Nguyen: Uber As We Know It May Be Gone Forever

Wednesday, February 25, 2015

AiVi Nguyen, GoLocal Worcester MINDSETTER™

From a consumer standpoint the decision between Uber and taxi is simple – Uber it, every time, hands down.

Gone are the days where you have to call a cab company to get barked at by the dispatcher and wait around outside for a dirty old cab to come eighteen minutes later than promised to fumble around with your cash or credit card to pay some jacked up price to go four miles.

Uber is a ride-sharing service that allows a person to schedule a ride, with a driver affiliated with Uber, by a few taps on his or her smartphone. Because it is done on an app, the passenger has a number of luxuries that are not available with traditional cabs, including: knowing exactly where the driver is and how long it will take the driver to arrive; the ability to estimate fares before committing; and the ability to pay through the app. No awkward stare down when you don’t leave a tip – because there are no tips.

Uber came to Massachusetts in 2011 and it has been a free-for-all. $15 to get from Waltham to City Square Plaza? $6 to get from Mai Tai on Green Street to the Holden line? All in a clean car less than a decade old? Why WOULDN’T Uber take off?

Sadly, the golden days of Uber may be coming to an end. Like all good things, when the market and the competition caught wind of Uber’s success, the simplicity of Uber was lost. In the midst of impending licensing regulations, battles over insurance coverage of drivers and safety concerns for passengers, a lawsuit has been filed by Uber’s competition, the Boston Taxi Owners Association. *cue ominous music*

In a complaint filed in federal court in Boston against the City of Boston, the Boston Police Commissioner, the Department of Public Utilities, the Department of Transportation and the Secretary of State, the Association essentially claims that allowing Uber to exist as it does is unfair and a violation of the Equal Protection Clause of the Fourteenth Amendment, which holds that no state can deny any person in its jurisdiction “equal protection of the law.” The Association argues that, for no good reason, the regulations applied to Uber are laughably lenient compared to the stringent and expensive requirements placed on cab drivers, when Uber and cab drivers provide the same service.

There is no question that cab drivers are subject to much stricter rules than ride-share drivers. Examples include:

For decades, in order to drive a cab in the Commonwealth a driver needed to buy a medallion, which is basically a license to operate a taxi cab. Medallions are not cheap and people don’t just buy them outright with cash. Think of it as a mortgage – on a really nice house – with a hot tub – and three car garage. Buying a medallion was believed to be a fail-proof investment because the city always needed taxis and the supply was limited. In Boston, the number of medallions in circulation is capped at 1,825. Cab drivers could sleep at night knowing they could earn enough in fares to pay back the debt on their medallions and make a good living. Then came Uber. You don’t need a medallion to be an Uber driver. You just need a newish car. Suddenly the value of the medallion has dropped significantly and cab drivers are finding themselves under water.

Cab drivers can only charge you city-approved rates. Not so with Uber. While on a regular humdrum day Uber is by far much cheaper than a taxi, at 6pm on a Friday night Uber is sure to ask you to agree to a “surge charge”, which is a higher rate based on the low availability of drivers. Uber claims that the higher rate is to entice more drivers to get on the road to service the demand. While that may make logical sense, charging 3x the normal rate is a bit aggressive.

Boston cab drivers must meet 17 requirements before being granted a medallion, many having to do with the driving records and safety benchmarks. It appears that Uber drivers only have to pass a criminal background check. The thoroughness of the background check and the standards of what is “passing” are unclear. The alarming allegations of assault against several ride-share drivers may reflect this looser oversight.

Uber argues that it is not a taxi service, but instead is just an information-providing technology company that links passengers to drivers. The outcome of this argument is critical for determining whether there is a Constitutional violation. If Uber is the same as a cab company, the government will have to provide a good reason as to why Uber is treated differently. Off the top of my head, I can’t think of any.

It is more than likely that Uber as we know it will change given all these regulatory and legal issues. But, the positive side is that taxi cabs, if they survive, will also change and for the better. Service is always better when there is competition. A little healthy competition will only help the consumer.

Aivi Nguyen is a trial lawyer with the Law Firm of Bowditch & Dewey, LLP in Worcester.

Related Slideshow: UBER vs. Taxi Experience in Worcester

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1. Ordering

Taxis:For both reporters, ordering a taxi in Worcester was a headache. Using the New Worcester Yellow Cab App, one reporter ordered a cab at 10:48AM. At 11:12AM, Cab #41 was assigned, for a total order wait time of 24 minutes. And that was only for a cab to be assigned, it does not include the time it took for the cab to arrive.

Red Cab does not have an app. It has a mobile site with a telephone number. The first call was 22 rings before the call failed. The second call was 16 rings before anyone answered.

Uber: Using the Uber app, ordering was easy. For both reporters, it took less than a minute to order.

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2. Pick-Up

Taxis: For the Worcester Yellow Cab reporter, at 11:15AM, Cab #41 drove past the reporter and parked two blocks away. Apparently realizing his mistake, the cab driver picked the reporter up at 11:19AM, on the opposite side of Shrewsbury Street (31 Minutes from the time the reporter ordered the cab).

The Red Cab took eight minutes to arrive to location.

Uber: On average, the reporters only had to wait six minutes for a Uber car to arrive. When Uber arrived, they picked the reporters up right at the curb.

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3. Cleanliness

Taxis: Both taxis had dirty mats, and their upholstery was worn out. However, both vehicles were at least ten years old.

Uber: Although clean, the inside of the Uber vehicles were both pretty worn. One Uber vehicle was a new Nissan Altima. The other Uber vehicle was an older Toyota Camry.

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4. Driving

As shown in the videos, all four rides were safe and slow. The only problem was Yellow Cab’s decision to take a longer route to Holy Cross. All drivers were friendly and talkative and they all had a good estimate of fares from point A to point B.

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5. Cost

As mentioned, each driver had a good idea of what it would cost for a ride from Shrewsbury Street to Holy Cross and back. However, the cabs were nearly twice as much as Uber. The total cost of the cabs was $28, while Uber only cost the reporters a combined $17.

In one instance, the Uber driver knew ahead of time that construction was being done on an I-290 on-ramp near Holy Cross. As the Uber driver put it, “if they weren’t doing that work, this would’ve been even cheaper.”

See video here:

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6. Service

All drivers from both Uber and local Worcester taxi companies were very professional and friendly. Upon arrival, each driver asked said "Hello," and asked the reporters how their day was going. All four drivers made sure destinations were exact and upon reaching those destinations wished the reporters a "Happy Thanksgiving."