Report to/Rapport au :

Transit Commission

Commission du transport en commun

14 September 2011 / le 14 septembre 2011

Submitted by/Soumis par: Alain Mercier, General Manager/Directeur général

Transit Services/Services du transport en commun

Contact Person/Personne ressource : Jane Wright, Manager/ Gestionnaire

Safety, Business Services and Customer Relations/Sécu, Serv op & Relations client

613-842-3636 x2126, jane.wright@ottawa.ca

Ref N°: ACS2011-ICS-TRA-0020

OBJECT : TRANSFÉRABILITÉ DES LAISSEZ-PASSER DAUTOBUS AVEC

CARTE À PUCE

REPORT RECOMMENDATIONS

That the Transit Commission approve the principle of transferability and non-photo ID requirements for the smart card, as well as the age category adjustments, as detailed in this report, and that any resulting financial implications be addressed through the budget process.

RECOMMANDATION DU RAPPORT

Que la Commission du transport en commun approuve le principe de transférabilité et les exigences didentification sans photo pour la carte à puce, ainsi que les ajustements aux tranches dâge, comme il est expliqué en détail dans le présent rapport, et que toute implication financière qui en découlera soit traitée par le biais du processus budgétaire.

BACKGROUND

On December 7, 2007, Council approved a partnership with the Greater Toronto Area Fare System (GTAFS) and working with the PRESTO smart card system. PRESTO is a partnership between the Government of Ontario, GO Transit, eight other transit systems in the Greater Toronto / Hamilton area, and Ottawa, to implement a public transit smart card system.

By working with GTAFS and PRESTO to implement a smart card system in Ottawa, the City will achieve significant cost savings, reduce implementation risks, and benefit from the resources already committed by the Province. The PRESTO model, and experience in implementing similar systems elsewhere, was an important element in designing, developing and implementing a seamless smart card system in Ottawa.

The PRESTO system uses contactless smart cards and readers, which are considered industry best practice because they enhance customer service, allow rapid boarding, and provide increased security for both OC Transpo and its customers. Customers are able to use their smart card both as a pass and as an e-purse. Reloading of the card can be done remotely over the phone, the Internet (via home or mobile devices), or at OC Transpo Sales and Information Centres and some City Client Service Centres.

Updates have been provided to Council throughout the development of this project, including:

· August 2008  Memo sent to Council  progress update;

· May 2009  Amendment to Smartcard Project Report (ACS2009-ICS-TRA-0004), which detailed the revised commission structure of credit cards;

· June 2010  Technical briefing, which outlined the progress of the project;

· March 2011- Information presented within the OC Transpo Marketing Plan; and

· May 2011  Presentation to Transit Commission highlighting milestones and implementation schedule.

The vision statement for PRESTO is: To provide eTransit fare and information management systems that improve client service while enabling revenue collection and efficient operations for Ontario Transit Agencies.

The PRESTO system is already operating on a number of Ontario transit systems, including GO Transit Rail, TTC (limited stations), Brampton Transit, Burlington Transit, Durham Region Transit, Hamilton Street Railway, Mississauga Transit, Oakville Transit and York Region Transit. As of September 12, 2011, PRESTO has issued 71,500 smart cards with total fare payments at $35.5M.

PRESTO is an operating unit of Metrolinx, an agency of the Government of Ontario under the Metrolinx Act, 2006. Pursuant to Council direction (ACS2007-PTE-TRA-0010), OC Transpo signed the PRESTO Smartcard Procurement and Operating Agreement with Metrolinx on October 19, 2009. In doing so, the City committed to the PRESTO model, which includes no photo identification on the card.

In summer 2012, the City of Ottawa will begin the roll-out phase of the PRESTO smart card. The smart card will provide OC Transpo customers with a new, secure and convenient way to purchase fares and bus passes.

In order to finalize the business plan and implementation strategy for the PRESTO smart card, the issue of transferability must be addressed.





Photo ID

While photo identification is currently being used on OC Transpo passes, research and new technology confirm that this requirement is no longer necessary.

Photo ID serves two purposes. The first is to limit pass transferability by linking a particular bus pass to a specific customer. The second is to have identification immediately available at the time of inspection so that proof of payment can be established. Currently, OC Transpo passes consist of two pieces  a photo ID and a monthly paper voucher  both of which have corresponding validation numbers.

The key for inspection purposes is not the photo ID, but the corresponding numbers between the picture identification and the pass.

In the 2006 the Revenue Processes Audit of OC Transpo and Para Transpo, and the follow-up audit in 2009, photo IDs were examined by the Citys Auditor General. The recommendations pertaining to passes and photo identification dealt with their handling, issuance, information tracking, presentation and communication. The intent of the Auditor Generals recommendations was to secure fare collection, ticket and pass distribution and ensure accountability by OC Transpo. The smart card is an important means of achieving these outcomes.

DISCUSSION

As a result of the Auditor Generals recommendations, as well as discussions with PRESTO, and lessons learned from the other municipalities, staff undertook an analysis and identified the best option moving forward to prove ownership of a pass. This option takes into account issues such as security, integrity of the discounted fare, technology, transferability and customer service.

Based on the results, staff concluded that the best option is to provide OC Transpo customers with a smart card that does not require photo ID (to prove ownership) and is legally transferable within class. Importantly, this model is compatible with PRESTO.

It is to be noted that transferability will be restricted to the same fare category (class). For example, a Student Pass may be used by another student but not by someone requiring an Adult Pass; a Senior Pass may be used by another senior, but not by a student. An Adult Pass, however, could be used by anyone as it represents the highest level of pass and provides no discount.

Benefits of Transferability

The most important attribute of providing a transferable smart card is customer convenience. Industry best practices confirm that enhanced customer convenience increases a customers commitment to the service, promotes transit to infrequent riders and improves the reputation of the transit provider.

In the case of a transferable smart card, customers will benefit from increased convenience in many ways. Specifically, customers can:

· Purchase fares on-line, eliminating the requirement to visit a store or client centre to purchase monthly pass/tickets;

· Purchase fares and monthly passes to best suit their day-to-day travel needs;

· Share and transfer their PRESTO smart card within the same fare category;

· Carry a card instead of tickets; and

· Not worry about having cash (or exact change).

For OC Transpo and the customer, there would be an avoidance of an additional administrative requirement by not having to get an OC Transpo issued photo identification card (annual event for students).

It is expected that ridership would increase because of improved customer convenience, a strengthened OC Transpo brand, and potential customers would have more opportunity to use the system. Customers using another persons card would account for part of the ridership increase, but it is anticipated that new customers purchasing their own pass or e-purse in the future would be attracted because of improved customer experience.

In line with the experience of other transit agencies around the world who have adopted this model, a non-photo ID card will also enhance service for OC Transpo customers by:

· Increasing promotion opportunities for OC Transpo to infrequent or potential new customers that would generally not use OC Transpo.

· Reducing the cost of a smart card (specialized equipment and administration required to do photo ID increases costs)  $6 card issuance fee, but an additional $8.50 charge to customers for photo ID.

· Reducing line-ups at Sales and Information Centres and the City Client Service Centre at City Hall.

· Integrating PRESTO smart card with partnering municipalities  for example, in the future OC Transpo customers will be able to use their card (e-purse) when they travel to Toronto (GO Transit, TTC, etc.). This would also work for people travelling to Ottawa from the partnering municipalities who have a PRESTO smart card and will use OC Transpo.

· Supporting the PRESTO business model where customers can purchase their mode of transit fare payment from their home or through their personal PDA (smartphone, tablet, laptop, etc.). This allows greater access to all customers (rural, for example) because they may purchase online.

· Ensuring the security of the PRESTO smart card is more advanced than current fare instruments.

The full benefits of the PRESTO smart card  including the ability to purchase fare instruments online - will not be fully realized with a photo ID requirement.





Risks and Mitigation Factors of Transferability

At OC Transpos request, KPMG prepared an assessment of the potential impact of transferability on fare revenue, which incorporated a number of potential risks and benefits and included an analysis of trip patterns by households.

Using various assumptions, KPMG identified a range of potential fare revenue loss between $170K and $2.6M. This analysis is in line with OC Transpos original conservative estimate that customers transferring their transit pass could potentially represent an annual revenue loss of up to $1.5M.

OC Transpo based their analysis on the very extensive Origin-Destination Survey 2005, which provides a wealth of information on travel patterns in Ottawa and the surrounding area. The survey concluded that on a typical weekday, approximately 100,000 households in Ottawa have at least one member making a trip by transit. Of these, 960 households  or roughly 1 per cent of all households making transit trips  have another household member also making a transit trip who could have used a transferable pass given the arrival time of the first persons trip (typically returning home) and the departure time of the second persons trip.

It is safe to assume that only one round trip per day could be made on a transferred pass for any of those 960 households, given typical trip times of day and trip lengths. Annualizing this number of trips (including proportions for weekend days) yields approximately 560,000 one-way trips. Using the conservative assumption of a $2.60 fare per trip (i.e. no pass used, no discounted fare, or no valid transfer time for the return leg), results in $1.5M revenue lost annually.

KPMG provided OC Transpo with additional information based on composition of households and experiences in Toronto. However, this analysis does not provide the in-depth information required by OC Transpo (actual trips made), nor does it provide an apples to apples approach in the case of the Toronto experience.

In the end, the risks of fare revenue losses are reduced by practical considerations for many households, starting with the logistics and timeliness of physically passing a shared card from hand to hand.

These risks are further offset, in part, by lower administrative costs, related to the issuance and delivery of photo IDs (e.g. new specialized photo equipment required), and privacy issues related to the collection, storage and use of customer photos. The cost of new equipment to permit printing of pictures is estimated at $120K plus $75K per year in operating costs. These start-up costs would significantly increase if additional equipment was purchased to set-up temporary sites to accommodate the increased volume during the deployment of the PRESTO smart card  allowing transferability would eliminate these costs entirely.

Based on the mitigation factors and lower administrative costs outlined within this report, OC Transpo believes the $1.5M estimate of potential revenue loss is high and that the real figure will likely be much less  closer to the point of revenue neutrality.

Further, providing a PRESTO smart card that is transferable significantly reduces the risk of fraud and counterfeiting. The smart card also improves fare collection by eliminating tickets and reducing cash fares. Mitigation of transferability is also achieved by:

Allowing only passes within class to be transferable (e.g. student to student, senior to senior, etc.);

Validation and discounted fare setting would only be done through the Sales and Information Offices;

Simplifying fare enforcement by enabling Fare Inspectors and Special Constables to view the type of fare by using the PRESTO hand-held device to tap customers smart cards; and

Requiring all customers to carry proof of discounted fare entitlement (e.g. student card to prove eligibility for student smart card).

As mentioned, the transferability of the PRESTO smart card will provide current OC Transpo customers with many benefits while, at the same time, promote the service to infrequent and non-users. Importantly, transferability will streamline the fare payment process, both for OC Transpo and for the customer.

The implementation of photo ID smart cards will be much more difficult to align with PRESTO and the partnering transit agencies.

For example, a non-transferable smart card would require a mandatory photo ID for all transit passes. For this, a number of additional steps  at an additional cost to the customer - would be required for customers to still have the ability to order their passes remotely after they had purchased their photo ID.

If a photo ID is required for all smart cards then a transit pass could not be purchased initially online and each of the approximately 55,000 OC Transpo monthly pass holders would be required to visit a Sales & Information Centre to purchase their PRESTO smart card to have a photo taken. This would result in long line-ups for photo IDs during the launch. Additionally, a number of temporary sites would need to be set up to accommodate customer demand.

Of the approximately 30,000 adult monthly pass holders, there would be no benefit to ordering their card on-line as a visit to an OC Transpo facility would be required to procure a photo. The volume of customers that would require photos during a relatively short time frame would require additional resources by OC Transpo and add to the costs of implementation.

In more practical terms, a photo ID requirement would delay deployment of the PRESTO system as it would put OC Transpo outside the PRESTO operating model. Also, a number of steps would need to be undertaken and endorsement by the Office of the Information and Privacy Commission of Ontario would be required to make these changes.

Fare Enforcement

Transit Fare Inspectors and Special Constables are responsible for enforcing the Transit By-law proof of payment requirements. The Transit By-law currently requires that customers produce a transit pass that includes both a renewable voucher and an OC Transpo issued photo identification card. From the perspective of a Fare Inspector or Special Constable, the principal piece of information for verification is the corresponding numbers on the photo identification card and the renewable voucher, rather than the photo itself.

If OC Transpo permits transferability of the PRESTO smart card within class and repeals the current photo identification card component of the transit pass from the Transit By-law, as recommended in this report, adjustments to fare enforcement processes and amendments to the Transit By-law will be required. As a result of a new transferable-within-class pass structure, Transit Fare Inspectors and Special Constables will no longer verify proof of ownership of passes but instead verify proof of payment and proof of discounted fare eligibility.

In order to provide Transit Fare Inspectors and Special Constables with the ability to verify customer entitlement to use a student or senior pass the Transit By-law will require that as a condition of use of the pass the customer meet the eligibility rules for the pass and that the customer produce their drivers license, Ontario photo card, or other photo ID as specified in the By-law. In addition, the Transit By-law will be amended to include the offences of being ineligible to use a student or senior pass and failing to produce valid identification, thereby allowing Law Enforcement the ability to issue Provincial Offence Notices to customers who fail to produce the required ID.

In conclusion, OC Transpo expects that fare enforcement processes will be simplified when the focus of fare inspection shifts from confirmation of proof of pass-holder ownership and proof of payment to verification of customer entitlement. Fare Inspectors and Special Constables will only occasionally require a customer to produce ID, and only customers who hold a student or senior pass will be required to produce ID. Most importantly, many of the issues seen currently with OC Transpo issued photo identification cards, such as Provincial Offence Notices issued to customers who have not recorded their OC Transpo photo identification card number on their voucher, will be eliminated by the Smartcard implementation.

By-law Amendment

PRESTO has built its operating model as a non-ID card with transferability as an option. Since the present Transit By-law does not provide for transferability, it is recommended that staff be directed to amend the By-law to permit transferability, as well as, to remove the OC Transpo photo identification card requirement, and have these and other amendments related to this report brought forward in a report for Transit Commission and Council approval.

In addition, other by-law amendments may be required to address discounted fare categories and blocks, as approved by Council. Specifically, there are two areas which will require alignment with PRESTOs universal age rules: child class and student class. At OC Transpo, a child age is currently considered to be 6-11, under the universal class rules a child is 6-12. This extends the child fare by one year. The student age rule is anyone that is in full time school. The universal class rules define a student as 13-19. However, this will have no impact on customers as students age 20-64 will be able to access a student bus pass through a special discounted fare category.





Privacy

Transit Services is subject to the protection of privacy requirements found in Part II of the Municipal Freedom of Information and Protection of Privacy Act (MFIPPA) in the same manner as the City. In addition, Transit Services is also subject to the Federal Personal Information Protection and Electronic Documents Act (PIPEDA) with respect to employee information.

Both laws prescribe rules that govern the manner in which personal information is collected, used and disclosed. The Privacy Impact Assessment Final Report for the PRESTO System Project (the PRESTO PIA) dated August 04, 2009, provides a detailed privacy analysis of the PRESTO System Project. The PRESTO PIA was completed by the Office of the Chief Information and Privacy Officer (OCIPO) of the Ministry of Government Services.

Section 2.4 of the PRESTO PIA sets-out a key assumption that the PRESTO project will not collect or apply photos of cardholders to the PRESTO card and further states that [a]ny change in this decision should be subject to further privacy analysis.

OCIPO emphasizes the need for a further privacy analysis should photos be collected or applied because a photograph often constitutes personal information as defined under MFIPPA. Any such further privacy analysis would need to confirm the need to collect the photographs for fare enforcement purposes.

The privacy analysis would also analyze the risk of an unauthorized use and/or disclosure of customer personal information and make findings on how the City ought to address that risk. The current OC Transpo practice is to use hard copy photo IDs, which means they are not stored electronically. Any further privacy analysis would need to include a consideration of security issues associated with the storage of data and ensuring that customer photographs are used only for fare enforcement purposes.

If OC Transpo were to not collect customer photos, these additional privacy risks would be eliminated and OC Transpo could continue to rely on the findings of the PRESTO PIA.

U-Pass

Currently, the U-Pass is out of the scope of this phase of the project and will remain a paper-based transit fare. This is due to the student associations role in the issuance and distribution of their institutional passes with photo ID because of the unique specifications of eligibility for student groups.

An assessment may be completed in conjunction with the universities and with PRESTO at a later stage of development.

ENVIRONMENTAL IMPLICATIONS

The convenience of providing a transferable bus pass (within class) and e-purse should increase public transit usage. As a result, more ridership would reduce the number of vehicles on the road and reduce greenhouse gas emissions.

STRATEGIC DIRECTION

B1  Achieve 30 per cent modal split by 2021

H4  Deliver agreed to level of service at the lowest possible cost.

CONSULTATION

Public consultation has occurred through the OC Transpo Usage and Attitude Survey in which transferability was presented as a topic for feedback. This survey is conducted every year through telephone interviews with 2,000 randomly selected residents, whether they are OC Transpo users or not.

The 2010 Survey demonstrated how very favourably survey respondents react to the notion of a smart card. The research showed that smart card has received the highest "anticipatory" rating by customers compared to other OC Transpo initiatives. When asked, people cite convenience as the main reason they take transit. Once the survey digs deeper into why people are so favourable to smart cards it is because they see the technology as serving to add even more convenience.

Examples of questions from the 2010 Usage and Attitude Survey:

1. If instead of lining up each month to purchase or renew a monthly pass, customers could renew their smart card monthly pass online, by phone, or at a self-serve kiosk.

· 95 percent positive response

2. If instead of requiring the correct change or number of tickets, a smart card reader automatically deducted the appropriate fare when boarding the bus.

· 92 percent positive response

3. If instead of being non-transferable, smart card transit passes were transferable.

· 85 percent positive response

4. Once OC Transpo implements a smart card fare payment system, will your transit use increase?

· 64 percent answered the same

· 25 percent answered slightly more

· 6 per cent answered significantly more

LEGAL IMPLICATIONS

As noted by staff in this report, if the decision is to include a customer photo as part of the PRESTO smart card system then this would necessitate a further Privacy Impact Analysis in order to ensure full compliance with protection of privacy obligations in applicable legislation.

The current Transit By-law does not account for the PRESTO smart card as a fare instrument, and, furthermore, does not allow for the transferability of fare instruments. Should Council approve the 2012 Business Plan as discussed in this report, authority should also be sought at that time for By-law amendments related to the implementation of the smart card. Amendments will be required to allow transferability and to establish requirements in the By-law for proof of payment and proof of discounted fare eligibility for smart card users, including the required regulatory provisions and prohibitions. Amendments to the Transit By-law will be required to eliminate the photo ID as part of OC Transpo discounted fare instruments, as recommended in this report. Furthermore, the PRESTO Universal classes will need to be reflected in the By-law and the redundant OC Transpo categories will be deleted where required. Furthermore, any corresponding changes to the related fares of each category will also be required.

RISK MANAGEMENT IMPLICATIONS

There are risk implications. These risks have been identified and explained in the report and are being managed by the appropriate staff.

RURAL IMPLICATIONS

N/A

FINANCIAL IMPLICATIONS

Any budget implications will be addressed during the 2012 Business Plan and budget process.

OC Transpo estimates that the impact of PRESTO smart card transferability on revenue will be neutral.

The restriction of transferability to within the same fare category, coupled with the tools made available to Fare Inspectors and Special Constables to validate a fare category, will serve to minimize potential revenue losses.

While it will be difficult to isolate the impact of the above upon implementation, we will monitor revenues to assess any change in trends over time or from anticipated results and take action where required.

The broader implications of the PRESTO smart card must also be considered as it will introduce a significant change from current processes, including both financial and efficiency changes.

IT IMPLICATIONS

There are no IT implications directly related to the issue of smart card transferability.

SUPPORTING DOCUMENTATION

N/A

DISPOSITION

Following Transit Commission approval, OC Transpo will prepare a report for Transit Commission and Council regarding the proposed By-law changes.