Future of Services

Services are increasingly being delivered by a market of providers, including community groups, businesses, automobile and technology companies, and recreational or tourism planners.

This chapter addresses six ways the future of transport services will change for the better:

  • A focus on service outcomes for customers
  • Technology catalysing new services
  • Providing customers with integrated information, pricing and trip planning
  • Customer-led services
  • The role of government in enabling new services
  • A service hierarchy for the future

A focus on service outcomes for customers

New service models and competition are giving customers more choice and making transport outcomes-focused

New services should improve the customer experience and help us achieve our vision

Technology is transforming the transport services market. Where market entry previously required significant capital investment, mobile apps are allowing smaller companies and individuals to enter the market with lower upfront costs.

The emergence of rideshare companies has significantly changed the point to point market, with new online service providers emerging and being embraced by customers. The NSW Government has harnessed the potential of new point to point models through changes to legislation. However, this experience has taught us that the pace of change can be swift and unpredictable.

Today, we are at a ‘tipping point’ with more companies developing or operating innovative transport services. Unlocking the potential of new services for the benefit of customers requires us to set clear customer outcomes for transport services, engage closely with industry and the community and ensure our infrastructure can support new services.

Source: McKinsey, Urban Mobility is at a tipping point, September 2015

Figure 31 Investment in new service models

Technology is unlocking new service models

Technology empowers new service providers and breaks the nexus between asset ownership and service delivery

A marketplace for innovation

Traditionally, transport services were strictly the operation of transport infrastructure and fleets. This meant that service providers were dependent on their control or ownership of the physical assets or network. Today, mobile technology is increasingly enabling a new class of customer value by connecting providers directly to customers.

Figure 32 New ways of unlocking customer value

The emergence of new services enabled by technology has a number of significant implications for government. It places greater importance on the availability and sharing of data as markets operate most efficiently and deliver better customer outcomes when people and service providers have access to information.

A new market of service providers also highlights the need for integration of payment systems and information. With so many transport services potentially on offer, government has a critical role in ensuring network integration.

Figure 33 Smartphone technology supporting transport

As outlined in the Future Transport Technology Roadmap, a new market for service providers requires clear information to be made available to customers in real-time so that the transport system is simple to understand, easy to use and can deliver personalised services relevant to individual needs and preferences. For transport customers, this means being able to compare travel times and prices across different transport modes in real-time to make the best choice about how to reach their destination. It also means that in times of disruption or major incidents, we are able to communicate and re-route customers to minimise the impact of issues on the network.

Future directions to investigate

NSW will work with service providers and technology companies on the sharing and innovative use of data, to better match services with customer needs.

  • Expand open data and data exchange initiatives to improve customisation of services and journey planning across providers
  • Support data platforms for Mobility as a Service (Maas) models
  • Resolve issues relating to privacy, data protection and liability and adopt a set of principles to ensure any data collected from customers will be appropriately used to benefit the transport network
  • Lead innovation nationally, with a Data Science Incubator and Open Data policies across public and private services to enable safe and effective use of technology

Mobility as a Service (MaaS)

Customers will access a market of mobility services in a simple, easy-to-understand way

MaaS is a service model that enables customers to plan and pay for their journeys using a range of services via a single customer interface, such as a mobile phone app. MaaS will enable customers to access integrated, easy-to-understand journeys in a broad market of transport services that gives them more choice in how they travel.

MaaS relies on sharing real time information across different transport service providers to help customers optimise their journeys through a single MaaS provider. It enables customers to plan and purchase their end-to-end journey from a retailer (most likely via an app) choosing from a range of travel options, such as travelling by public transport, rideshare or bike hire. In real time, the app then guides the customer through their journey.

Data drawn from customers via a MaaS platform helps providers offer more personalised services and can also link customers to non-travel related products such as restaurant delivery, event ticketing and retail.

MaaS platforms are already being used in other countries. An example of a recent roll out of MaaS was in Turku, Finland. Under this MaaS system, passenger journeys increased by 20 per cent and 98 per cent of surveyed customers said the attractiveness of public transport had improved. The system also engaged new customers, with 9 per cent of customers on regional lines reporting they had previously not considered themselves to be public transport users.[1]

A trial of MaaS in Sweden also indicated positive results for public transport use, with patronage increasing from 35 per cent before the trial to 45 per cent during the trial[2].

[1] Intelligent Transport magazine (formerly Eurotransport)

[2] UbiGo: trial participant  - Chalmers University of Technology in Sweden

Customer-led services

Customers will have even greater input into transport services, including where they go, how much they cost and even how they are packaged with other services

Customers influencing service provision

Personalisation of many transport services means customers will have more choice of where services go, their price and even how they are packaged with other services, such as events and shopping.

As technology unlocks new service possibilities, transport will increasingly resemble a retail industry, where individual service providers can tailor offerings to individual customer needs. This presents an opportunity for customers to have unprecedented input into how transport services are delivered.

The emergence of on-demand bus services and other forms of shared transport will allow customers to directly influence where their local services travel on a day-to-day basis. For example, if few customers happen to board a local, on-demand bus service in the evening, a more direct route may be taken to ensure each customer arrives home sooner.

An example of an innovative development in packaging transport and other products together is the “virtual shopping wall.” The first wall combining travel and shopping experiences was set up in Seoul in 2011, and allows customers to view, purchase and arrange the delivery of groceries at the train station. China plans to roll out 1,000 virtual supermarkets across the country in the near future.

Other opportunities might include the ability to, take into account public transport use in health insurance premiums or package public transport into rents in high density areas.

Future directions to investigate

Customers will have unprecedented input into service planning enabled by digital platforms that connect customer needs to service provision.

  • Transform the customer experience and service interface, with integrated digital channels, contactless payment and seamless interchanges
  • Develop and introduce customised service models shared services and on-demand models, with priority roll out in regional centres and for people who find it harder to access transport services.
  • Identify opportunities and challenges in supporting data platforms for Mobility as a Service models

Figure 35 Customers directly influencing service providers     

The role of government in enabling new services

Government sets the right environment to get the best from a growing market

Creating the right environment for quality service provision

Typically, government has been the default provider of transport services. However, the emergence of new services is changing this role, with the private sector becoming increasingly involved in transport service delivery and operating in environments that are traditionally the domain of governments alone.

The future role of government will be to focus on setting network and customer outcomes and ensuring policy and regulatory frameworks are in place to support new service models. This will likely involve reducing regulatory burden and setting safety and service standards to ensure positive outcomes for our customers and the community.

In some instances, the role for government will be to get out of the way and allow the market to deliver services. This may be the case where demand for services is high or where the private sector is better equipped to meet customer needs. This aligns with the NSW Government's position on regulatory frameworks to ensure unnecessary restrictions on competition are removed unless the community benefits of the restriction outweigh the costs and the objectives of the regulation.

A recent example of government creating a more contestable market is its response to the emergence of rideshare companies. Many customers were quick to embrace ridesharing but regulation did not reflect the “shared economy” approach, meaning rideshare companies were unable to operate legally. Similar services like taxis and hire cars were able to operate legally but were heavily regulated in a way that hampered innovation and created unnecessary barriers to new market entrants.

In response, the NSW Government removed 50 unnecessary regulations on the point to point industry and allowed rideshare companies to operate legally, while continuing to regulate on issues in the public interest such as safety and consumer protection.

Future directions to investigate

NSW will create a service ecosystem where government enables service innovation and is no longer the default service provider.

  • Conduct or facilitate pilots of new service models
  • Support industry partners in service delivery and engaging communities
  • Review regulation governing road, rail and bus operations to provide new arrangements that can pre-empt or respond quickly to market disruptions

Introducing an element of competition to smaller markets

The NSW Government takes an integrated approach to services where the customer outcome drives delivery choice, regardless of organisational boundaries and constraints. Where government has traditionally had to directly provide public services to meet its obligations to the community, it is now able to play a more sophisticated role in developing a marketplace for services and purchasing high quality, innovative services - where these deliver better outcomes for customers.

In markets with lower contestability, such as some areas in regional NSW and customer segments where disadvantage exists, we will need to look to more innovative procurement practices, where services that better respond to customer needs, and deliver better value for money for government, are purchased.

A recent example of a new procurement approach is the awarding of a contract to a private entity to operate bus, ferry and new light rail services, as well as manage interchanges in the Newcastle area.

The contract is outcomes-based and sets minimum service levels but provides a greater level of autonomy to the service provider to plan and reshape the network. The contract also contains provisions for incentive payments for patronage growth above the base contract rate.

This approach introduced a level of competition in the Newcastle transport service market that has not existed before as the government went out to competitive tender before appointing the service provider.

The new network is expected to increase the quantity and quality of services in Newcastle within a more efficient cost structure for government.

Future directions to investigate

Government service delivery and procurement will focus on achieving the market and service outcomes – not prescribing fixed service levels.

  • Go to open market tenders when procuring services, to introduce competition in markets with low contestability
  • Include arrangements that reward innovation and patronage growth into service contracts
  • Continue creating a workplace culture where Transport for NSW is equipped to achieve best value for money outcomes from private sector providers

Figure 36 Newcastle - artist's impression

A service hierarchy for the future

New providers entering the market will result in more personalised services, which will complement ‘turn up and go’ services on trunk corridors

An easily understood and efficient network

The emergence of new service providers will result in customers having more choice than ever. However, it is important that the transport system also remains easy-to-understand. In high demand areas including Greater Sydney, the Global Gateway City of Newcastle and the Satellite Cities of Gosford and Wollongong, frequent, high capacity, city shaping corridors will be provided to move the majority of people. These will be complemented by more flexible or on-demand services on city serving and local corridors.

In regional NSW, the focus will be on services that operate on more localised networks radiating from regional cities rather than Sydney. Services will include scheduled public transport services such as in town bus services, NSW TrainLink rail, and coach services connecting towns and cities. Communities will also be supported by flexible or on-demand services that better personalise journeys in service areas where traditional public transport is harder to provide and access.

The NSW Government has already launched a program to identify and pilot creative new ways to deliver flexible services in regional NSW and in less dense metropolitan areas so people can reach their destinations quickly, safely and efficiently and at a time that suits them. Expressions of interest to run pilots were sought between December 2017 and February 2018 and all pilots are expected to be underway in the near future.

The service hierarchy in NSW will evolve towards:

  • ‘Turn up and go’ services on city shaping and city serving corridors in metropolitan areas. These will include city-city and centre-centre corridors in Greater Sydney and on major trunk road and public transport corridors within Greater Newcastle, the Central Coast and Wollongong. Services will carry large numbers of customers on predictable and reliable services without timetables – customers will ‘turn up and go’.
  • Frequent and reliable services in regional areas. Services will operate on a ‘hub and spoke’ network and provide reliable services on certain routes allowing same day returns between regional cities and centres. Modes may include rail, coach, bus or air services, determined by journey length and demand.
  • Flexible or on-demand services. These services support both metropolitan city shaping services and regional services. They will operate as on-demand services on centre serving corridors in metropolitan areas, such as between local train stations and residential areas, and in less densely populated areas where customers’ travel patterns are more disperse. In regional NSW, they will provide more personalised, end to end journeys by connecting transport hubs in cities and centres to smaller towns and villages, providing efficient transport in areas that currently have few or no services.

Future directions to investigate

Transport planning will focus on city-shaping corridors and major regional transport routes, supported by flexible or on-demand service offerings.

  • Prioritise investment in city shaping corridors including automated systems to support ‘turn up and go’ services in high demand areas
  • Conduct pilots of flexible services in rural and regional areas and investigate government support to run these services
  • Move towards dynamic scheduling for some transport services, so routes and timetables can be altered to better match demand

Improve multimodal interchanges, particularly in regional NSW, so customers can more easily connect to flexible services and experience seamless and reliable journeys