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26 Smartcard Interoperability Issues for the Transit Industry be upgraded to the new technology and industry standards of the interoperable system. A useful tool to help determine the best approach is the preparation of a comprehensive value analysis. The value analysis balances the life cycle cost to acquire and maintain the new equipment against the cost to upgrade and maintain the legacy equipment for the useful life of the fare payment sys- tem. In addition to the capital cost of new equipment and normal operating and maintenance cost, key components of the value analysis need to include Useful service life of equipment and systems, Life expectancy of the equipment, Cost of spares or replacement devices, Residual value of legacy equipment, Expected reliability, and Operational improvements and customer convenience. 2.5 Transit Industry Issues This section discusses the issues that exist within the transit industry that may impede efforts to adopt a common smartcard specification. Chapter 3 identifies the components and informa- tion that need to be exchanged to achieve interoperability. A smartcard specification needs to define items such as data elements, objects, API, and an APDU command set for an interopera- ble fare payment system. The issues for discussion are categorized as follows: Business justification, Supplier behavior, and Supplier compliance with available standards. 2.5.1 Business Justification One of the primary goals of interoperability is to provide transit agencies with the ability to multi-source their equipment procurements. The ability to access multiple suppliers for equip- ment and system purchases increases competition in the market place, usually resulting in lower pricing. However, in today's market, many smartcard-based fare payment implementations are based on proprietary system architectures that do not conform to common interface protocols. This situation may inhibit any attempt to implement regional interoperability among transit providers.Furthermore, the challenge and the cost of adopting an agreed-on standard after a pro- prietary system development may be prohibitive and may even prevent post-deployment regional-interoperability efforts. Another goal of interoperability is to provide the transit patron with a seamless means to pay for travel across multiple transit systems. This goal has already been achieved at regional levels using systems and equipment incorporating varying degrees of proprietary design. For a standard to be relevant, it needs to be universally adopted by the institutions that it ben- efits. Without a critical mass supporting a standard or specification, the standard or specifi- cation becomes ineffective. The strong business case for compliance does not materialize in the initial stages of adoption. However, as adoption progresses, economies of scale begin to materialize. 2.5.2 Supplier Behavior Proprietary solutions are used to create barriers to entry and lock transit agencies into long- term contracts. Standards and common open specifications can remove the barriers created by proprietary technologies, thus allowing transit agencies more choice and making interoperable