Telecommunications and transportation both fulfill requirements for social and economic interactions, transactions, and other relationships, although in very different ways, as described earlier. There are millions of teleprocess events every day that amount to activities that could be done in alternative ways requiring more travel. Every telephone conversation, every data transmission, and every e-mail message or fax represents a potential substitution of telecommunications for physical movement of people or paper.

Telecommunications substitution for transportation is apparent on a small scale of analysis but is difficult to discover on a larger scale. Taken one by one, telecommunications transactions (faxes and teleconferences, for example) expand numbers of personal contacts and business trade areas. New relationships are established. More transactions and interactions occur. Even if 90% of the new interactions are done electronically, the remaining 10% involving personal visits or movement of physical matter via package shipment represents a net increase in travel.

Under present conditions of population growth, economic development, and public policy, the net result of human activity in the emerging information age has been a growing level of travel, as shown in Exhibit 2-3. Annual vehicle miles traveled (VMT) per household increased by 29% between 1983 and 1990, according to the Nationwide Personal Transportation Study, whereas the annual number of trips per household increased from 1,486 to 1,702, a gain of 15%. For comparison, public switched telephone network minutes of use (MOU) are also shown. This measure is apparently growing at roughly the same rate as VMT, although a large but undetermined amount of telecommunications traffic over private telecommunications facilities is missed in the MOU measurement.

Several recent, prominent studies of telecommunications substitution have been based on assumptions rather than on measurement. In a widely cited 1991 Arthur D. Little study of potential telecommunications impacts on transportation, substitution coefficients were derived from decade-old estimates made in Europe (Boghani, 1991, pp. 26, 30, 33). In the USDOT telecommuting study (1993), there similarly were no data or studies cited that actually measured historical travel substitution by telecommunications based on empirical data for a significant segment of the economy.

Some evidence for the prospect of telecommunications substituting for transportation lies in data provided to the State of Pennsylvania by DRI/McGraw-Hill from their proprietary databases describing the U.S. economy. DRI reports (Cronin, 1993) that the telecommunications intensity of the U.S. economy rose by 3.9% annually in the period 1965 to 1987. This rate of increase in telecommunications intensity represents the telecommunications usage of 30 industries (including service industries) across 22 years. In 1965, the average industry used 27 cents' worth of telecommunications services to produce one hundred dollars' worth of output. In 1987, the comparable figure had risen to 62 cents per hundred dollars of output, more than a doubling. (All monetary figures are adjusted to current dollars.)

Over the same period, the use of transportation and warehousing services was falling from $2.11 per hundred dollars of output in 1965 to $2.01 in 1987 (Cronin, 1993a). This is a two tenths of 1% annual drop over more than two decades, during which time the price of petroleum energy was approximately doubling in constant dollars. Energy prices, therefore, were putting upward pressure on the economy's consumption of this input, which means that other economic factors must have been pushing transportation and warehousing services downward. These numbers are consistent with telecommunications substitution for transportation, although they are in no way a sufficient demonstration of such a relationship.

Selvanathan and Selvanathan (1994) analyzed transportation and communications statistics from Australia and the United Kingdom for the period 1960-1986. Using econometric tools, they concluded that communications demand was increasingly substituting for transportation demand in this period. Replication and extension of this work, with more interpretation of results for policy makers, is sorely needed.

There is no evidence that the movement of information in physical formats is slowing down because of telecommunications substitution. United States Post Office volumes are showing strong per-capita growth, as seen in Exhibit 2-4. Demand for overnight delivery services is growing at 20% annually (Burgess, 1990) even as the mix of shipped objects is changing. Fax delivery is cutting into physical document movement, but shipments of nonfaxable physical objects are growing in share. The movement of information through physical means is likely to remain an important component of the information age despite the availability of telecommunications. Physical information delivery includes such objects and events as full-color mail-order catalogs from retailers, CD-ROM disks holding 500 million characters of information, overnight package delivery, the rendezvous of a Hollywood movie print and a crowd of people at a cinema, wallet-sized smart cards with embedded microcomputer chips, and nationwide daily newspapers like the Wall Street Journal and USA Today.

Surface transportation volumes seem to be pushing against the envelope of capacity more every year. For example, in the busiest metropolitan areas, traffic is closer every year to volume limits on freeways, and the resulting traffic congestion is growing worse (Exhibit 2-5). Despite opportunities to use telecommunications to reduce travel, people on average drive more every year.

The phenomenon of latent travel demand is further support that transportation is a highly demanded service that will not be easily pulled down by the availability of telecommunications substitutes. Latent demand means use of roads that manifests only at times when free-flowing capacity is available. As an example of latent demand in a modern city that fully embraces the benefits of telecommunications, consider what happened in the Seattle metropolitan area when the new Interstate 90 freeway bridge opened up across Lake Washington in 1989: 40,000 new vehicle crossings per day materialized, a 60% increase over traffic on the old bridge. This jump in traffic is dramatically illustrated in Exhibit 2-6, on which an arrow shows the volume jump between 1988 and 1990. The new volume was not a net diversion from other routes nor from a mode shift. A comparison of the hourly average volumes on the new bridge before and after the bridge opening showed that increased traffic is maintained throughout the day.

Anthony Downs (1992) describes latent demand within rush-hour periods as a "triple convergence." He suggests that any free road space produced from marginal reductions in commuting (or from expansion of road capacity) is consumed quickly by three sources of ever-present demand: those traveling just outside of the peak time period who would shift back in, those driving on less optimal routes who would take advantage of lowered congestion on the most popular freeways, and those on slower public transit modes who would prefer driving if there were any more space on the road. Outside of commuting, latent demand induced by newly opened road capacity could include new vehicle trips by people who would not have otherwise made the trip or trips resulting from drivers who select an alternate destination (i.e., shoppers who prefer a new mall over a downtown).

One analysis based on data from 339 cities estimates that, in the long run, each daily vehicle mile traveled that is removed from congested urban roads through telecommunications substitution will be 50% replaced by latent demand (USDOE, 1993, p. 91).

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