How Can Mobility as a Service Enable Smart Cities?

Written in Collaboration with Adam Rabin, MBA Candidate ‘20, University of California Berkeley – Haas School of Business

Mobility-as-a-Service (“MaaS”) at its core, is a simple concept. Similarly to how Netflix compiles available entertainment on a single platform for its users to enjoy, MaaS aggregates available supply (e.g., buses, trains, rideshare vehicles, etc.) in a single mobile app to help a commuter get from place to place in a frictionless intermodal transaction.

With all the available transit supply, MaaS proponents argue that there should be a single point for consumers to access this supply. In theory, the MaaS user will not own any of the supply (just as Netflix subscribers do not own the content they view), but will subscribe to a collated transportation service that offers the user access to myriad transit options. With MaaS, then, just as the personal ownership of a DVD became obsolete, technology is enabling personal ownership of transportation supply to become increasingly unnecessary.

In 2016, Helsinki, Finland pioneered a MaaS application called Whim, which “aims to make it unnecessary for any resident to own a private car by 2025”, as featured in a Deloitte Study: The Future of Mobility – the rise of Mobility as a Service. Since then, MaaS has increasingly gained traction in other parts of Europe and in the United States.

According to a March 2019 McKinsey study, total investment in e-hailing—a central component of MaaS—totaled roughly $56B since 2010, with an average annual investment of $11.4B over the last five years.  In addition, “younger generations use ridesharing two to three times more than do those older than 55 and are increasingly less likely to get driver’s licenses”—this data suggesting an openness to replace owning cars and a predilection towards shared mobility.

In short, mobility is undergoing a paradigm shift and the benefits are not just central to an efficient, inexpensive trip from A to B. With reduced congestion, increased passenger utilization and attenuated personal automobile use, the environmental benefits prove abundant—carbon footprints on a per passenger basis will decrease. Of course, stakeholders will also want to understand the financial implications of such a reduction. In other words, given the “cost of carbon,” what is the economic benefit associated with a net emissions reduction?

The “social cost of carbon,” which is a measurement of the opportunity cost a community will realize from CO₂ emissions is estimated at roughly $40 per metric ton (“MT”) CO₂ emitted by the EPA. This reduction in carbon, in terms of MTs, can then be converted into a dollar amount and presented in terms of economic opportunity savings. The financial benefits of reducing carbon are central to the sustainable transit narrative and should be viewed as an additional—and significant—cost-reduction measure when introducing MaaS into a region.

Cities everywhere are coping with increased urbanization, and are struggling to provide mobility choices to their citizens. MaaS aims to help cities provide choice for their citizens, while facilitating smart city initiatives with cost savings and improved efficiencies.

Franco Amalfiis a GovLoop Featured Contributor. He leads the go to market strategy for smarter government for Oracle Public Sector North America. Franco advises government officials on how to leverage modern cloud-based solutions and emerging technologies to help government organizations deliver personalized government services. In addition to working with customers, Franco authors, publishes white papers and articles on leveraging technology to drive business value for governments. He is also a frequent speaker at government conferences. He is a graduate of McGill University in Montreal, Canada and has completed an Advanced Certificate for Executives in Management, Innovation, and Technology at MIT Sloan School of Management in Cambridge, USA. You can read his posts here.