Implementing the European Train Control System

ETCS migration strategies on corridors and at national level

Cost/Benefit analysis

Contents
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Executive summar y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1. Objectives and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2. Data available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3. Methodology to assess Traction Units associated with corresponding Corridors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 4. International Rail Corridor analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5. Analysis of Results in the context of an accelerated programme on International corridors . . . . . . . . . . . . . . . . . . . . . . . 23 6. National Migration Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 7. Global Assessment of Cost of Migration . . . . . . . . . . . . . . . . . . . . . 28 8. Other Economic Global Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 9. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Appendix A: SWOT analysis from the document prepared in connection with UIC ERTMS Conference Leipzig 10-11 December 2003. . . . . . . . . . . . . . . . . . . . . . . . . 35 Appendix B: Corridor analysis of additional costs for faster ETCS migration and associated on-board savings . . . . . . . . . . . . . . . . 39 Appendix C: ETCS migration from a practical perspective . . . . . . . . . . . . . 53 Appendix D: Global assessment of cost of migration . . . . . . . . . . . . . . . . . . 59 Acronymes and Abbreviations: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Foreword
The theme of this years UIC ERTMS Conference, Managing the Migration, has been chosen because it serves to highlight that the progressive introduction of ERTMS over the coming years in Europe will need to be effectively managed to ensure that optimum benefits are realised from the sizeable investment, at the earliest opportunity. It also focuses attention on the national and international aspects of achieving an interoperable European railway network, within a reasonable time horizon, which will facilitate an expansion of rail traffic.

At last years Conference at Leipzig, UIC presented participants with a report and survey of current ETCS implementation plans in Europe in order to stimulate the decisionmaking process for the future (entitled: Implementing the European Train Control System Opportunities for European rail Corridors).This years Conference report, prepared during the course of 2004, builds on the previous work and further explores the business cost/benefits of ETCS Migration strategies, from the perspective of the railway organisations within the UIC. In this respect, it is complementary to the macro-economic perspective undertaken in the recent cost/benefit analysis carried out by AEIF, as part of the economic appraisal accompanying the control, command and signalling elements of the Technical Standard for Interoperability for Conventional Rail.The UIC report has been prepared with the assistance of a number of its Members and the input of CER and EIM.

From the railway actors perspective, it is generally accepted that ETCS is the right long term technical solution, but that the migration from existing national systems will be difficult and costly. Its implementation will necessitate sizeable financial assistance from Member states and the European Union to enable this transition to be made without overburdening the debt on the railway operators and infrastructure managers, who will have to bear the burden of the costs in the medium term before the long term benefits from a standardised signalling system are realised.The UIC study has examined five differential cost scenarios, using four different financial discounting rates, over a forty year period covering an expanded Trans European Network area, inclusive of New Members States and pending accession countries.The most probable scenario postulates that the net extra cost to the railways, expressed in Net Present Value, could be 12.5 billion Euros.While this is a substantial additional sum, on top of other investment priorities, it has to be viewed within the context of other macro-economic parameters and decisions that embrace future transport sustainability, quality of life and connectivity within a rapidly changing European landscape. Another aspect of this report is its analysis of the strategy of migration, based on unifying the signalling systems along important corridors. In this respect the relationship between trackside and on-board investment is examined. The conclusion, of this part of the report, is that there is a need to be selective in the choice of corridors and in the concentration of investment to ensure the earliest realisation of track-side and on-board savings.This arises from the fact that, to achieve a reduction in the number of signalling systems along any particular corridor, there must be a long-term co-ordinated parallel strategy of trackside and on-board investment, starting as early as possible, to reap the benefits in 10 - 20 years time. It is clear that such a long range investment commitment

from the railway actors will only be achieved if the vision is shared and confidently underpinned by the character of decision making at Member State and European level. It is also necessary to correlate other investment requirements with the decision making process relating to ERTMS, as part of a full analysis of corridor development needs.

It is therefore satisfying to report that in the period between the last UIC Conference in Leipzig and todays conference in Rome we have experienced a positive engagement between the Member States, the European Commission, the railway actors and the supply industry to plan a realistic course for ERTMS deployment on a backbone of important economic corridors, which will, in time, link each Member state and new accession countries along an interoperable railway network. Reaching final agreement, to commonly aspire to this vision, will facilitate development at national level and stimulate the prospect of new business ventures based on the exploitation of the potential of the international rail business.The fruits of this engagement should result in the signing of a Memorandum of Understanding between the parties to constructively develop an ERTMS migration approach based on a sound business perspective, underpinned by solid commitments on funding.

UIC will continue to contribute to the development of such a comprehensive approach and will actively assist in promoting a wider understanding of the technical issues involved. It is anticipated that by the time of our next ERTMS Conference, planned for the spring of 2006, we will be able to offer further insights into this challenging project.

In parallel with this exciting opportunity in Europe, UIC has, through its activities at a World level, engaged in a broadening of the horizon toward the East and West through its promotion of new freight transit corridors, reinforcing Europes links with North America and Asia. It is indeed a welcome addition to our Conference that we will have speakers on the platform from India and China, which demonstrates the broadening interest in ERTMS beyond the borders of the European Community. The location of the 2004 UIC ERTMS Conference in Rome and the enthusiasm, pride and generosity shown by our host Rete Ferroviaria Italiana (RFI), in making the experience of 300km/h running with ETCS Level 2 on the new high speed line between Rome and Naples an attractive part of the conference programme, attests to their confidence in this new technology.

I hope that you enjoy the Conference and find the subject matter of this report stimulating.

Philippe Roumegure UIC Chief Executive 15 December 2004

Executive summary
The TSIs for High speed and Conventional rail (pending) prescribe the implementation of ETCS as a common signalling system in Europe to enhance interoperability between rail networks in the future. It is generally accepted that ETCS is the right long term technical solution, but that the migration from existing national systems will be difficult and costly and many networks are questioning whether the net commercial result will be positive. This study takes, as its starting point, the assumption that the force of the EU Directives precludes any consideration of non-compliance while, at the same time, appreciating the position held by certain railways with regard to economic viability. Accordingly, the assessment is limited to the following boundary conditions:

Establishing whether there are benefits (or less cost) involved in proceeding with a
more co-ordinated and integrated approach along particular international corridors to mitigate system wide costs and reduce operational hindrance.

Examining whether there is a financial/economic case for justifying a faster rate than
might be otherwise planned or required by minimalist compliance with the Directives.

Assessing the appropriate combination of on-board and track-side migration towards

ETCS having regard to the normal pattern of replacement of life-expired assets which must, in any event, be planned to maintain the integrity of the rail system.

Quantifying the order of magnitude of the costs involved in the migration process as
a basis of a case for special EU support during the transition period.

The report starts by examining 10 corridors covering 30,563 equivalent single track km and representing about 12% of the overall combined total network length of the countries covered by the corridors.These corridors represent a correspondingly higher proportion of the TEN network, of the order of 20%, and thus provides a good crosssection of the entire pan-European network. The additional cost of installing ETCS, in an accelerated programme, in parallel to existing national systems, is quantified.This strategy would close many of the gaps in the 10 selected corridors, where some ETCS is already planned for completion by the end of 2008.The study reveals that the cost would be of the order of 638 M on the

t rack-side. This cost is over and above the cost of the investment, in the current national (or bilateral) plans that have already been approved, or are on the point of approval.This extra cost works out at an average of 46.6 k single track km (93.2 k per additional equivalent

per double track km) for the sections studied.

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The cost of converting on-board equipment, in such an accelerated programme, would be of the order of 8.8 billion for the entire fleet using the 10 corridors

studied. This would equip about 13,650 traction units (28% of the national fleet in the same networks). It is estimated that approximately 1500 of these (11%) would be involved in international cross border operations.The cost of only converting this reduced fleet would be 1 billion .

The conclusion drawn from this part of the study is that, in general, the cost of accelerating the ETCS Programme, by parallel installation on the track-side, will not be covered by the savings on international on-board systems.Therefore the pace of migration, in the immediate future, will more likely be dictated by national perspectives based on life expiry rates of assets and considerations of safety and capacity improvement. A global cost benefit analysis, based on a phased programme of ETCS Migration, synchronised with replacement of life expired assets and traction overhaul intervals, is then carried out.This analysis assesses the difference in the costs and benefits which would result from a decision to unilaterally implement ETCS over the entire TEN network.The potential global impact on the railway infrastructure Managers and Undertakings (i.e. the internal railway system) is determined in Net Present Value terms.The analysis restricts itself to the potential direct impact of ETCS and does not include general macro-economic and societal benefits, which might ensue from interoperability and modal shift.The latter are more speculative and could not be attributed to ETCS alone.Therefore the report quantifies the net cost of migration to the railway companies so as to determine the funding support that would be required to flow from Members States and the EU towards the rail system.

A number of scenarios are projected over a 40-year time horizon.The probable scenario suggests that the implementation of ETCS would result in a negative Net Present Value (NPV at 6%) of 12.5 billion . On this basis, the railways within an

expanded European network of 27 Member State, plus neighbouring networks, would need an injection (funding) of this amount of money purely to maintain commercial equilibrium with to-days position. Taking the broader economic factors into consideration, the study considers that the greatest benefits (or least cost) are likely to arise from an integrated strategy involving:

no further development of national systems; focusing on the busiest corridors and the laying of ETCS in parallel to national
systems on the sections of smallest extent;

systematically reducing of the number of on-board systems; creating a mass market for ETCS and enhancing rail safety through replacement of
life expired or obsolete national systems;

setting a realistic programme of traction fleet conversions to the ETCS C/C system.
Acknowledging that each network is in the process of elaborating its own national rollout out strategy for ETCS migration, the report suggests that the following provisions may be considered as a prudent approach to migration:

order new rolling stock equipped with ETCS or at least prepared for ease of fitment,
and equip or prepare existing fleet at major overhaul;

roll out an ETCS programme for track side migration at least in line with the life
expiry of the signalling system. However, it is unlikely that this approach will be sufficient, both on track-side and onboard, for the highly integrated networks, or portions of networks, and a faster path will be appropriate. The report concludes by observing that the cost of accelerating the ETCS programme, by parallel installation on the track-side, will not generally be covered by the savings on international on-board systems and so other considerations need to be taken into account. However, it considers that the strategy of migration to ETCS is correct from a business and technical perspective as it unlocks individual networks from the technical perpetuation of bespoke systems and lays the basis for a common safety signalling standard for the future. It also concludes that the broader economic benefits will not be maximised by an apathetic uncoordinated approach to ETCS and that the railway companies must review the current situation constructively and prepare, in a united fashion, for the appropriate engagement with industry and the EC in relation to the ETCS migration programme, system specification and interchangeability issues and cost.

1. Objectives and Scope

The Technical Standards for Interoperability (TSIs) for High speed and Conventional rail, have, as an objective, the implementation of ETCS (European Train Control System) as a common signalling system in Europe to enhance interoperability between rail networks in the future. It is also anticipated that wider benefits will include reduced specification cost, speedier cross acceptance and economies of scale in procurement.The increased safety and capacity potential of ETCS will also be an important factor, especially for networks with less modern signalling systems. It is generally accepted that ETCS is the right long term technical solution, especially where an effective cost relationship to route benefit can be demonstrated. However, the migration from existing national systems will be difficult and costly and many networks are questioning whether the net commercial result will be positive.The speed with which networks progress towards ETCS implementation will be conditioned by the persuasiveness of the financial appraisal for their respective businesses. This study takes, as its starting point, the assumption that the force of the EU Directives precludes any consideration of non-compliance while, at the same time, appreciating the position held by certain railways. Accordingly, the assessment is limited to the following boundary conditions:

Establishing whether there are benefits (or less cost) involved in proceeding with a
more co-ordinated and integrated approach along particular international corridors to mitigate system wide costs and reduce operational hindrance.

Examining whether there is a financial/economic case for justifying a faster rate than
might be otherwise planned or required by minimalist compliance with the Directives.

Assessing the appropriate combination of on-board and track-side migration towards

ETCS having regard to the normal pattern of replacement of life-expired assets which must, in any event, be planned to maintain the integrity of the rail system.

Quantifying the order of magnitude of the costs involved in the migration process as
a basis of a case for special EU support during the transition period.

To achieve these aims it has been considered appropriate to:

Examine a fast/integrated ETCS migration scenario. Analyse the cost implications of the fast/integrated migration. Substantiate the corridor philosophy and identify corridors where a faster ETCS
migration strategy could be the correct decision on the balance of financial cost.

Examine the least cost/disruptive opportunities for national migration towards ETCS,
afforded by the replacement of assets and the upgrading of the traction fleet at major overhaul.

Assess the additional cost of migration, over and above what is currently planned by
individual networks, and to prepare the basis of the case to attract European funds. The overall Strengths,Weaknesses, Opportunities and Threats (SWOT) of ETCS have been carefully analysed in other UIC studies and are summarised in Appendix A.This elaboration has shown that the potential long term benefits cover areas of financial, organisational and wider economic opportunity but that the costs and operational disruption extend beyond the replacement of like for like systems. At this stage of early development it is not possible to be categorical about many aspects of ETCS.Therefore this study concentrates on the practical business decisions that will need to be made, particularly in relation to co-ordinating the international roll out programme along railway corridors and the need to consider the replacement of assets over the long term. As this study is a high level global analysis the results are to be considered as subordinate to more detailed individual network migration strategies, which are being currently defined by each Member state.

2. Data available
The data utilised in the analysis has been obtained during the compilation of the UIC Report: Implementing the European Train Control System - Opportunities for European Corridors, presented at the UIC ERTMS Conference held in Leipzig on 1011 December 2003 (see especially, Appendix pages 46-77) and from other UIC Statistics.The former has been gathered via several enquires and meetings with the railway companies. These were updated and completed by the UIC ETCS Migration Strategy Group during 2004.

The following table A gives an overview of the type, the functionality and the extent of the existing CC-systems for various countries by the end of 2003. For the track-side, the equivalent length of single track km (i.e. for double track lines the length is doubled) equipped with different national signalling systems is shown. For the train-side, the number of vehicles equipped with the corresponding CC-device is displayed. Extra columns have been created in order to report percentages (partial and total) of infrastructure and rolling stock equipped.

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Table A
Control/Command Systems overview per country

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Table A
suite

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3. Methodology to assess Traction Units associated with corresponding Corridors

Detailed data is currently unavailable to accurately determine the total amount of traction units, which would be affected by a decision to introduce a new signalling system (such as ETCS), on a particular corridor.Therefore it has been necessary to devise a methodology to calculate this figure with sufficient accuracy and confidence for use in a global business case scenario.The following approach has been taken: a) The total number of traction units per equivalent single-track km has been calculated for each country.This ratio (last column in table A) ] combined with a global perspective of the network
total number traction units

[ total length sin gle track =

concerned, offers an empirical indication of the overall network characteristic.

A low value of indicates: peripheral/dedicated network traffic (0.05< 0.15). A medium value of indicates: intermediate network traffic (0.15< 0.25). A high value of indicates: highly integrated network traffic (0.25< 0.36).
The following table B has been created on this basis:

Table B

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It should be noted that large networks, such as in Germany, France, Great Britain and Italy will display all three characteristics in different parts of their networks, however their national averages tend to be consistently in the low to medium range.

b) It is then necessary to assess how the systematic introduction of a new signalling system influences the amount of traction units, which have to be converted, in relation to the national average per km.The general assumption is that the introduction of ETCS will have the same repercussion on rolling stock (in terms of number of traction units to be equipped) as the systematic introduction of new signalling systems in the network had in the recent past.To determine this general relationship for ETCS, the amount of actual conversions made in a sample of representative railways, associated with their own national signalling systems, has been reviewed in order to derive the multiple factor - (above the national average) for the three types of network characteristics outlined above at each stage of track conversion.Therefore actual figures, for other systems, have been used to plot a range of curves, which are utilised in the ETCS study. In this way the graph multiple factor vs. % of track converted to ETCS has been created as a best fit compromise using selected information from table A (see Graph 1 below).

In accordance with the multiple factor definition, the percentage of traction units converted is calculated with respect to the percentage of track converted for each multiple factor curve. In this way the graph percentage of traction units converted to ETCS vs. % of track converted to ETCS has been created (see Graph 2 below). For a given percentage of track converted to ETCS three different percentages of traction unit conversion is reported depending on which type of network is being considered.

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Graph 1
Multiple Factor

Graph 2
ETCS Conversion

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Graph n. 1 is consistent with intuitive understanding. It shows that at the early stage of a new signalling system (ETCS in this case) a higher number of traction units per km needs to be converted than the national average.This reduces towards the national average figure as more of the system is converted.The actual multiple is significantly affected by the network traffic characteristic and so three curves are drawn, which can then be appropriately utilised for the analysis on each specific corridor. For obvious and intuitive reasons when plotting the three best fit curves an asymptote, whose equation is the line assume values less that 1. =1, has been imposed. In fact the multiple factor cannot

Graph n. 2 is derived in correspondence with Graph n. 1 by calculating the % of total fleet converted, resulting from the application of the multiple factor.This also offers a balancing check on the appropriateness of the multiple factor curves since the inverse graphs of cumulative fleet conversion display a characteristic, which is again consistent with intuition. In this case, also, some restrictions have been placed on the best fit curves.The three curves are bounded by the horizontal asymptote line v=100 and they start from the point v0 (0;7); that is to say that a minimum of 7% of traction units is necessary from the very beginning (track length tending to zero). It is important to point out that the two graphs represent a distillation of information drawn from a number of networks, with different levels of advancement of national C/C systems.This has been used to plot a common set of curves for use in studying the migration of the on-board C/C system in a broad economic business case scenario for ETCS. It is accepted that, in the case of a stand alone national project involving, say, the first 100 km of ETCS, a specific analysis of the percentage of the fleet to be converted would be necessary. In this regard it can be speculated that the first step towards ETCS on the trackside will necessitate a certain proportion of fleet conversion, possibly of the order of 5-10%. However, this specific national aspect has no significant impact on the global model in this analysis.

c) A third step in determining the cost/benefits associated with the timing of the ETCS trackside installation and on-board equipment is to estimate the proportion of the fleet which operates on the corridor and crosses national boundaries. Potential savings in the cost of future on-board C/C equipment could be anticipated on the international fleet arising from a unified signalling system. To assess this figure, in the absence of specific data, it has been necessary to examine national and international traffic-kms (passenger and freight) in each network and

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propose a relationship between the traction units utilised for freight and passenger traffic.The data have been extrapolated from UIC statistics using certain assumptions as to fleet distribution.The resulting table C is shown below.

Table C
Network international traffic factor

Note: Network International Traffic Factor = 0.25 Freight ratio + 0.75 Passenger ratio

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4. International Rail Corridor analysis

The 10 corridors outlined in the document: Implementing the European Train Control System - Opportunities for European Corridors, presented at the UIC ERTMS Conference held in Leipzig on 10-11 December 2003, have been taken as the basis of this analysis.The ETCS projects on those corridors, where decisions have already been made, or are in the process of been taken, have been noted.The financial cost/benefits of implementing an accelerated track side programme over and above these plans has been examined.The 10 corridors cover 30,563 equivalent single track km and thus represent about 12% of the overall combined total network length of the countries covered by the corridors.They represent a correspondingly higher proportion of the TEN network, of the order of 20%, and thus provide a good cross-section of the entire pan-European network. For each corridor a spreadsheet has been produced showing information on infrastructure and estimates of ETCS track-side and on-board costs.These costs have been mainly obtained by UIC either directly from members or from AEIF.Where neither was available an estimate has been made within the range of the figures that have been supplied.This has allowed an overall estimate to be made of the additional financing cost of advancing the track-side migration in comparison with the potential on-board savings on C/C equipment on the international fleet. The investment cost of rolling out a GSM-R network has been largely excluded from the analysis for the following reasons: a) Modern Telecommunications systems are, today, considered as an essential part of the basic infrastructure of many railways. Future reliance on such systems will transcend ETCS applications. b) The additional investment to support data transmission for ETCS levels 2 and 3 should be somewhat off-set, in the future, by reduced track-side equipment, such as the elimination of line-side signalling. However, the exact relationship between the costs and benefits will be a function of the extent of commercial exploitation of GSM-R and the actual reduction in the signalling equipment. c) Many networks intend to use their GSM-R platform to leverage safety and productivity gains in other non-signalling related area.

Accordingly, having regard to the complexity of assigning an appropriate proportion of GSM-R investment cost to ETCS, it has been decided to avoid a discussion on the relative merits and savings of various levels of ETCS and their dependency or otherwise on GSM-R. The results of all the individual corridor sheets (see Appendix B to this document) are

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brought forward to two summary tables D1 and E1 where a complete analysis has been performed per corridor and per country respectively. Each spreadsheet was mutually electronically connected forming a unique tool described in figure 1. A reduced subset, involving a re-analysis of four corridors, which offer the most potential, is also shown in tables D2 and E2.These latter corridors were first examined as part of global proportion (20%) of the TEN Fig.1 The migration tool

network and later re-viewed on a specific individual corridor basis. A higher proportion of rolling stock (i.e. highly integrated network traffic multiple factors) has been assigned in the re-analysis to assess the sensitivity of this on the results.

The working method was iterative: hypotheses agreed at the ETCS migration strategy group meetings were implemented in the model, the model run and the results evaluated until a final and definitive agreement was reached (see the following figure 2).

Fig.2

Table D 1
Corridors analysis of additional costs for faster ETCS migration and associated on-board savings

19

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Table E 1
Per Country analysis of additional costs for faster ETCS migration

Table D 2
4-Corridor re-analysis of additional costs for faster ETCS migration and associated on-board savings

21

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Table E 2
Per Country (related to the 4 corridors) re-analysis of additional costs for faster ETCS migration

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5. Analysis of Results in the context of an accelerated programme on International corridors

The approach adopted has been to quantify the additional cost of installing ETCS, in parallel to existing national systems, to close many of the gaps in 10 selected corridors, (fig. 3), where some ETCS is already planned for completion by the end of 2008. It is assumed that corresponding financial benefits would result from a more rapid reduction in the number of on-board C/C systems on international trains than is currently likely to occur at the planned rate of migration to 2008. To assess the net benefits of such a strategy, the cost of interest payments (6%) on this advanced capital expenditure is then compared with the potential earlier realisation of on-board equipment savings on new orders of Fig. 3
10 selected corridors

rolling stock (the annual rate is assumed to be equal to a 1/30 of the international fleet).The ratio of interest paid is compared to on-board savings. A figure less than 1.0 would suggest that accelerating current plans should have an overall positive benefit for the corridor. A figure above 1.0 would suggest that the interest paid would not be covered in the short term by the on-board savings on international traction units. However, the results need to be reviewed, having regard to the high level nature and simplification of the analysis. For example, if track-side installation costs were 25% less and on board savings were 50% more a corridor displaying a ratio of two would be worth re-examining. However it would require a reduction of track-side cost by 50% and an increase of on-board savings of 100% to restore a corridor with a ratio of four to financial equilibrium.

Accordingly, the following broad comments can be made about the 10 corridors selected: a) The analysis is sensitive to the length and cost of closing the anticipated gaps in the corridors with ETCS and the corresponding savings attributed to the international fleet. Since, in overall terms, the assigned European International fleet represents probably little more than 10% of the entire traction units, and as the analysis only claims benefits for new international fleet purchases, the majority of corridors display

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no financial benefits from an accelerated programme purely on the basis of savings of on-board equipment of the international fleet.This means that, as a general philosophy, unilateral premature replacement or parallel installation of track-side equipment will not be an optimum financial choice.

b) Corridor 3: PBKAL (fig. 4) displays the most immediate potential for considering an accelerated migration programme, especially if the figures estimated for the number of international traction units and on/board cost savings are substantiated. It should be noted that the European Commission has also expressed an interest in examining this corridor.They have sought to establish the cost of closing all remaining gaps (including TVM areas, which were not considered in the UIC study to date). A more detailed analysis of the rolling stock savings need to be made, especially the specific units operating between Brussels and Paris. Fig. 4
PBKAL corridor

c) Three other corridors should be further evaluated in more detail as the international component may still represent a strong factor when considered in conjunction with any other national benefits. A co-ordinated strategy along all, or part, of these routes in the future could present the opportunity to reduce the overall cost of ETCS migration for each of the adjoining networks, especially if additional national projects result in increasing the length of ETCS installed in each network, thus reducing the cost of closing the remaining gaps.These corridors are (fig. 5):

Paris-Mannheim-Zurich (corridor 2) Rotterdam-Milan-Genoa (corridor 5) Antwerp-Bettembourg-Metz-Basle (corridor 6).

Two general observations support this Fig. 5

3 promising corridors

contention.

Firstly, it can be seen from the summary table

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of the 10 corridors, aggregated on a national basis (Table E1), that countries such as Belgium, Luxembourg and The Netherlands could benefit from an integrated approach. Secondly, the results of the market study of the Eurailinfra project (UIC Infrastructure Commission) indicate strong future international traffic relationships between the countries involved, which offer the prospect to increase the amount of international traffic on the corridors in question.

d) The remaining corridors do not appear to offer an immediate benefit from an accelerated integrated ETCS programme along the entire length of the corridor.The reason for this is due to insufficient international traction units operating over the entire corridor and/or the absence of existing national plans, at this point in time, which would provide a sufficient foundation to make the additional filling of outstanding gaps an attractive financial proposition.Therefore, there is a need to reexamine whether a less extensive proposal on a bilateral or tri-lateral basis between some networks, covering a smaller extent of the corridor, would offer a better proposition.

6. National Migration Strategies

The analysis in the previous section strongly indicates that the pace of ETCS migration will be driven more by national perspectives and the age and condition of current infrastructure and traction units, than by the attraction of reduced on- board costs of the international fleet. Each network is currently in the process of elaborating their national rollout strategies for ETCS Migration.These strategies will be influenced by the factors outlined in section 1 and in the SWOT analysis in Appendix A. It is worth observing that the on-going requirement to replace assets offers an opportunity to consider an optimised transition path towards ETCS. In such circumstances, the decision is not whether there is financial case for pre-mature replacement or parallel installation of equipment, but more a question of assessing how ETCS can be introduced instead of like for like replacement of existing systems. Compliance with the European Directives has also to be factored into this decision.The tables in Appendix C approach the migration to ETCS from this practical perspective. Table C1.1 demonstrates that, based on a conservative assessment of the life cycle of signalling equipment, there should be a need to replace 4,000 equivalent single track kms on the TEN network of an enlarged European Union on an annual basis.This figure

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rises to 6,400 km per year if one takes the entire enlarged European rail network into account. In simple terms this means that there is an opportunity to make progress towards ETCS at a regular rate each year.The following steps appear to represent a prudent approach to migration:

1) Define a roll out programme for track side migration at least in line with life expiry of the existing signalling systems. Based on an average life of forty years this suggests that the European network should be at least 35% converted to ETCS on the trackside by 2020. Based on the analysis in section 2 (see Graph 2, in particular) this track-side renewal would necessitate an associated proportion of the national fleet to be fitted with a compatible on-board ETCS system.The minimum percentage of the national fleet to be converted can be estimated from Graph 2, depending on the network characteristic. Knowing the injection of annual new fleet enables one to calculate the balance of fleet conversions to be carried on the existing fleet (see Table C1.2).

2) Order new rolling stock equipped with ETCS or at least prepared for ease of fitment subsequently for ETCS (Eurocabs, DMI, Odometry etc.) and equip or carry out remaining preparation of existing fleet at major overhaul.This would represent the least disruptive on-board conversion programme and should minimise or eliminate the additional out of service cost for workshop fitment at other nonscheduled times. Even at a steady replacement rate of traction units on a forty year cycle (average of TEN network fleet assumed to be 30 years in this exercise) and a 10 year overhaul frequency (fitting only the 10 and 20 year old fleet each year) this should see the European fleet pre-fitted by 2020 (see Table C1.3).

3) In overall terms the above strategy may be sufficient to cover the networks which have been described as peripheral or intermediate in this report.The likelihood is that some initial injection of fleet conversion will be necessary before settling into a national pattern.This is likely to be about 5-10% of current fleet size and is displayed at an average of 7% on the curves in Graph 2. However, it is unlikely that the above minimalist approach will be sufficient, both on track-side and on-board, for the highly integrated networks, or sections of networks around busy hubs, and a faster path will be necessary.The aspect can be seen from a comparison of the required programme suggested by Table C1.2 and the least disruptive programme suggested by Table C1.3.These two tables are combined and shown in Graph 3 (below and in appendix C).This shows that while the overall rate of conversion by 2020 should be

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adequate in all cases there would be a need for more accelerated fitment programme in the earlier years on the highly integrated networks, which could be compensated by a reduced programme in later years.

4) The difference in cost between the selected ETCS Migration programme and the normal steady state replacement and upgrading of assets can be quantified.This amount should represent the additional funding support sought from the EU towards ETCS Migration. A global cost benefit analysis has been carried out to assess the order of magnitude of the total cost difference for UIC member railways in an expanded EU of 27 Member states, plus the neighbouring networks.This is discussed in the next Section.

Graph 3
Traction fleet conversion to ETCS per network type

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7. Global Assessment of Cost of Migration

The study of the 10 selected corridors has revealed that, the cost of closing many of the gaps in the overall corridor length, by overlaying ETCS in parallel to existing national systems, would be of the order of 638 M .This cost is over and above the cost of the investment, in the current national (or bilateral) plans that have already been approved, or are on the point of approval.This extra cost works out at an average of 46.6 k per additional equivalent single track km (93.2 k per double track km) for

the sections studied.This serves as a useful global indicator of the extra cost provision that would have to be made in the future to roll out a faster strategy on the TEN network, than appears to be covered by current national priorities or the needs to replace life expired equipment. The global study also reveals that the cost of the on-board Eurocab equipment would be of the order of 8.8 billion for the entire fleet using the 10 corridors

studied. This is to equip about 13,650 traction units (28% of the national fleet in the same networks). It is estimated that approximately 1500 of these (11%) would be involved in international cross border operations.The cost of only equipping this reduced fleet would be 1 billion If one adopts the slower migration approach, in line with the replacement rate of lifeexpired assets, it will be possible to optimise the financial costs by avoiding the overlay costs of ETCS in areas where there is no obvious financial benefits from saving of onboard equipment. It will also be possible to consider a migration of the on-board equipment based on an injection of new fleet in combination with a less disruptive conversion programme of the existing fleet, in accordance with planned overall schedules. Such a scenario has been chosen as the basis for a global cost benefit analysis to establish the order of magnitude of the total differential cost of migration for an expanded Trans European Network area, inclusive of New Members States and pending accession countries (fig. 6) , taking the following expenditure elements into account: a) The difference in signalling replacement cost, and subsequent maintenance, between Fig. 6
Trans European rail network in a EU of 27 Member States

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ETCS and like for like replacement. b) The difference in fleet replacement cost and maintenance, including the on-board equipment, with a European ETCS programme compared with continuing with installation of national C/C systems. c) The cost of converting the on-board systems of a proportion of the existing fleet until 2020 to keep pace with the track-side installation of ETCS. The differential cost of migration to ETCS for the European Railways Companies concerned (Infrastructure Managers and Railway Undertakings) has been calculated.This is based on a 40 year time horizon, applying a range of discount factors (0%, 4%, 6% and 8%) to the annual estimated difference in anticipated expenditure in order to arrive at a Net Present Value (NPV). In addition to assessing the difference in investment cost and savings, an attempt has been made to place a monetary value on other potential incremental benefits arising from the uniform adoption of ETCS - such as gain in track capacity and savings arising from a reduction in rail fatalities and injuries.The analysis, however, does not consider other more general macro-economic and societal benefits, which might ensue from interoperability and modal shift.The latter are more speculative and could not be attributed to ETCS alone.Therefore the study concentrates on quantifying the net cost of migration to the railway companies so as to determine the funding support that would be required to flow from Member States and the EU towards the rail system. Furthermore, at this stage of early development of ETCS, and without a strong indication and commitment of industry, it is not possible to attribute potential benefits or cost savings in spare parts or other procurement benefits due to economies of scale. It might also be reasonable to anticipate savings related to reduced training for drivers, maintenance and operational staff due to the adoption of a unique CC system in the long term. However, the study considered that the cost/benefit would be broadly neutral during the time horizon of the analysis due to higher potential costs in the early stage being compensated by benefits of the unique system in the long term. The full calculations are contained in Appendix D, and a summary of the results is

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shown below.

Differential cost of migration to ETCS (Billion

negative Net Present Value (NPV at 6%) of 12.5 billion

The probable scenario suggests that the implementation of ETCS would result in a . On this basis, the railways

within an expanded European network of 27 Member State, plus neighbouring networks, would need an injection (funding) of this amount of money purely to maintain commercial equilibrium with to-days position. This figure correlates well with the cost elements (both on-board and track side) calculated in a separate AEIF study, taking into account the fact that the study is based on migration costs within the EU 15 member states.

8. Other Economic Global Factors

Overall, this analysis has been concerned with the optimisation, mainly in terms of financial cost/benefit, of the ETCS migration strategy. However, assuming that the financial imbalances are addressed in discussions with the EC and Member States, and taking the broader economic horizon into account, the greatest benefits are likely to arise from the following strategy: 1) No further development of national systems so as to:

effectively concentrate the attention of the signalling industry to the more rapid
development and support of ETCS, to include finalisation of specifications and progress on interchangeable supplier equipment;

begin to gain benefits through economies of scale procurement and reduced cross
acceptance costs;

de-risk the transfer of specialist signalling system principles and knowledge to

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manufacturers and outside industry, having regard to the trend of reducing in-house expertise within many networks. 2) The least cost route to an accelerated migration at international level, and towards meeting the goal of interoperability, will be achieved by focussing on the busiest corridors and considering laying ETCS in parallel to national systems on the sections of smallest extent. 3) Systematically reducing the number of on-board systems will bring benefits for train operators in time. In this regard there are over twenty European signalling systems. By 2010, ETCS will be, at least, the fifth most extensive signalling system with over 16,000 equivalent single track kms installed, based on current commitments alone

(see table F below for plans to 2008).

Table F
This will establish it as a dominant system and will leave only PZB, Crocodile, KVB,

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ATP/TPWS systems with a greater coverage, predominantly in Germany, France & UK (see Table G).

Table G
The extent of such systems means that on-board parallel equipment will still be required on many international routes crossing these networks for many years.This study shows that there is a weak financial case for accelerating the migration of track side equipment. However, if it can be shown that there are wider economic or practical technical benefits, by minimising the amount of international foreign trains requiring such additional on-board equipment, an accelerated programme of ETCS implemented in important transit corridors such as from Belgium,The Netherlands, crossing North and Eastern France and South-Western and Eastern Germany to Switzerland, Italy and Austria would seem to be the best place to start. 4) As a general observation it may be stated that the installation of ETCS in peripheral networks, outside of the central European corridor areas, is unlikely to be financially justifiable based purely on interoperability benefits. However, the installation of ETCS, consistent with national plans, will be an important contributor to enhancing rail safety and will create the mass market for ETCS through replacement of life expired or less modern national systems. 5) The underlying rate at which existing national systems can be eliminated will be largely determined by the pace of traction fleet conversion to ETCS C/C system. While the parallel fitting of ETCS on the track-side can reduce pressure on national fleet conversions, this will not be a substitute for a well organised long term strategy for on-board equipment. Failure to recognise this could result in severe restrictions

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on fleet operations and high out-of-service time if programmes have to be implemented at short notice due to sudden obsolescence, unsustainable maintenance cost or life expiry of the predominant national system. It is important to recognise that it can take up to forty years of gradual replacement, in normal steady state conditions, to replace/upgrade an entire national system or fleet. It is also evident that by about 2015, few of the existing systems may be supported by the manufacturers.

9. Conclusions
This report has examined the cost/benefits of ETCS Migration strategies from a financial, economic and organisational perspective. It is clear that the cost of accelerating the ETCS Programme, by parallel installation on the track-side, will not be covered by the savings on international on-board systems.Therefore the pace of migration, in the immediate future, will be dictated by national perspectives based on life expiry rates and considerations of safety and capacity improvement. Nevertheless the broader economic benefits, outlined in the report, will not be maximised by an apathetic uncoordinated approach to ETCS.There is technical consensus around the ETCS solution for the long-term and the force of EC Directives will ensure the future evolution in this direction. It is reasonable to assume that a unified signalling system will bring economies of scale in an area which is fragmented and specialised. Therefore, for the long-term, the strategy of migration to ETCS is correct from a business and technical perspective as it unlocks individual networks from the technical perpetuation of bespoke systems and lays the basis for a common safety signalling standard for the future.These are important issues for companies with aspirations towards commercialisation and public accountability. Accordingly, there is a need to consider ETCS as the next generation signalling system and in accordance with any replacement strategy, railways will need to plan in such a manner so as to ensure the continuity of their future operations in the light of future signalling market conditions. Ambiguity will only be a feeding ground for indecision and will result in a lack of real commitment from industry to make the necessary steps to advance rapidly with reliable, safe and economical solutions, including interfacing with existing systems and inter-change between supplier products. Therefore the railway companies must consider ETCS in the context of a more global economic perspective and prepare, in a united fashion, for the appropriate engagement

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with industry and the EC in relation to the migration programme and the practical resolution of concerns such as the stabilisation of specifications, interchangeability of supplier equipment, funding and cost. It is reassuring to report that such discussions have commenced and should shortly

Fig. 7
Relevant corridors