Yesterday afternoon, I was surprised when I opened up my inbox to find an email from Travis Kalanick, CEO and Co-founder of Uber. Well, lets pump the breaks, I’ll get back to that in a sec.
Let’s first start with a good question: What is Uber? For those unfamiliar with this San Francisco-based startup, Uber is a new transportation service that has found an innovative way of connecting riders with luxury sedan drivers that find themselves with spare time between pick-ups. By creating an app that facilitates the transportation services of these drivers and prospective customers, Uber can provide a high-quality of experience for riders that need to get from point A to point B, don’t mind paying a little more than a taxi cab (about 1.5 to 2 times more), and enjoy the creature comforts of looking like a baller who rolls around in private town cars. The drivers benefit because instead of just sitting around waiting for their next client that their parent limo service has them scheduled to pick-up, they can turn the app on and find local folks who are willing to pay them for their time they would have otherwise have spent doing nothing (assumedly nothing that is). Uber takes a cut, customers get reliable service for a little more, and drivers are converting wasted down time into money.
Yup, pretty damn innovative, no arguments there.
The problem that arises with this service is that it is so disruptive that it fails to conform to the normal standards and categories of a normal transportation service. Is it a luxury sedan service, or is it a taxi service? It’s nebulous definition has landed it in some hot water in the past few months, specifically when Uber opened it’s services in D.C. and were confronted by D.C. Taxi Commission Head, Ron Linton, who asserted that the company failed to operate to the laws and regulations set forth by the city. According to Linton, Uber’s pricing model, which uses a $7 base charge with an additional $3.25 for every mile and 75 cents for each minute a car is hired, is not congruent with the laws set forth by the D.C. Taxi Commission’s approved meter rates.
But is Uber a taxi?
Well, the company would argue that it’s not, therefore it’s not subject to these rigid standards. Council Member Mary Cheh also seems to agree with these views, a major reason why she was one of the first on the D.C. Council to come to the company’s aid a few months back when the threats started flying regarding Uber’s legal ability to operate in the District. They have been able to carry on with their service with the understanding that taxi laws will have to be amended to take account their presence in the city, so it seemed like a victory for Uber, Mary Cheh, and luxury sedan fans everywhere (including myself).
Then we come to now, and that email from Travis.
Apparently, Uber has been ready to roll out a new service in D.C. that will offer the choice of hybrid cars in lieu of luxury sedans that will be offered at a lower cost than their normal rates, under the new moniker of UberX. Sounds spicy, sounds cheaper, and it sounds environmentally friendly, three things D.C. folks tend to be really into. Unfortunately, in this email, Travis indicates that this new service won’t be realized in our fair city due to the actions of our Council Members:
The Council’s intention is to prevent Uber from being a viable alternative to taxis by enacting a price floor to set Uber’s minimum fare at today’s rates and no less than 5 times a taxi’s minimum fare. Consequently they are handicapping a reliable, high quality transportation alternative so that Uber cannot offer a high quality service at the best possible price. It was hard for us to believe that an elected body would choose to keep prices of a transportation service artificially high – but the goal is essentially to protect a taxi industry that has significant experience in influencing local politicians.
Much to my chagrin, I was horrified to find that the D.C. government was yet again enforcing some archaic law to put out what is clearly an innovative new form of transportation. I mean, why would my government make it mandatory for a company to charge me more when they want to charge me less? Clearly, this was some sort of un-American bureaucracy that violates the very definition of living in a laissez-faire, capitalist economy.
To dig into the matter further, I hit up the Twittersphere to see if I could find some more deets on what the dastardly Council was up to. Then I came across this DCist article written by Benjamin Freed who outlines the proposed law in question quite thoroughly, being kind enough to even include the actual “Uber Amendment” in a convenient Scribd document so I could read it for myself.
This is where even more confusion kicks in: this law was written in by Mary Cheh.
Wasn’t she the Knight in Shining Armor who valiantly stepped forward to Uber’s aid during the whole ‘Linton’ situation? Bewildered and even further vexed by the situation, I read the amendment thoroughly. Then I read it again. Then I conferred to my Politics expert, Kate Tummarello, who also read it because sifting through thick, ugly legal jargon is about as appealing as eating a bowl of mayonaise, and misery loves company. With that said, I think we were able to decipher the major points in the new “Uber” Amendment, specifically from their “Explanation and Rationale” section:
- This section would clarify how sedan services operate.
- Sedans would be required to charge a minimum fare of 5 times the drop rate for taxicabs.
- Sedans would be required to charge time and distance rates that are greater as those for taxicabs.
- These requirements would ensure that sedan service is a premium class of service with a substantially higher cost that does not directly compete with or undercut taxicab service.
- This section would also clarify that businesses that connect passengers to sedans are exempt from regulation so long as they provide an estimated fare, disclose rates, provide a receipt, and use sedans licensed by the Commission to operate in the District.
So what I got from this is that Uber has been allowed to operate because their rates are so high that they won’t undercut normal taxicabs or compete with them, one of the primary concerns from other taxi companies. Fine, that’s cool, all they had up to this point was balling private cars that are more expensive than taxis, so no competition therefore no sweat.
It would seem that any normal, rational person in Mary Cheh’s shoes would agree that this new amendment was essentially the understanding that herself and Uber came to when they clashed head-to-head with Linton a few months ago.
But then there is this whole UberX ordeal, which has conveniently rolled out days before this new amendment was put into place. According to DCist who spoke with one of Cheh’s spokesmen,
Cheh said the amendment was hammered out by every interested stakeholder: ‘We worked with Uber and all the parties. Our intention was to make it so that Uber could continue to operate and we think we have that in this amendment.’
Um, so…what the hell just happened?
So, we circle back to my confusion in convenient, numbered bullet points:
- If Uber was working with Cheh and other interested parties, clearly they saw this amendment coming and realized that this nifty “UberX” concept would conflict with the proposed law. Why are they acting like they were blindsided by it, and why would they dispute this the DAY before it gets signed into law?
- Wouldn’t UberX be directly competing with taxi cabs since they are neither luxury sedans or charging more than a normal taxi (in fact they may even charge less, unconfirmed)?
- I get that they are directly competing with cabs, but what’s wrong with charging less? Wasn’t this country founded on the idea of a competing market and that better service means better business?
- Did Uber pull this stunt just so they wouldn’t have to go through the same taxi regulations and expensive barriers to entry that most companies endure for years? Um, shenanigans?
- Is it fair for other taxi companies that have endured the ridiculous, expensive, and circuitous laws and regulations the city has set in the past, and Uber gets to skip all of that under the guise of not being ‘technically’ a taxi company?
Okay, I know that’s a lot, but let’s get a few things straight: I freakin’ love Uber, I love their service, and what they offer is brilliant. I love the idea of having a cheaper service that is iPhone compatible and is much more reliable than current taxi companies so yeah, UberX gets me antsy in my pantsy. Yes, I recognize the state of the city’s current taxi service is in shambles and is at best, laughable. Many drivers are rude, rides are more expensive than they should be, and many blatantly ignore rules and regulations to take advantage of riders and tourists.
Things have to change, but surreptitiously skipping laws and procedures on nebulous technicalities is wrong, especially when normal law-abiding taxi drivers have to spend the time and resources conforming to those laws, no matter how awesome of a transportation service you are. So again, I have to reiterate, I am confused, I have questions, and I am under the firm belief that nobody knows what the hell is really going on.
[image via blog.uberdc]