A growing convoy of startups is using data analytics and mobile networks to help cities manage traffic better. Note: This post originally appeared in Canadian Business. Story by Peter Nowak.

Like many drivers, David Alleyne-Martin has seen the engine light on his dashboard occasionally turn on, only to wonder what it means.

“It’s the mystery light that tells you something is wrong with your car,” he says. “It’s saying, ‘Go take it in, and someone will figure it out.’” Frustrated by how little he knew about what was going on under the hood, Alleyne-Martin started a company, Drven, aimed at giving motorists a user-friendly look at their cars’ inner workings.

For decades, automobiles have been gathering data about their own internal systems, yet that information has typically been locked away from drivers; only mechanics armed with special hardware have been able to access it. Drven’s product, called Ke (pronounced “key”), is a small fob that plugs into the same telemetry port a mechanic would access and wirelessly transmits to a smartphone app—kind of like a Fitbit for your car.

Once they’re armed with more accurate information, Alleyne-Martin says drivers will have a better idea of what’s gone wrong with their cars, how much repairs will cost and which vehicles perform better than others.

Toronto-based Drven is just one of thousands of startups worldwide focusing on the rapidly growing field of car and traffic technology. There’s never been a better time to be a startup focused on transportation, with several factors converging to create a huge market opportunity.

On the one hand, there’s the rapid rise of Uber and its smart-phone-enabled ride-hailing ilk, plus the success of electric- and connected-car maker Tesla. On the other hand, self-driving cars from the likes of Google—while still at least a few years away from consumer use—also loom large. Taken together, the developments signal the long-overdue arrival of rapid and meaningful technological advances in the previously staid world of transportation, and consumers are about to get a lot more choice when it comes to everything from the cars they drive to the public transit they take.

The global smart transportation sector is expected to grow to US$138 billion by 2020, up from US$46 billion this year, at a compound annual growth rate of 24%, according to analysis firm Markets and Markets.

“We’re in a perfect storm of activity,” says Salim Teja, executive vice-president of ventures services at the MaRS Discovery District in Toronto. “Every large city is talking about a smart city strategy, and almost all of those connect to an Internet of Things environment.”

Matt Ginsberg, founder and CEO of Connected Signals, believes his startup‏ is facing the same bright prospects. The Eugene, Ore.-based company makes an app called EnLighten, which predicts when traffic lights will turn green or red. ‏The app hooks into traffic-light data supplied by cities to make its predictions, which are then displayed on the driver’s smartphone.

‏“We actually know it’s going to make people safer,” Ginsberg says. “If you tell people they’re going to make the light, they no longer speed to do so.”

‏The company started in 2010 and has gone live in nine cities, including Portland, Salt Lake City, Las Vegas and Christchurch, New Zealand. EnLighten is also being tested in Melbourne, Australia and the company is in talks with a number of other cities, including Edmonton, Ginserg says.

‏Connected Signals also scored a major coup earlier this year with the announcement that BMW will integrate EnLighten into cars, which transfers the app’s interface from the driver’s smartphone to the dashboard display.

‏BMW was looking to develop similar functionality on its own, but the car maker didn’t necessarily want to get into negotiating traffic data access with cities. Municipalities are in turn responding to such inquiries from the auto sector by being more receptive to working with startups.

‏“Two years ago, the only way I could get a new city online was I had to call them up and I had to beg,” Ginserg says. “Cities are coming to us now.”

Toronto is one of the municipalities embracing the idea of solving transportation issues by working with startups. In early October, the city held TrafficJam, a hackathon that invited entrepreneurs to come up with ideas for beating gridlock. The idea was a decided shift away from previous approaches.

“The best way to make some progress on this…wasn’t to go out and hire a consultant, as we often would have done, but rather get some of these people in who are spending their lives developing these things that will hopefully be a big score for them one day,” says Toronto Mayor John Tory. “Hopefully it’s something that becomes a big score but in the short term helps us with our traffic.”

Toronto is one of the municipalities embracing the idea of solving transportation issues by working with startups. Photo credit: Gadjo Sevilla under CC BY-NC 2.0

Based in Kitchener, Ont., Miovision is on its way to that proverbial big score. Started in 2005 as a school project by University of Waterloo engineering students, Miovision’s main product is Scout, a camera system that counts cars at intersections. The idea for it had an all-too-familiar origin—the founders’ own experiences. Kurtis McBride worked as the quintessential college student grunt, spending whole days counting cars in the hot sun as a way to make a few bucks. “I formed an opinion about whether it was a good use of people’s time,” he jokes.

Scout cameras automate the process of gathering traffic data, which cities use when deciding to re-time traffic lights. New developments such as condos and other buildings usually change traffic patterns within their vicinities, and that often necessitates recalibration.

McBride says the U.S. Federal Highway Administration has estimated it could reduce traffic by 10% if all the lights on the roads were properly adjusted, which represents a substantial opportunity for Miovision in the U.S. alone. Scout cameras are already in use in 60 countries.

The company is now launching Spectrum, a device housed inside the traffic cabinets found at intersections. Like Drven’s Ke, Spectrum frees the data that is generated in those cabinets by connecting them to mobile data networks. An enabled cabinet can send out a text message to a technician if a problem occurs, or it can allow for remote adjustment of traffic signals.

“The information used to be trapped inside that grey box. We come along and digitize it all, and create a really easy way for cities to get that information out via the Internet,” McBride says. Spectrum is currently being tested in Waterloo, Ont., with full rollouts planned by the end of the year.

As with other transportation-oriented startups, Miovision is finding city planners increasingly receptive to its pitch. “The government and the guys who are in charge of the network want nothing more than to improve the quality of service for the driver,” McBride says. “They’re really open to the ideas that we’re bringing to them.”

‏Not every startup is getting the red carpet treatment, however. Last year, Rome-based MonkeyParking voluntarily shut down operations in San Francisco—a city that couldn’t be friendlier to technology startups—after officials threatened to sue the company.

‏MonkeyParking was offering an app that allowed users to auction off their parking spots to other drivers when they were finished with them. City officials said that was against the law, so the company decided to retreat rather than fight.

‏The lesson for startup entrepreneurs is that while municipalities are increasingly willing to play ball, it’s often better to work with them than against them as some—most notably Uber—have opted to do. In many cases, the cities supply data that can make or break a company, or at least save it from having to develop its own database, which can be costly and take years.

Parko, based in Tel Aviv, Israel, is a case in point. When the company started in 2012, its app used crowdsourcing to connect drivers with one another to help find open parking spots. Since then, Parko has pivoted to gather data straight from municipal parking authorities.

The result is a map that shows streets as red, orange or green, with the colours denoting parking availability the same way Google Maps shows traffic flow. Parko has found that co-operating with city hall has produced better results than trying to connect drivers directly, as some rivals attempted.

“Our solution doesn’t discriminate. It doesn’t provide the information to the highest bidder,” says co-founder Tomer NeuNer. “It’s a complete user experience for drivers.”

Ultimately, analysts believe the market for traffic and transportation startups—whether it’s in-car diagnostics or traffic and parking analytics and predictions—is still only in its infancy. The opportunities are going to continue to grow as cars and other modes of transportation become increasingly connected, generating more data that can be used and manipulated in turn.

“It’s evolving a broader ecosystem than some of the other industries we’re working with,” says MaRS’ Teja. “Startups seem to be coming in droves.”

Municipal officials also have every reason to want to share transportation data rather than hoard it, because it will inevitably make their own jobs easier.

“They don’t want to have to do all the work,” says Jeffrey Wood, principal of The Overhead Wire consulting firm in San Francisco. “The agencies, all they have to do is make their data free, and people can come up with all kinds of cool things. They’re just going to do their jobs, which is moving people.”

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