Is it Time to Scrap Toll Booths and Toll Plazas?

Technology makes it possible to go fully cashless

On April 22nd the second of four cashless toll roads opened in Santiago, Chile. Costanera Norte joins the already open Autopista Central in making 21st century tolling an everyday experience for more than a million commuters. By the time all four privately concessioned toll roads are completed and operational, Santiago will have the world’s first fully automated urban tollway system.

Although four different private firms have financed, built, and operate the expressways under 30-year concession agreements, there is standardized electronic toll collection technology and complete interoperability among the four systems. All four draw on a central customer database, under which each concessionaire can bill those who use its roadway, regardless of which company issued the transponder and has the direct customer relationship.

The fully automated toll collection is largely based on transponders (about 90% of users), but non-transponder users can purchase a day-pass, under which their license plate number is entered into the database as an authorized user for that day, to be recognized as such by the video enforcement system. A non-day-pass, non-transponder vehicle (i.e., a violator) is offered the opportunity to by a “late day pass,” and if that opportunity is not exercised, is fined $50.

This cashless tolling model is very similar to that used for the past five years on the Melbourne CityLink in Australia’s second-largest city. When I visited Melbourne in November 2000, Avis explained the day-pass system to me when I rented a car, and the charge was included on my Avis bill. Transurban, the concessionaire that owns and operates CityLink, recently purchased the M2 toll road in Sydney and plans to convert it to CityLink-style cashless operation.

More costly cashless systems operate on Toronto’s Highway 407ETR and the Cross Israel Highway. These systems advertise completely open-road tolling, with no need for non-transponder holders to register in advance. Their license plates are videoed, the plate is looked up in various DMV databases, and a bill is sent to the registered owner. The sanction for those who refuse to pay is denial of renewal of vehicle registration, but that becomes more difficult to arrange the more distant the jurisdiction of the vehicle owner. Violation rates on this type of system seem to be about twice as high as on day-pass-type systems, partly due to the much higher transponder-use percentage on the latter type of system and partly due to the difficulties of enforcing payment by distant users.

And of course HOT lanes in California, Texas, and now Minneapolis (and soon Denver and Washington, DC) all operate on a cashless basis, although since these are optional lanes, it’s easier to sustain a transponder-only policy.

So the transportation community is nearing a critical mass of operational data with cashless toll collection. We have a spectrum of options, from transponder-only to fully open-road, open-to-anyone. So why do we still have toll booths and toll plazas? Isn’t it time to scrap these anachronisms?

There is ample survey data that what most ticks people off about toll roads isn’t the price itself but the hassles of using toll booths. What a great step forward it would be for road pricing if by a date certain—say 2015—we could promise motorists that the last toll plaza would be torn down and all toll roads would operate without cash payment. So why don’t we do it?

There are a number of concerns, which certainly must be addressed. Let’s look at the most common ones:

Unions—foot-dragging by toll collectors’ unions has slowed down the introduction of E-ZPass-only lanes in the northeast, but has been unable to stop the inevitable progress of demonstrably superior technology. There is no more future in toll booth operators than there was for elevator operators or firemen on diesel locomotives.

Transponder penetration-another concern is getting the level of transponder ownership up to a large majority of all potential users. In Santiago, the concession agreements require a large amount of free distribution of transponders, initially. That’s certainly one way of addressing this problem.

Transponder standardization—in a country the size of the USA, it’s not surprising that we have several regional standards at this point. But as tolling expands, and the next generation of transponders appears, we are likely to see the emergence of a de-facto national standard.

Interoperability-E-ZPass has already achieved regional interoperability. Whether we need national interoperability is open to question, but if tolling grows rapidly, it will probably evolve.

Rural, occasional users—If a toll road gets a handful of cars a month from Montana, would it be worth its while to spend money seeking to enforce payment? Probably not. But as more and more states move into tolling, the enactment of reciprocal laws providing for non-renewal of vehicle registration for non-payment of tolls will become more practical.

In exchange for addressing the above problems, those implementing cashless tolling will realize a number of benefits. First, there should be large cost savings from eliminating toll booths and toll collectors (though customer-service costs of fully automated toll collection are hardly trivial). Second, there will be large time savings to customers who no longer have to sit in long lines. Third, drivers will save fuel by eliminating the stop-and go and idling that’s inherent in waiting in toll lines. And that will lead to important emission reductions, a fourth benefit.

I’ll close with an opportunity to realize all those benefits in a highly visible location-the Oakland (CA) approach to the Bay Bridge toll plaza. This is one of the country’s largest traffic bottlenecks and pollution hot-spots, as traffic backs up for miles and hours every morning, waiting to get through the toll booths. A new Bay Bridge is in the early stages of construction, but its design is likely to change due to ongoing problems with huge cost overruns. Why not make the Bay Bridge the first toll bridge in the country to go fully cashless?

Robert W. Poole Jr. is director of transportation studies and founder of the Reason Foundation.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the Ronald Reagan, the George H.W. Bush, the Clinton, and the George W. Bush administrations.

Surface Transportation

In the field of surface transportation, Poole has advised the Federal Highway Administration, the Federal Transit Administration, the White House Office of Policy Development, National Economic Council, Government Accountability Office, and state DOTs in numerous states.

Poole's 1988 policy paper proposing privately financed toll lanes to relieve congestion directly inspired California's landmark private tollway law (AB 680), which authorized four pilot toll projects including the successful 91 Express Lanes in Orange County. More than 20 other states and the federal government have since enacted similar public-private partnership legislation. In 1993, Poole oversaw a study that coined the term HOT (high-occupancy toll) Lanes, a term which has become widely accepted since.

California Gov. Pete Wilson appointed Poole to the California's Commission on Transportation Investment and he also served on the Caltrans Privatization Advisory Steering Committee, where he helped oversee the implementation of AB 680.

From 2003 to 2005, he was a member of the Transportation Research Board's special committee on the long-term viability of the fuel tax for highway finance. In 2008 he served as a member of the Texas Study Committee on Private Participation in Toll Roads, appointed by Gov. Rick Perry. In 2009, he was a member of an Expert Review Panel for Washington State DOT, advising on a $1.5 billion toll mega-project. In 2010, he was a member of the transportation transition team for Florida's Governor-elect Rick Scott. He is a member of two TRB standing committees: Congestion Pricing and Managed Lanes.


Poole is a member of the Government Accountability Office's National Aviation Studies Advisory Panel and he has testified before the House and Senate's aviation subcommittees on numerous occasions. Following the terrorist attacks of Sept. 11, 2001, Poole consulted the White House Domestic Policy Council and the leadership of the House Transportation & Infrastructure Committee.

He has also advised the Federal Aviation Administration, Office of the Secretary of Transportation, White House Office of Policy Development, National Performance Review, National Economic Council, and the National Civil Aviation Review Commission on aviation issues. Poole is a member of the Critical Infrastructure Council of the Los Angeles Economic Development Corporation and of the Air Traffic Control Association.

Poole was among the first to propose the commercialization of the U.S. air traffic control system, and his work in this field has helped shape proposals for a U.S. air traffic control corporation. A version of his corporation concept was implemented in Canada in 1996 and was more recently endorsed by several former top FAA administrators.

Poole's studies also launched a national debate on airport privatization in the United States. He advised both the FAA and local officials during the 1989-90 controversy over the proposed privatization of Albany (NY) Airport. His policy research on this issue helped inspire Congress' 1996 enactment of the Airport Privatization Pilot Program and the privatization of Indianapolis' airport management under Mayor Steve Goldsmith.

General Background

Robert Poole co-founded the Reason Foundation with Manny Klausner and Tibor Machan in 1978, and served as its president and CEO from then until the end of 2000. He was a member of the Bush-Cheney transition team in 2000. Over the years, he has advised the Reagan, George H.W. Bush, Clinton, and George W. Bush administrations on privatization and transportation policy.

Poole is credited as the first person to use the term "privatization" to refer to the contracting-out of public services and is the author of the first-ever book on privatization, Cutting Back City Hall, published by Universe Books in 1980. He is also editor of the books Instead of Regulation: Alternatives to Federal Regulatory Agencies (Lexington Books, 1981), Defending a Free Society (Lexington Books, 1984), and Unnatural Monopolies (Lexington Books, 1985). He also co-edited the book Free Minds & Free Markets: 25 Years of Reason (Pacific Research Institute, 1993).

Poole has written hundreds of articles, papers, and policy studies on privatization and transportation issues. His popular writings have appeared in national newspapers, including The New York Times, The Wall Street Journal, USA Today, Forbes, and numerous other publications. He has also been a guest on network television programs such as Good Morning America, NBC's Nightly News, ABC's World News Tonight, and the CBS Evening News. Poole writes a monthly column on transportation issues for Public Works Financing.

Poole earned his B.S. and M.S. in mechanical engineering at Massachusetts Institute of Technology (MIT) and did graduate work in operations research at New York University.