I, personally, have far less problem with Uber as I do with Lyft or Sidecar. My view is Uber will survive, but Lyft and Sidecar will not. Let me explain why.
I operate a transportation business, but I do buses, not the small scale rides like cars. They are not competitors to me, but I understand their model of operation. AND I know the legal situation… and how it became that way.
The Taxi and Limo/Livery system started as a way for politicians to protect the “professional” drivers moving people for a living from any one with a car in the Great Depression. It is essentially a legal monopoly, but then, virtually every sort of business nowadays is a legal monopoly if it requires ANY sort of license. You can’t braid hair without a cosmetology license in most jurisdictions, even if cosmetology never teaches hair braiding, for example. It is a legal monopoly for the people who can satisfy those requirements… often in the name of consumer protection, but often, the bureaucracy took over and the actual consumer protection mandate got ignored.
Another view is even in licensed industry, there’s often enough of dark economy that basically does things without the license, usually on a handshake and a promise. A friend needs a room or a couch to crash overnight and slips you a $10 for your trouble? A friend slips you a $5 for “gas money” after you gave him a ride to the bus station? Nobody’s going to regulate that.
Yet the former is basically AirBNB, and the latter is Lyft / Sidecar, aren’t they? And if they are formalized into a business arrangement, can they expect to STAY under the regulatory radar?
Furthermore, is taxi and livery transportation industry such an industry where consumer protection mandate is being ignored in place of bureaucracy, and is Uber, and Lyft/Sidecar disruption actually helping to innovate the industry?
Let us however, discuss the legal situation first. I am in California, so I’ll primary go by California law, and as the Public Utilities Commission, i.e. PUC had already fined all three companies before, I know exactly where PUC stands.
First, in California, AFAIK, a limo / sedan / black car / town car is PROHIBITED from making curbside pickups. They can only be CHARTERED, with origin and destination clearly defined on the “waybill”. Uber gets around this by treating an Uber order as the waybill itself. Taxis can be flagged down on the street, limo cannot be. That’s illegal, as it’d be basically a Taxi service. However, keep in mind that taxi is governed by local Taxi Commission (city / county level), and livery is governmented by PUC (state level). Furthermore, this separation is rarely if ever enforced, as you can often find idle sedan drivers hanging out near major hotels hoping for a “referral” from the concierge desk (they get a kickback, of course). It’s gotten so bad, some major hotels operate their own courtesy fleet to discourage this.
Second, IIRC, carrying people or goods for money requires commercial drivers license. This is part of California Vehicle Code (CVC).
You can see how Uber complies with PUC as Uber only hires Sedan drivers with their own PUC authority to operate. They are already commercial drivers. AND they need at least 1.5 million in insurance to operate as required by PUC (larger vehicle companies require 5 million in coverage). AND companies are supposed to subscribe to “pull notice”, which is a driver record monitoring service operated by California DMV on commercial drivers.
That’s something Lyft and Sidecar do NOT have. You can literally have any yahoo off the street driving any decent looking sedan join Lyft or Sidecar in minutes and start making money, regardless of their driver license status.
And I haven’t even covered driving record and insurance yet.
Yet Lyft and Sidecar are not really competing against the black cars, but rather, taxicabs, which is ruled by local taxi commission. And the taxi system is… to lack of better word, medieval. The average taxi driver makes little money, yet takes tremendous risk. It is allegedly the 2nd most dangerous job (just behind convenience store clerk, IIRC). They have to pay “gate” just to take the keys and drive out their yard to start their shift. “Gate” in San Francisco for one shift depends on weekday or weekend, but it’s estimated to be between 115 and 150, and there are surcharges, both clear and hidden. Hybrid vehicles, due to fuel savings, has a surcharge. There is also a “dispatch” fee (the dispatcher / phone order takers have to be paid too). There are rumors that for the older radio-dispatched cars bribing the dispatcher may help. Probably why the computerized dispatch systems went to an expanding circle system: the free cabs are notified closest to the location, and was given X seconds to respond, first to respond gets the fare. If nobody volunteers, the circle is expanded, and the process repeats until someone accepts the fare. it’s supposedly bias-free. The truth is the drivers pay for the gasoline, so they minimize travel. They sit at popular locations and go nowhere, not to waste gas, and wait for fares to come in, and this makes them all wait in the downtown area, basically, leaving the rest of the city barren. There are also computer flash news like “Show X just finished and people are coming out” and such. AND most drivers don’t own the vehicles. They are are driving a company vehicle, and the company “rented” someone else’s medallion (i.e. taxi license) to operate such. That person only drives the bare minimum hours required to stay qualified as a taxi driver. The rest of the time he sits at home watching TV and wait for money to roll in while doing no work.
I don’t hate Lyft at all. Indeed, I’ve tried both Lyft Plus (premium cars) and Lyft. The allure of making 30-50 per hour is luring people outside the area to San Francisco. Both times my driver claimed he was not too familiar with San Francisco streets and is relying on GPS / Google Nav. I’ve tried taxis and I really do often wait 30 minutes or more before. Yes, it is very convenient. And I just drove by a huge recruitment event by Lyft today, with people waving signs around major intersections directing them to check out a chance at $500 bonus (and free tacos).
But overall, I think Lyft and Sidecar has little chance in fighting the bureaucracy and the existing infrastructure, while Uber was more careful in working WITHIN the existing legal frameworks.
This “sharing economy” is not what it cracked up to be. While it is supposedly more efficient use of resources, the actual implementation was really anything but.
In the case of AirBNB, instead of people renting out their spare rooms or just during their vacation, you are seeing people buying up properties and turn them into microHotels using AirBNB, without ANY of the protections that a real hotel would provide (whether you need them is something else), but consider yet another cost… they are taking the property off the NORMAL rental market. People in San Francisco complain about Googlers turning San Francisco into a bedroom community. You don’t really see them complaining about the hidden AirBNB rooms that only a tourist can afford to rent, do you? And that sort of “tax evasion” attracts the regulators, which is why AirBNB is now collecting hotel tax for most jurisdictions.
Something similar is happening with Lyft / Sidecar (but not Uber, as they are already sedan drivers)… Instead of San Franciscans with spare time and their car, it’s out-of-towners (the Lyft Plus guy was driving a very fancy SUV customized by Galpin Auto Sports! so new it doesn’t even have a license plate yet!)
So my problem with Uber is minimal: it stayed within the legal framework (at least in California, IMHO), and it is actually the LEAST disruptive of such companies. The main objective to them is going to be from the taxi people, NOT the CPUC.
IMHO, OTOH, Lyft and Sidecar will end up in trouble with the CPUC unless laws are changed, quite fundamentally, carving out vast exemptions that legalized all these “dark economy” that was previously deemed too small scale to govern (and tax), and it will face opposition from the taxi people as well.
