By Tom S. Noda
Published in the CWP November 2009 issue

With all the fuss that’s been going around the Land Transportation Office’s (LTO) radio frequency identification (RFID) project, only one thing is certain — RFID, per se, will affect many people’s lives. As for LTO’s project, many believe the system will be used to spy on vehicle owners — a perception the LTO claims is a myth.

In an interview with Computerworld Philippines, Vince Dizon, vice president for communications and public relations of local systems integrator Stradcom, LTO’s exclusive IT provider, clarifies the major issues surrounding the project.

A next-generation identification technology similar to barcode readers, RFID uses radio frequency waves to identify objects, thus drastically increasing the range and accuracy of identification compared to optical light which is used in barcodes.

According to Dizon, RFID will address today’s complex problems in the land transportation sector. But once implemented, its applications are expected to be “limitless” since it is an ID system that is generic in nature. RFID can be used in groceries, cargo, logistics, machines, drive-thru fast food chains, and restaurants, among others. The technology can also be set up with a payment gateway.

Dizon says RFID is already being used by several countries worldwide. For instance, motor vehicle registration in South Africa; vehicle identification, authentication and toll road operation in Mexico; toll payment, traffic management and payment card (EZ link) in Singapore; airline luggage locator/segregator, retail payment (Octopus Card), toll and mass transport in Hong Kong; and for passports and payment systems (Touch and Go) in Malaysia.

Over in the US, RFID is used for retail systems (Walmart), supply chain management, passports, payment systems (mass transport/toll payment), inventory tracking, as well as for tracking and authentication of medical records.

In the Philippines, RFID is currently being used for toll payment or the so-called Epass in the South Luzon Expressway (SLEX); EC Tag in the North Luzon Expressway (NLEX); and also for access cards, ePassport, and authentication cards.

“Large Philippine companies are already moving towards using RFID for inventory and supply chain management,” Dizon says. “It is now being used by some schools for gate access, security and borrowing of books, and also for access cards and parking among hospitals.”

LTO RFID SYSTEM

Dizon says the LTO RFID system involves the use of a “tag” and a “reader.” The tag, or “sticker,” has a microchip that stores the unique number assigned to a vehicle. This number is used to identify and verify all necessary information about the vehicle. The reader, however, is used to retrieve and pass on digital information received from a tag to LTO’s computer system.

Dizon says the main objective of the LTO RFID project is to make the Motor Vehicle Registration System (MVRS) process much faster and easier. The drive-thru registration is pegged to become a reality once all vehicles are tagged.

“RFID’s potentials are very wide. It is tamper-proof, a permanent identification for vehicles,” Dizon says, claiming the system could address the problems of “colorum” vehicles (unregistered public transport), assist in law enforcement by serving as deterrent to crimes such as carnapping, smuggling, and illegal switching of plate numbers.

LTO believes the system will be an effective tool in land transport planning and traffic management. It will also provide protection to commut ers since it can automatically identify and verify franchise records of public utility vehicles (PUV).

And besides solving traffic woes, Dizon adds RFID technology can also address concerns on air pollution as it ensures road worthiness of vehicles and strict compliance with the Clean Air Act by eradicating the practice of “non appearance” in emission testing centers.

“A lot of things can be unified by using RFID. Just like in Singapore where one card can be used as payment for gasoline stations, parking, toll gates and others. But to realize all these benefits of the system, the first step is all vehicles must be tagged,” says Dizon, stressing the government can’t maximize the system if vehicles are untagged.

He says a good example on how RFID system can be used for traffic management in Metro Manila is to put readers in the entry and exit points of the Epifanio Delos Santos Avenue (EDSA), probably the most major and congested highway in Luzon.

Dizon notes that the problem today with colorum vehicles is that the franchising system is still manual and paper-based. There are two common problems that exist with such a system – income lost by PUV drivers, and bribery practiced by some law enforcers or more commonly known as “kotong.”

“There are income losses by some PUV drivers because illegal or colorum vehicles are technically stealing their passengers,” Dizon says. “Bribery, however, mostly happens when a jeepney driver is flagged down by a law enforcer to check its franchise and would say it is fake though it isn’t. To avoid conflict, the jeepney driver would just give money.”

Dizon says to address the two common problems with colorum and bribes, there is a need to have a tamper-proof, accurate, permanent, and electronic way of identifying vehicles.

“The RFID tag will contain information details about PUVs, including the franchise and the route. Other options considered are the usage of smart plate or E-plate, but the advantage of RFID is that it can’t be moved from one car to another,” he says, adding if the sticker is taken out, the microchip would automatically be damaged, a feature that makes the system tamper-proof.

CLAMOR VS. RFID

When LTO announced its planned implementation of the RFID project in October, various public sectors opposed the project claiming that the system would spy on vehicle owners. There were also allegations of overpricing and irregularities.

“It’s absolutely a myth to believe that you can be tracked and monitored by government with the RFID sticker. It has no GPS (global positioning system); besides no GPS tracking device can fit into a sticker,” Dizon clarifies.

Although LTO’s RFID tag can be read at high speeds of 140 kph, it only has a short consistent range of 10 meters. “If you’re not within the 10-meter radius, you can’t be tracked.”

Dizon claims a cellphone is potentially a more intrusive device than RFID. Stradcom says that another reason why RFID can’t be used for harassment or “spying” of individuals is that the system can’t access other detailed information such as: RFID unique code, MV (motor vehicle) file number, engine number, chassis number, plate number, MV type, color, make, series, year model, body type, MV classification, franchise, route, owner/org name, and the last registration date.

Dizon says tag stickers on vehicles will be placed in the middle inner portion of the windshield. Meanwhile, for motorcycles, all-weather RFID tags will be placed in the space between the side mirrors.

According to Dizon, the LTO tags can withstand harsh environments like ultra violet (UV) radiation, humidity, heat, among others for a long period of time.

LEGAL ISSUES

Dizon, likewise, addressed the legal issues being hurled at the LTO RFID system, such as questions on public bidding, lack of identification of RFID devices, alleged money-making schemes, and public consultation issues, among others.

“The LTO RFID project does not require any bidding since it is part of the existing LTO IT Project under the Build Operate and Transfer (BOT) law and its implementing rules and regulation,” he says.

Dizon recalls Stradcom bidded and won the LTO computerization project way back in 1997 when the government decided to computerize the whole LTO so that the public can transact in any of the LTO offices in the Philippines.

“Taking advantage of the BOT law (Republic Act 7118), the LTO opened the possibility of creating a computerized system that would significantly increase service efficiency and lessen human intervention in order to avoid opportunities for fraud and corruption,” he says. “Out of the five participating companies, Stradcom stood out with the most technically and financially viable plan for system development. It was also the one which offered the lowest cost for the transacting public.”

Dizon explains BOT law’s objective is to encourage the private sector to invest in government projects that lack funding. Some of the government’s recent BOT projects include the Metro Manila Skyway; the upgraded North Luzon Expressway; and the Subic-Clark-Tarlac Expressway or SCTEX.

“The government tried to apply BOT law in IT sometime in 1993, when LTO was investing around US $80 million for its computerization project. LTO decided it should be a BOO (Build-Operate-Own) contract,” narrates Dizon, adding the BOO is the proponent who seeks for investment funds of a project. This explains why there is a “computer fee” indicated on receipts given to motorists. What the public pays go to the LTO’s IT project.

In 1997, during the bidding for LTO’s IT provider on its computerization project, Stradcom “won” as it offered the lowest user charge of Php120, significantly cheaper than its bidding rival who offered Php299.

Under the BOO contract, Stradcom will own, operate, and maintain all IT facilities at no cost to the government, while the LTO continues to handle the processing of all transactions. Because of this, Stradcom became LTO’s IT provider, delivering its IT requirements. To date, Stradcom has computerized LTO’s MVRS and driver’s licensing issuances, except the printing of cards.

“Today, the RFID system serves only as an update to the existing MVRS. It is an upgrade, an enhancement and there is no need for any bidding. The bidding for IT provider took place already in 1997,” stresses Dizon, noting that with Stradcom’s exclusivity as LTO’s IT provider, the company will be the one to implement the RFID project.

Dizon claims large transport groups are already supporting LTO’s RFID system but some are still skeptical because they don’t understand it yet.

Scheduled to be implemented in October, LTO has put on hold the project to conduct more information dissemination. LTO chief Arturo Lomibao has suggested that the system be applied first on government vehicles to serve as example and to dismiss claims that the system will be used to spy on individuals. The project is now on a voluntary basis from October to December this year.

NO MONEY-MAKER

Dizon likewise denies that the RFID system was made just to incur more funds. He says the Php350 fee for the system’s tag is valid for 10 years.

“What people don’t understand is that the breakdown of the Php350 fee is not only for the stickers alone. It’s a lot bigger than that. It will pay for stickers, the readers, hardware, software, maintenance, services and others. So if you reduce the costs, what remains is Php240, the Php110 or more than Php90 goes to the government (treasury, VAT, LTO IT training fund, capacity building, etc.). And the net income of Stradcom per tag is only about Php14 or Php15,” he says.

Dizon says the total investment on the RFID project is pegged around Php1.2 billion, or Php240 multiplied by the five million registered vehicles in the country. The Philippine has about 10 million licensed drivers.

Another misconception, Dizon cites, is that LTO doesn’t need any license to implement the RFID system. It simply needs an approval from the National Telecommunications Commission (NTC) for the RFID devices.

Dizon says they are confident that LTO will soon secure a permit from the NTC since the devices’ radio frequency is only around the 918, 920 megahertz band. The devices will come from Stradcom’s provider Free2move, a Swedish firm and one of the leading providers of RFID system in the world.

Included in the Php350 tag, he says, is the IT security at LTO’s database. With five million vehicles registered and 10 million driver’s licenses, Dizon reveals the LTO experiences about 100 hacking attempts per day since 2002. However, all attempts have been unsuccessful. “The RFID system is linked to the LTO database. And it has redundant security.”

Dizon says not anyone can just replicate the LTO’s RFID tag. “As compared to license plates or registration stickers, RFID tags are impossible to replicate. Each RFID tag all over the world is unique and is controlled by an industry organization called Electronic Product Code Global (EPC Global). This organization ensures that every RFID tag in the world is assigned a unique ID and therefore RFID tags cannot be pirated or duplicated. This is certified by ISO 18000-6C.”

To date, the RFID project has undergone various approval processes since September 2007. This was presented to several committees in LTO to determine in length its technical, operational, legal and financial viability. The project was also independently evaluated by the Department of Trade and Commerce (DOTC) prior to actual release and issuance of the department order.

Meanwhile, as far as public consultations are concerned, Dizon says there were two public consultations held on February 11 and 19, 2009. The first was in Visayas and Mindanao; and the second, in Luzon. Notices to the public were also published in newspapers before the actual consultation. Afterwards, LTO reported that a favorable endorsement was passed by the national transport leaders.

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