# Transportation Deployment Casebook/2014/Electronic Toll Collection in Japan
## Qualitative Analysis
### Mode Description

Electronic Toll Collection (ETC) system is a “state-of-the-art technology” that vehicle can pass through toll gates without stopping. In order to operate this system, on-board device has to be installed inside the vehicle and antenna is set at the tollgate. When the vehicle is near the toll gates, driver has to insert the ETC card (IC card) into the on-board device to pay the toll. The user can buy on-board device at car dealer or car equipment shops, and ETC card is issued by credit card company or toll road organization. On-board device and ETC card are not linked each other. It means that driver can utilize ETC service not only private car but also rental car when on-board device is installed.
When the vehicle enters the toll road, user’s information (e.g. ID and time) and type of vehicles are recorded in both on-board device and ETC card. Then, when the vehicle exits the toll road, toll gate device receives the driver’s entrance information. Moreover, the device calculate the travel distance and the fare automatically. Finally, the device sends this information to the vehicle and the information are recorded in ETC card. At that time, these information is encrypted to protect the user’s security.
First ETC service was started in Norway in 1987 and other countries followed in 1990’s. On the contrary, Japan was delayed and started the service in 2001. At first, the price of ETC on-board device was more than $300 in 2001. It was a hindrance to spread the use of ETC for many drivers. However, due to the effort of manufacturers and government policy, the price declined to $60 in 2005. When the government started the discount service for the ETC driver, the number of user increased gradually. Along with the discount service, the number of ETC tollgates also increased. As of 2014, 89% of users use ETC tollgates. This movement helps to reduce the congestion on highway.
Japan’s ETC system can be used everywhere on Japan’s expressway even if the road administration is different. Compared to many other countries, Japanese toll payment system is different from them because many Japanese toll road adopt “distance-base variable fares”. This payment system takes time to calculate the fare more than “flat-rate fares”, so it results in increasing congestion at the tollgate. This is one of the major cause of traffic jam and about 30% of congestion occurred near the tollgate among the all congestion on highway. Japan’s ETC service was applied to both “distance-base variable fares” and “flat-rate fares”, therefore it is complicated and became an obstacle to start service.
Advantages
The advantages of ETC are as follows;
1. Non-stop payment service
ETC system helps to reduce the congestion because the driver doesn’t need to stop at the toll gates. According to the Norway’s example, the ETC lane can offer 3 times faster service than conventional coin collection tollgate. The Ministry of Land, Infrastructure, Transport and Tourism showed the result about the effectiveness of ETC system in the inter-city highways. Before the introduction of ETC service in 2000, 32.1% of congestion was caused near the toll gates. On the other hand, the proportion of congestion declined to 0.1% in 2009. This shows the significant effect of ETC service. Moreover, they can focus only on driving because they don’t need to prepare the cash. The driver are not likely to take their eyes off the road and it would reduce the risk of accident at the toll gates.
2. The protection of environment
Thanks to the non-stop service, the number of time to accelerate and decelerate was decreased. It contributes to reduce the noise problem and fuel consumption from the vehicle near the tollgates. According to Ministry of Land, Infrastructure, Transport and Tourism, when 85% of drivers use ETC system the amount of CO2 emission can be reduced 210,000 tons/year compared with the past (0% use).
3. Convenience for the driver
Before the emergence of ETC service, it was very inconvenient for the driver to own left-hand drive car because most of the conventional toll collection device were set on the right side. The driver needs to take ticket and pay the cash on right side, so it much increases a time. When the driver use the conventional toll collection system to pay the fare, they have to open the window every time. The driver feels discomfort by this action especially in rainy day and freezing/scorching day. Thanks to the ETC system, they don’t need to do these actions.
4. Discount service
The toll road company offers several discount service to the ETC-use driver. (e.g. "specified area discount" and "time of day discount") In order to increase the number of ETC users, discount service was started. The toll is different depends on the time, day, the type of a car and travel distance. This discount service is also beneficial besides reducing waiting time at toll gates compared with non-ETC users. This system is also good for toll road companies because they can save maintenance cost and personnel expenses. For example, as of 2011 the cost of toll collection (¥/vehicle) for the ETC vehicle is about one-fourth of price compared to non-ETC vehicle, so the effect of ETC service was significantly large.

### The Scene

Before the installation of ETC, majority of the toll collection were manual. The driver had to stop at the tollgate to pay the toll by cash. It took much time because the toll collector checked the fare and the process of money-exchange were sometimes needed. Therefore, conventional toll system relied heavily on the collector. When the traffic volume is large a lot of toll lanes are required; however, it would increase the construction cost and personnel expenses for the toll road company. In some area, toll collector had to walk across the toll gates, so there was a risk of car accident.
In order to collect two types of fares, ”distance-base variable fares” and “flat-rate fares”, several toll collection methods were introduced in Japan. In 1980 magnetic ticket method started instead of punched ticket method. The travel information is recorded in the magnetic stripe on the ticket and this ticket is still used in Japan’s toll road. In 1987 “Highway card” system was introduced. This is a prepaid card which can be used only in toll road and premium amount was added depends on the amount of the purchase price. This card enables the cashless utilization and it could reduce the time compared with toll collection process by cash. In 1989 automatic ticket issuing machine was installed at the entrance. It could reduce the personnel cost and the time to pass the toll gate. In 1995 credit card settlement system started. This system enabled to improve the process speed and expand the method of payment. However, these countermeasures did not show a significant effect to decrease the number of congestion and to enhance the effectiveness of toll collection. It was clear that there was a limit of conventional tollgate system and the demands of renovating system increased day by day. It was the clue of the birth of ETC system.

### Invention

Compared to the conventional toll collection system, some new technologies were adopted in order to offer automatic and cash-less transactions. For example, ETC card (IC card), On-board device, ETC security and Dedicated Short Range Communication (DSRC) which is wireless communication between on-board device and antenna at 5.8GHZ and international standard. These technology enables to offer advanced process and this process is possible all over Japan and two types of fare charging system same as conventional toll collection system, so it needs a high reliability of these technology. These technology are maintained by different organizations. ETC card is issued by credit card company or toll road organization. On-board device and DSRC are made by manufacturers, but highway company maintains DSRC. ETC information is secured by the Organization for Road System Enhancement (the current name is ITS-TEA since September 2014), which was licensed by the Ministry of Construction. This organization is independent of on-board device companies, ETC card companies and highway companies. ETC system is based on close cooperation among several organizations. This new ETC system does not take over the conventional toll collection system completely because some driver still use non-ETC toll gates to pay the toll by cash. Although the number of ETC tollgates are increased, both ETC system and non-ETC system exist together at the present time.

### Early Market Development

The idea of ETC started along with the general idea of Intelligent Transport System (ITS). ITS project was developed through collaboration among industry, universities and the government to reduce car accidents and traffic jam by using advanced technology. In July 1996, the government made “Comprehensive Plan for Intelligent Transport Systems (ITS)” and established 9 fields. “1. Advancing navigation systems, 2.Electronic toll collection systems, 3.Assistance for safe driving, 4.Optimization of traffic management, 5.Increasing efficiency in road management, 6.Support for public transport, 7.Increasing efficiency of commercial vehicle operations, 8.Support for pedestrians, 9.Support for emergency vehicle operations”. Besides ETC, the technology of car navigation system and Vehicle Information and Communication System (VICS) are researched actively. These technologies are known as successful examples in Japan.

### The Role of Policy in Birthing Phase

The reason of birthing ETC system is the policy by the Ministry of Construction and highway corporations. In order to expand this new system, they decided to use interoperable system for all toll road. As of 2000, about 8,000km of toll road were operated in Japan. This number indicated that 4.8% of the total distance of national road and more than 9 million vehicles used this network per day. Average fare per vehicle is about 15 US dollars and maximum fare is more than 1,000 US dollars. The number of toll operators was 47 and the fare system is different depends on the toll operators. Some organization used “distance-based rate” and others adopted “flat-rate”; however, the Ministry didn’t change the toll rate system to start ETC service. Moreover, they regulated to use the same ETC system for all toll roads and new ETC system was designed to coexist with conventional toll collection system. In order to protect the user’s security, specialized security agency was established. This agency is in charge of keeping both the ETC card and on-board device data. Along with “the government five-year road improvement and management program from 1998 to 2002”, the government decided to spend 210 billion yen (approximately $2.1 billion) for the development of ETC system. Due to the leadership of the Ministry, the development of ETC system moved forward quickly at a short period. With the purpose of preventing a monopoly for the sale of the on-board device, twelve on-board device companies participated in the test operation. These policies enabled to improve the development of ETC system all over Japan.
In 1994, the Ministry of Construction and highway company started the research and development about ETC system. In 1997, they began the test operation at Odawara toll gates in Odawara-Atsugi Douro to evaluate the safety and reliability of the ETC lanes for traffic operation. In March 2001, ETC service started in Chiba and Okinawa area. Finally, in November 2001, ETC service began all over Japan. However, the number of users were small in the birth stage because the lack of knowledge about the service, high price of ETC device and the difficulty of procedure to begin ETC service. The number of ETC lanes were also small and ETC lanes were constructed by replacing the general lane which is for non-ETC users. It caused the reduction of capacity for the non-ETC vehicles. When the traffic volume was large, ETC users could not use ETC lane smoothly because the congestion from general lane extended to the main lane. ETC users were involved in this congestion, so the congestion problem still existed in spite of starting ETC service. In order to popularize ETC service, several countermeasures were started to examine (e.g. reduction of toll and on-board device, expansion of ETC lanes, publicity).

### The Growth of the Mode

In order to increase the number of ETC users, the Ministry announced the plan as follows;
1.Price policy
With the purpose of increasing the users, the government started price policies for ETC use. Due to the introduction of ETC system, flexible discount system is possible, so the rate is different depends on the time zone, day and type of vehicle. In November 2004, ETC discount service at midnight (from 0am to 4am) was started. Then in January 2005, time zone of discount service was expanded to ranges from 22pm to 6am, and commuter discount service was also started. In March 2009, the dramatic discount service that the maximum price was \1,000 (about $10) was introduced. Along with the discount service, existing service was abolished. Before the ETC service, Pre-paid card system, “Highway card system”, was popular for highway users; however, this service was terminated since April 2006 to promote the use of ETC.
2.Lease system
Regarding the on-board device, the price was significantly high at 30,000yen ($300) in 2001. With the purpose of reducing high initial cost for users, lease system of on-board device started and the government offered subsidies to reduce the price since May 2003 and 5,000yen ($50) per vehicle was deducted. Finally, the cost declined to about 10,000yen ($100) in 2004 and user can start ETC service at small amount of money.
3.ETC service for motorcycle
Although only car-drivers can use ETC service at first, this service expanded to motorcycle users.
4.One-stop service
User can do ETC procedure at one place from acquisition of ETC card to installation of on-board device. This service is in service area on highway, car equipment shops and commercial facilities.
5. Expansion of payment service
User can choose payment service whether pre-paid or post-paid payment
6.Increase the ETC exclusive lane
The number of ETC exclusive lane expanded due to the increase of the percentage of ETC users. In May 2004, the highway company completed to equip 895 ETC tollgates which is more than 90% of total tollgates in Japan. They also installed a notice antenna in front of the toll gates to tell the information about incorrect insertion and expiration of the ETC card. They also began to construct “Smart Interchange” that only ETC vehicle is applicable to use for entry and exit.

### Development during the Mature Phase

Although most of driver use ETC service, not all toll gates are ETC lanes. There are still general lane which the driver pays the toll by cash in the tollgates and some lanes are “ETC/general shared lane” which is used for both ETC and non-ETC users. It is difficult for the driver to find the ETC lane while driving at a high speed, therefore toll road operator installed the traffic sign board which navigates the driver to the ETC lanes. In the maturity stage, enlightening activities are important to decrease the problem, so publicity works are needed for telling the driver to use ETC service appropriately. For example, if driver didn’t pass through ETC lanes at entrance they cannot use ETC discount service. Driver has to insert the ETC card accurately before passing through the ETC gate. Driver have to pass through the ETC lane at a speed under 20km/hr. The Ministry of Land, Infrastructure, Transport and Tourism is planning to start new project “ETC2.0”. This project offers not only toll collection but also driving support service (e.g. information provision about congestion and disaster, operation management by utilizing route information and the private service on parking lot) by using ETC device combined with other technology service.

## Quantitative Analysis

The ETC data in Japan was obtained from the official website of the Ministry of Land, Infrastructure, Transport and Tourism. They show the number of ETC vehicles (cars/day) and the percentage of ETC usage on Japan expressways. The period of date is from 2001 to 2014 (ETC vehicles: from April 2001 to September 2014, ETC usage rate: from December 2001 to September 2014). We can see that ETC usage is already in maturity stages. At first the users of ETC system was relatively small, but since 2003 the number dramatically increased and the proportion of ETC usage exceeded 80% in 2009. Although the number is fluctuating, the users and usage rate increased slightly since then. As of September 2014, the number of ETC usage is 7,072,000 (vehicles/day) and ETC usage rate is 89.6%.
| Stage | Period |
| Birthing stage | 2001 - 2003 |
| Growth stage | 2003 - 2009 |
| Maturity stage | 2009 - present |
Cautions with the data
Although this data covers nationwide information of ETC usage on expressways, some data are omitted. Since June 2010 about 20% of expressways became toll-free to revitalize the regional economies (this policy ended in June 2011). Moreover, since June 2011 several expressways in Tohoku region are toll-free because of Tohoku-Pacific Ocean Earthquake on March 11, 2011. The data of these sections are excluded.

### Equations

S-curve is used to identify the birth, growth and maturity stages. In this analysis, an Ordinary Least Squares Regression model was used to estimate the following three-parameter logistic function:
S(t) = K/[1+exp(-b(t-to)]
Where: S(t) is the status measure (Number of ETC vehicles and ETC usage rate) t is time (ETC vehicles: from April 2001 to September 2014, ETC usage rate: from December 2001 to September 2014) t0 is the inflection time (half of the K) K is saturation status level b is a coefficient
The following equation was used to estimate the coefficient (b) and inflection point (t0);
Y = LN(a/(K - a))
Where: a is the status (Number of ETC vehicles and ETC usage rate)
The results of the regression analysis as follows;
| Fit parameters | Number of ETC vehicles | ETC usage rate |
| K | 7,610,000 | 90.1 |
| b | 0.00159 | 0.00185 |
| t_o | 39416.4 (November 2007) | 38908.3 (July 2006) |
| Regression Results | Number of ETC vehicles | ETC usage rate |
| Multiple R | 0.91231 | 0.98055 |
| R-squared | 0.83231 | 0.96147 |
| Adjusted R Square | 0.83125 | 0.96121 |
| Standard Error | 1.00424 | 0.49835 |
| Observations | 160 | 153 |
As the figure shows, both observed data follow the track of the S-curve very well. However, there are some differences between observed data and predicted S-curve data especially in ranges from 2004 to 2008, it is in growth stages. As mentioned in the qualitative section (The Growth of the Mode), it is assumed that the price policy, toll-discount service and reduction of on-board device, would significantly affect to increase the users because the government decided to start the discount service for ETC drivers since 2004 and the price of on-board device also decreased to approximately 30% of price in 2004. They would become an incentive to use ETC service for many people along with several other policies.

# References

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