Taxi Hail App Leaves New York City Yellow Cabs in its Rear View Mirror

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(Photo by Caitlyn Kim)

In a bitter blog post, the head of a taxi-hail smart phone app said his company was pulling the app out of New York City yellow cabs -- one month after launching.

Travis Kalanick, the CEO of Uber, said bureaucracy had prevented his app from gaining a foothold in the city's taxi fleet.

"We did the best we could to get more yellows on the road but New York’s TLC (Taxi and Limousine Commission) put up obstacles and roadblocks in order to squash the effort around e-hail," Kalanick writes.

Uber allows ride-seeking passengers to hail available cabbies with their smartphones. But the app got a chilly reception when it entered the New York market in September. Only 160 cabbies participated in the UberTAXI pilot -- a fraction of the city's 13,000 yellow cab fleet.

The TLC said it was restricting the use of electronic hail apps due to "current contractual agreements between the TLC and payment processors." A passenger using the smartphone app pays its fare to Uber. But the TLC has existing -- and exclusive -- contracts with two companies (Verifone and CMC) for payment service. The agency says until those contracts expire next year, it can't allow any other company to process fares.

And another obstacle: the TLC also reminded cabbies last month that New York law forbids the use of electronic devices while driving.

While some cities (most notably Boston and San Francisco) are Uber-friendly, the app has met with resistance in other places. The company has been battling the Washington D.C. city council over regulations, and it's being sued in Chicago over its practice of automatically charging a 20 percent gratuity.

"We’ll bite our tongues and keep our frustration here to ourselves," Kalanick writes, not entirely succeeding. "In the meantime you can try UberTAXI in more innovation-friendly cities."

But the taxi app could one day return to New York. TLC commissioner David Yassky said the agency "is moving toward rule changes that will open the market to app developers and other innovators. Those changes cannot legally take place until our existing exclusive contracts expire in February. We are committed to making it as easy as possible to get a safe, legal ride in a New York City taxi, and are excited to see how emerging technology can improve that process."

That rule change could be introduced at a TLC meeting next month.

Uber's car service hail apps -- UberX and Uber Black -- continue to operate in New York.