The ETC system stalls at the gate: electronic toll systems are inching forward at a snail's pace in Japan - toll - Upfront

Japan, Inc., Oct, 2003 by Mayumi Saito

WHEN INTERNET RESEARCHERS Japan.Internet.Com and Info Plant asked 300 drivers in June if they knew what the ETC (Electric Toll Collection) system does, 95 percent of them answered that they recognize the name. Yet only a paltry 3 actually use the system itself.

"I wonder what the system is for," wrote 21-year-old Yasue Takeda on the Yomiuri Shimbun's readers' forum. Takeda had just survived Golden Week traffic tie-ups on the Tohoku Expressway and was unimpressed. "As far as I could see, the ETC-only tollgates were not only rarely used--they were even exacerbating the congestion at the regular gates."

Now a common sight on Japan's highway tollgates, the ETC system was introduced by the Ministry of Land, Infrastructure and Transport in March 2001. The system was supposed to ease traffic jams on the nation's major expressways, allowing vehicles equipped with a transponder to pass through the gates without having to stop to pay.

The system requires the driver to have an ETC-compatible credit card for insertion into a transponder slot. As the vehicle passes through the tollgates, the fare is recorded on both the expressway computer system and the IC card in the transponder via the technologies of wireless telecommunications.

Thirty percent of highway congestion occurs at tollgates, according to the Japan Public Expressway Corporation (JPEC), operators of expressways nationwide. Instead of expanding roads, accelerating the speed at which traffic passes through tollgates is a quicker solution. The JPEC estimates that ETC systems can double or even quadruple the number of cars passing through the gates at a given time.

Consumer response in Japan, however, has been slow. 76 percent of the drivers cited in the above survey remain wary of installation due to the price. Many drivers who only occasionally use expressways have found the system's initial price tag of [yen] 30,000 to [yen] 40,000 too expensive.

More than 70 percent said that the desired price would be under [yen] 5,000, though 57 percent say they will still consider the system in the future. And if the ETC systems are available at the ramps and parking lots of shopping centers, for example, the figure jumps to 68 percent. Many drivers are willing to pay the cost if the systems move beyond expressways.

Similar ETC systems have been employed for over 10 years in the West, and more than 30 countries now offer the service, according to the nonprofit study group, Toll Road.Org. Seven million transponders, called "E-Z Pass," are in full force throughout the US East Coast. 70 percent of New York vehicles have an E-Z Pass plastered to their windshield, dramatically reducing traffic jams during the urban rush hour. Users in New York can even rent the transponder for as low as $20.

In Italy, the Tele-pass system prevails, with a [yen] 20. monthly fee for the transponder. Ten years ago, the Italian models were similar to those now found in Japan, which are installed inside the vehicle with an IC card in a slot. But now Italian transponders are attached to the windshield like the US models. This system is also compatible in other countries of Southern Europe.

To tackle the lackluster sales and mounting criticism of the current ETC system in Japan, bureaucrats, toll road operators and electronics companies are not idling.

Three public expressway corporations have been offering a 20 percent discount service on Japan's expressways for the period covering November 30, 2001 to June 30, 2004, granted to drivers who registered their ETC cards between November 2001 and June 2002. Also, drivers who registered with prepaid ETC tolls have been entitled to discount services on the expressways since July 2002. The discount rates are 4.8 percent for [yen] 10,000 and 13.8 percent for [yen] 50,000.

Earlier this year, at the end of February, public expressway corporations stopped selling the high-priced prepaid expressway cards, available for [yen] 30,000 and [yen] 50,000 apiece. Transport minister Chikage Ogi said that denying drivers access to the highway card would help convert them to the ETC system. While the ministry permits drivers to continue using cards that were issued previously and is still selling lower-priced cards of [yen] 10,000, [yen] 5,000 and [yen] 3,000, Ogi is considering abolishing them altogether by the end of February 2004.

In June, the transport ministry announced that it would give discounts for the transponders to the first 450,000 vehicles that applied for the two-year monitoring of the ETC system use. They promised [yen] 8,000 discounts for the first 350,000 commercial vehicles, such as trucks, buses and taxis, and [yen] 5,000 discounts for the first 100,000 (later upped to 120,000) private vehicles. Applications rushed in before the government closed the offer within two weeks.

"The government campaigns and the discount services have gradually pushed sales of our transponders," says sales representative Koji Yoshikawa at Matsushita Electric Industrial Co.'s Automotive Systems division. The electronics companies are also releasing remarkably cheaper equipment. Matsushita marketed separate-antenna type CY-ET 500 ([yen] 20,800) in June, which now boasts top sales in the transponder market. "We are now continuing hill-steam production to meet the number of orders," Fumio Kosuge told Nikkei Business Daily.