Huge transponder price drop in GA - 6C sticker $1.59 to $3.05ea, 5.9GHz $24.80ea

September 20, 2009

Georgia toll authority's I-85 HOT lanes procurement saw three companies bidding sticker tag transponders at $1.59 (TransCore), $1.79 (Neology) and $3.05 (Sirit). These are far and away the lowest prices ever bid for toll transponders in the US. The prices are for ISO 18000 6C (EPC GEN2) standard tags (6C), never to our knowledge specified before in any US toll procurement and never before offered by vendors. A sudden drop in transponder prices of 70 or 80% is likely to make huge changes in tolling.

Kapsch price of $24.80/unit on 5.9GHz is the first hard bid with the USDOT and OmniAir -sponsored high capability wireless system at the higher frequency. $24.80 is much lower than expected. Industry talk had been that 5.9GHz transponders were likely to be priced in the $40 to $50 range. It isn't long since regular E-ZPass IAG standard transponders from Mark IV were costing in the mid-$20s. They currently run around $20.

5.9GHz suddenly looks nearly affordable

5.9GHz is a compelling future technology for a range of safety and driver assistance applications but has generally been regarded as excess capability, and cost, for tolling. But if Georgia can get a $24.80 bid for 350k 5.9GHz transponders then E-ZPass IAG with potential sales of millions should be able to get close to $20/unit. At this price 5.9GHz looks a lot more competitive than many of us had assumed.

IAG procurement

The IAG has had proposals for a new technology transponder/reader system since last year. An IAG official told us recently the evaluation and selection is "well along" but he wouldn't give any indication of when the result will be announced.  There has been extensive testing at a couple of test locations.

The IAG is more secretive than the CIA. They have never officially announced the proposers, or any short list.

Talk is it's a "two-horse race"  - between Mark IV and TransCore - on the basis that the other strong bidder Kapsch is priced too high, and lacks experience with operations of the existing IAG transponders. There was a flurry a few weeks back when someone put out the line that Mark IV had lost, making TransCore the winner. Our information is that no one has won or lost yet. We can't establish that TransCore has an advantage overall.

Their product line offers a more diverse range of choices of both transponders and readers. And since they have been deeply involved in system integration and operations they know how Mark IV equipment works in the field at least as well as Mark IV themselves.

IAG toll agencies have effectively ruled out sticker tags by requiring customer feedback in the RFP.

"Sticky tags" they call them

Mark IV people disdain sticker tags and the company has never proposed their use. Their proposal seems to be to make improvements to the existing active IAG transponder and to provide for an orderly move to 5.9GHz at some future point, running the two in parallel during the transition to 5.9GHz. Kapsch likewise.

TransCore in offering a variant of the Encompass 6 reader, now titled the IAG PnP (plug and play) Reader, hope to attract the IAG with the option to go up-market to 5.9GHz or the flexibility to work with a range of existing modes - the eZGo Anywhere multimode transponder, and sticker tags.


Sticker tags head for a dollar apiece

But for now there's a hubbub of speculation about what the low-low 6C prices revealed by Georgia mean for the future. Neology wasn't far from TransCore's prices, but Sirit so far the major proponent of 6C was approximately twice the TransCore prices.  

They'll be under strong pressure to lower their costs.

The Okie dilemma - eGos, Super eGos deflated

TransCore will have to lower their 6B prices if its going to make sense to their customers to stick with 6B.

Take Oklahoma Turnpike, a big toll system with ten tollroads and 377 electronic toll lanes.

They were an early adopter of electronic tolling.

They have 1.2m battery powered ATA transponders in use - essentially the same early 1990s model, extensively deployed in Texas too - AT5544 is the TransCore designation.

TransCore has ceased manufacturing these hardcase ATA transponders new, but they'll refurbish old ones with a new battery.  But that costs $26.40/unit.

OTA have been sending approximately 200k/y for refurbishing at a cost of over $5m/yr.

They are in the early stages of a transition to Super eGo 6B-based sticker tags.

They are currently switching out their single mode ATA readers for the multimode Encompass 6 (E6) readers at a rate of about one a day. The Kilpatrick is done. Others are being swapped out progressively. The schedule is for Oklahoma Turnpike Authority to be completely working on E6 readers by April next year (2010).

Their plan then is to begin issuing eGo 6B sticker tags in the fall of 2010.

6B eGo tags $9.40 v 6C tags $1.59

TransCore's currently quoted price to the Oklahoma Turnpike for the eGo 6B sticker tags is $9.40 - a big improvement on the $26.40 of the refurbished ATA hardbody tags. But how to justify 6B tags at $9.40 when TransCore sells 6C sticker tags to Georgia at $1.59 apiece?

At 200k/year that's $1.9m v $0.3m.

They have similar performance. Some say 6C, approved in July 2006 is an upgrade on 6B. It was certainly intended as an upgrade by the standards writers at ISO.

TransCore is seriously undercutting its own prices.

There's a similar if less dramatic story on reader costs with dedicated 6C readers being significantly cheaper than other readers.

Neology & Mexico's Repuve

All this had to happen at some point.

It is the economies of vast scale in logistics or supply chain RFID tracking spilling over into vehicle RFID, and now toll collection.  

Neology, runner up in Georgia, won one of the world's largest single transponder sales not long ago - to supply a 6C sticker tag for the vehicle registration of every motor vehicle in Mexico, about 27m of them.

Details of the contract with Repuve, the Mexican national  motor registry agency, are not entirely clear but the contract is for tag supply alone - readers are being separately acquired by the states. The quoted total cost of 6C tags is $40m.

$40m/27m = $1.48/tag.

Game changer

COMMENT: The toll industry won't be the same after the Georgia I-85 competition. By attracting extraordinary bids with 6C sticker tags and 5.9GHz it will have repercussions in tolling for some time to come.

TOLLROADSnews 2009-09-20

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