Anne Grünkorn, CEO of LogPay Mobility Services, examines the challenges and possible dangers of new EU legislative proposals on public transport for the future of mobility.
In the EU, the concept of ‘services of general interest’ summarises the governmental task of providing the goods and services deemed necessary for a human existence. The German concept of municipal provision of basic services includes, for example, the supply of water, gas and electricity and the maintenance of hospitals; as well as educational and cultural facilities and the provision of public transport services. In discussions on the European Services Directive, a longstanding debate on the design and financing of services of general interest in the European single market has now intensified on public transport provision and the future of mobility.
These services, previously provided mainly by the public sector, are moving into the focus of attention. There are many aspects to be considered when adapting different national regulations on services of general interest to the European internal market. Due to the potential market volume, the pressure for further market openings in the area of services of general interest is steadily increasing. However, there is a risk here of abandoning the European social model by liberalising the service-oriented markets.
In accordance with the principle of subsidiarity, the EU and its Member States are responsible for providing these services at moderate prices and of regionally comparable quality to the EU citizens. Transport, including public transport, is a service of general interest. The German public transport structure allows equal access and service in high- and low-density areas, even when public transport service is economically unattractive.
Mobility as a service of general interest
According to the Association of German Transport Companies (Verband Deutscher Verkehrs-unternehmen), it is important to ensure an attractive, affordable and sustainable future of mobility for all citizens. Public transport companies in Germany are predominantly publicly operated; and most are organised in regional public transport authorities. They create mobility offers for all people, both in big cities and rural areas. They maintain and operate buses, suburban railways and underground lines, regional trains and trams. They are currently supplementing their offer step-by-step with newer mobility concepts such as the rental of bicycles or electric scooters and car- and ridesharing solutions; and they are mainly financed by the revenues from tickets (representing on average 70% of the income of public transport operators) and grants from the communes and federal states (averaging 30% of income).
Private sector companies, on the other hand, are geared towards maximising profits. Access to customers is therefore central to the mobility sector in metropolitan areas. Rural regions are disadvantaged and deprived of central services of general interest when it comes to services of the private sector companies. Even in the city areas the new mobility service providers are selective regarding the areas in which they operate. According to German and European principles, equivalent living conditions should be guaranteed in towns and the countryside; but if mobility offerings by private providers only focus on urban spaces, this equivalence no longer exists. People living in low density areas – in Germany more than half of the population – are currently excluded from new mobility provision. This is also true for the speed of broadband expansion, meaning the development of mobility as a service (MaaS) run by private companies focuses on metropolitan areas, where high speed internet is available for platform services.
The new EU PSI Directive: a danger to public transport
The EU’s new directive on open data and the reuse of public sector information, adopted by the European Parliament and the Council of the European Union in mid-June 2019, includes a general obligation to transfer all ‘public documents’ (covering data in all formats) to private companies for commercial and non-commercial purposes; and is part of the Digital Single Market Strategy. This means that public transport companies must pass on data from their business operations to third parties, including competitors, without restrictions. This represents a serious intervention in the markets for the future of mobility services. Although the obligation to disclose data is limited by the applicable national security, data protection, copyright and trade secret provisions, it further aggravates competition between public undertakings and private companies in the mobility sectors. Especially since the provision of the data by the public transport companies is basically free. Article 13 governs the transfer of so-called ‘high value data sets’.
The EU institutions believe extended data use by the private sector will bring particular benefits to society, the environment and the economy. Nevertheless, the main goal of private companies is to run a profitable business and not to provide services on the base of the German concept of municipal basic service provision.
Initially, the directive must be transposed into national law by all member states within two years: in Germany the ‘Informationsweiterverwendungsgesetz’ (Act on the Further Adoption of Information) is already underway. The purpose of this adopted legislation is to promote digital innovation, particularly in the field of Artificial Intelligence, through free access and exchange of data. In addition to the economic factors that this open data offers, the EU is also concerned with the importance of transparency and democracy, accountability and the promotion of social engagement – as well as access to information; all the fundamental rights of the EU the provision of these data also serves to promote competition.
However, public transport companies are already competing with the ‘new’ mobility private service providers. If implemented as planned, the directive will reinforce this competitive environment to the benefit of big international companies. It is therefore important to keep a close eye on the competitiveness of local public enterprises in relation to big international companies, particularly those based outside the EU; and their legal and financial possibilities. Today there is already evidence in the market that private companies with financially strong investors eliminate competition – witness the market leaders Flixbus or Uber, for example.
Data: the new currency
The exchange of mobility data from all areas is an important basis for intelligent and connected mobility services. However, the Public Sector Information Directive obliges public transport companies to release their data for free in public. Even high value data sets such as competitive data – for example, data concerning the flow of passengers – will therefore go to competitors in the future, without a reciprocal obligation on their part to disclose their data in return; as private companies are not affected by this directive. According to the Deutsches Verkehrsforum, the currently emerging partnerships between public transport and new mobility service providers are endangered by the new legislation. On top of this, the revenue share of public transport companies is at risk and will lead to an even higher public financial burden on communes and federal states.
Conclusion: competition versus public service obligation
If there is no amendment to this legislation, the worst case scenario is a quasi-monopoly incursion of big internationals into the mobility market. Then the nationwide, cost effective and widely available public transport option will be eliminated. Private service providers would take over the transport companies which are majority publicly owned. Therefore, the medium and long term consequences should be examined urgently at an EU summit of all stakeholders.
Only a local and regional mobility offer, according to the principles ‘anyplace, anyhow, anytime’, can guarantee the equivalence of living conditions with regard to access to mobility. Public transport companies should have the right to decide on which terms and conditions they invite others to participate to their mobility platforms and should solely own their data in the future. Clear legal regulations are therefore needed so that private mobility service providers will position themselves as a supplement and not as an exclusive alternative to public transport companies. Data is the new gold in digital platform development.
LogPay Financial Services GmbH