Transportation Policy

Driving into the Future

Ride share and e-hailing services guarantee creative destruction in the business of paying for rides


Spiros Vathis / Foter / CC BY-NC-ND

Last month, California became the first state to establish a set of regulations on the bevy of new companies that summon rides-for-hire via smartphone apps. Most prominent among such services are Lyft (a pure "rideshare" in which the fee you pay is officially a donation) and Uber (which offers various services in 31 cities in the Americas, including ones that summon taxi cabs, some that send licensed limo drivers, and some that just send, like Lyft, private individuals in their cars).

The regulations from California's Public Utilities Commission (CPUC) came in the face of lots of heated opposition to these services on the part of existing licensed and regulated taxi drivers, who hate the competition. Sometimes that opposition is expressed through political activism, such as hundreds of drivers protesting the very existence of the services in Los Angeles—a city that briefly tried to ban them entirely.

Los Angeles City Councilman Paul Koretz, even after the CPUC promulgated its regulations, has been making noises about legally challenging the state's ability to regulate those services against the city's wishes. Koretz still sounds like he'd rather the services didn't exist, no matter how many consumers want them or how many people make their living from them.

Sometimes, as I learned from interviewing an Uber driver and a Lyft driver from the San Francisco Bay area, that opposition from traditional taxi drivers who see their turf threatened can get quite personal. I'll call them "Tim" and "Jess" as both wanted to remain anonymous because their business is very public.

Each driver has a profile and rating through the app that allows every customer to know exactly what person and vehicle they are dealing with, and how other customers have rated them. Uber driver Tim finds the Uber lifestyle—he works when and how long he wants—suits his desire to not deal with "authority figures" and be "micromanaged." He says he sees visible hostility from cabbies regularly.

Lyft driver Jess got involved because she needed a flexible moneymaking gig while she launches her own business—and because her 11-year-old daughter became obsessed with the big pink moustaches on cars that are Lyft's cutesy identifying mark. Jess tells me of a fellow Lyft driver who lost his personal insurance because an angry cabbie sent photographic proof of the incriminating pink moustache—showing that he used what he told the company was a personal vehicle as a vehicle for hire, something the companies don't cover in personal policies—to every insurance company he could think of.

Part of the new CPUC regulations require companies to maintain a million dollar per incident insurance on each vehicle in this new "TNC' classification (for "Transportation Network Company"). The CPUC says that Lyft and Uber have already been doing so under an agreement that has kept them operating pending these new regulations, though neither driver I talked to felt confident about that and knew their personal insurance would not cover any incident occurring while they were driving professionally.

Jess personally says she gets "flipped off by cab drivers. I just smile at them. I kind of empathize with their position but the stories I hear of bad experiences with SF cabbies—they are not nice, demand cash, don't show up—honestly I feel they created this situation themselves, they created a need for a new system."

The cruel market forces of the apps make drivers obsessed with perfection. Both services have public passenger ratings of drivers and anything even slightly less than a perfect five can harm their ability to get riders. Tim and Jess both say that the fact that they don't have visible running meters—which would make them taxis—means there can sometimes be real sticker shock for Uber riders, or a recommended price that strikes the rider as too large, for Lyft. In the information-rich world of Lyft, a driver can ensure if they wish that passengers with records of paying below any given percentage of donations won't have their ride requests received by the driver (though drivers can never know the specific payment records of specific passengers).** Jess says "that little tidbit needs to be out there. Passengers should know that if they pay much less than recommended, they do hurt themselves."

[Related: Uber Wars: How D.C. Tried to Kill a Great New Ride Service. Story continues below video.]

CPUC's regulations are not designed to make these services impossible. They will, to quote the regulations, "require a criminal background checks for each driver, establish a driver training program, implement a zero-tolerance policy on drugs and alcohol, and require insurance coverage" and make drivers "register in the Department of Motor Vehicle (DMV) Pull Notice program, conduct a 19-point car inspection, and require a one-year driving history from the driver." Many words in the regulations are concerned with making sure the app-driven driving services are sufficiently accessible to the disabled. The TNCs must pick up only prearranged fares via apps, never street hails.

The new regulations requirement for registering as a TNC will not go into effect for 60 days after their September 19th issuance, so both drivers say they haven't yet been affected by them. The regulations and the medallion system for regular cab drivers discouraged Tim from entering that system. But even getting his state charter party carrier license to be an official limo driver for the UberBlack service, "you couldn't get any more anti-big government after trying to go through all that bureaucratic red tape" —cost many months and many thousands of dollars, he says.

"I've had this conversation with a few passengers," Tim says. "I used to be a lifelong Democrat, but I'm probably voting Libertarian now, to be honest. I'm starting to feel the pains of Joe the Plumber—it's like I'm Tim the Driver." But even after they are fully regulated, forget about one of the most lucrative services for hired drivers in urban areas, airport drop offs and pickups. Those are still illegal unless you go through another time-consuming wait to get approved by the airport authorities, and give them their substantial cut.

As of now, your Ubers and Lyfts are not supposed to enjoy that privilege. Some drivers were arrested or cited at San Francisco International Airport this year. Tim says Uber has promised to pay any fines they accrue for illegally delivering passengers to SFO Airport, but still "we take precautions, take our phone out of the cradle and hide it. If you can get the passenger to sit up front, do so. Ask them to give me a hug and pretend we're friends. I joke with my passengers I feel like a coyote taking illegal aliens across the border. "

Tim worries that if all the UberX drivers—another service he provides for Uber, a lower cost one competing directly with Lyft with normal drivers driving their personal vehicles—have to be visibly stickered with the new "TNC" classification, the airport gravy train could be over for them and "that can be 40 percent of our income."

Jess was already nabbed at SFO, though she got off with a warning. An airport snoop noticed the pink moustache stuffed in her trunk when the passenger took out his luggage. "They told me what they look for—for people in back seats, for fist bumps [another Lyft tradition between drivers and passengers], for phone holders on the dash." Even if Lyft paid any fines, she could still suffer driver's license points, Jess says. She was scared straight—for a while. She's been doing clandestine airport deliveries again, hiding the moustache deeper, and constructing stories with the passenger about being cousins.

Such gambits may seem silly or even sad for representatives of a technology that is revolutionary for an industry that, as Steven Juliver says, is one where "80 percent of the fleets still operate like Danny DeVito in Taxi." Juliver is CEO of a smartphone dispatch service called NexTaxi that works exclusively with existing regulated taxi fleets and, unlike Uber, allows them to maintain their own branding. On the side of the existing taxi fleets he serves, he said, "I love the tech, we are in the tech business. I understand what [companies like Uber and Lyft and others] are doing and why they are doing it. But it has to be a level playing field." 

In California, localities have the legal power to regulate cabs, while the state claims that right for other forms of hired drivers. So the CPUC's actions will never be seen by taxi companies or drivers as leveling that field; the political fight over these services is not over. And while Uber is being hobbled in various ways in cities from Portland to Miami, it has also won victories in New York CityWashington, D.C., and Colorado. Uber has big money behind it—a recent quarter-billion investment and partnership with Google. Tim says he and some fellow drivers see Uber making the mere conveying of passengers by drivers obsolete: they see Uber's system as a perfect final step in, say, Amazon's need for swift real-time delivery. In the Google Ventures alliance, they can't help but darkly suspect within a decade Uber cars will all be driverless Google vehicles.

A traditional taxi driver in San Francisco—the fourth city in which he's been a professional cabby—named Heath knows exactly what he thinks about UberX and Lyft drivers: "Scabs!" He's an old-school working class man, and sees them as the equivalent of the forces that made "a city full of factories close down and go to China."

He's attracted to the old cabbie glamour of the lone ronin, refusing to give his number to passengers who love him, taking a perverse pride in how he's often dealing with "a crack whore who spits on me" while others just "want to get in a car with a young white person and fist bump and say 'hey dude, what's up?' I'm just not that person." He's proud of both his curmudgeonliness and a deep knowledge of the city's underbelly that will be lost when his ilk is gone; "are you going to Yelp about a handjob?"

Every new technology destroys old ways of life while opening new possibilities. While the CPUC's regulations in California will make business a bit more expensive for the companies and a bit more annoying for the drivers, it doesn't seem likely to, or intended to, cripple the technologies. A series of annoying—and expensive—legal battles will undoubtedly still haunt Uber and Lyft across America. But it's hard to believe taxi interests will succeed in squashing such a useful, even if disrupting, technology.

Heath, reveling in the dark and gritty glamor of the traditional urban taxi driver, seems equally aware he's an endangered species. He doesn't love the thought, but he sees it coming. "I've seen my business fall about half [since the rise of Lyft and Uber], just since the new year. It's crazy how fast it's changing." Next time he goes on vacation to Mexico, he thinks, "I might come back and it's all gone. I'm fine with it." To Heath, a culture of people "walking around staring at their iPhones bumping into each other" will be getting what it deserves. He's probably right.

**Correction: An earlier version of this piece mistakenly implied that Lyft drivers could see specific donation information on specific passengers and make an active choice to ignore their pickup requests.

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  1. Um, thanks. I will take a clean car and a pleasant driver over instructions on where to get a hand job. I need a ride, not a “ride”.

  2. “require a criminal background checks for each driver, establish a driver training program, implement a zero-tolerance policy on drugs and alcohol, and require insurance coverage” and make drivers “register in the Department of Motor Vehicle (DMV) Pull Notice program, conduct a 19-point car inspection, and require a one-year driving history from the driver.”

    If the government would get out of the license business, this would not be an issue. Besides, for all driver’s licenses isn’t CA already all picky about drug/alcohol charges, insurance, testing, etc?

    1. The insurance is if you want to register a car.

      If you are breathing, you pay a fee, show a 50/50 knowledge of the law, pass a vision test, and drive around the block without killing anyone, you get a license.

      As an aside, if you can’t manage that much, you shouldn’t vote.

    2. Merely getting cited for a DUI won’t automatically have your regular driving privileges revoked and blowing less than 0.08 BAC is not a statutory DUI.

      Both of those things will now mean you can’t be a TNC. Similar regulations already apply to cabbies, limo drivers, etc.

  3. My personal opinion of big city cabbies is a bunch of lazy pricks. Queued up at hotels, never in neighborhoods, obviously geared towards tourists, hated being called to a neighborhood for a ride because they lost their place in the hotel queue. Surly bastards all thought the world owed them.

    If I still lived in a big city, I’d be all over Uber and Lyft.

    1. That’s because they’d lose money and starve if they queued up at a gas station in West Suburbia. The distances are greater and the rides fewer.

      Less income and more costs put suburban service on the wrong side of ‘Putting food on the table.’ And as long as cabbies are in a subcontractor model, renting the hack and the dispatch, then that’s called Basic Economics.

      They owe you their starvation as much as you owe EBT cards they’re twinkies.

      1. I’m not disputing any of that. But if they want to stick with tourists and leave me out of the picture when I only live a mile from the tourist areas, especially the resentment they make so obvious when I call for a taxi, then fuck ’em.

        If they won’t take care of natives, then stop whining when the natives take care of themselves.

        1. I don’t think you understand either. It is *illegal* (In every jurisdiction I know of) for them not to ‘take care of the natives.’ I don’t mean this abstractly, I mean it is a misdemeanor crime at the least.

          The way it works is that if you’re in a cab-stand (queue) you don’t have to post a zone to get fares. If you post a zone you are required by law to take every random thing in the zone, that pops up on the computer screen. And zones, such that they exist, can trivially be 30 miles a side to run for a fare that wants to skip walking 2 blocks.

          And if you make a 15 mile run for a 2 block ride you may very well get there and have every spider sense tingle going off about letting the fare sit behind you. But you’ll commit a further crime if you don’t do it anyways.

          There’s a further crime if you even possess anything like a weapon. You can usually get away with a screwdriver if you own your own hack (“Maintenance, officer.”) but everything and anything else is also a misdemeanor or felony.

          Likewise it’s illegal to take a security payment up front. And in many jurisdictions it’s illegal to install a cage, partition, or any other safety device.

          It’s hardly ‘whining’ to be subject to all of this for the sake of trying to eat, when others are not under the same criminal codes. You can say that they’re completely misguided in their objections, and to be sure there’s a case for that.

          But the problem in the State, not the people that suffer under unjust laws.

          1. Almost forgot. In most jurisdictions it’s illegal to give out your cell phone number to repeat customers. Or take calls for service that don’t go through dispatch.

          2. No, I’m talking about the drivers’ surly attitudes, extending so far as to never come when called, regardless of how illegal it may have been. Laws like that are trivial to get around. The dispatcher puts out a call and no one is available. And when I got in a cab at a hotel stand, their attitude made the ride miserable.

            That’s not the law, that’s the drivers. If they don’t like the rules, don’t take it out on me, and don’t take it out on other drivers who have found ways around the stupid laws which protect their asses.

            Taxi companies and drivers want those stifling regs to protect themselves form competition. So when someone else finds a way around the protectionist regs, fuck those who suddenly find themselves hoisted by their own petard.

            Fences not onbly keep strangers out, they keep the occupants in. Don’t like being fenced in by your own fence? Tear it down.

            1. “Laws like that are trivial to get around. The dispatcher puts out a call and no one is available. And when I got in a cab at a hotel stand, their attitude made the ride miserable.”

              Uh yeh, because you flagged them in the stand. It’s a misdemeanor if they don’t take you where ever you want to go at that point. Folks at the hotels are usually running somewhere far enough to justify the income/cost breakout. Folks that flag in a stand typically go a couple blocks and blow your spot in the rotation.

              Want to flag a friendly guy in a stand? Take the guy farthest back. It rewards his time investment in the stand, rather than causing him a loss.

              Or better yet, quit bitching about dealing with poor people and buy a car. Mind that it’s illegal not to carry insurance, to run without certain mandated features, to use the wrong fuel, to not obey traffic laws, to use your smartphone while driving, or go home drunk.

              1. Did you read anything I wrote or just what you wanted to believe? I said I always took the last cab in a stand and they were still surly at losing their spot.

                And where do you get off telling me how to live after already telling me you haven’t read anything about what I wrote and not having the foggiest idea of where I live now or when that was.

                You are a pathetic statist showing typical statist insight — clueless, thoughtless, full of yourself.

      2. You stirred up some awful memories. I remember needing rides in the rain, just a mile away, many times taking the last taxi in a hotel queue near the BART station, and they were so surly sometimes at such a short ride I gave up. Rain washed off, but their attitude stank up the rest of my day. Or call for a ride and give up after waiting 20 minutes because not a single one wanted to give up his precious end-of-the-queue spot, and I could have walked to the hotel district in the same time.

        Seriously, the service just sucked. This was San Francisco. It’s a small town, 7 miles square. Yet they acted like any ride anywhere other than the airport was an imposition. And they had the airport business locked up. Only SF cabs could pick passengers up at the airport, so Oakland cabs or any other cabs hated going to the airport because they had to deadhead back.

        So fuck ’em. Uber and Lyft are just desserts and those fuckers can rot in hell for all I care.

        1. “Rain washed off, but their attitude stank up the rest of my day.”

          Sure, there ‘ought to be a law’ right? Let’s add a new criminal offense. Where the dispatch office gets on the dock for a misdemeanor if the cabbies that never saw your call, don’t service you.

          1. No, let’s get rid of the regs altogether. Cabbies and their companies wanted those regs to stifle competition so I weep tears of joy when they suffer at their own handiwork.

            Fuck ’em.

            1. So, like the ‘whining’ cabbies, that have a misplaced vent for their anger. Your derision about the regs are pointed at the cabbies that didn’t write them, and don’t make enough to bribe pay the legislators to do so.

              This is why we can’t have nice things.

              For what it’s worth, the regs need to go away in this and in every other barrier to entry in the economy. But I’ll not lie one little bit to you here. If the regs are removed on the cab indutry, the rates you pay will go up. A lot. And especially so in the suburbs and for short trips.

              The trade off will be that folks will be willing, and legally allowed, to sell you the use of their time and capital goods.

              1. At the cabbies AND their companies. The cabbies are happy to have such stifling regs, just as their companies are. Are you one of those whiners who think you can make friends by intentionally misleading everybody else about the poor victims of the righteous right so they will welcome the loony left with open arms? Wrong audience for that, buddy.

                The rates will go down without cabby protection cartels. That’s basic economics. You show typical statist knowledge and insight to claim otherwise.

                1. Maybe what he means is rates will go up for a time afterwards, especially for those guys buying guns/partitions in their cabs. But it will go down when more people jump on the lucrative taxi driver bandwagon. Just the fact that you won’t have to pay for medallions will lower the cost.

                  1. How much will rates really go up though, even for a short time? Without having to pay a minimum of $360,000 for one of 50 taxi cab medallions with a cap of around 6800 issued in Chicago, I can see costs going down pretty fast. That much plus a car that is less than five years old, license, cab equipment, and dispatch seems like it would cost a whole hell of a lot more than a guy, a cell phone with GPS, and a Glock.


    2. A good number of uber drivers are or were taxi drivers, they wont tell you even if you ask them because they are aware of the bashing going on against them. You probably don’t see those drivers hustling after the orders and street hails, like myself, that for every 10 cancelations gets a customer. You are entitled to your opinion, based on your limited experience and knowledge. Taxi industry is broken not only in comparison to the new model but for the way cities and taxi companies have molded it. I understand your aversion to taxis, but uber and lyft have their own flaws too, that many of their users are ignoring while in their honeymoon with them. Uber, Lyft and Sidecar, needless to say are not only good at providing their services but they are good at highlighting and creating a divide between the haves and don’t haves. the able and the disable. A lot need to change to make taxi companies more competitive and is not only the driver’s mentality or franchise owners business models but city regulation that tie them up. Taxi drivers are people too.

  4. Government likes to put on a pretense that it can properly nanny up human interactions to prevent flaw. The current environment for pushing a hack being that only the ‘virtuous’ people are allowed to pick up hitch-hikers. Which is only slightly less impossible to accomplish then the idea that they can nanny the safety of the virtuous cabbies by convicting them for the crime of Common Sense if they decline to give a ride to every random breather on a curb side.

    The grand irony of tales of hazard, rape, and moral turpitude in deregulating the ability of people to pick up hitch-hikers as they please, is that the public will be now endangered in the same way that a cabbie is currently. Less a conviction for following good judgement.

    To be sure, a lot of the statements about letting people freely associate are certainly correct and true. But then, if you’re not smart enough to avoid wandering into back alleys with random strangers, you’re already a first-order contender for a Darwin award.

    Either let people associate, as they will anyways. Or criminalize people that take a cab without having previously proven though State licensing that they’re at least as virtuous as the cabbie the State has licensed.

  5. The new regulations requirement for registering as a TNC will not go into effect for 60 days after their September 19th issuance

  6. my roomate’s mom makes $73 an hour on the computer. She has been unemployed for seven months but last month her pay was $18333 just working on the computer for a few hours. pop over to this website

  7. like Walter explained I am taken by surprise that a single mom able to profit $5487 in four weeks on the internet. visit their website

    1. i dont believe this kind of stories buddy

  8. He’s proud of both his curmudgeonliness and a deep knowledge of the city’s underbelly that will be lost when his ilk is gone

    Which can’t happen soon enough.

    May you and your ilk soon be seen as quaint as the horse-drawn carriage ride.

  9. I agree with everything until the narrator blurted out the gratuitous Fetish Jesus comment. I doubt he would ever use the word fetish and either homosexual or Muslim in the same sentence for fear of backlash. Yet he feels free to go after those of us who follow Jesus.

  10. buying a regular car and carrying people without any commercial permission is not fair.

  11. someone need to stop lyft and uberx/xl immediately to protect local businesses

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