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The Uber debate

In case you missed it over the weekend, the Chron’s op-ed pages featured a point/counterpoint on Uber and its push to enter the Houston market, which would require changes to various city ordinances. Here’s the pro-Uber piece:

Imagine it’s Friday night – date night. You pick up your phone, click a button, and within seconds a luxury car and driver are on their way to pick you up; just minutes later you’re on your way downtown for a show at the Alley Theater. The car is pristine, the driver is courteous and professional. When you arrive at the Alley, you simply exit the car while your payment is processed electronically. No fumbling for your wallet. No parking woes. As the show wraps up, you open your Uber app again and summon another ride to dinner at Reef. No waiting in a taxi queue. No worry about missing your reservation. At the end of the night, you request one last vehicle to take you home, unconcerned about that last glass of wine. Date night just got a lot easier (and better).

Uber is everyone’s private driver in 38 cities around the world, providing stylish, efficient and reliable rides in nearly every major U.S. city. It is why thousands of Houstonians – many of whom use Uber when traveling elsewhere – have petitioned Mayor Annise Parker and the City Council to clear the path for Uber in Houston. There is no reason that every town car ride has to cost a minimum of $70, last a minimum of 2 hours and require 30 minutes prior scheduling to enter the vehicle. These are just a few of the antiquated regulations inhibiting innovation in transportation in Houston – regulations that are designed to protect incumbent transportation providers from competition, at the expense of consumers and the city.

Mayor Parker and the City Council should acknowledge the unfortunate reality that current transportation options in Houston simply aren’t as affordable, reliable or pleasant as they should be and take action that will have tremendous impact across the city. As policymakers consider regulatory changes that will modernize the city’s approach to consumer choice in transportation, it is important to set the record straight about the way Uber works and make clear the value it will bring to Houston.

I’ve said before that I favor the idea of letting Uber into the market. I do believe that regulatory structures put into place years or decades ago for various industries need to be reviewed as new technologies and business models come along to ensure that they put the needs of the consumer first. Those aren’t the only needs in play, however, and having had a chance to meet with representatives from the taxi services, it’s fair to say they raise some valid points. Here’s their perspective on Uber.

Yellow Cab is required to comply with existing laws and ordinances; to not dispatch trips to unlicensed or otherwise incompetent drivers; and to maintain its vehicles in safe operating condition. Uber seeks to compete by avoiding all such responsibility.

In a small portion of Uber’s lengthy Internet contract disclaimer, the company states:

“You understand, therefore, that by using the (Uber) application and the service, you may be exposed to transportation that is potentially dangerous, offensive, harmful to minors, unsafe, or otherwise objectionable, and that you use the application and the service at your own risk.”

Our request is simply that competitors be required to follow the same laws and accept the same levels of responsibility as we do. Uber claims exemption from our local laws because Uber does not own cars, and it hires “partners,” not drivers. Uber further claims that it’s simply using technology (a smart phone app) to match drivers with passengers.

[…]

While Capitalism 101 would suggest this is nothing more than smart business, the taxi industry is treated as a public utility, and, as such, is required to charge established rates, to provide 24/7 service and to serve all areas and all people of the city, regardless of affluence, race or any other basis of discrimination. This is something we’re happy to do, but think everyone should be required to live up to the same standard.

That last paragraph gets at the crux of the debate. If we consider cabs to be basically a utility – an extension of Metro, if you will – then it makes sense to regulate them as such, with the goal being to ensure access to the service at an affordable price for as many people as possible. The analogy is therefore not to breweries or auto dealerships, which have hidden behind antiquated regulatory structures that have served to keep out competition and cushion their own places in the market, but to electricity and health insurance, which are things everyone needs but which are all too often inaccessible or unaffordable in a deregulated market. I’m not sure I fully buy this argument for cabs, but it’s logically consistent, and they are correct to note that would not be able to operate effectively if they are subject to a different set of regulations than a competitor such as Uber. This is a debate worth having, and worth thinking through.

Here’s a full list of regulations the cabs are subject to, according to a document they sent out. I believe that Uber and the cabs can co-exist, and that there is middle ground on which to find a compromise solution. One possibility is that perhaps there are some regulations that the cabs are subject to that could be loosened up for them as well as for Uber. To their credit, the cab companies have worked with Council to make changes to the regulations that allowed jitneys like the Washington Wave, pedicabs, and electric carts like RevCar onto the streets. There were bumps along the way, and the process was likely longer and more frustrating than the newcomers would have liked, but in the end it all got done. Though I don’t know what it looks like yet, I believe a similar outcome is possible here.

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