Thursday, August 29, 2013

Uber ridesharing service coming to Houston (Part II)

(Part I is here)

Mike Morris' piece at the Chron names the power players for the two sides involved in Uber's entry into the Houston market. We'll pick it up where the battle lines are drawn.

Yellow Cab CEO Roman Martinez and Joe Jordan, president of the Houston Limousine Operators Networking Group, labeled Uber a rogue operator.

Martinez, whose Yellow Cab and affiliated companies field 1,400 vehicles, said Uber's service will skim the best trips in the city, hurting the taxi industry and curtailing its ability to give rides to the poor or disabled.

"We don't understand why Uber would want to change existing law instead of operating under current ordinance just like all of us have been doing for years," Martinez said. "It's unfair for them to come in the market and say, 'Now we're going to get rid of all these rules and regulations so we can get into the market.' "

Yellow Cab affiliate Towne Car operates sedans at the same price as cabs, said lobbyist Cindy Clifford. She is joined on the cabs' lobby team by Felix Chavelier and former council member Sue Lovell. Uber has hired lobbyists Jeri Brooks, David Gonzalez, Robert Miller, Neftali Partida and Nancy Sims.

"Every place they go, they say, 'We're only going to use established, licensed operators; we're clean as choir boys.' And as time goes on they start using anybody with a pulse and a running vehicle," Jordan said. "If there's an issue with the city or a ripped-off client, where are you going to go? You going to go complain to a website? It'd be chaos if they let Uber come in."

That's really the best word to describe Uber: chaos. Another clarifying adverb is 'disruptor'. More on disruptor companies here, here, and here.

The Original Disruptor, as both Jen Sorensen above (and perhaps you) surmise, is Wal-Mart. Or rather, Walmart. In attaining their goal to compete solely on the basis of price, they succeeded in bullying both their suppliers and employees into accepting the lowest price Walmart was willing to pay, which has culminated in the wholesale destruction of the retail industry's mom-and-pop stores across the United States. This also resulted in the scions of Sam Walton becoming some of the wealthiest people on the planet. They have pushed workers onto welfare, bought off politicians in countries around the world... you probably already well understand the Walmart 'success' story.

Still, before we get back to the business of Uber and how it will affect us both positively and negatively in the Bayou City, more local background is essential.

Yellow Cab and a few other Houston brands (like Fiesta and United Cab) are owned by Texas Taxi Inc., a corporate parent to the Greater Houston Transportation Co. and others. The Houston affiliates currently hold about a 60% market share here, according to their own data, and Texas Taxi also serves Austin, San Antonio, and Galveston. They are in competition with several other smaller taxi and limousine operators, not to mention outfits like SuperShuttle, the jitneys and even pedicabs. In Houston the company employs about 250 dispatchers, mechanics for their fleet of cars, administrative and support personnel as well as nearly 2000 cab drivers as independent contractors. Many employees are long-termers, with 30 and 40 years' service. The companies have a long history of supporting the community, from scholarships to free rides to the polls on Election Day.

By contrast, Uber -- a company with only a smartphone app, no actual cabs or dispatchers, no customer service personnel, no phone number to call if you leave your briefcase in one of their cars, no long-term reputation to protect and no ties to the local community -- got in hot water with New York City after they doubled their rates in the wake of Hurricane Sandy. They called it "surge pricing".

This is the kind of thing that results when there isn't sufficient regulation to protect consumers from gouging. The kind of regulation Uber's CEO calls 'draconian'.

Let's be clear that the argument in favor of ordinance compliance is not naive to the premise that many laws have been written to the prejudice of large corporations seeking to protect their market share. The big banks own the Congress; the oil companies have bought off the Texas Legislature and most of our statewide office-holders, and even the beer distributors in the Lone Star State have long used the Lege to keep a boot on the neck of the microbreweries. But city ordinances compelling taxi cab companies and operators to high standards came about many decades ago primarily as a result of two things: unsafe transportation and unethical operators taking advantage of customers. The public safety of citizens -- and not manipulation of the market by influencing lawmakers -- is why taxis operate in a regulatory environment. Houston's ordinances have not restrained the many and varied competitors listed previously.

Uber's model, simply, is not to play by the rules. They don't want any employees except for a few at the top of their pyramid, they aren't going to have a fleet of cabs that they maintain and service, they don't wish to train, license, insure or support their drivers (except to the barest minimum standard). They simply want to profit by offering a service designed to cut every single cost of doing business... except for the lobbyists to get them their way in the beginning, and the lawyers to clean up their messes after the fact.

Here's a checklist that describes the differences in greater detail.

It is not restraining commerce to ask the city to enforce laws already on the books. But in the spirit of "letting the market decide", go read some of the reviews at Uber's Google Play page. You'll find some really good ones and some really bad ones. Then do something you rarely, if ever, do: carefully read the terms of service. Among the eye-widening disclosures, you'll find that in order to litigate a dispute with Uber, you must file your case in The Netherlands. The damage limit for a successful tort claim of this type in that country is... wait for it... 500 euros.

You might also be aware that just as Uber gives their passenger a quick customer-satisfaction survey at the end of the ride, its drivers are also rating you.

In my humble O, Uber should be able to easily comply with the city of Houston's long-standing and generally accepted good business practices in regard to providing transportation services -- or brokering such, as they claim. If they decide they can't, then there are lots of other sandboxes they can play in.

The matter will likely be resolved by Houston city council sometime after the November election, so now would be a great time to quiz your favorite candidate for mayor or council about whether they support -- or oppose -- Uber's "disruptor" business model.


Elderlady said...

All I know about "Uber" is what I have read here.

If they are so "wonderful" why not be regulated under the same regulations that govern taxi cabs?

Just askin'

PDiddie said...

Their argument is that they are not a transportation (cab/limo) company, but a 'broker' for 'ridesharing'.

You can read more about what they say that means in the terms of service link above.

But as such, they believe this should exempt them from (most) regulations.

Where this is likely to end -- at some point relatively long away in the future -- is a rewriting of ordinances that reflect the new world we live in (apps, smartphones, etc.). As well as how the service providers fit into the transportation needs and desires of Houstonians and visitors here who want a quick, cheap ride in a clean, nice car in an area like downtown, Reliant, or the Galleria, and not just to and from the airports.

Gadfly said...

The big problem w/Uber is, by claiming to be a rideshare, it goes skeezix on not adequately insuring its drivers.

And, because of an accident by a Uber driver in the Bay Area, this is going to, in California at least, get a quick lawsuit test.

Hey, I'm fine with Uber challenging some regulations of taxi service. That one, though? Not at all.

Nor do I by the larger claim that it's just a rideshare organization.

Unknown said...

I want them to be in Houston yellow cab is killing the cab driver its modern slavery working under them do u know how much they charge weekly 650 dollars think about it they got the medals from the city for one medal they paying around 600 dollars a year so do u think thats fair thats why I want uber so badly but one thing u have to understand no one is working for the driver at least we can have options

M Driver said...

Im a cab driver in San Antonio and Im waiting for Uber here. All the rules and regulations are specially designed to Cabs company's benefits instead driver's at all.
The industry is getting poor with a really bad service. Drivers working 24 hours without driving skills, only to pay all that Yellow and their executives and CEO's want.

Unknown said...
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