Myki ticketing decision could ride on cost of replacing readers

The cost of replacing more than 25,000 myki devices has become a critical factor in whether Victoria will stick with the company behind the maligned ticketing system or order a major overhaul by a new operator.

Victoria’s transport department is expected to announce a winning bidder to run and update the ticket system within weeks, according to multiple sources familiar with the confidential process.

Victoria is exploring whether it can improve the ticket system without having to replace all its existing infrastructure. Credit: Scott McNaughton

The Andrews government has promised the new contract will deliver improvements including enabling passengers to touch on using a bank card or smartphone rather than a physical myki pass, which has been possible in London since 2012 and in Sydney since 2018.

Myki’s current operator, NTT Data – whose seven-year, $690 million contract ends on November 30 – global industry leader Cubic and the US-based firm Conduent were the three contenders invited to make final offers for the contract, the sources said.

A key issue discussed with final bidders was whether they could continue to use existing ticket readers, gates and other infrastructure, estimated to be worth tens of millions of dollars – and the cost to taxpayers to replace them if not, according to sources who requested anonymity to discuss confidential information.

Cubic is more likely to install proprietary scanners, the sources believe. The company operates London and Sydney’s ticket systems and spent two years installing its own scanners and gates across New York City’s 472 subway stations and buses after it won a $US597 million ($895 million) contract to replace the MetroCard system in 2017.

Conduent uses its own validators in many of the 400 transport systems it runs around the world, which include Montreal, Helsinki and Adelaide.

NTT may be a cheaper option for taxpayers because it could continue to use much of the existing third-party technology and gradually update it. Most existing ticket readers can be used with a bank card payment system.

However, one transport industry insider said it may not be politically viable for the Andrews government to give NTT another contract given the Victorian public’s low opinion of myki, which replaced Metcards in 2012 after a four-year rollout plagued by delays, cost blowouts and technical failures.

Carol Schweiger, a Boston-based expert and leading consultant on transport technology, said whole-of-system operators, such as Cubic could deliver unparalleled expertise, but also locked transport agencies into their own technology which was disruptive and expensive to install or replace.

“One of the most expensive parts of these fare systems is the infrastructure,” she said. “Cubic is the one that did the London system, and that is what almost everything is measured against, but you’re paying for their experience.”

Schweiger said this was why some transport agencies, such as California’s, were moving to “open architecture” systems made up of infrastructure and technology from different providers, which they could update more easily and cheaply in the future.

NSW is looking to split its next ticketing contract between different operators, but Victoria did not consider that model in its tender process.

Japanese group NTT bought the company that developed myki, Kamco, in 2010 and won a seven-year contract extension in 2016 after promising to improve the system. Recent upgrades include faster ticket readers and the ability to touch on with an Android smartphone.

iPhones cannot be used, although passengers have been able to instantly top up credit on their myki cards using the PTV app since 2021.

The introduction of contactless bank card travel would overcome some major remaining criticisms of myki, including: the $6 cost of smartcards; the lack of a single-trip option for visitors; the fact the cards expire after four years; and, the inability to buy them of top them up on trams or buses.

Other improvements expected under the new contract include users being automatically charged the lowest possible fare based on their travel patterns, rather than them having to buy discounted weekly or monthly passes in advance, and its extension to parts of the regional V/Line network still using paper tickets.

A spokesman for the Department of Transport and Planning said it would be inappropriate to comment on details about procurement process while it was underway.

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