Telecom Companies Scope Transportation Market

Smarter cars and highways are coming down the pike and America's communications concerns want a piece of the $200 billion project

f everything goes as planned, commuting in the next millennia will be much more high tech and much less annoying. One expected anxiety-buster: changeable message signs along highways that provide drivers with correct, up-to-the-minute traffic information. They would be a welcome change from today's signs, such as those found along Interstate 66 in Northern Virginia, that flash "congestion in seven miles," when in reality drivers hit a traffic snarl a mile later.

Accurate message signs, in-vehicle computers that alert drivers of upcoming traffic jams and systems that collect tolls from cars traveling at 60 miles per hour are among the intelligent transportation technologies that leaders have in mind. And who will bring these to you? AT&T, and America's other leading telecommunications providers, of course.

Each of these high-tech transit systems, along with many other exotic technologies the U.S. Department of Transportation and private industry are planning, will depend on the telecommunications industry to provide either the infrastructure or the equipment to get things moving. Telecom companies, for their part, are trying to figure out exactly where their telecom talents can best be deployed to ensure they get a chunk of the $200 billion that the Transportation Department estimates will be spent over the next two decades making America's cars and highways "smarter."

Telecom companies that provide cellular, satellite and other wireless technologies say their mobile products, such as in-vehicle traffic information systems, will garner the largest share of the high-tech transportation pot. But traditional phone companies, such as MFS Communications, say wire line will have a lucrative role, too.

"Fiber will play a huge role in intelligent transportation systems because even if wireless dominates, fiber still links it all together," said Kevin Moersch, president and CEO of MFS Network Technologies Inc., Omaha, Neb. Diverse communications companies from Sprint and Ameritech to Motorola and Rockwell are assessing what their part should be in the emerging high-tech transportation industry.

Market insecurity

"We're still trying to figure out the role that we should play in ITS," said Richard Wolff, executive director for government research at Morristown, N.J.-based Bellcore. So far, Bellcore is exploring the market for providing traveler information services, such as up-to-date traffic reports, but they haven't won any contracts yet, Wolff said. There's a lot of discussion going on, but little has been decided about what the future national transportation infrastructure will look like.

In fact, a national intelligent transportation architecture is being developed under an ongoing $20 million effort directed by two industry-led teams -- each of them with a corporate telecom member on board. Ameritech has a place on the Loral-led team and GTE Laboratories is working on the group headed by Rockwell International. Ameritech and GTE will help the teams define the communications requirements that smarter highways and vehicles will demand. Some say that until these guidelines are set, it's risky for companies to dive into the intelligent transportation marketplace.

"Companies are taking a big risk if they introduce products based on their own standards before a national architecture is designed," said Frank Cahoon, a senior associate with Booz-Allen & Hamilton, a McLean, Va.-based consulting firm that's helping the Transportation Department evaluate the 60 or so ITS operational tests going on around the United States.

In addition to the lack of industry standards, insufficient radio spectrum allocated to transportation infrastructure is another concern. Some radio spectrum has been dedicated to transportation projects by taking it away from some others, such as amateur radio. "But spectrum is a scarce resource, and as ITS becomes a reality, it'll need its own dedicated space," Cahoon said. These issues have made telecom companies hesitant to dedicate serious resources to intelligent transportation technologies.

Brien Benson, a senior fellow at George Mason University's Institute of Public Policy, said he doesn't think telecom companies will ever consider the transportation industry one of their top markets. Not when the telecom industry is considering other enormous shifts, such as moving into the cable television markets.

Infrastructure investment

Still, the opportunity is big enough to warrant attention. One of the most lucrative markets for telecom companies is in providing the communications infrastructure that the systems will need to operate. It's not yet clear exactly how the technologies will fit together, but it's generally agreed that the infrastructure will incorporate a host of wireless and fiber technologies.

Take a proposed traveler information system. In this case, electronic sensors in the highway will send traffic information, such as the speed or density of cars on the highway, to a central information management center. This transmission requires high bandwidth because it will constantly send a large volume of information, therefore fiber would be the best choice.

"But it's only half the equation getting the information from the sensors to the center," said Mitchell Diamond, GTE Mobile's manager of business development. The other half is getting the information back to the end user -- the driver, he said. For this application, where the information receiver is mobile, a wireless application, such as cellular or satellite, is appropriate.

Taking tolls at 60 m.p.h.

Telecom companies are also eyeing the electronic toll collection market, a business that analysts expect will be worth $1.75 billion worldwide by 2005. MFS Network Technologies, an operating company of MFS Communications, has already won several electronic toll collection deals. Most recently, it won a $7.5 million contract to create and install an electronic toll collection and traffic management system on the Atlantic City Expressway, a 44-mile highway that handles 48 million toll transactions a year. The system is expected to speed up traffic and reduce congestion.

The Atlantic City deal differs from most intelligent transportation contracts in that MFS is putting together the whole system in addition to providing the telecom expertise, whereas most prime contractors are systems integrators who include a telecom concern as a subcontractor.

Another company tapping the potentially lucrative electronic toll collection market is AT&T, but it's focusing on equipment by marketing its smart cards as toll collectors. AT&T's smart cards, which electronically store cash that can be used to pay for tolls and other transactions, are being used at toll facilities in Italy, but the telephone behemoth has yet to sell its cards to any American agencies.

But AT&T has bigger transit plans in mind for its smart card -- a card that can be used as a complete travel card, where a traveler can board an airplane, rent a car, pay for a hotel and make phone calls with the same electronic card. AT&T is experimenting with the first part of that paperless idea with a project it's doing with the Delta Shuttle. The airline now offers ticketless boarding for its passengers traveling from Dulles International Airport in Virginia to La Guardia in New York.

For the test, passengers hand the electronic card to the boarding agent who runs it through a reader that records billing and frequent flyer information. "There's no reason it couldn't be done without any human interaction, basically self-boarding," said AT&T spokesman Monty Hoyte.

Computers on the road

In addition to addressing the electronic toll collection market, telecom companies are also finding a role in car-mapping systems that are showing up in U.S. electronics stores.

Most in-vehicle navigation units sold today go to Japan, but sales of all car-mapping systems worldwide are expected to reach more than $1 billion by the end of 1995 -- and telecommunications companies want their part of that market, too.

Rockwell International of Seal Beach, Calif., which has both electronics and communications experience, has been a leader in getting mapping units into American cars, especially rental vehicles. But it's also been selling a navigation unit to truckers that allows operators to supervise their fleets by combining an on-board computer and a global positioning system receiver that transmits a vehicle's location.

Many of the major U.S. trucking companies already use communications systems to monitor fleets, but the decreasing costs of GPS receivers and computers are popularizing the systems.

Several satellite communications companies are also developing fleet monitoring systems for truckers, including Dulles, Va.-based Orbital Sciences Corp. This market for commercial fleet vehicle monitoring is about the only ITS business to have caught on so far.

In fact, the whole ITS marketplace has so far been filled more with promise than profit. So far.

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