SAN FRANCISCO (Business 2.0 Magazine) -- The Disruptor: Applied Location

The Innovation: A satellite-based system for toll collection, traffic congestion management, and pay-as-you-drive insurance

The Disrupted: Traffic congestion, toll collectors, parking meters, and RFID-based systems like E-ZPass

Traffic congestion sucks an estimated $63 billion a year out of the U.S. economy in the form of wasted fuel and time stuck in traffic. Anyone who's ever zoomed through a tollbooth thanks to an E-ZPass knows there's a better way.

But what if instead of a wireless radio-frequency ID tag attached to your windshield, the device was based on global navigation satellite systems like GPS and Galileo? Bern Grush, the founder of Toronto-based Applied Location, thinks it would open up all sorts of new possibilities -- from congestion management and meterless parking to pay-as-you-drive insurance. "It changes the game for drivers and insurance companies, and it creates a new market," suggests Michael Urlocker, a consultant who writes a blog called On Disruption.

Grush calls his system Skymeter. He says he's created an algorithm that corrects for the noise and missed signals to which GPS is prone, especially in urban canyons, so Skymeter can reliably pinpoint a car's location to within 1.5 meters. Once that becomes possible, cities can start to manage traffic better by charging more for driving during peak times. (London already does this, but with an expensive system of cameras.) "The problem is congestion," Grush says. "We need to send pricing signals to motorists to drive at alternate times."

Skymeter is disruptive more for the new economic models it might spur than for what it might displace. For instance, in addition to congestion tolls, it could be used to charge for parking anywhere in a city, even where there are no meters. Or the technology could enable insurance companies to offer better rates to safer drivers, since it records speed, time of day, and driving route.

Grush is still almost a year away from a finished product, but he has $250,000 in seed money from family and a government grant, and traffic directors from Toronto to London have expressed interest in testing Skymeter as soon as it's ready. Grush thinks his product could ultimately help to supplement or even replace the fuel tax now used to pay for the upkeep of our roads. "The need to fix road financing and congestion is so acute," he argues, "that a dramatic shift will necessarily occur."

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