The Network of Networks
The concept of mobility-as-a-service goes further than just the convenience of a booking app and a flat rate. Transport platforms can create a multi-sided market where travelers on one side and mobility service providers on the other can interact in a coordinated way, thus transforming the previously isolated transport modes into a fully coordinated transport system: a network of networks.
Some urban transport modes already operate as a network. This is the case with urban railway services, public bus services, and new shared mobility services. They concentrate a high number of travelers in a coordinated way. Railway and bus passengers travel together in the same vehicle, reaching high levels of efficiency in terms of cost and occupation of congested public space. New shared mobility services, including ride-hailing, car-sharing, and bike-sharing, go a step further, introducing a network on top of previously isolated vehicles, increasing the efficiency in the provision of the service.
However, each network operates with little coordination with the rest of the transport networks. Local authorities try to coordinate different transport modes by creating hubs so that passengers can transfer from one network to another; they try to coordinate schedules and they try to develop common ticketing systems. However, such efforts have had limited success so far.
Technology empowers better coordination of the different transport modes, creating a network on top of the pre-existing networks. The Internet of Things (loT) has made it possible to gather information about the location and conditions of the vehicles (trains, buses, cars, bikes, and so on). Artificial intelligence has made it possible to analyze such information and to determine the optimum coordination of the transport mode.
Platforms play a central role. Firstly, the loT empowers the network of networks. Users can be connected though their smartphones. And now vehicles can also be connected through specific sensors that provide information on the location of the vehicles, the number of passengers in the vehicle, the speed, etc. Furthermore, it is possible to incorporate sensors into the roads in order to obtain information about the evolution of traffic: congested streets, incidents in the service, and so on. The loT makes it possible to digitalize the real world, mirroring it and creating a digital proxy of it - a digital twin.
Secondly, software is in the position to organize the information in a sensible way. Algorithms and Al can identify the patterns and the opportunities for the coordination of the different transport modes. Intermodality can be increased as there is more information about each transport mode and such information can be organized in favor of the passenger. It is possible to identify the best combination of services for a traveler to move from Point A to Point B in a seamless and effortless way. In this way, passengers can optimize the coordination of mass-transit services with first/last mile mobility.
Travelers already have access to good sources of information about travel options. Waze (owned by Google) provides real-time information about traffic conditions and the best routes to drive around the city or region. Google Maps also provides information about available traveling modes, including mass-transit, shared-mobility and the best intermodality options to reach a destination.
A similar, if not more powerful effect can be identified on the supply side. It is not only that travelers can passively identify the best mobility alternative. It is also that the providers of mobility services can actively adapt their services to the passengers’ needs. As demand can be anticipated in a more precise way, suppliers can adapt their services in terms of schedule, frequencies, and coordination with other transport modes.
Most mobility managers are aware of the need to digitalize their operations, to install sensors into their infrastructures and vehicles, to gather data about their operations, and to improve the efficiency of their systems. They perceive the possibility to increase the efficiency in their operations and to increase consumer satisfaction.
However, it is not sufficient to digitalize the mobility networks. The deepest transformation will come from the interactions between passengers and the different transport modes that digitalization makes possible. Of course, digitalization will transform the direct relationship between each mobility service provider and the customers. However, the transformation will not finish there.
Digital platforms have the ability to facilitate the interaction between different parties, between the different sides in multi-sided markets. Digital platforms are in a position to receive data from all the parties thanks to the internet (not only from computers and smartphones, but from all kinds of sensors). Platforms, then, have the capability to make sense out of all these data through their algorithms, their Al systems. Thanks to these capabilities, they can optimize the interaction between all the parties. Such interactions are not limited to passengers or to a specific mobility service provider. The most powerful role of platforms is to facilitate interaction among passengers and all the service providers at the same time, making them work as a single system, thus creating a network of networks.
However, the role of digital platforms in transport could be even more relevant. Platforms, being at the center of the system and having the Al capability, can become the organizers of the mobility system. They will inform travelers of the best traveling options. They will inform mobility providers about the demand for their services. They will not only inform the parties, but also determine the available mobility options. They will have the power to nudge passengers to use a specific mobility option. Through their suggestions, they can steer the flow of travelers from one transport mode to another, from one route to another, even from one moment of the day to another.
On the supply side, platforms might substitute traditional transport managers as coordinators of each transport mode. Railway or bus companies not only provide the mobility service, but they also organize it, as they decide the routes and schedules. They decide when a specific train or bus is operated, when the maximum capacity is in operation, etc. Traditional network operators had control of the direct network effects, which they had created by supplying the infrastructure/service that allowed the aggregation of traffic (passengers/freight). They decided how traffic would be managed (schedules, frequencies, quality of service, etc.) and how the benefits of the direct network effects would be distributed between the passengers and the service provider, in the form of rates for passengers and benefits for the service provider.
Platforms create larger network effects by adding to the traditional direct network effects in each network, the indirect network effects derived from the interaction of all the different networks and the algorithmic network effects that empower machine learning. As large pools of travelers make their traveling decisions through the platform, the system as a whole can increase its efficiency, distributing traffic flows better across the existing transport modes. The network of networks brings new efficiencies that will far exceed the benefits created by the isolated networks.
As platforms are creating these new network effects, they have the power to coordinate the system and the power to nudge travelers into a specific network and route. Transport service providers will increasingly adapt their services to the flow of traffic directed by the platform. They will always have the role of transporting passengers and freight, but will gradually lose their direct relationship with the passenger and, more importantly, their role of coordinator of the service. As described in the following sections, transport services providers might get “platformed.”
Digital mobility platforms