Taxi, Limo Trade Group Hates Innovative Upstarts, Labels Them 'Rogue Applications'

from the can't-beat-'em-in-the-market,-so... dept

There's nothing like a bit of disruptive innovation to make the legacy players start busting out the old moral panics. We've written a few times about the new generation of ride-for-hire and ride-share services, which are really disrupting the old taxi and limo business -- leading to all sorts of highly questionable lawsuits and attempts at regulating these new players into oblivion. In almost every case, it seems quite clear that these attacks are not because the service is bad for consumers... but because it's disrupting traditional players who haven't innovated. So, it came as little surprise this week to receive an email from the "Taxi, Limousine & Paratransit Association" excitedly telling me all about a new paper they've issued with a giant "warning" about what they call "rogue apps." Isn't that great? Rather than innovative and disruptive services that consumers absolutely love, they just rebrand them as "rogue" apps and they can make them seem sssssssssssssscary. The paper grades various new services, giving them a "red light," "yellow light" or "green light."

Not surprisingly, the more well known apps -- Uber, SideCar, Lyft and Tickengo -- all have received the coveted "red light." While according to the TLPA this means they're dangerous "rogue apps," to me it suggests that they're all doing something right. They're providing services that people want that are more convenient or better priced than the old guard, which is why the old guard has to attack them.

The key point they make is that these are all "unregulated" taxi services, which allows them to go into full out moral panic mode about how, without regulations, these services will likely take advantage of consumers. The paper talks about threats of "criminal" drivers and the potential for meter rigging. Of course, as we've seen in other industries, this seems like a clear case of businesses using regulations to keep out innovation and competitors, rather than for a legitimate purpose. Yes, many of those regulations were put in place for a good reason originally, yet many of those reasons really don't apply to these new services.

In the past, you needed regulations to protect you from drivers taking extra long paths to where you wanted to go, driving poorly or charging too much -- because drivers could do that and there was little recourse. But the thing about these new services, which rely heavily on online reputation systems, is that these reputation systems make the need for such regulations much less necessary. The services, like Uber, set the price and poor drivers get booted from the system based on user reviews. And, since most people who have a mobile phone these days to use one of these apps will also have GPS on those phones, people can self-monitor if the driver is taking a reasonable route. Basically, the original safety reasons (which, again, may have made sense at the time) for many of those regulations simply may not really apply to these new services. But rather than deal with that, the legacy players are doing what legacy players do: using those regulations to try to stomp out innovation and stifle competition.

Filed Under: innovation, limos, protectionism, regulations, taxis, threats
Companies: lyft, sidecar, tickengo, tlpa, uber

And... Yet Another Regulator Flips Out About Uber, Tries To Kill It

from the regulation-2.0 dept

Here we go again. Yet another local transportation regulator who either doesn't understand Uber or (perhaps more likely) understands it all too well has decided to give Uber all the free Streisand Effect publicity it needs to build its reputation in the market by trying to pass legislation to shut it down. This time it's the Colorado Public Utilities Commission, which is looking to pass some new regulations that effectively make it impossible for Uber to operate its innovative car/taxi service (which is incredibly popular with users) in Denver. Of course, all this has really done is give Uber the perfect opportunity to get tons of attention for its service in Denver as it urges Uber fans to speak out against the regulatory changes.

Uber points out that the proposed changes will basically make its business model illegal in multiple ways -- saying that you can't price based on distance, effectively keeping Uber cars outside of downtown areas that taxis populate, and forbidding Uber's key relationship set up with drivers (independent partners). As Uber points out, these rules don't serve any legitimate regulatory purpose other than to prop up the taxi business model and hurt the disruptive upstart:

These rules are not designed to promote safety, nor improve quality of service. They are intended to stop innovation, protect incumbents, hurt independent drivers, and shut down Uber in Denver.

Of course, we've seen this before. In a bunch of places where Uber operates, the service faces regulatory crackdown by local regulators who seem to do a lot more to protect incumbent taxi services than they do to figure out what benefits the users the most. This gets back to that concept of corruption laundering that I've mentioned a few times. The regulations can be presented as having good intentions: they want to protect riders from getting scammed by unscrupulous drivers, and they want to make sure the market is safe and efficient. But, as with so many regulatory schemes, what can be positioned as having the best of intentions also serves a secondary purpose: to allow incumbents the ability to thrive, while blocking out competition and the impact of disruptive innovation. That seems to be the case here yet again.

Filed Under: colorado, denver, limos, puc, regulations, taxis
Companies: uber