Wednesday, July 30, 2014

Uber, Lyft decision coming

Today's the day... maybe. The Examiner explains that only the amendments or a substitute ordinance are taggable, and like them I would say that's likely to be the case.

Update (7/31):  As we suspected.  Lots of detail on the proposed changes.

So, to recap...

Charles' post from Monday is a good update that sets the field for this afternoon's vote, filled with linkage worth clicking.  CM Stephen Costello took the 'pro' in the TribTalk faceoff, with Noah at Texpate taking the 'con'.  For deep background, my two-part series from a year ago (Part I and Part II) are among the most clicked posts here, and make the top five on the front page at Google for "Uber Houston".

Uber and Lyft have been going rogue in Houston for some time, which IMHO pees on their prospects for today. They also recently got stung locally, which has the Texas Department of Insurance yellow-flagging them.

And that's where I'll begin, with my experiences last month in Dallas with UberX and two cab companies (Yellow and Executive). When I decided to do this I wanted the experience to be as bias-free as I could make it; if I used the Houston services I might encounter someone I knew, for just one example. So the state Democratic convention at the Omni last month gave me the best opportunity to see how things were going.  Like Houston, Uber in Dallas still awaits city council's final approval, and aren't waiting around to get it.

The primary sticking point -- among many -- is who's carrying the insurance if an Uber car is involved in an accident, particularly one causing injuries or death.  Uber says it's their drivers; their drivers don't seem to know.  From the KHOU article linked above...

Houston-based attorney for taxi and limo services, Martin Hill, said everyone is at risk.

There is absolutely no coverage for these hailed trips or these repeat business trips, said Hill. The passenger is at risk, any third party is at risk.

A woman by the name of Olivia, who did not want KHOU 11 News to use her last name, is a former Uber driver who claims she was eventually fired.

It s almost out of control, she told the KHOU 11 News I-Team as she talked about the confusion she had over the company's insurance policy.

She says even when she was working as an Uber driver she had unanswered questions about the company s insurance coverage.

KHOU: So at this point you have no clue what kind of insurance you had?

Olivia: With Uber? No. None.

It's at least a little more clear when someone hails an Uber, as they would a cab, without using the app and paying cash instead of being billed by smartphone: Uber declares they are not responsible.

In an effort to prove their point, attorneys for local cab companies hired private detectives who wore hidden cameras. The detectives did not go through the app. They just hailed an Uber driver who they found in the area.

Undercover video shows the detectives approaching the Uber driver s window and asking him for a ride. The driver accepted the ride.

The detectives paid in cash for their ride and at the end of the trip, asked for the driver s cell phone number so they could call him for a future ride. The driver willingly gave his number to the detectives.

Later, the detectives made a call to that driver and the driver picked them up at a location near downtown.
I figured, shoot, it will be easier and you can make more money and pay your cash. We don t have to do that other stuff, the private detective said to the driver.

You can hear the driver respond in the undercover video.

At least I don t have to give my 20 percent, he said referring to the percentage Uber gets from each ride that goes through the app.

And that is precisely what I did in Dallas.  But from the top...

We walked out the front door of the downtown Omni and hailed a Yellow cab there to take us about eight blocks to the Sixth Floor Museum, at Dealey Plaza.  The driver was Middle Eastern, the vehicle an older model Chrysler minivan, not in bad shape.  When I told him I like cabs and not Uber, he was diplomatic: "There's plenty of business for everyone", he said.   The ten-minute ride was under 6 bucks and I gave ten.  I also asked for his card in order to come back and get us in a few hours, and he did so, arriving withing 15 minutes of our summons.  He was grateful for the repeat business, and I gave him a twenty this second trip.

The following evening we called for him but he was unable to take our trip, so we again walked out the front lobby doors and asked a bellman to hail us a cab.  The last one was pulling away with another fare, and as we waited in the heat, the bellman walked over to a man in front of a late model black Chevy Tahoe, returned and told us we could take his car... an UberX.  I said to the Caucasian driver, well-dressed and professional: "I don't have the app, I'll have to pay you cash" and he said that was fine.  So off we went to Deep Ellum for sushi, a twenty-minute ride that cost $17.  I gave him a twenty, asked for his card for a return, and he graciously accommodated.

After dinner, we stepped outside the restaurant and before I could call the number, the wife was hailing an Executive Cab (the blue ones) driving by.  We piled in -- like the Yellow, an older Dodge minivan, nothing fancy, but good enough -- and broke the ice again with our African driver and his girlfriend about not liking Uber.  He laughed and said something similar to our previous cabbie.  The return trip to the Omni was shorter and cheaper for some reason: $12.  I gave him a twenty.

So while my cab rides in Dallas were less expensive and less flashy, it's easy to see what Uber (as a company) wants to do: skim the cream off the top of the market, with very nice cars, very courteous drivers, and a luxury price point.  The premium experience at a premium price.  The affinity branding that so many upscale folks prefer.

But I have my doubts as to what might have been the outcome had we been T-boned in an intersection with our driver at fault.  I get the impression we would have been SOL in more ways than one.

So that's another reason for me to emphasize that while Uber and Lyft have every right to participate in the market, they need to do so according to Texas law and city ordinance.  Those laws and ordinances exist for reasons that are NOT monopolistic and not cumbersome to decades of ride-for-hire entrepreneurs before them.  They exist because people were injured -- or killed -- and the drivers and the companies who employ them had to maintain legal responsibility for that possible occurrence.

Play by the rules, or get penalized when you don't.  Uber seems to want to have it both ways; that is to say, not play by the rules and not be penalized for doing so.  Hell of a business model if you can get away with it: $17 billion capitalized -- or is it $6 billion? -- certainly sends that message.

This homie don't play like that, and he also expects his CMs to do likewise.

Read this Forbes article about the "bear" case for the company.  One excerpt:

Across North America and Europe, taxi and limo drivers’ unions have been lobbying legislators to regulate or outlaw peer-to-peer services, and occasionally succeeding. “What they’re trying to do is get all their competitors to have to incur the same costs they do,” says Samuel Staley, who teaches economics and urban planning as director of Florida State University’s DeVoe Moore Center. One industry group, the Taxi, Limousine and Paratransit Association, claims that 30% to 40% of a traditional taxi’s operating expenses consist of regulatory costs Uber is now avoiding, especially primary commercial liability insurance. (Uber requires drivers to have their own insurance, although it does provide secondary coverage for certain situations.)

Uber might actually play by the rules if they are compelled to do so.  Let's count on someone at Houston council to convince them that there shouldn't be lawsuits from maimed passengers or their survivors before they do.

1 comment:

Gadfly said...

Well, put, both on the issue of following the law on insurance and the issue of market skimming/affinity branding.