Hmmm

Politics And Cabbies Clash In Ridesharing Market

The rise in popularity in the ridesharing market did exactly what e-Commerce did to traditional brick-and-mortar retail. It disrupted the space, undercut business models and angered those in the industry — but it grabbed consumer attention.

That’s the nature of the free-market enterprise. And although it’s not the only player in the game, Uber has become the poster child for the ridesharing market, particularly in the battle against cab companies and state legislatures/city councils across the U.S. It’s even caused a stir internationally in places like India where the company was recently shut down following accusations of an Uber driver sexually assaulting a rider. There have been two similar cases recently reported in the U.S. in Chicago and Boston.

Even before the safety regulations came to light, ridesharing companies like Uber and Lyft (those pink mustached cars) have been attacked by cab companies in major cities. Uber has responded to recent media attacks by ensuring background checks are done on all drivers and launched a automatic safety reminder message on its app. But what really started the fight was the traditional taxi cab industry fearing the technology-driven ridesharing app would saturate the car-service market. Which, of course, it did.

As ridesharing app-based companies become more popular, New York, Boston and Chicago cabbies have banded together in their respective cities to fight against the transportation options they claim have evaded the long-standing traditional medallion system regulated by the cities. In many instances, they’ve branded the practices of Uber and Lyft as “illegal.”

“When an individual driver is on the street picking up an illegal fare, we call them a gypsy,” National Taxi Workers Alliance President Bhairavi Desai said last month at a Boston City Council hearing. “And yet when you have a multi-billion dollar company pulling the strings to commit the same illicit act, we somehow call it innovative.”

Some taxi companies in major cities have tried to combat the ridesharing apps by creating their own, but without the deep pockets of Uber and Lyft’s successful marketing campaigns, the traditional cabs are still falling short at creating awareness that those apps exist. In the meantime, cabbies have continued to push for stronger state and local laws that put them on an equal playing field. But even the recent legislation that’s moving through the Massachusetts State Legislature could continue to tip that scale in favor of the ride-sharing companies, taxi companies have argued.

Massachusetts Gov. Deval Patrick is attempting to help pass through legislation that would require Uber, Lyft and other types of ride sharing operations to get state operating certificates, conduct criminal background checks of driver and provide insurance coverage to protect riders and drivers. Uber claims it already conducts criminal background checks and ensures its drivers and riders are insured. But what the cab companies really want is the ridesharing companies to be regulated the same as taxis, not treated as a separate entity.

At the same December Boston City Council hearing that brought out taxi cab representatives, Uber and Lyft drivers also had their say about the industry and why its already regulated as needed.

“The consumers have sided against you. the consumers want this. the voters want this,” driver Gordon Gossage said at the hearing. “You’re too small an industry. Uber is too big, OK?…It’s a tragedy. But the current system is dying. It’s just dying.”

Since then, however, the state has moved to recognize Uber, Lyft and other ride-sharing companies as official modes of transportation. In a Jan. 2 blog post, Uber praised the Massachusetts governor for filing the “much-needed regulatory framework for ridesharing, providing a permanent home for uberX in the Bay State.” The post emphasized the need to establish uniform rules and provide consumer choice and opportunity.

The taxi associations, of course, aren’t pleased with the direction the legislation is headed. Stephen Regan, the spokesman for the Massachusetts Regional Taxi Advocacy Group, called the decision a “stain” on the governor’s administration, the Boston Globe reported.

“You have a last-minute hearing by an outgoing governor to make major regulatory changes, as confusing as they are,” Regan said.

It’s clear real issue with cab companies and ridesharing companies isn’t only about regulation. That’s what they may be pitching to politicians, but a majority of taxi companies care about what it’s doing to their bottom line. A Boston Globe article took a look into the expense discrepancy in what traditional cabbies are making versus an Uber driver and the results show why drivers, not just consumers, are turning toward Uber.

The difference, on average, was about double in terms of what a typical Uber driver can earn, according to a Boston Globe article. After the pricy medallion purchase, commercial driver’s insurance, car maintenance and dispatch radio, one Cambridge cab driver told The Globe he was only clearing $1,600 a month. The Globe also talked with an Uber driver who said, after a $350 car payments, maintenance, personal insurance and the $10 a week for iPhone Uber provides, he was able to clear around $3,500 a month. And that’s with Uber taking 20 percent of the fare.

The East Coast hasn’t been the only place in the U.S. that Uber has faced backlash. San Francisco and Los Angeles both sued and later settled with Uber and Lyft on the claims that the ride sharing companies mislead consumers about the background checks. In Portland, Ore., Uber suspended services after it was hit with a lawsuit until the city adopta ride-sharing regulations.

Uber and Lyft are obviously the big players in the ridesharing space with the most credibility and users. Uber says its offered in 53 countries, but Lyft is still stateside. But what about other competitors? There are a few, but less known and in limited markets. Remember Hailo? The cab-hailing company that’s prevalent in the U.K. pulled out of the U.S. markets last October but said it may eventually come back. The other ridesharing app companies are smaller and geared toward carpoolers and not quite like a taxi system. Sidecar in one company that allows drivers to set a price and pick up someone near them. The San-Francisco-based service is now in 10 cities. If the ridesharing trend sticks it’s likely more will join the space to compete with Uber and Lyft, giving taxi companies more companies to air their grievances at.

And to top off the hype around the ridesharing regulation clash between cities, cab companies, Uber and Lyft, the Monday (Jan. 5) news cycle in Boston kicked off with a story about a Boston Police officer charged with assaulting an Uber driver.

Perhaps the questions surrounding safety regulation and ridesharing will spur regulation about protecting not just the riders but the drivers as well? Just like questions about how to regulate e-Commerce in a consumer market full of data-breaches, ridesharing services are getting their own close examination of how to regulate the taxi industry.

——————————–

Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

Click to comment

TRENDING RIGHT NOW

To Top