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FTC Sticks Up for Taxi Apps in Colorado

Friday, March 08, 2013 - 01:11 PM

Taxi hailing apps may have a new ally. Amidst the national shake-up of the taxi cab industry, the Federal Trade Commission took the unusual step on Thursday of issuing written comments against a Colorado taxi regulation, and in effect, supporting smartphone applications for arranging taxi pickups, such as Uber and Hailo. The FTC said the proposed regulations "may significantly impair competition."

After the mobile app Uber, which allows its customers to hail a cab by showing drivers their location, launched in Denver last summer, the Colorado Public Utilities Commission proposed new rules for car services. Under the changes, car services would have to prearrange the price they charge passengers for every ride. Uber currently charges based on trip distance, and prices can fluctuate based on time of day and levels of passenger demand, a feature that has caused price shock to passengers when they learn how much they pay after the fact. Uber says this pricing method encourages more for-hire vehicles to stay on the roads when demand is spiking.

Under the proposed regulations, Colorado car services would also not be allowed offer service within 200 feet of taxi stands, airport pick-ups, restaurants, hotels--pretty much anywhere a taxi or private car service normally look for customers. Both of the proposals would amount to a significant competitive edge for the traditional taxi companies in the area over the more expensive car services category that include limousine rentals.

In its comments, the FTC addressed each of the proposed Colorado rules directly. "Demand-based pricing can be more responsive to consumer preferences than some traditional flat-rate models," and in regard to the 200-foot rule, the “CPUC should avoid unnecessarily restricting the ways that consumers can be picked up by passenger vehicle transportation services.”

This broad phrasing is being hailed as a victory by the e-hailing app makers. The FTC's comments are somewhat unusual in that they target a particular industry in a specific region of the country. But, taxi and limousine companies and state and local governments are likely to keep a close eye on what transpires in Colorado. Uber and other apps like it have caused legal battles in other markets, such as Washington, D.C., Chicago, San Francisco, Boston and New York City.

Here's the FTC letter to the Colorado Public Utilities Commission, and the official FTC release.

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