2017. Would customers embrace the change?

    UAlberta’s Manish Shirgaokar is skeptical. The urban planning assistant professor researching consumer adoption of new transportation options notes that taxis are simple in a way that ride-shares are not. Consider, he says, the “grey tsunami”: By 2036, one in four Canadians will be 65 or older. And, Shirgaokar says, research shows seniors are risk-averse, often lack credit cards needed to use ride-shares and will be prone to ask—as you can likely hear your grandma asking right now—“How do I call an Uber?”

    “There are many questions of accessibility to services in the new transportation realm,” Shirgaokar says. “Think about the penetration of technology in groups like single-income families. Uber is cheap if you’re time constrained. But will single mothers get on board?”

    Just as families in suburbs are currently the kryptonite for car shares, there’s a lot of kryptonite for ride-shares too. The private automobile’s future looks relatively safe. For now.

    Alberta School of Business - UAlberta Business Magazine - Winter 2017 - TappCar co-founder Shayne Saskiw

    Shayne Saskiw, BCom ‘03, LLB ‘06, co-founder of TappCar in Edmonton and Calgary.

    The private car can’t keep its momentum much longer, at least not in Canada and the U.S., where Millennials, now the majority demographic, are turning their backs on the suburbs and delaying getting their licenses. But even in so-called developing nations, where the commoner’s possession of a private car is a modern phenomenon, mass urbanization and technology expansion has created favourable conditions for MaaS’s takeover. The world’s collection of smartphones has already surpassed that of automobiles, tracking to hit 2.16 billion in 2017, says research firm eMarketer, and for the first time in human history the majority of people live in urban areas. The lovechild of these two trends is the autonomous car, the disruptor of disruptors, set to upend all we’re accustomed to in mobility, urban design and lifestyle.

    These are not what Tesla, Mercedes, BMW and other tech-focused car manufactures currently sell. Those are self-driving cars that can travel for short periods with you, a human, still behind the wheel. An autonomous car—one with no human at the controls— is the next evolution and will depend on cities building sensor and signal infrastructure to enable it. Like an Uber, you might simply hire an autonomous car to pick you up and drop you off, then it’s off on its merry way, plying streets for another customer. You won’t have to fuel up, change the washer fluid or get a tune-up, nor will you have to track it down, make small talk or feel obliged to tip.

    Boston Consulting Group predicts the autonomous car industry will hit $42 billion by 2025 and by 2040, Deloitte predicts autonomous and shared-ownership vehicles (like Pogo) will travel 80 per cent of all distances that cars drive.

    A taste of what’s to come is three years away: Tokyo’s Summer Olympics are expected to be the autonomous car’s mainstream reveal, as the country is investing heavily in the technology needed to make the capital a “self-driving city” for the event. While 20 companies test autonomous cars in California legally, Uber’s much-discussed autonomous SUVs drove San Francisco’s streets (and occasionally ran red lights, as seen on YouTube) without permits. This won over many who feel regulation is an anti-capitalist crime; it also earned a cease and desist order from the government of California.

    The implications go beyond what you drive (or what drives you). Uber’s endgame is to not employ drivers at all, and if other ride-shares and taxis can catch up, an entire workforce will be obsolete. David Dale-Johnson, Stan Melton Chair in Real Estate at the School of Business, also argues that autonomous cars will change land use—or, more simply, allow the suburbs to keep sprawling and slow urban densification. “If you don’t have to worry about insuring the car or parking it, the suburbs become relatively more attractive, which is kind of an odd result, given everybody’s brain thinking about more density in the urban setting,” he says. Kurt Borth, a researcher with UAlberta’s Office of Sustainability, sees a similar outcome, where infamous suburban commutes become leisure or productivity time. “If the drive was stress-free—and that’s a big if—then maybe people would be okay with living further and further out of the city,” says Borth. In these scenarios, the status quo design of modern cities is just fine, allowing for some further density when parking lots become infill development, as demand diminishes from two cars per household to one or none at all.

    Perhaps the only certain thing about the future of the private car is that owning an automobile will increasingly be viewed as a luxury, and possibly a shameful one, as we must increasingly find ways to do more with less—be it less energy, space, money or time. We’ll have to adjust to new ownership structures and city layouts that suit new mobility concepts, and, eventually, we’ll be like Mike Wilson. Except in the future, we won’t be stuck without a ride.

    Tim Querengesser, contributor to The Atlantic’s CityLab and Alberta Views, is writing an “anti-memoir” on the private automobile.