The Washington, DC region is great >> and it can be greater.

Would new taxi rules "shut down" Uber?

The DC Taxi Commission (DCTC) has proposed new regulations for "sedan" services, rides you pre-arrange instead of just hopping in a cab driving down the street. Uber, a popular service that uses sedans, says the new rules will make their business impossible in DC, but DCTC Chairman Ron Linton says Uber is misreading the regulations.

Photo by magerleagues on Flickr.

In a letter to elected officials, Uber continues its aggressive rhetorical stance against regulators. Uber CEO Travis Kalanick writes:

These rules are not designed to promote safety, nor improve quality of service. They are intended to shut Uber and similar technology companies down. ... The rules, which the DCTC has published and coordinated to present at Mary Cheh's hearing on Monday, are a blatant attempt to shut small sedan companies down and therefore Uber's business. Our position is that any additional DCTC rule-making around sedans must be severely restricted.

Linton vehemently disputed that the commission is trying to attack Uber's business model. "I think [Kalanick]'s figured out that by being a bad boy he gets more attention, more publicity and more customers," Linton said. "We not only don't want to shut them down, we're trying to create a condition in which he and competitors" can compete. "We don't want to limit the competition, we want to have an open field."

The emotional intensity certainly has worked well for Uber thus far. A heated email about Mary Cheh's proposed regulations stirred thousands of residents to write the Council, even if the actual facts still remain in dispute at best. Maybe this is indeed a good lobbying strategy for startups in regulated fields: Build a great service that might be in the gray area of the law, accumulate a lot of happy customers, object loudly when lawmakers or regulators take unfavorable action, and channel customer energy to get better regulations.

As with the the last few rounds of the Uber battles, the folks from the government argue Uber is reading the laws wrong. Uber's letter alleges, for instance, that one of the provisions limits all trips to start and end within DC, but a closer look (§1405.1) shows that it also exempts trips that comply with the reciprocal agreements DC has with surrounding jurisdictions.

This provision changes nothing in the law, Linton said, except requiring the dispatch company, like Uber, to ensure that it's dispatching a vehicle allowed to make that trip. If it stays within DC, it has to be a DC-licensed sedan, but someone going to Virginia could use a DC or Virginia sedan.

Companies need a minumum of 20 vehicles

§1401.5 of the rules says that any "sedan company or association" must have 20 or more vehicles. In a telephone interview, Kalanick said that such a rule would "shut down pretty much everyone we partner with." Uber's sedan drivers are individual operators who own a single sedan, or in a few cases, a handful of cars.

But Linton said Uber "needs to have some lawyers read the regulations who know how to read regulations." He explained that this rule doesn't apply to individual operators, who aren't part of a "sedan company or association." Linton did say that such an operator wouldn't be allowed to have 2 or 3 vehicles under this rule, which has long applied in DC to all "public vehicle for hire" companies. "We don't accept anything between 1 and 19," Linton said.

Why is this? Linton said "it's historic," and added that changing it would make the commission's workload too great. They have 116 taxi companies now, and don't want 2-300. Workload is also a reason they have not been authorizing new sedan operators for some time, one reason Uber drivers' cars are registered outside DC.

It seems that this rule should change. But the commission's workload is not a good enough reason to refuse business licenses to anyone. Our economy usually does not, and never should, operate on a principle that you can't engage in smaller-scale economic activity because the government is too busy to review it. Some reasonable approval process may be appropriate, but if the regulatory agency is too busy to handle approvals, they ought to either get more budget or authorize more applications without such detailed review.

Sedan drivers will need a handheld printer

The rules also require each taxi to contain a "handheld device," with the capability to to print a receipt, send a receipt electronically, and/or audibly read out the fare. It also has to track vehicles using GPS and upload that information to DCTC.

Kalanick said it would be prohibitive for Uber to create a compliant device. Given that that their current system of using an app or text messaging is working well for its users, he asked, "what problem are they trying to solve?"

Linton said the problem is to ensure that drivers don't scam customers. He noted that drivers already have devices like these that they are using today. When the trip is done, the drivers have to hit "complete." They could hold it in front of the passenger to show they've hit complete, but it would be easier, Linton said, to just have the device print out a receipt.

Is that technically difficult or expensive? Linton said, "I understand it's no big deal to be able to have a printing device on them." What if Uber's devices are functioning well without these requirements? Linton said that Uber will surely claim that, but they have gotten a few complaints, it's the commission's job to ensure that riders get charged fairly.

Kalanick, though, worries that every time Uber wanted to add a new feature, they would have to change the physical devices and get the commission's approval. That would hinder innovation, he said.

Dispatch services need to have a place of business in DC

Another potentially problematic rule is §1403.1:

Each person operating a sedan company or association in the District of Columbia and each person operating a sedan vehicle reservation service operation in the District of Columbia or offering reservation services to any sedan vehicle licensed in the District of Columbia, whether by central dispatch, mobile phone or other electronic device communication or other form of digital dispatch shall maintain a bona fide administrative office in the District of Columbia.
Uber has a place of business in DC, so this wouldn't affect them, but why should DC require this for reservation services? Linton said that every company that does business in DC needs a business license, and this is no different.

What about an Internet e-commerce company that ships goods here? If I buy something from them, they don't need to be a DC-licensed business, even though I am doing business with them. A taxi dispatch service seems more analogous to that.

Taxi Magic is in Alexandria. Do they need a DC office just to have an app that lets you reserve DC Yellow Cabs? Linton said, "That is good enough, they are in Alexandria, we don't fuss with them about that. We're talking about companies that are located in San Francisco, Boston, or New Orleans. We can't reach them."

However, the regulations don't explicitly exempt Alexandria businesses. Having DCTC just not enforce the rule against some companies is not a good approach. And why is the ability to "reach them" the issue? DCTC could set up rules for such services that work with DC-licensed sedans whether or not they have an office in DC.

Debate will continue Monday

Councilmember Mary Cheh (ward 3) is holding an oversight hearing on sedan services Monday. I'll be participating, and plan to repeat the points I've made before. There's a role for regulations, but we should err on the side of less prescriptive ones, rather than more.

Uber is bringing more choice to District travelers. Whether or not you use their service or not, we want to foster more options rather than fewer. We want to enable other companies to create taxi dispatch services. Linton wants that too, but making it succeed requires making the barriers to entry as low as possible, and sometimes the regulations get in the way.

Do these? Linton said that he's talked to the heads of several other current or aspiring taxi dispatch companies, and they don't have a problem with the regulations. Taxi Magic Director of Marketing and Communications Matt Carrington said, "Our platform is reforming the taxi industry through technology (as opposed to disrupting it)."

Kalanick agrees that regulators have certain legitimate goals, listing "safety, accessibility, and transparency." Rules which ensure that cabs are safe make sense, as are ones that guarantee that services won't discriminate against people in certain parts of the District.

If regulations don't directly advance those ends, or if they put up barriers to Uber or new services, DC should steer clear. But some regulations will serve an important goal, and then it will do a disservice to District riders if Uber rallies its customers to oppose them without all the facts.


Add a comment »

DCTC = Rent seeking.

by Ironchef on Sep 20, 2012 3:55 pm

Printed receipts? Regular taxi drivers don't even fill in their receipts (a practice which I'm sure people who get reimbursed from their employers don't mind, since it allows them to inflate the cost) – making Uber drivers carry a damn printer around with them is just silly.

by Stephen Smith on Sep 20, 2012 3:58 pm

Note who's not consulted by DCTC: taxi users. Our needs do not matter compared to the taxi industry and the convenience of DCTC.

This is why people love Uber so much - it meets the needs of consumers by providing a valuable service, one that we will pay a small premium for rather than risk our lives in a broken-down cab that doesn't even supply change much less a receipt.

by Joe Flood on Sep 20, 2012 4:04 pm

Stephen Smith: Street hail type taxis will also have to have meters that can print receipts. This wouldn't treat Uber differently, though you could argue that neither rule should exist.

by David Alpert on Sep 20, 2012 4:05 pm

No sympathy for the cab drivers in DC. It is just a horrendous taxi system for such a wealthy metro area. I like Uber a lot so far.

by Tomahawk on Sep 20, 2012 4:16 pm

I haven't taken Uber yet, but I'm glad it's around. I've been frustrated with the inability of the DC cab dispatchers to guarantee that a cab will show when I request one. They literally tell me each time that they can't be sure one will arrive! WTF?!?!

by Bettercabs on Sep 20, 2012 4:26 pm

The DCTC is pitiful. None of these regulations make sense if their goal is to serve DC visitors/residents who hire a car (cab, uber, or otherwise).

"we don't want to deal with the paperwork of lots of small companies" (and so therefore they can't exist).

A handheld printer? How does that help me? One of my favorite things about Uber is that I can get in, get out, and not worry about the transaction. I know going in that I'm trusting Uber and the driver to handle the transaction properly. If they don't, I'll take it up with them.

I'm not going to touch the DC-DC/DC-VA trips and place of business stuff. As a consumer I don't care, but I guess I understand that the government needs to know who's doing business here.

Leave Uber alone. I've yet to see DCTC try to propose something in regards to them that will actually make my Uber experience better. It all smacks of protecting cabs, and that's dumb. I still take cabs more than Uber because I'm cheap and where I live they're usually convenient. But Uber's a great alternative and they should be allowed to compete without burdensome regulations.

by Zach on Sep 20, 2012 4:30 pm

Printed receipts are essential for an auditable system.

This is a very small cost, to required the operator of a $50,000 luxury car, charging about $30 per fare, to have a $50 mini-printer.

by goldfish on Sep 20, 2012 4:31 pm

A handheld printer? How does that help me?

Actually, I see nothing wrong with the printable receipt regulation. At some point, it is fair to argue that all customers have a guarantee that they can receive a printed, physical receipt indicating the cost of their trip, if they wish. While DCTC is mostly a sketchy, rent-seeking agency, I like the Kalanick is engaging in a bit of "working the refs", objecting to all new regulations in a pro-forma manner as a negotiating stance.

by JustMe on Sep 20, 2012 4:44 pm

@goldfish: Printed receipts are essential for an auditable system.

If that were the case, then nobody would be able to audit anything related to e-commerce. I'm not given a printed receipt when I buy things online. While not perfect, regulations for electronic record keeping are in place and very strong. And as a matter of personal preference, I actually prefer electronic receipts to printed ones -- I can lose a printed receipt, but I'm less likely to lose a text message or email.

by WestEgg on Sep 20, 2012 4:48 pm

This is a sideshow. DC cabs suck. Always have, always will. Do the city a favor and put these jerks out of their misery by using a DC cab as infrequently as possible.

by MJ on Sep 20, 2012 4:50 pm

@WestEgg: if you do not want the receipt, you are free to throw it away.

Not everybody is capable of handling an electronic receipt. If you asked my father (in his 80s) where to email the receipt, he would smirk.

by goldfish on Sep 20, 2012 4:56 pm

You are emailed a receipt which you can print. Still easily auditable. When you order from amazon they send you a receipt. If that doesn't fit your needs, take a taxi, where they can continue to hand-write you a receipt. Or sometimes just give you a blank form for you to fill out.

by JLP on Sep 20, 2012 5:21 pm

@Goldfish- Your father probably won't be requesting from an app.

by JLP on Sep 20, 2012 5:23 pm

I love Uber. Why does DC always stop something that works! SMH they must be mad that they are not getting kickbacks from the company

by Michael on Sep 20, 2012 7:08 pm

Matt Carrington is dreamy...

by Ab A. Gail on Sep 20, 2012 8:19 pm

Ugh...another tempest in the District teapot. The DCTC is insane, and seems absolutely hellbent on screwing consumers to the benefits of cabs. But on the flip side, we have Uber, who's been caught pretty much outright lying about its negotiations with the DC government, and basically wants to run completely unregulated because it uses this new magical device called "The Internet," and seems well-adept at riling up its supporters to get them there.

I don't really care about Uber, because it is the most expensive form of public transit in this city and therefore not something I'd consider using (and I know people who spend enough on Uber each month that they would actually be saving money by owning a car). But I do wish that some of the strum and drang that constantly followers Uber not just on GGW but other blogs was saved for a few of the other "bad actors" in DC (cough*Doug Jamal*cough), because there's only so much Uber one person can take.

by Circle Thomas on Sep 20, 2012 9:38 pm

Th DC cab system is so corrupt it's not even funny anymore. The District needs to abolish the DCTC, overhaul the system, actually put some safety inspection in place for decrepit/unsafe vehicles most cabbies here operate and institute actual training for cab drivers. The reason Uber is increasing in popularity and creating a 'threat' to the current system is because it offers a better service that many are willing to pay a small price premium for. DC cabbies and the DCTC however need to look at the real message being sent here; it's not that Uber is so great, it's that regular DC cabs just suck so much.

by ontarioroader on Sep 20, 2012 9:45 pm

DC Taxi system is hardly that bad. Not sure why it garners such strong negative reactions. Always seems available when I need one, drivers are generally friendly, cabs are in serviceable condition.

by H Street LL on Sep 21, 2012 7:01 am

@JLP, correct, my dad wouldn't send the request -- I would, from my phone.

by goldfish on Sep 21, 2012 8:04 am

Uber is a corporation like any other and they need to obey the law. The notion that the app or good service is illegal is just foolish. Why didn't Über obtain permits or buy existing cab companies? Because they didn't want to spend the money. They didn't want the liabilities. This is corporate thuggery at its finest. They worked outside the law and branded themselves as victims "just trying to do the right thing". Oh please already. Just read Uber's terms and conditions, So much for accountability...

by Athan on Sep 21, 2012 8:15 am

Circle Thomas nailed it.

by Jazzy on Sep 21, 2012 8:35 am

I'm glad Dave is starting to see that Uber is 90% publicity and 10% reality.

However, his other points are still pretty weak.

"Uber is bringing more choice to District travelers. Whether or not you use their service or not, we want to foster more options rather than fewer. We want to enable other companies to create taxi dispatch services. Linton wants that too, but making it succeed requires making the barriers to entry as low as possible, and sometimes the regulations get in the way."

The old saw about bringing more compeition is to improve the service. How is that working for telecom?

I think the major point that needs to be made is regulations have to made with the goal of improving service, not on strucutring the industry.

by charlie on Sep 21, 2012 8:36 am

Telecom? In most communities, telecom is still a monopoly, and when it's not, it's a tight oligopoly. Most Americans have 1 or maybe 2 choices for high-speed Internet. There are 4 mobile carriers and 2 of them own most of the spectrum (more now). With all of the barriers to entry of building infrastructure, the limited resource of spectrum, and more, telecom is one field that's far, far from having enough real competition.

by David Alpert on Sep 21, 2012 8:46 am

@Dave; sigh, you didn't get the joke, but then again you were't a telecom lawyer in the 90s!

constant mantra from the FCC that allowing new entrants in would improve compeition. No, it was just an excuse to build up 2 giants.

Proper regulation, as I said, needs to focus on the end-user experience.

by charlie on Sep 21, 2012 8:52 am

charlie: I actually have been paying a lot of attention to telecom since the '90s, but okay, clearly the joke didn't come through.

A lot of that was botched deregulation. With Internet, they had a decent concept going there that the companies with the wires had to offer it on equal terms to other companies (then largely DSL), but the incumbents just stonewalled, kept violating the law, and bet on the FCC not actually enforcing anything, which turned out to be accurate.

by David Alpert on Sep 21, 2012 9:03 am

@Dalpert; a little bit more complex with that. With the internet and the 96 act, FCC wanted to give up a lot of traditional regulation. The new focus was just using antitrust and competitive measures to bring in the same services.

And it worked: my phone gets landline-like speeds.

But you've got to go back to traditional regulation, which is mean, ugly, and detail oriented. It also outdates itself really quickly (like the taxi printers) and has be updated. That requires a lot of work and expertise on the part of regulator, which, as others have noted DCTC may not have.

Probably a bit unfair of me to say, "pretty weak" since I actually agree with about 70% of what you said, and I just wish you would defend the need to regulate the industry a bit stronger.

by charlie on Sep 21, 2012 9:23 am

Th DC cab system is so corrupt it's not even funny anymore.

I think this seriously overstates the case. The DCTC actually does a yeoman-like job representing its constituents. It's just that its constituents are made up almost entirely of MD residents providing taxi service at a sub- Third World level. It's kind of like a bizzaro-world DOES, but with the goal of providing employment services to non-DC residents.

by oboe on Sep 21, 2012 9:42 am

Just for clarification: DCTC isn't "rent seeking". An agency can't be a rent seeker. The existing cab companies are the rent seekers. What can be said of DCTC is that it has become subject to regulatory capture, which is a very true statement in this situation.

by TM on Sep 21, 2012 10:40 am

I've got some cabbies that live near me (in Rosslyn) and I have to tell you, they don't look like they are high on the hog.

Probably the easiest solution is to allow the Arlington cab companies to move in and operate in DC. They aren't great, and it is much harder hailing a cab in Arlington on the street, but they answer about 85% of the compaints identified by GGwers.

by charlie on Sep 21, 2012 10:47 am

I intend to use Uber exclusively. I can't stand DC cabs. They are awful and seeing how they are trying their best to cripple Uber, I am going to give Uber all my money

by mona on Sep 22, 2012 10:04 am

I've got some cabbies that live near me (in Rosslyn) and I have to tell you, they don't look like they are high on the hog.

I've got some folks living near me who are employed through DC's various jobs-programs for DC residents. They don't look like they're living high on the hog either. Of course, those people are subsidized by DC taxpayers, not folks who live in VA and MD.

by oboe on Sep 24, 2012 9:52 am

Why is it no one sees the bottom line here? ALL vehicles for hire (no matter if it's a taxi or a town car or a limo) are supposed to have a BUSINESS LICENSE issued from the city they do business in. They are also supposed to have commercial insurance, for hire plates and permitted drivers.
HOW can Uber or any company like them know if the drivers they are giving calls to are even legal?
I'd also love to know how people in DC, or anywhere Uber or apps like it are being utilized, would react if the taxi companies raised their prices by as much as 7% when it was busy and there were not enough cars on the road? That would be okay, wouldn't it? Right? Guess again.
No one in the taxi or limousine industry would argue that phone apps are new. There are many already in use that MAKE SURE they are only being utilized by LEGAL companies. My company has been using one of these systems for months.
But, we know how to get a hold of our drivers. We know all our vehicles carry proper insurance, plates and permits. We know our drivers have had drug tests, background checks and have obtained a driver permit. We had to prove it to the app company. Why should Uber be any different?
No one in the industry is afraid of Uber. We just want everyone to follow the same regulations.

by Tracie on Sep 24, 2012 12:21 pm

@ Tracie We had to prove it to the app company

What is an "app company," and why did you have to prove it to them? What makes use of apps being utilized by legal companies? I don't understand.

And also, if having a 7% surcharge on cabs at certain in-demand times of the day or night would guarantee that I'm able to find a cab when I need it, I'd gladly pay that.

by WMATARage on Sep 24, 2012 3:03 pm

The "app company" is the company that provides us with the dispatch system we use which also has a smart phone/iphone app. Exactly like Uber. You can see our vehicles closest to you and click a button to have them come to you.
We had to prove to the app company that we were a legal taxi company in our city carrying all proper business licenses, permits, insurance, etc. Would you want your wife or daughter picked up by a taxi you couldn't find later if for some reason they misplaced their purse? Would you want it to be you who had your vehicle involved in a hit and run with a taxi that couldn't be found? Fyi: I didn't make up the previous statements. It happens every day. One of the "gypsy" cabs who started their business in the city north of us tried to contact the same dispatch/app company we use. He tried to get the service to show him available in our city but was told no because he didn't have a business license here.
In our city we have a city approved $.50 surcharge on the meter between 6:00pm-6:00am. More than 50% of taxi riders gripe about this to their driver. Most taxi companies are regulated by their local government which also sets rates. This keeps pricing reasonable and doesn't allow people to make up their own rates which protects the customer. We have gypsy cabs here charging people 3 TIMES the rate of the legal cabs. But instead of people understanding, they just want it now, now, now regardless of anything else.
No one in the industry is fighting to have Uber shut down. The point is: they should be regulated just like the rest of us. Why should Uber, or others like them, be allowed to be the gypsy cab of technology?

by Tracie on Sep 24, 2012 4:28 pm

Notice how so few customers are complaining; the uproar is from Uber's competitors.

The taxi rules are ridiculous and in dire need of reform in the first place. Taxi rules benefit taxi drivers ("How will we earn a living!" they say) at the expense of the public.

by WRD on Sep 24, 2012 7:32 pm

Nice post and also here in our We provide fast & friendly the most reliable Airport taxi cab service to SJC.

by smokingrobes on Sep 25, 2012 3:48 pm

Add a Comment

Name: (will be displayed on the comments page)

Email: (must be your real address, but will be kept private)

URL: (optional, will be displayed)

You can use some HTML, like <blockquote>quoting another comment</blockquote>, <i>italics</i>, and <a href="http://url_here">hyperlinks</a>. More here.

Your comment:

By submitting a comment, you agree to abide by our comment policy.
Notify me of followup comments via email. (You can also subscribe without commenting.)
Save my name and email address on this computer so I don't have to enter it next time, and so I don't have to answer the anti-spam map challenge question in the future.