Tagged: ridesharing

Uber v. Taxis

I decline to choose a winner. The people of New Orleans should be allowed to choose who wins by either using Uber or not  using Uber. Unfortunately, this is not the typical city approach to new companies disrupting the status quo. This is especially true when the threatened party is the deeply connected New Orleans taxi industry.

The Transportation Committee of the New Orleans City Council is set to debate rules changes to some city ordinances on Tuesday, June 24, 2014. Since I will not be able to attend that meeting, my thoughts (non-exhaustive) on the situation continue below.

Assuming that opposition to Uber stems from a concern for public safety, there are some common misconceptions out there that simply aren’t true. These include lack of insurance coverage, unsafe vehicles, random people as drivers, and the affordability of rides. First, Uber now provides significant insurance coverage for all Uber drivers that should certainly be adequate in the event of an accident. Second, the average age of an Uber vehicle is 6 years, and none are older than 10 years. Third, Uber conducts extensive background checks on its drivers before allowing them to hit the streets.

Further, before getting into an Uber car the customer sees a picture of the driver, the driver’s license plate number, and the driver’s name, and then after the ride is over, the customer can rate the experience they had with the driver. This process allows other customers to know who they are getting and the quality of the driver. Uber also is able to keep tabs on its drivers through this system.

Finally, while Uber does have a minimum fare structure to account for insurance and the background checks it runs on drivers (certainly worthwhile fees for a rider to pay for), the customer at least gets an estimate on the cost of the trip before getting into the vehicle. That way, if the cost is too high, they know to seek other options.

Now, comparing Uber with New Orleans’ recent updates to taxi regulations, at least on these four points there aren’t appreciable differences that weigh against Uber. Going beyond these points, Uber is far superior. First, introducing a new player into the market will provide additional transportation options for New Orleans riders. Anyone who’s continually heard a busy tone while trying to call a cab or seen a constant parade of full cabs heading uptown late at night knows that additional drivers are needed. Second, having the ability to rate your driver, and for your driver to rate you, sets up an incentive for drivers to not only be trustworthy and efficient (i.e. not take the long way), but for both driver and rider to just be nice to each other. This is a welcome addition.

Third, Uber technology requires drivers to use GPS. What does this mean? No more having to tell the lost driver that you are PAYING how to get to where you’re going! Fourth, it is far preferable (to me) to be able to pull up a ride on a phone app instead of standing out on a curb waving like a maniac or constantly calling dispatch and waiting for a car to pull up and honk. Further, the app allows you to see the progress of your driver on his way to pick you up.

Fifth, no more cash! Not only do you just hop out of the vehicle at the end of your trip without having to complete a transaction, but the app takes care of tipping for you. This process is preferable for rider and driver for 4 main reasons: 1) not having to give your card to the driver prevents drivers from engaging in swapping out your card with someone elses and then running up charges before the theft is discovered (I dealt with this multiple times in a previous life as a banker at Chase); 2) riders not having cash is also faster and safer (for obvious reasons); 3) no more having to make sure a driver’s credit card machine is working or that they aren’t flouting the city regulations requiring them to accept them; 4) it’s safer for drivers, too, since they don’t have to carry cash on them.

Of course it is true that not everyone has smart phones. This is why Uber will not destroy the taxi industry. There is still room for taxis. Regardless of whether you simply don’t own a smartphone (or haven’t updated your phone’s software to allow you to use it at the moment), or choose not to pay for the service at times of peak-pricing, or just happen to see a cab and hop in instead of pulling out your phone, there are still many customers and situations that will support taxis. Also, there is no reason that existing cab companies can’t adopt similar technology as Uber uses unless they have no incentive to. Unfortunately, due to the current lack of real competition on this front, taxi companies don’t really have an incentive to adopt better technology (not to mention it may not even be affordable at the moment due to the added expenses resulting from recent ordinance changes).

The point is that competition is good. Keeping a competing company out of a market for arbitrary reasons is not good. After reading the above and considering other possible public safety rationales for limiting Uber, I can’t help but think that keeping Uber out must be based on other motivations. Just because taxi companies have been granted a monopoly by the city doesn’t mean they are entitled to enjoy it forever. Plus, as soon as it is honestly acknowledged that what is really going on is simple economic protectionism, at least New Orleanians will know that it isn’t public safety that is being secured. Instead, it is profits of the well connected taxi industry paid for by the public. If the city of New Orleans truly cares about protecting the public and making sure there are safe, dependable, and plentiful rides for people choosing or needing to not drive themselves, then it will amend current regulations to allow for robust competition in the New Orleans taxi market.