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Taxis, limos upset over rules for app-enabled competition

By Ivan Moreno & Ray Henry / Associated Press

POSTED:
LAST UPDATED: 08:39 p.m. HST, Mar 07, 2014


DENVER » Frustrated and angry, more than 100 cabbies pulled up outside the Colorado Statehouse early this legislative session to protest tech startups known as ridesharing services.

The taxi drivers say the emerging firms, which allow passengers to hail rides with the swipe of a smartphone, are avoiding costly requirements that they and other commercial drivers are forced to follow.

Ridesharing company officials say they're open to regulation and point to self-imposed controls such as criminal background checks as proof of their willingness to cooperate. They're also pushing back, saying critics and protesters are only trying to suppress competition and legislate them out of business.

The dispute in Denver mirrors similar fights playing out across the nation as state lawmakers and city government officials consider how to regulate emerging Web-based businesses that provide a service similar to that offered by traditional cab and limo companies, but under a distinctly different model.

"You know, change isn't easy," said Colorado Democratic Rep. Cheri Jahn. "But sometimes it's time to move forward."

The companies use mobile apps that connect passengers to drivers, often everyday people seeking extra income by picking up fares as they commute or run errands. Passengers pay through the app and can even tip electronically.

One well-known firm, Uber, operates in more than 70 cities around the world, offering everything from quick rides to luxury service.

Another, Lyft, has become known for pink mustaches on front bumpers and does business in more than 20 U.S. cities.

Neither has publicly released financial figures or user statistics. But their entry into the market has been disruptive, according to traditional cab and limo services that have raised the loudest opposition.

"There's all kinds of ways to avoid costs, which goes to the corporate bottom line," said Al LaGasse, CEO of the Taxicab, Limousine & Paratransit Association. "But is that really in the public's interest?"

The ridesharing companies say they welcome regulation, but not thinly veiled attempts to shut them out.

"We're open to having a conversation on how to create a permanent home in the regulatory scheme," said Uber spokeswoman Nairi Hourdajian. But proposed bills that have "the clear intent of eliminating choice for consumers and opportunities for drivers are not the way to go about this."

Public officials have to sort out several topics, including insurance, background checks and price structure. Also at issue is the definition of "ridesharing service."

They realize something has to be done, otherwise cab and limo companies could simply say they're in the ridesharing business and avoid expenses such as painting vehicles, installing meters, obtaining permits and keeping mandated maintenance schedules.

"So why would you stay a cab company?" asked Doug Dean, the head of Colorado's Public Utilities Commission, at a hearing last month.

It's difficult to determine the exact scope of efforts to regulate ridesharing companies, said Douglas Shinkle, of the National Council of State Legislatures, a Washington, D.C.-based nonpartisan nonprofit that monitors and researches state governments. Some proposals have come from state lawmakers, some from city councils and others, such as California, from state agencies, he said.

Arizona, Colorado, Georgia and Maryland all have had legislation pending this year, Shinkle said. No proposal has passed.

The attempt at regulation in Georgia, drafted with help from a limo company lobbyist, stalled amid opposition from the ridesharing companies, customers and the libertarian-leaning Americans For Prosperity.

The Colorado plan passed an initial vote of the full Senate on Friday, but it faces several more legislative hurdles. It has bipartisan support and several sponsors from both Republicans and Democrats, including Jahn. The measure would designate ridesharing firms as "transportation networks," separate from taxi and limo services. It would require insurance, background checks and training, which Uber and Lyft already are doing, but the bill would add utility commission oversight.

At the city level, Chicago and Seattle officials also are discussing plans.

Chicago Mayor Rahm Emanuel has proposed an ordinance that would license ridesharing operations and require insurance. Critics say it doesn't go far enough, and several taxi companies sued, saying the plan unfairly singles them out.

In Seattle, the City Council is considering limiting the number of drivers ridesharing companies have on the roads.

In California, state regulators decided last year that ridesharing companies must make sure drivers undergo specific training and criminal background checks and carry commercial liability insurance.

In unregulated markets, Uber and Lyft internally require checks on drivers. For insurance, ridesharing drivers use personal policies when they don't have passengers. When they have a fare in the vehicle, they use a corporate policy.

Insurance has become a flashpoint after authorities said a 6-year-old girl was killed in a crosswalk by a driver logged into the Uber app in San Francisco on New Year's Eve. The girl's family said in a lawsuit that Uber is financially responsible since the driver was waiting for customers. Lawyers for Uber say the company isn't liable since no passenger was in the car. The case is pending in state court.

Another point of conflict has been the pricing system. Uber, which offers services that include professional drivers, sets rates using a combination of minimum charges, time and mileage. But prices increase during heavy demand. Lyft also uses flexible rates, asking users to pay an amount based on time and mileage.

On a recent afternoon, a 2-mile trip through downtown Denver, using Uber's low-cost service, UberX, to get from the Colorado Capitol to Coors Field, would cost about $5 to $6, based on the company's online fare estimator. The same trip in a traditional cab, such as Yellow Cab or Denver Metro Taxi, would cost about $7 or more, according to the rates posted on their websites.

The scrapped legislation in Georgia sought to require limo drivers working through Uber to standardize their rates. Lyft doesn't use professional operators and didn't expect its pricing structure would have been affected by the Georgia bill, spokeswoman Paige Thelen said.

Jennie Morris, a 37-year-old Denver resident, said she uses Lyft about twice a week and enjoys chatting with drivers. "It's just like if I would meet someone on the street and have a nice conversation with them, but instead they're giving me a ride," she said.

Gary DiGiorgio, a 59-year-old from suburban Denver, became an Uber driver to supplement his income during slow months in his real-estate business. For him, the issue of regulation comes down to economic concerns. "We, as Americans, need to go ahead and respect freedom of business," he said.

But for cabbies, the issue is one of fairness. "We're not afraid of competition," said Mohamed Abdi, a 32-year-old Yellow Cab driver in Denver. But "we all have to play by the same rules."

Henry reported from Atlanta.






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