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technology paralysis. The solution is not to wait perpetu- ally for change, but to embrace it. By initiating a Road Usage Charge system today, one can focus technology onto an evo- lutionary path of continual refinement and improvement. This is exactly what Oregon has done by employing a range of user choices that include: • No technology – simply report “maximum” miles set at the 98th percentile;

• Basic technology interface to read mileage only, using open OBD-II standards;

• Advanced technology with third party location-based devices and customer relations management (open mar- ket);

• In-vehicle telematics; • In-vehicle telematics with connection to third party device, eg, smartphone or tablet with a RUC application.

The Oregon approach provides users with the power of choosing their own approach to paying for their road usage. Rather than mandating a single solution, Oregon is allowing its citizens to select the approach that best fits their life style and personal level of acceptance or confidence in technol- ogy. Oregon is starting the evolution of technology to seam- lessly emerge while not forcing people to lock into any one approach such as smartphones and tablets, but allow them to fit into the mix of choices offered. The one constant in all of these approaches is change. All

of the above options will change over the next 10 years. It is early in the product evolution of these various choices. Pay- as-you-drive insurance and OEM telematics are evolving rapidly each year over the previous year’s model. The market is ready for RUC, and in the true sense of Matthew Dorf- man’s article, we salute those early adopters.

NOTES 1 For sake of consistency, we use the term Road Usage Charging (RUC) instead of Vehicle Miles travelled Tax (VMT) because the purpose of road funding, whether based on fuel consumption or distance traveled, is to charge for usage of the network. In addition, most of the world measures distance in kilometers, not miles.

2 overview/industry-economics/~/media/Files/ Statistics/state-motor-fuel-taxes-report.pdf


4 Fleming, Daryl S. “Dispelling the Myths: Toll and Fuel Tax Collection Costs in the 21st Century” Reason Foundation Policy Study 409, November 2012. Available at: dispelling_toll_and_gas_tax_collection_myths.pdf

26 Oregon is leading the way by taking advantage of market

solutions. There is no sense waiting any longer for the ubiq- uitous but perpetually postponed DSRC V2V and V2I fairy, to build a high-cost national communications infrastructure, as Mr. Armstrong suggests, when the business models, serv- ices, and technologies for RUC already exist today.3

6. If implemented wisely, the cost of collection for RUC could be competitive with fuel taxes In his article Mr. Armstrong states that the data collection, error control, compliance measures, and tax collection for RUC would be large, complex, and expensive to operate and maintain. Specifically, RUC would require “an entirely new infrastructure,” run by “a whole new government bureauc- racy” and featuring “hardware in every car.” On each of these, points Mr. Armstrong is mistaken. First, RUC does not require an entirely new infrastruc-

ture. As implemented in the Oregon pilot, no new roadside infrastructure was required, and the only IT infrastructure needed is a cloud-based account management service, which can be obtained very cost-effectively. Second, RUC would not create a burdensome new govern-

ment bureaucracy. As demonstrated in the Oregon pilot, pri- vate companies can provide account management services for RUC payers. Government would need to pre-approve private providers to ensure they follow good business prac- tices. A small team of existing auditors, comparable in size to the units that currently oversee state fuels tax collections, could accomplish this. Third, RUC would not require new hardware in every car.

The hardware required to measure miles traveled is already present in every car — an odometer. States can quickly set up a system by which periodic odometer readings, whether self- reported or verified, form the basis of the road usage charge. Consumers who prefer advanced hardware in their vehicles to count miles and conduct transactions should have that technology option, but the evolution of such technology is up to the market. Today it could be based on the same technology used by

many consumers for pay-as-you-drive insurance, smart- phones or tablets. Tomorrow it could be built in to the vehi- cle. The bottom line is that RUC can exist today with no new in-vehicle hardware required in every car. The only existing RUC system in the world is in New Zea-

land, where RUC is charged on 500,000 diesel cars. There, the cost to collect is <5 per cent of revenues. This compares favorably to the cost of fuel tax collection, which though quoted widely at 1 per cent is actually closer to 5 per cent when factoring in evasion (at least 3 per cent) and other unaccounted costs in the private and public sector.4 Thus, when operating at similar scales, RUC collection has

comparable costs to fuel tax collection. In smaller programs and in early years, the cost of collection for RUC will be Vol 8 No 3 North America


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