Controversial cab, ride-share apps reshape the face of transportation

It happens all the time in every major city across the country: You plant one foot in the street, wave your arm, whistle, yell “Taxi!” But nothing works—the cabs, some full of passengers and others empty, whiz by.

Now, a handful of startups are wedging into that space between you and those cabs, a space just big enough for creative tech interpretations of what it means to get a lift.

Car-dispatch and ride-sharing apps such as Uber, Lyft, and SideCar are on the frontier of 21st-century transportation, figuring out the rules (and in some instances, helping to write them) as they go along. Here's some background on this segment of the evolution of transportation.

California gets Uber

It seemed to happen almost overnight. One day, you had just cabs and luxury-car services to choose from. The next, you had downloadable apps that would deliver a driver to you. No more futile arm-waving. No more whistling.

Of course, the change wasn't actually an overnight occurrence. The process of developing the services, recruiting drivers, building a following, and expanding into cities that haven’t exactly been rolling out the welcome mat has taken at least a year, if not more for some startups.

California is a natural testing ground for transportation apps because of its high population of early adopters of new technologies. Uber was one of the first taxi apps on the market, launching in San Francisco in 2010 on iOS and Android.

Although Uber now has a variety of services, it started out connecting passengers with the drivers of already licensed private high-end sedans and SUVs (most of them black).

Choose one of the services and a pick-up location on Uber's app.

Uber Black remains the core service, but the company has added UberX (normal cars at lower rates), Uber SUV (on the higher end), and Uber Taxi (an e-hail dispatch service). (Note that not all services are available in all Uber-served cities.)

In San Francisco, Uber Black starts at a base fare of $7, with an additional $4 per mile if the car is driving faster than 11 mph (this means a lower charge for a car caught in gridlock).

A minimum fare is $15. Uber Black typically costs more than a taxi, but the company says its high-end cars and reliable service are worth the extra cash.

Uber immediately made a splash in the market, drawing fans, investors, and protesters who claimed that the company was violating transportation law by acting as a cab company with no license or insurance.

Like its ride-sharing counterparts Lyft and SideCar, Uber claims it isn’t providing transportation services, but merely serving as a platform for people to find rides. Passengers don’t pay drivers directly; they link their credit-card information to the app and then pay with the press of a button when the ride is over.

Last November, the three services were fined $20,000 each by the California Public Utilities Commission for operating without permits. However, after months of negotiation, the CPUC rescinded its decision and made ride-sharing legal in California, settling its case against Uber, Lyft, and SideCar.

That’s not to say there aren’t still complaints about the startups, most notably from cab drivers, who claim that the apps are unfair competition. But taxis will soon have a way to compete, at least in San Francisco.

The city’s Municipal Transportation Agency on March 19 approved a plan to develop a taxi-dispatch app so that San Franciscans can hail a cab from their smartphones. The transit authority won’t be developing the app; instead, it authorized the use of Frias Transportation Infrastructure’s RideIntegrity technology to create a real-time database of cabs.

All taxi companies and drivers must participate in the new Electronic Taxi Access system. Developers can then use that database to create their own apps for the city.

“Any time that we can put more information in the hands of our customers, that can only improve service,” says SFMTA spokesman Paul Rose. “We’ve seen the trend of ride-sharing applications throughout the country, and this would allow our taxi service to compete with those ride-sharing applications and provide much of the same service and information that they do.”

To the East Coast and beyond

Like California, other states are now facing the decision of whether to crack down on transportation apps or open up the market.

SideCar cofounder Nick Allen says his company carefully examines transportation laws in cities where SideCar wants to expand, but the startup still runs into trouble.

A confirmed ride on SideCar's app

In February, the company chose Austin, Texas, as its next market after building a customer base on the West Coast, and planned a promotion to coincide with the South by Southwest festivals.

The city of Austin had other plans. After the city passed an ordinance that would have impounded vehicles suspected of offering rides for hire, SideCar gave festival attendees free rides and paid its drivers as brand ambassadors. Then the company sued the city.

Allen says SideCar is still in talks with Austin to resolve the situation.

“Transportation really hasn’t seen a lot of innovation. This is all very new,” Allen says. “Politicians and regulators are well intentioned to protect the public [out of] safety and fairness. They try to apply existing regulatory code to this new medium, and it doesn’t apply. The regulation has to catch up to the innovation.”

How you define it

The heart of the matter is the definition of transportation service. Taxi-dispatch and black-car apps let you hail a car and typically set a base rate plus mileage, just as a traditional cab company does.

Ride-sharing apps such as Lyft and SideCar connect ordinary drivers using their own vehicles with people looking for rides. The service is donation-based, and the apps offer suggested donation amounts. You could pay nothing, but then drivers would give you negative ratings, and no one would offer you a ride again. The tech companies argue that they’re just providing a platform. Cities aren’t so sure.

Washington, D.C., balked when Uber first entered the city more than a year ago. City officials tried to introduce legislation that would have instituted a price floor for luxury-car services higher than Uber’s $7 base fare.

Uber CEO Travis Kalanick protested and, after months of negotiations, D.C. officials in December created a new digital dispatch framework to regulate apps like Uber. The city now has a single license for for-hire vehicle operators regulated by the D.C. Taxicab Commission.

But ride-sharing apps like SideCar, which on March 22 expanded limited service to D.C., don't offer vehicles for hire.

Ride-sharing apps are 21st-century versions of the ride-share boards that popped up decades ago in college student unions. Cofounder Allen says that SideCar looks at each city’s transportation laws before expanding—the nine-month-old company is now in nine cities across the country—but because few cities have rules regarding transportation apps, SideCar and its cohorts find themselves untangling legal threads as they go along.

Full speed ahead

Nevertheless, the rate of expansion isn’t slowing down.

Lyft, which debuted in San Francisco last summer and became best known for its fuchsia fender ’staches, added Los Angeles service in January and will roll out in Seattle on April 12. Uber, the largest of this crop of apps, is now in more than 30 cities around the world, including Paris and Berlin.

Lyft
A Lyft car with its sporty mustache

Though the apps are targeting major metropolitan areas right now, soon an e-hail or ride-share app could be available in suburbs.

Both SideCar and Lyft plan to roll out to smaller cities as part of their expansion plans.

Lyft cofounder John Zimmer says that the startup is first finding its footing in dense metro areas with a high population of early tech adopters, but that the plan is to go mainstream and expand its core demographic. Expansion will be difficult in areas where car ownership is the norm, SideCar’s Allen says, but SideCar is seeing success in Los Angeles.

Of course, most transportation apps have the same plan. Will the arena eventually get too cluttered with too many apps trying to disrupt the system? Zimmer says each app is just another option.

“I think there’s some overlap, but I also don’t think it’s a zero-sum game,” Zimmer says. “What we’re all competing against together is the idea that you have to own a vehicle. I got rid of my car when I started Lyft, and I’ve heard that story several times. Whether it’s public transportation, taxis, or things like Lyft or Zipcar, we’re giving people tools to get around. The sum of those parts can be greater.”

Also look for the apps to get more social. Both SideCar’s Allen and Lyft’s Zimmer hinted at adding more social features to the apps down the line to foster friendships between drivers and riders.

Lyft app: iOS | Android

SideCar app: iOS | Android

Uber app: iOSAndroid

Subscribe to the Tablet Tips & Trends Newsletter

Comments