Regulatory capture

The Toll Regulatory Board (TRB) is a good example of classic regulatory capture. They forget the public interest nature of their work, or maybe they are just plain lazy.

Regulatory capture is an economic concept that says regulatory agencies end up dominated by the industries or interests they are charged with regulating. The agency, charged with acting in the public interest, instead acts in ways that benefit the industry it is supposed to be regulating.

The TRB issued its order mandating RFID for all vehicles using the expressways. The operators might have given TRB and DOTr the idea because that means a cash float the operators can get from the deposit for every account. Crunch your numbers: P200 times four million cars. Did the toll rate formula take this “free” money into account?

Actually, the RFID mess goes all the way up to DOTr Sec. Art Tugade. It was Tugade who insisted on a short deadline, supposedly to beat COVID infection.

DOTr announced a deadline only on Aug. 27, and that first deadline was on Nov. 2, but extended to Dec. 1. The rush for the RFID stickers and registration caused crowds to develop around installation sites. That made IATF stop the registration because of the high danger of infection.

Speaking of IATF, they also mandated only 100 stickers/registration per site per day. If they have 100 sites (and they didn’t have that many at the start), that means they can only do 10,000 a day. If they are trying to reach two million cars (the number is more around four million) that means 200 days or seven months. At four million, they need 400 days.

The demand for RFID stickers had been low. So, the inventory of the companies was not enough to meet the sudden surge of demand. I understand, they normally need three months lead time to order from suppliers.

It is clear Tugade didn’t crunch his numbers, and TRB just said “yes, boss” without crunching the numbers too. The result is the spectacular mess we are seeing now.

Actually, Ramon Ang made a sensible suggestion to leave some lanes as cash lanes for the meantime. Both expressway operators had to do this emergency measure anyway because of the worsening traffic build up.

The cash lane makes sense because some people, myself included, rarely use the expressways.

I have seen the system in California and it is so painless. They don’t even have the tollgate barriers we have. They don’t even need the RFID sticker because the cameras pick up the plate number. But it will cost you more without the RFID sticker.

Here, they could have offered to give a discount if you have the RFID. After all, you are saving them manpower cost. They could use the deposit cash float to cover discounts. A TRB actively looking for ways to fight for the consumer should be able to see things like that.

One comment on Facebook: Ang hilig nitong gobyerno mag Red-tagging, pero sa RFID-tagging, palpak!

How come there is a continuing problem of failure to read RFID stickers, causing traffic to back up and make people wish they could pay cash.

One motorist on FB commented:

“They bought first generation sensors. Performs badly if they work at all. You practically need to crawl towards the sensors to be detected. In Taiwan in 1998, when they were just beginning to develop, you could speed through toll booths and be detected. They cannot say we pay less when, in fact, our rates are atrociously higher.”

Of course, the operators will deny there is anything wrong with their systems but daily experience is a better indicator of truth. This is where TRB should step in, station its own people at the toll booths and document each case of failure. Once documented, operators have no choice but to do something.

The good news is that the two operators will integrate their systems. Folks don’t have to get two sets of RFID stickers. This proves Sen. Win Gatchalian was right to tell DOTr that integration should have been the first step and mandatory use follows. But DOTr got the sequence wrong.

The other Gatchalian, Mayor Rex of Valenzuela finally had his patience run out and cancelled the business permit of NLEX. The mayor was not taking the explanations of NLEX and simply wants the problems of traffic and malfunctioning RFID readers to disappear. After all, the mayor said, this had been going on for seven years.

How will Mayor Rex’s withdrawal of business permit work? In a Viber message to me, the mayor explained that NLEX cannot collect toll within the city, making large portions of the tollway free.

Some would say the mayor was grandstanding, but the mayor was doing the job that should have been performed by the do-nothing TRB. Expect TRB to now prove how much of a captive they are.

But the problem shouldn’t have gone this far if TRB was doing its job. They should spend less time inside their air conditioned offices and more time in the field making sure their orders are being carried out flawlessly.

Where do we go from here? Some suggestions:

DOTr should suspend implementation of their department order and not set another deadline.

Until further review, allow both cash and cashless transactions. Give motorists the option until the operators have corrected glitches and they realize themselves the benefits of cashless transactions.

Make an independent technical audit of the system.

Have a more orderly installation program.

Tugade must have his own people on the ground and fire the executive director of TRB for not doing his job.

The private tollway companies have a big responsibility to do their jobs right. Randy David made a very cutting comment that they are as bad as the government agencies they replaced in terms of delivering service.

The private sector must live up to its image of great management and efficiency. That’s the key justification for privatization. Otherwise, we are a hopeless people. We shouldn’t be.

Boo Chanco’s email address is [email protected]. Follow him on Twitter @boochanco