Speed Bumps Arise for Upstart Car Service Uber

Posted by Seth Miller on September 11, 2012 at 3:48:32 PM EDT | Post a Comment
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The on-demand car service powered by iPhones rather than traditional dispatch centers, Uber, is upsetting the traditional livery car industry as it rapidly expands into new markets. The app allows passengers and drivers to connect directly, speeding dispatch and lowering overhead. Plus, most drivers are working with a livery service already, allowing them to pick up extra fares during lulls in their normal shifts. And for travelers new to a city and unsure of just how to best arrange transportation, this sort of service is most welcome.

But while customers and drivers seem mostly happy with the offerings, regulatory bodies are less convinced. A number of cities have questioned the operations of the company based on taxi and livery laws; the future of the company in these locations is rather uncertain.

It isn't like these are small markets where the impact is minimal, either. Washington DC, Boston, and New York City are just a few of the cities where the company has seen officials rule against their operations following introduction of the service. The reasons provided by authorities vary but heavy reliance on their current licensing rules to suggest that Uber is operating outside the lines with their service.

In Boston, the issue was the use of the iPhone GPS as the tool for calculating trip distance rather than a NIST-approved meter system. That earned the city an injunction against Uber in August, though that injunction was eventually reversed. The company can now operate using their GPS solution on a temporary basis until the NIST issues a formal ruling. In Washington, DC, the fight was similar; the outcome was as well. The company is now operating in that market, too.

In New York City the challenges are new and, as yet unresolved. Rather than traditional black-car drivers, Uber is recruiting yellow-cab hacks in New York, raising the ire of the Taxi & Limousine commission. Uber claims the operations are legit because there is no central dispatch service. A trade group representing taxi operators suggests that at least 11 rules are violated by the Uber service, including refusing cash payments and automatically including a gratuity on the fare. And the TLC is stuck in the middle. They acknowledge that New York is on the leading edge of incorporating technology into their taxi fleets but they have, as yet, refused to determine whether Uber is in compliance with TLC regulations. But with recently announced fare hikes taking effect this month there aren't a lot of customers in New York City who would object to a bit more competition on the streets.

Major technology jumps in any industry are disruptive and can threaten the legacy environment. Uber has been reasonably successful so far in challenging those rules but plenty of challenges remain. Passengers mostly seem to be benefitting and at least some drivers are, too. Not everyone is happy but changes like this generally work out well for consumers; hopefully these speed bumps are easily overcome.

Photo credit: Taxi cab via Shutterstock

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