One of my co-founders at Gridstone Research was driving us back from lunch in San Mateo a month or so back. As he approaches a red light where he is supposed to make a right, he doesn’t come to a full stop. He just ‘rolls’ through the right turn. Flash, flash from the wierd looking gadget across the intersection and a month later he’s got a ticket for $371! He had been caught commiting a traffic violation by technology.
My colleague was none too happy, but I was laughing my head off. Not just because the guy hates to lose money to such things, but mainly because I had just paid off an identical ticket for an identical violation near my home in Fremont. And my wife had contributed to the same cause a month before me. It was thoroughly enjoyable to see someone else bear the same pain.
I tried to piece together how this technology works. There is a sensor in the road that senses the speed at which you are approaching the intersection when the light is red. If it is above a maximum speed it sets off the camera which takes a frontal picture of you and the car. As soon as you turn right there is another sensor that times how long you took to get from the first sensor to the second sensor and if that time is less than some minimum, it assumes (correctly) that you did not stop at the red light. The camera then flashes again, getting the back side of your car. A couple of weeks later you get a ticket in the mail with all the time-stamped pictures clearly establishing your violation.
When this happened to me (just a few weeks after I had finished making fun of my wife and her ‘rash’ driving), I was upset, but also fascinated. I thought this was just so cool that traffic could be enforced without a police officer. The technology being used is pretty reliable. It does not make mistakes (far fewer than people at any rate). It uses no discretion. Unlike a police officer, it does not let off blondes in convertibles. It is always on. And best of all, it costs far less than the police officer. This, I thought, was great for traffic enforcement. The Fremont Police Department thinks the same way.
But then I thought there’s got to be more to this. I’ve often heard anecdotally that the Highway Patrol gets very strict in its enforcement a couple of weeks before the end of their budget period ends. Why? Because they have revenue targets to meet! You might say that’s not the purpose of the traffic ticket. But in the real world local governments need money to run. I am quite sure that the Red-light Cameras are being sold to the local government by justifying them on an RoI basis. If you invest so much in the camera system, the increased revenue will return your investment so many percent a year. etc. etc.
But wait, it can get better than that. If I was the Red-light camera system company, I wouldn’t even sell it to the city. I’d install it free and take a cut of the revenues. This way everyone wins. The city makes no investment and gets revenue from where it had none. The company gets an annuity, high margin stream of revenue from an unsuspecting public. The Fremont Police Department may proclaim that they are doing this for red-light enforcement. But we know better. Not that I hold it against them. Fremont city underfunds many civic services and I’m happy if they can enforce traffic rules and raise revenues.
That leaves the question – what is this company that makes these camera systems? It turns out that the company that does these red-light camera systems is an Australian company called Redflex Group. Which is unfortunate since my broker doesn’t let me buy Australian stocks. I think they are on to something. Redflex Group has a Traffic Systems business and a Communications business. The holding company’s stock has been doing rather poorly, I don’t know why but the Traffic system business has got to be smoking hot.
And guess what else is available from Redflex? Photo speed enforcement on highways! For those of you who have forgotten what 65 miles an hour feels like, there’s a traffic ticket coming your way.