Uber announced Wednesday that the company plans to cease operations in Houston if the city council does not repeal its existing regulations relating to vehicle-for-hire companies.
Houston is one of two cities in the country where Uber continues to operate despite a local requirement that its drivers undergo fingerprint-based background checks. Uber has recently left three cities in Texas for approving similar regulations and has threatened to do the same in Austin.
The company’s main competitor, Lyft, pulled out of Houston over a year ago in response to the new rules requiring its drivers to undergo fingerprint-based background checks. Uber had continued to operate in the city while publicly criticizing the regulation as burdensome.
“We have worked hard and taken extraordinary steps to help guide drivers through the current process in Houston,” said Uber General Manager Sarfraz Maredia in a letter to Houston City Council on Wednesday. “However, a year and a half later, it is clear the regulations are simply not working for the people of this city.”
Uber also released a report Wednesday detailing, “The Cost of Houston’s Ridesharing Regulations.” The report claims Houston’s regulations have led to a decrease in Uber drivers and in turn, “fewer safe rides.”
No departure date has been set, Uber spokeswoman Debbee Hancock said.
“We have not set a specific deadline,” she said. “We want to work with the city to develop regulations that work for riders, drivers and the entire community. We understand this process may take a few months.
Meanwhile use of Uber in Houston surges, something both sides have said bolsters their case. The city argues use means Uber is profitable even with the regulations, though the company says they stifle supply of drivers.
From the Statesman:
The company does not disclose to the media or public how many drivers it has working in Houston, and it obtained a court order preventing city of Houston officials from releasing that information. (Lyft does not operate in Houston.)
The report released Wednesday by Uber includes a chart purporting to show drivers-per-million residents in Houston, Austin and Los Angeles, and the chart is presented in such a way as to imply that Austin (with no fingerprinting required until Feb. 28) has many more drivers per million residents.
But the chart has no numbers listed on its vertical scale of drivers per million residents, rendering it qualitative in nature, not quantitative. Given that and the company’s refusal to release driver figures, it is impossible to confirm the company’s claims about driver supply there.
The letter and report do not mention that Houston has a process under which a driver can get a 30-day “provisional” license without first going through fingerprinting. But according to Uber, a Houston driver, even to get that provisional license, must complete a physical, take a drug test, appear at Houston municipal court to get a check of outstanding criminal warrants, buy a fire extinguisher for the car, get his or her car inspected by a city inspector and get an Uber identifying marker for the car.
From the Houston Business Journal:
According to the letter and a corresponding report on Uber’s Houston operations, 59 percent of its Houston fleet drives less than 10 hours a week. That’s compared to 79 percent of drivers in Austin, and 77 percent in Houston’s outer limits. Uber argues that for these part-time drivers, the regulations are too oppressive and prevents new drivers from signing up.
Mayor Turner held a press conference yesterday at 4 to give his reaction. The Chron story that contained it was updated too late for me to see it last night, so I’ll do another piece tomorrow to discuss that. Click2Houston reports him saying he was “surprised” and that when he had last spoken to Uber reps a few months ago they gave no indication they were dissatisfied; I received another statement from Uber later in the day that takes issue with that, but I’ll get to all that tomorrow. The one thing that surprises me about this is that Uber announced it before the results of the Austin referendum are known. I had assumed they’d wait and pounce if they were successful in repealing Austin’s ordinance; if they failed, I figured they’d still make some move in Houston, but they might be more circumspect about it. Winning the referendum in Austin gives them leverage, which I strongly suspect is part of the point. Maybe this is a show of confidence on their part, maybe it’s just bravado, or maybe this was the plan all along. Who knows?
There are three logical ways Houston can go with this:
1. Do what Uber wants, which would surely have the effect of bringing Lyft back as well. That would not be my first choice, but if Prop 1 passes in Austin, there may be a lot of sentiment here for that.
2. Stand pat and let Uber do what it’s going to do. Get Me is operating in town, so it’s not like there’s no vehicle for hire alternative. One could argue that Uber’s abandonment of many Texas cities, potentially including Austin, would pave the way for another competitor to arise. The demand clearly exists for this service, and opportunities like this don’t come along every day. This is a better strategy if Prop 1 fails, and the bigger the margin the better. It also assumes a commitment to ensuring that no legislation that pre-empts local rideshare ordinances gets passed in the 2017 Legislature.
3. Try to negotiate a compromise. I still kind of like Austin Mayor Adler’s proposal for voluntary fingerprinting, which then becomes part of a driver’s profile and which customers can request. Let’s see what the free market has to say about that, shall we? There are certainly other possibilities, and again, this is likely to be more feasible if Prop 1 goes down.
Anyway. I don’t know as I write this what Mayor Turner had to say beyond his surprise, nor do I know what the prevailing opinion on Council is. Whatever the case, I’m sure this will be a big part of the discussion over the next few months, which I’m sure is exactly what the Mayor wanted given the forthcoming budget battle, the ongoing flood cleanup, the continuing search for an HPD chief, and everything else on his agenda. Well timed, Uber.