eu travel tech Position on TSI Telematics Revision

1.      Introduction

eu travel tech welcomes the opportunity to comments on the European Commission’s proposal to revise the Implementing Regulation on the technical specifications relating to the telematics subsystem of the rail system in the EU for interoperability of data sharing in rail transport (“TSI Telematics”).

The proposals revise both the Implementing Regulation itself (“the Act”) and its Annex and follow an extended period of consultation between the Commission, Member States and stakeholders in bilateral format, in the Railway Interoperability and Safety Committee (“RISC”) and in the Telematics Expert Group. Throughout this consultation activity, which has lasted several years, eu travel tech has consistently expressed its concern[1] with the regulatory approach pursued, alongside Member States and other stakeholders. We raise strong concerns that the revised TSI Telematics in its current form would lead to additional complexity and costs, while providing no added value to railways, intermediaries or consumers. We note that the ‘Mother-Directive’ of the proposal (Directive (EU) 2016/797) further states that the “drawing-up of TSIs and their application to the Union rail system should not impede technological innovation, which should be directed towards improving economic performance”. The proposals made by the Commission are a complex “solution in search of a problem”, with the capacity to degrade economic performance for the reasons set out in the following.

2.     Definitions

A key deficiency of the proposals is the lack of clarity regarding its definitions and their application to rail ticket intermediaries, specifically the definition of “distributor” (Art. 3 (36)) and “retailer” (Art. 3 (39)). It is vital for intermediaries that their role in the framework of this Implementing Regulation is clearly defined. The Act and Annex impose technical specifications principally for interactions between distributors and railway undertakings (“RUs”) (see Annex Points 4.5.2 (1) and 4.5.3 (1)), whereas interactions between distributors and retailers fall out of scope of TSI Telematics. The definition of these terms thus determines whether intermediaries are in scope of the technical specifications, possibly leading to significant added costs due to a requirement to change complex technical architecture. Legal clarity is all the more necessary to avoid inconsistent interpretation and implementation across Member States, which would undermine the purpose of the regulation by fragmenting the legal framework.

2.1.  Definition of distributor

The proposal’s definition of distributor introduces several cumulative requirements: (a) legal and technical capacity to combine rail products of one or more RUs into an offer for an issuer or retailer; (b) autonomous rights to use its own journey planner’; (c) autonomous rights to check availability of fares for a rail transport service. At a fundamental level, uncertainty arises as the terms “offer” and “journey planner” are not defined anywhere in the Act or Annex. These terms may have evident meanings for the pen holders; however, we believe they should be defined unambiguously.

In addition to the definition itself, Point 4.5.5 of the Annex provides an outlook on the role of a distributor, which should be enabled to “combine rail products into offers (…) independently of the RUs involved” and “be able to retrieve the trip information from its journey planner and then determines from its pricing engine the associated fares or range of fares”.

When measured against current market practices, the distributor definition would apply to all ticket vendors. Ticket vendors of all kinds currently have the legal and technical capacity to combine various rail products into a single journey (e.g. a multileg-trip sold to consumers), have rights to use their own journey planner (e.g. by taking on offers suggested by railways and splitting and re-combining them) and can check for availabilities. In their current form, the two separate definitions for distributors and retailers are not useful.

It is our understanding that the Commission’s intention with the distributor definition is not to capture current traditional ‘ticket vendors’ but a category of intermediary performing a function akin to a classic Global Distribution System in air ticket distribution. That is, an intermediary able to withdraw fares and schedules, compute offers and provide those offers to B2C intermediaries based on contractual agreements with transport operators, but without control of the latter over the process. The current distributor definition fails to accurately capture such players, as the capacity to combine rail products into an offer, to use a journey planner and to check availability is equally applicable to ticket vendors, both on the B2B and B2C level.

To return to the Commission’s intention with the distributor definition, we suggest the following distributor definition:

‘distributor’ means a telematics stakeholder that, for a retailer or issuer, independently and without an initial request to a railway undertaking, compiles a passenger rail product.

The key aspect is “without an initial request”, as this is the real distinguishing factor between the concepts of distributors as an actor compiling rail products independently of offers provided by RUs, whereas retailers do so based on an initial offer provided.

2.2. Definition of retailer

If outstanding issues with the definition of distributor are addressed, the basic utility of the retailer definition becomes more evident. However, certain issues persist with this definition as well.

The definition mentions the term “fixed fare”, which lacks any clear definition in the Act or Annex. It is unclear whether ‘fixed’ fare refers to a non-yield managed fare or a fare to which an RU has attached certain ‘fixed’ conditions.

In any case, the definition of ‘fare’ (Art. 3 (41)) already refers to the amount “fixed by a distributor for a given rail product offered to a retailer”. The wording leaves open whether an RU would be able to fix a fare vis-a-vis a distributor, which could then fix a fare vis-a-vis a retailer.

Overall, the ‘fixed fare’ element mischaracterises the relationship between RUs, distributors and retailers. This point is aggravated by the remainder of the retailer definition, which states that a retailer does not have “autonomous rights to amend the content or conditions of the fare but can use its own pricing engine to apply fees or reductions”. While the term “conditions” is not defined in the Act or Annex, it presumably relates, at least in part, to the amount to be paid to the RU, the distributor or the retailer. It is true that retailers are unable to amend the amount to be paid to the RU, in other words the ‘wholesale’ price of a ticket. However, retailers are fully able to amend the amount paid by the customer, i.e. the ‘retail’ price, which can be higher or lower than the wholesale price. This vertical pricing freedom is enshrined in the jurisprudence of the EU’s Courts and the Commission’s Guidelines on vertical restraints regarding Art. 101 TFEU, which classifies contractual obligations for retailers to refrain from pricing below supplier reference prices as object restraints and thus inherently anti-competitive.[2] Without clarification, the wording “without autonomous rights to amend the content or conditions of the fare” is thus not aligned with commercial reality or the legal framework.

To avoid these issues and ensure alignment with our proposed distributor definition, we propose the following retailer definition:

‘retailer’ means a telematics stakeholder that compiles one or more rail products made available to it after an initial request to one or more railway undertakings or distributors. Retailers may have the ability to recompile products and amend certain conditions such as prices at the retail level.

3.     Substantive obligations

We welcome the efforts to make more data available and ensure that data is of better quality. The offline system put forward by TSI Telematics can offer interesting opportunities for existing and new vendors. However, the industry has moved towards a system based on Application Programming Interfaces (“APIs”) that is not geared for consuming offline content as the only option.

3.1.  Use of NAPs for modern rail ticket distribution

The experience of eu travel tech members with existing National Access Points (“NAPs”) shows that they are unsuitable to facilitate modern rail ticketing/distribution. For both static and particularly for yield managed (incl. integrated reservation tickets) fares, a direct API-connection between an RU and the respective ticket vendor, or alternatively a connection intermediated by a B2B distributor, is unavoidable. NAPs are not suitable to enable the necessary dynamic communication between RU and TV. This comes in addition to the lackluster implementation of NAPs in certain Member States. For static data (e.g. timetables, connection times), a NAP-based solution may be viable. Nonetheless, eu travel tech is supportive of any obligations for RUs to share their data, as such data may be used in contexts other than usual ticketing/distribution. Our concern is that NAPs should not be the only vehicle to enable RU-ticket vendor data exchange.

3.2. Imposition of NeTEx to all intermediaries may lead to degraded services

With the proposed revisions of the TSI Telematics, DG MOVE foresees a full implementation of the Network and Timetable exchange (“NeTEx”) standard regarding timetable data, reference data and fares data, which is to be shared with ticket vendors through NAPs. The provisions of Art. 6 (3) of the Act respective Point 4.3.1 and Point 4.5 of the Annex tackle a main concern; the question of which specification will be mandatory for communication between RUs and distributors. We understand that NeTEx is currently under consideration for this purpose. We see a few challenges with this approach:

• Third party rail intermediaries may be forced to use NeTEx-based solutions as a result of the obligations put on RUs, which would render rail ticket distribution more challenging. Adapting to an offline mode would be costly and extremely difficult – if not impossible for many distributors who have built their IT and reselling infrastructure around APIs.
• NeTEx lacks the standardized API necessary to implement shopping, booking, ticketing and aftersales services in a uniform manner. It would thus not lower entry barriers for TVs based on lower distribution costs.
• A simple catalogue of fares to be shared by RUs in compliance with future ERA technical documentation would bring little added value for ticket vendors. Static fares are becoming less relevant, as the use of yield-managed fare components rises, particularly for the high-speed, long-distance services which are currently most relevant to ticket vendors.

We therefore suggest the TAP-TSI review takes the following into account:

• We urge the Commission and Member States to allow the use of solutions developed by the sector (such as OSDM) if all involved parties agree. This would prevent the introduction of an obligation to use NeTEx in cases where both RUs and TVs agree that another approach would be more beneficial.
• An obligation for RUs to fully and transparently share rules for yield management, sales and after sales would be beneficial. This would nonetheless force ticket vendors into implementing pricing engines on their end with the risk of pricing rules misinterpretation and increased need for controlling both on retailer/distributor sides.
• Access to yield-managed fares and real-time data remains a core issue for ticket vendors, even in light of obligations of the Rail Passenger Rights Regulation. Any effort to make that more accessible would be welcome.

3.3. Obligations for intermediaries to point to authorized sellers not justified

Beyond the Annex’ provisions related to specifications, Point 4.3.3. introduces an obligation for stakeholders involved in journey planning who are not authorized retailers or distributors to “at least point directly to the railway undertakings’ authorised sales channels”. This provision represents a severe intervention into the commercial practices of independent journey planning services and disregards the fact that retailers can be active as journey planners and sellers of RU products without authorization. While it is currently not a widely spread practice in rail ticket distribution, it is legally and commercial possible for intermediaries to act as their customers’ agents in making bookings on sales channels of RUs without the authorization of the RU in question. There is no justification to require intermediaries to point to RUs authorized sales channels.

4.      Unfair commercial restraints for ticket distribution to remain regulatory priority

eu travel tech remains fully committed to policy/regulatory solutions which facilitate the broadest possible availability of RU content to third-party ticket vendors under fair, reasonable and non-discriminatory (“FRAND”) conditions. Without comprehensively addressing the commercial restraints related to access to rail content and distribution by third parties, any revised EU framework on technical standards will be of limited use. The issue of restrictive commercial conditions and a lack of content access for ticket vendors, and ultimately for consumers, cannot be addressed only through a technical lens. Our concerns with the draft and the annex should not be misconstrued as opposition to any policy objectives aimed at ensuring a more open distribution system based on FRAND. In this context, we welcome the fact that the Annex already recognizes the need to safeguard FRAND regarding the combination of rail products by distributors (Point 4.5.1. (5)). This provision could be usefully extended to cover retailers as well, in combination with our proposed revised distributor and retailer definitions.

Legal obligations on transparency and access to full content of railways in a FRAND manner, regardless of the technology, would enforce railway obligations independently from current and future technical evolutions. We look forward to legislative action from the European Commission on these points, in the context of the Single Digital Booking and Ticketing Regulation and Multimodal Digital Mobility Services initiative.