In California, They're Not Taxis, They're "Transportation Network Companies"

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California is considering a new regulatory approach to deal with—not ban—taxi industry disruptors like Uber and Lyft but established taxi companies are crying foul.

The smartphone-based ride sharing services either dispatch regular cabs in new ways or facilitate private drivers giving rides to strangers and usually charging less than a taxi would -- a business model not beloved by taxi companies. Los Angeles had listened to them and issued a cease-and-desist to ride sharing companies. But that might be rendered moot by a new statewide plan. 

NPR is reporting that the California Public Utilities Commission "recently proposed a set of rules for ride share companies — insurance requirements, driver background checks, drug tests. It also puts all of the companies under a new legal label: Transportation Network Companies, or TNCs — not taxis." 

Taxi companies don't like that either. "You'd think if it looks like a duck and walks like a duck, it's probably a duck," William Rouse, general manager of Los Angeles Yellow Cab told NPR. "The PUC thinks it's probably a giraffe. I don't know."

He added: "It's eating into our business. They're providing essentially the same service that we are without complying with all of the regulations that we have to comply with."

Dodging emissions standards and fare limits give the app companies an unfair advantage, he also argues.

The proposed regulations would place some compliance burdens on the new companies, but not the same ones taxis face. The rules still have to be approved next month, but ride sharing companies see it as a victory that a new category of transportation company is being created for them. California has a history in implementing regulations that are replicated elsewhere later.  

From NPR: John Zimmer is one of the co-founders of Lyft. He says that the PUC has set a precedent that others can follow nationally and he thinks that they will. "I think the tides are turning. I think that people are realizing that we can improve safety for transportation, we can improve affordability for transportation, we can improve efficiency in transportation, and that's a good thing," Zimmer says.

App companies have been battling for the right to give rides in most cities they enter. Travis Kalanick of Uber famously defied and then triumphed over the Washington, D.C. regulations that outlawed his company -- in large part because he won in the court of public opinion. D.C. cabs were seen as so inefficient and unpopular Uber was considered a force for positive change by many cab riders, even if it cost three to five times more per ride. (Kalanick even called the regulations draconian and inane in one public meeting.) Since then, D.C. has been issuing mandates to conventional taxi companies to upgrade and improve. Just this week many D.C. drivers asked for more time to comply with a rule that requires credit card readers in all cars. Uber requires riders to pay through credit card accounts on smartphones. 

New York allowed the apps for some kinds of cabs and not others, then forced them to integrate with the yellow cab meter system which has limited the apps functionality and attractiveness to some drivers and users. 

Meanwhile, a Colorado court has suggested rules that amount to an all-out ban on Uber's business model, Portland would have to actively amend laws to permit the new companies, and Seattle is delaying making a decision—even as taxis literally circle City Hall in protest of demanding a crackdown on the new companies. 

These are the mile markers along the rocky road to an app-friendly taxi industry. 

Among them the D.C. about-face and embrace of Uber is the most permanent and settled. The new California approach to regulating ride share upstarts could be the most sweeping, both point toward a new era of taxis, one much more friendly to the new technology-based companies. 

Listen to the full NPR story here in which you can hear a man dressed and talking like Batman play an app-dispatched cab driver.