Though the car service and taxi app Uber has won some battles, it’s far from clear it’s winning the regulatory war against its service. Back in August, the startup scored a major victory locally, as the state of Massachusetts backtracked on its shutdown of the service, creating an exemption for the company pending further review.
But Uber isn’t out of the woods yet. As The New York Times reports, regulators from cities across the country – including Boston – met recently at a conference to outline a framework for regulating Uber and similar apps. Writes the Times:
Taxi regulators from 15 cities, including New York, Los Angeles, San Francisco, Washington and Chicago, were on the committee that drafted the guidelines on new rules. One rule would forbid luxury car services from using a GPS device as a meter for calculating fares based on time and distance, which is the method that Uber uses.
Another rule would forbid any driver from accepting an electronic hail through a smartphone while driving. And one says limousines may not accept a request for a ride that is made less than 30 minutes in advance, which would impede Uber’s primary business model of connecting luxury car drivers with passengers immediately.
The full proposal is here. And it includes a requirement that apps like Uber register with the appropriate regulatory body:
It’s for good reason that we have certain basic regulations for taxis, as I’ve argued before. But this raises two concerns. The first is that licenses might in some way be limited as they are with taxis themselves. Forcing entities to play by the rules is one thing; artificially restricting the number of players that can compete in an area of business, as is done with taxis in Boston currently, is quite another.
The second problem concerns barriers to entry. The beauty of mobile apps is how easily they can be created. If a few hackers can cook up an app better than Uber in a weekend, it’d be a shame if they’re unable to offer it to users because of regulations. (Regulatory barriers to entry protect incumbents and, ironically, could end up benefiting Uber in the long run.) So any set of rules needs to ease the creation of new apps while focusing on reasonably regulating the larger, established players.
I expect this last point about barriers to the creation of apps to be a theme for regulation in this space going forward. As more and more city data gets released, there will be greater opportunity for developers to create apps that help citizens interact with the city. It is critical that regulators tailor regulations such that new entrants are encouraged.
It’s encouraging that regulators are rethinking the rules in light of new apps like Uber, but I don’t expect the two sides to be in agreement any time soon.