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eTag fiasco shows contractors hold reins in gov't contracts

After days of letting public discontent against the glitch-plagued eTag system boil over, the Ma administration finally shifted gears to damage control. Premier Jiang Yi-huah on Thursday called for the new freeway toll system's operator, Far Eastern Electronic Toll Collection Co (FETC), to “take responsibility” for the problematic rollout of the system and ordered the National Freeway Bureau to be penalized for its role in the eTag debacle.

The ministers might have felt blindsided but the outrage against eTag is in fact not merely the result of the defiant words by Far Eastern Group's outspoken chairman Douglas Hsu. While Hsu's melodramatic sound bite —”You can pull out (of the eTag system) if you like,” he told the dissatisfied eTag users he was supposedly apologizing to — drew public anger and mass media attention better than blood draws sharks, the eTag system's problems have been years in the making.

The development of Taiwan's Electronic Toll Collection (ETC) system has been problematic almost since the beginning. Despite the fact that most nations adopted the electromagnetic field-based RFID (Radio Frequency Identification) system to transmit data, the government awarded the ETC build-operate-transfer (BOT) contract to the FETC, the only bidder that used an infrared-based system.

The FETC's infrared system proved to be problem-ridden. The system required a costly and battery-powered on-board unit (OBU) to be installed in every vehicle as well as special toll booths. Toll-fee transactions can only be completed under a specific speed and the right weather conditions. Shortly before the ETC's inauguration, Douglas Hsu answered concerns over the price tags of OBUs with the same “take it or leave it” attitude, suggesting that “people who find OBUs to be expensive can just not buy them.”

People apparently took his advice. By the end of March 2011, the ETC system failed to achieve a 40 percent actual utilization rate even though the FETC was bound by contract to hit 50 percent by that date. To address the problem of underuse, the FETC proposed a complete switch to — ironically — the RFID (i.e. eTag) system. The switch was implemented in September of the same year and motorists were told they would not get a refund for their soon-to-be useless OBUs. OBU owners could only get compensations in the form of eTag credit deposits. In other words, users let down by the FETC's (infrared) ETC system were given no apologies and no choice but to switch to the FETC's (now eTag) ETC system. Now the eTag system set up in a rush to fix the unpopular infrared system has run into problems of its own.

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