In Depth

Is Technology The Taxi Industry’s Lifeline?

Across major U.S. cities — from the heart of the Big Apple, to the Windy City and out west to the Golden Gate City, ridesharing apps like Uber and Lyft have spent much of 2015 driving their share of controversy with the local taxicab market.

While New York City and San Francisco lawmakers continue to map out a plan to legislate the touchy subject, Chicago officials took the first step Monday (May 4) toward a move that may even the ridesharing market’s playing field. Mayor Rahm Emanuel — President Barack Obama’s former chief of staff who was recently re-elected to his second term — has been a staunch proponent of regulating ridesharing services.

While regulation hasn’t been quite as easy to pass as the mayor may have hoped, he’s taken another route to help Chicago’s taxicabs remain competitive against Uber and Lyft. The plans involve working with the Illinois Department of Business Affairs and Consumer Protection (BACP) to launch a universal smartphone app that works with every registered taxicab in Chicago. Not only would the taxi app allow the drivers to connect with riders via the app, they would actually be required to use the app while on duty, according to a statement from Emanuel’s office.

Watch out, Uber. Could this new app disrupt the taxicab industry in favor of the taxicabs? 

Or is it too little too late? It’s not as if technology is going to make taxis all of a sudden a better experience even though it might make getting one and paying for one easier. But Chicago’s mayor believes this technology will help bring another option to its taxi-hailing residents. 

“Technology knows no boundaries and with the universal taxi app Chicago residents stand to benefit,” Emanuel said in a statement. “Residents from all across Chicago will be able to request a ride and be connected to a nearby taxi with the click of a button.”

Just like Uber and Lyft, riders would be able to hail a taxi via smartphone — making the payment process just as frictionless. Maria Guerra Lapacek, the commissioner of the BACP, called the addition of the app a “win” for taxi companies in Chicago, saying that it brings consumers a more convenient way to hail a cab — while still keeping the market competitive.

So how did Uber, this soon-to-be app’s top competition in Chicago, react? The company doesn’t seem to be worried (at least not publicly).

“Uber continues to grow in Chicago because we connect people with safe and affordable rides to all neighborhoods,” a spokesperson for the company told NBC Chicago. “We welcome competition.”

But not everyone welcomes that competition — especially the Cab Drivers United organization in Chicago who fear the city’s addition of an app will be another way for Chicago to tax its drivers. Cab Drivers United, the union representing Chicago’s taxi drivers, said attempts to level the playing field could actually hurt the taxi industry if not executed properly. There’s no word yet from Chicago officials if the city will charge for the app.

“It’s just not fair. To become a taxi driver, you have to go through all this pain. You have to pay some money to get a chauffeur’s license and you have to renew it. It takes a lot of energy to get done with it. But to become an Uber X driver, you get a car, you get an app and you’re on the way,” TK Iusupov, a Chicago cab driver told ABC 7.

But it isn’t costless to join the ranks of Uber as an Uber driver has to have a car of a certain caliber to join.

Similar to measures that the city council in New York City and Boston is looking to address, Chicago passed a Transportation Network Provider Ordinance that went into effect in September 2014 to clarify the regulatory framework for the services like Uber and Lyft. Since then, however, the tensions have continued to rise between cabbies and the alternative ride-sharing companies — spurring protests earlier this year that were similar to those seen on the East Coast.

In the past month alone, ridesharing regulations have been advancing — passing in some cases — across the U.S. at a much quicker pace than in the past. As Uber and Lyft add more cities, many metropolitan areas are feeling pressures to regulate the industry.

Some are even looking to address the matter with a universal statewide law. Last month, Maryland, Arizona, Wisconsin and Massachusetts legislators all looked to pass stricter regulations on the industry. The main motivation cited in each of the cases has been focused around consumer protection, with lawmakers pushing that ridesharing services must be treated the same as traditional taxi cab companies.

recent report on Boston’s ongoing ridesharing discussions indicated that Uber has taken steps to make sure legislators stay on their side. Reports indicate that both sides of the aisle have kept lobbyists’   checking accounts full. The report shows that Uber spent $150,000 in a three-year period, while Lyft spent about $25,000. In comparison, the Massachusetts Regional Taxi Advocacy Group spent about $60,000, and EJT Management (a taxi interest group) spent just above $100,000 on lobbyists. 

Clearly, there’s money to be made in the ridesharing market — whether it’s on the private sector side of politics or the private business side.

Ridesharing Startups Shake Up The Market

As cities attempt to work through the logistics of passing (and enforcing) ridesharing regulations, there’s also a matter of competing with an industry that seems to be booming — especially based on the growth and the partnerships that continue to form.

For now, it appears Uber has kept one lane ahead of the competition.

For example, UberEATS launched last week in New York and Chicago as an on-demand cab service that hails Uber drivers to deliver curbside food from a custom, daily menu. Uber also announced last week that it was moving forward with its same-day delivery in other markets. Early reports indicate Uber is making its merchant delivery move that will tap Uber and UberRUSH drivers to deliver goods same-day to online shoppers.

Outside of the early day ridesharing services that truly started the market, there’s also bundles of startups looking to join the industry — but in more niche, concentrated markets. Big cities, of course, are where these startups are hatching.

A new ridesharing service in Los Angeles called HopSkipDrive is trying to create the kid-friendly, parent-approved version of Uber or Lyft that provides on-demand rides to kids when their parents can’t shuttle them around the city. The startup claims to have a strict vetting process for drivers, only hires people with childcare backgrounds, and ensures it runs strong background checks on all of its drivers. The service operates across the greater L.A. area and has 11 employees, 100 drivers and 1,000 customers. Similarly, Shuddle launched earlier this year, offering a service specifically geared toward children and the elderly.

Now, major cities must look at regulating ridesharing services that serve children, which could complicate an already contentious debate. 

And then there’s the ridesharing service for those who need to get somewhere by water. Yes, there’s a ridesharing service for boats. A new app called Coastalyfe says it’s like the “Uber for boats.” The app, set to launch later this moth, uses GPS technology to help drivers who want, or need, a ride in a boat. The on-demand boat service works exactly like hailing a cab, but has taken the technology to sea with the new app.

This app is currently geared at tourists along the Gulf Coast of Florida, but of the major cities that are looking to keep their eye on the ridesharing market — Chicago, New York, Boston and San Francisco — they all have one other thing in common: They have large bodies of water and commuters who take water taxis to work that could be the next stomping grounds for the “Uber for boats.” That may throw another kink in the regulatory chain, making it difficult for cities to keep afloat of all the newcomers into the space.

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