NYC Taxi And Limo Commission Looks To Regulate All Ride Hailing Services

from the because-that's-how-innovation-works dept

Whatever you might think of Uber in terms of its attitude and practices (and, really, people feel this weird need to rant on about such feelings, but that's unrelated to the point of this post -- so no need to tell everyone), you can't really deny that it has truly revolutionized the way that many people are able to get around in a variety of metropolitan areas. And Uber and its various competitors have done this by building a better system that is much more convenient and easy to use, and actually using much more realistic market forces, rather than doing silly things like artificially limiting the number of taxi medallions to keep taxi services scarce and expensive.

Of course, the old beneficiaries of the system, have hit back any way they can. As we've written repeatedly, various cab companies and bureaucrats seem to go out of their way to attack such ride sharing services. The typical go-to claim from those hating on ride hailing services is that because they're less regulated, they're more subject to fraud and abuse or unsafe driving conditions. There is, however, little evidence to back that up. While there are some anecdotal stories of bad ride hailing drivers, we're already seeing innovative ways to deal with that. For example, in India, Uber recently added an emergency button to its app, which would directly alert police if a rider was in trouble.

In short, what we've seen is that, through innovation, competition and (most importantly) an abundance of information, a better overall result can occur. The reasons for many taxi regulations in the past was because of clear information asymmetry: taxi drivers could (and frequently did) screw over passengers, because there was basically no recourse. There was no way for a rider to know if the driver was safe or not, and (more importantly) no real way for that rider to then warn future passengers. But ride hailing services changed that in a big way by flipping the equation, and allowing a good way to rate drivers and to create incentives for those drivers to do a good job. It's not perfect, but, frankly, my own experience in using Uber and Lyft has been that the overall experience has been much, much better than using a traditional cab.

In New York City -- a place where cabs have long been limited by its famous medallion system -- there's been a struggle to deal with this innovative change. Just last year, we wrote about the Taxi and Limousine Commission declaring Lyft to be illegal. And, a few months ago, a NYC politician proposed a bill that would require the TLC to create its own Uber-like app. Because, apparently, innovation works by having the government mandate another part of the government copy an innovative company?

Either way, the TLC is now looking to go even further, in proposing new rules that say that basically any ride hailing app should be fully regulated by the NYC TLC and including a bunch of conditions that really don't seem necessary. Some of them just seem like relics from a previous era that are there because they were there in the past. It's difficult to see why that makes any sense. And then there are new requirements that also seem bizarre. Like this:

The website and/or smartphone application must provide Passengers, upon request, with an estimate of the total fare, inclusive of all fees and any price multiplier or variable pricing policy in effect, for the ride.

I can see how that would be a nice feature to have, but should it be required by the government? If Uber doesn't provide that and Lyft does, then isn't that just a competitive advantage for Lyft? And, really, do existing taxi systems already do that beyond a driver tossing out a random estimate off the top of his head on how much it will cost to go somewhere?

Then there's something really concerning: buried in the rules is the idea that drivers can only work for one provider at a time. I've seen many drivers that work for both Lyft and Uber (and sometimes others as well). Specifically, the rules have a "one device" rule -- saying drivers can only use a single device at a time, but many drivers that I've seen who work for multiple services have separate devices (and some, like Uber, will offer to rent you a special phone just for being an Uber driver, if you don't want to/can't use your own phone).

A Base Owner must not dispatch a For-Hire Vehicle that is equipped with more than one electronic device in addition to the dispatch equipment required by the Vehicle’s affiliated Base...

Again, I'm sure the TLC would argue that this is for safety reasons. Elsewhere in the document it suggests that by arguing that this single device cannot be handheld:

a For-Hire Vehicle may be equipped with one electronic device that is used to accept dispatches from a Base or FHV Dispatch Application, provided that that the device is mounted in a fixed position and not hand-held and use of the electronic device is limited to either voice or one-touch preprogrammed buttons or keys while the Vehicle is in motion.

And, sure, you can reasonably worry about the driving safety of someone who has multiple such devices, though I've seen plenty of drivers with two or three phones lined up in a way that seems perfectly reasonable.

The more glaring concern here, though, is that such a rule basically locks in the incumbents and harms the upstarts. If a driver can't drive for Uber and a new ride hailing startup, they're likely to just stick with Uber, and the upstarts get cut out. That's a problem. Even if that's not the intention, it's these kinds of regulations that all too often lock things in so that incumbents stay in power, while startups are blocked.

Furthermore, just the idea that any new service in this space has to now go and plead with the TLC to get "licensed" is going to slow and limit the opportunities for new and innovative players in this space. Uber got to where it was by building a useful service, not having to ask local bureaucrats for permission every time. The next generation of companies looking to reinvent the space won't be so lucky -- and that may mean we all suffer.

Filed Under: new york, new york city, regulations, ride hailing
Companies: lyft, sidecar, uber

California Continues To Be Anti-Innovation: Tells Ridesharing Services That Carpooling Is Illegal

from the oh-come-on dept

There has been plenty of discussion about ridesharing services lately, and whether they should be subject to the same sorts of regulations as taxis. As we've discussed, while taxi regulations have some historical basis in protecting riders from scammers, most of that was for a time when there was significant information asymmetry between drivers and riders, making it much easier for drivers to scam, rip off or endanger passengers. The wonderful thing that services like Uber, Lyft and Sidecar do is get rid of much of that information asymmetry and risk. The drivers are rated and monitored. The services handle the payment terms. The regulations that once served a purpose are less and less important. And, of course, then the reality starts to become clear. Where those regulations may have once had some benefit for the public, these days, they're much more about limiting competition, keeping prices artificially high and limiting new forms of innovation.

That's become especially clear in the last few days, where the California Public Utilities Commission (CPUC) has alerted Uber, Lyft and Sidecar that their new carpooling offerings are illegal. All three companies recently introduced a rather useful innovation that actually makes it much more accurate to call these services "ridesharing." By enabling "carpooling," the services find multiple people heading in the same general direction, and put them in the same car, allowing all of them to get a cheaper fare. It's the kind of useful innovation that seems like it's better for everyone. But, not the CPUC. In the world of the CPUC, you can't innovate if you haven't first groveled for permission:

Basically, the CPUC says that under California law it's illegal for these ride-sharing services to charge passengers an individual fare when carrying multiple people in one vehicle. If the companies would like to add a carpool feature, they first have to request an adjustment to their existing permits with the CPUC or petition the state legislature to modify the law.

Some people like to mock the idea that these companies like to innovate first and deal with the regulatory issues later -- and there may be something to that. But anyone who's ever worked in a setting where innovation is happening knows that having to ask for permission is a recipe for no innovation. California has a long history of enabling innovation. It would be quite a sad state of affairs for it to go the other way.

Filed Under: california, carpool, carpooling, cpuc, innovation, permission, ride sharing
Companies: lyft, sidecar, uber

Corruption Index Indicator: Cities That Ban Ride Sharing To Protect Taxi Incumbents

from the another-week,-another-disruption-stifled dept

Last week, lots of attention was paid to New Jersey's idiotic and corrupt decision to block Tesla from operating its own stores there, because car dealers don't like the competition and hate the idea of car manufacturers selling direct. As we noted, any such move is a pretty clear sign of corruption at the state level, favoring political allies over the public. There are similar issues at the city level, and this week's corruption highlight award goes to Seattle, where the city council has massively limited ridesharing/app-based transportation services like Uber, Lyft and Sidecar. The law doesn't ban them outright, but makes them a lot less useful for consumers (and drivers) by saying each can only have 150 cars on the road at any time -- which is a hell of a lot less than the combined 3,000 they had.

There's simply no reason for this, other than to protect the legacy taxi providers. If consumers want those app-based services, why are they being blocked? And, of course, because so few cars will be available, those services become a lot less desirable (less likely to have a car available nearby, etc.). The end result is that it sucks for everyone. People wanting to get places will have fewer options. People who might want to earn money as a driver cannot. These new innovative companies are held back. The only "winners" are the current taxi owners who have less competition.

One council member, Tom Rasmussen pointed out the absurdity of this, and offered up an amendment (which was voted down) that said there shouldn't be any caps on drivers from such services:

"Let's listen to what the public is saying," he said. "Let's not cut supply when demand is so high."

The public? The public? Ha! They're not lobbying like the taxi and limo companies.

As another council member, Tim Burgess notes:

"Someone told me that trying to limit TNCs would be like prohibiting Netflix because we wanted to protect Blockbuster," Burgess noted.

Indeed. And yet... it's now the law in Seattle. In a city known for having a fairly thriving innovation and tech scene, the city council has just made it clear that innovation that upsets local incumbents just isn't welcome.

Filed Under: corruption, limos, ride sharing, seattle, taxis
Companies: lyft, sidecar, uber