Regulators in the US and Canada Try to Protect High Prices and Bad Service from Taxicabs

I wrote about on-demand car service Uber back in July in “Why Taxis Suck and What You Can Do About It” and in September on New York City’s war against Uber which was then trying to make the city’s taxi cabs more available and more efficient.

It seems that regulators have their own trade group, and the International Association of Transportation Regulators has gotten together to strategize over how to put on-demand car service app Uber out of business.

Taxi and limousine regulators from 15 U.S. and Canadian cities plan to release proposed guidelines Friday aimed at reining in some of the smartphone applications and online services that are radically changing how customers hail cabs.

The rules were drawn up by a task force of the International Association of Transportation Regulators with members from New York, Chicago, Boston, Houston, San Francisco, Toronto and elsewhere, who will address emerging technology that allows passengers to hire cars and pay their fares using smartphones.

By developing new rules together — even though it’s just a draft recommendation, which would have to be passed separately in each jurisdiction — the regulators give themselves ‘cover’.

Cabs don’t like car services to be more convenient and more affordable, so they lobby against the new competition that Uber introduces into the market.

But whenever a city tries o regulate Uber out of existence, its customers rise up and protest.

Most of the claims made against Uber are downright silly. Megan McArdle finds that claims that consumers have ever complained to regulators about UBer are fake. Concerns about the safety of Uber vehicles are silly, since they don’t have their own cars — they just help existing, licensed vehicles to find customers and utilize down time to generate extra revenue.

But if they can portray moves towards regulation as in line with other cities, doing what regulatory associations recommend, then they’re being responsible and not going out on a limb. They give themselves cover.

I thought this was just special.

“The regulators really resent being branded as cronies and antitechnology,” Mr. Daus said. “It couldn’t be further from the truth. But they have to do their job and make sure it’s safe, customers aren’t being ripped off, and people aren’t being hurt.”

Of course these regulators might be able to feel better if they weren’t actually protecting their cronies (and contributors) and weren’t actually acting against technology that makes their industries more efficient and brings greater revenue to drivers and greater convenience to consumers.

(HT: Erik H.)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I’ve always wondered why the IRS doesn’t take a good and very hard look at taxi drivers, taxi companies and taxi regulators. When decisions seem not even to pay lip service to the concept of competition or the free market, there’s usually a good reason, and it’s usually to do with money.

  2. It sucks that the NY Taxi and Limosine Commission isn’t looking out for the public because the Taxi Medallions (license to be a yellow cab) are such a bi sorce of revenue. They auction off medallions at millions of dollars a piece. So great services and technology like Uber challenge that monopoly. It’s getting outrageous though. The “default” options for tips on cabs are 20%, 25%, and 30%. That is not looking out for the public and consumers.

  3. Given the increased cost of Uber over hailing a taxi, I wonder how big the threat Uber really is.

    The answer can often be found by following the money. For example, hotels and cities dislike Airbnb because Airbnb properties don’t pay local occupancy taxes. So, the hotels aren’t as competitive, and the cities don’t make as much money.

    If Uber drivers/cars are already licensed, and those licenses are controlled/issued by the taxi commissions, it doesn’t seem like they’d be losing any revenue by permitting Uber. But I’m probably missing something, perhaps a portion of taxi fares are taxed but Uber fares aren’t?

  4. @Tech trainer – cabs don’t like Uber’s car service app, it brings down the cost of car service and competes more directly with cabs. One attack on Uber, several localities are pushing to MANDATE that Uber not lower its prices.

  5. Of course it is all about the money. The regular cabs see their price advantage eroding and they’re worried. Regulators may be grasping at straws but there are some rules that probably do actually need to be followed at some point.

    I’m sure that – eventually – Uber and others will manage to get the rules changed in their favor, but just pretending the rules don’t exist or don’t apply to them is a silly approach. If the dispatcher is responsible for ensuring their drivers are properly insured, for instance, then there is no reason that Uber should be exempt from that requirement. After all, they are the dispatcher. And it is most certainly in consumers’ best interests to make sure that the drivers are properly insured.

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