The D.C. Taxicab Commission has a message for drivers using the new ridesharing mobile app SideCar: they are breaking the law.

New Yorkers will soon be able to lift their smartphones instead of their arms when they want to hail a yellow cab.

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.

Listen to a conversation about why NYC Taxi innovations so often result in litigation.

The latest effort to reform and remake New York City's taxi industry has met a similar roadblock as previous efforts: a lawsuit.  Livery cab drivers have filed suit to block a rule change that was set to go into effect Friday permitting yellow cabs to accept passengers through smartphone apps.

But city officials say they're reviewing apps as planned and hope to have the system up and running soon.

In New York, yellow cabs have the right to pick up passengers who hail them on the street, but can't be dispatched by phone. Livery cabs are a different category of taxi that can only pick up passengers who call ahead to pre-arrange a pick up.

Taxi apps like Uber, HailO, FlyWheel and ZabKab allow passengers to see where they are on a map and where nearby cabs are, then with a few taps on a touchscreen, hail a cab to come pick them up. 

If the city's 13,237 yellow cabs are allowed to pre-arrange pickups through apps like that, it amounts to a violation of Taxi and Limousine Commission regulations that distinguish yellow medallion cabs from livery cabs, the lawsuit filed Thursday alleges. (Lawsuit is here)

The spokesperson said the apps could go live after March 1 when a contract expires with the companies that provide the in-cab credit card processing and other technology--a suite of services known in the taxi industry as TPEP for Taxicab Passenger Enhancements Project. The TPEP contract would prohibit payment through a third parties, like the smartphone apps. That contract was set to expire today, but has been extended to March 1.

The TLC says four smartphone app companies have already submitted apps for approval and are being reviewed for features like integration with the meter and usability by drivers so they aren't dangerously distracted by their phones while on the road.

So called e-hail apps can make finding a cab easier and driving one more profitable, according to Anil Yazici, a Research Associate at the University Transportation Research Center. "This will bring some efficiency to the search process," he says. 

Yellow cabs in New York spend 40 percent of their time empty looking for fares, especially during off-hours and outside the city center. Yazici says apps "won't eliminate empty trips, that's for sure. But surely it will reduce the empty percentages."

It could also reduce business to livery cabs. In the past just about every change in taxi rules that could cut into the business of one category of cab has resulted in court battles. Earlier this year, Mayor Michael Bloomberg's plan was blocked to add a new category of outer borough "green" cabs that would have a meter and be allowed to pick up street hails outside Manhattan's central business district. (Ruling) Another plan to convert all yellow cabs to a single new car model known as the Taxi of Tomorrow is also facing a court challenge.

The latest legal challenge against yellow cab e-hail apps goes to court on February 28th.

NYC yellow cabs are a $2.5 billion industry and carry over 500,000 passengers a day. 

(photo by bclinesmith via flickr)

(Isabel Angell -- San Francisco, KALW) The e-hail concept might have just cleared legal hurdles in New York and D.C., but in San Francisco, it’s faced heated opposition from taxi drivers who say they’re being cheated out of fares to city officials worried about regulations and safety.

Meanwhile, hailing a taxi in San Francisco can be nearly impossible if you’re not downtown. Calling ahead isn’t a guarantee either – often, the cab is late and sometimes it never comes. Of course, there’s an app for that, several actually. The most prominent one, Uber uses GPS to match town cars and taxi cabs with people who need rides. The app figures out where you are, shows the cars near you, and sends the first free one over. You pay with a credit card on file, and the charge includes a tip.

Since 2010, the company has launched its service in 23 cities around the world. It contracts with car companies and individual drivers, and gives them free iPhones to run its software. Because Uber doesn’t go through traditional licensing channels, it’s running into trouble.

An Uber dilemma

I stood on the corner of 48th and Cabrillo, and with no cab in sight I opened the Uber app on my phone. It was eight minutes from the time I pulled out my phone to the time my Uber car showed up. Half an hour later, I arrived at the 16th and Mission Bart station in style – $50 worth of style, actually. I got the email with the credit card charge, a few minutes later.

Now, I did take a town car, instead of the cheaper yellow cab option. It was the closest car when I requested my ride. And we did hit some rush hour traffic. Still, that’s a pretty big chunk of change for a drive through the city, but maybe the convenience is worth it. Uber’s tens of thousands of San Francisco customers seem to think so. I decided to repeat my ride – same time, same corner – but this time, just calling a regular cab.

And instead of seeing a car rushing to pick me up, I got stuck on hold.

[Related Story: Uber Now Legal in D.C.]

Two years ago, Ilya Abyzov found himself in a very similar situation to mine. He had just moved to San Francisco from New York. It was late.

“And I found myself sort of stumbling out of a karaoke place at 2 am in Japantown and wanting to go home to the Mission, and my prospects were either to walk for half an hour or to seek alternatives, because there were no taxi cabs around,” Abyxov remembers.

Uber got him home that night.

“I thought it was amazing,” he says.

So amazing that he applied for a job with the company, and now is the general manager of Uber’s San Francisco operations. Clearly, Abyzov is a fan, but he says Uber fills a real need in the city.

“There’s a lot of excess demand for transportation that cabs can’t fulfill,” says Abyzov.

In most cities, the taxi industry is heavily regulated – it’s considered part of the transportation network. San Francisco is no exception. Part of the reason Uber is so efficient is that it sets up shop first, and asks official permission later, essentially skirting a lot of those regulations. The company has been expanding rapidly, though, and it recently hit legal walls in several cities. Here in SF, two local taxi drivers are suing Uber. Last month, the California Public Utilities Commission slapped Uber with a $20,000 fine, calling its rule-bending “a matter of public safety.”

City officials are concerned about safety as well. Christiane Hayashi is in charge of the taxi division at San Francisco’s Municipal Transportation Agency (MTA).

“We make sure that a San Francisco taxi driver has shown us a ten-year driving history, as well as a criminal background check to make sure that there is no crime in their background that would [make] them dangerous when they are alone in a vehicle with somebody,” explains Hayashi.

Uber says it’s just a middleman: a tech company that helps people find cars, but not a car service itself. Still, Ilya Abyzov says the startup does take safety seriously – and that it verifies whether all its drivers are licensed and have insurance.

“We only work with people who satisfy those conditions, we gather and track all those documents, and we verify their compliance,” says Abyzov. “So I think the biggest misconception about Uber is that we’re going rogue, but really we’re working with entirely regulated entities.”

MTA’s Hayashi says she doesn’t buy it.

While it’s not yet clear how the legal cases will shake out, the idea of Uber – or something like it – seems to have taken hold.

San Francisco already has an app that helps people find available parking, using data provided by the city. MTA’s Christiane Hayashi says it’s a model San Francisco is embracing: “I think that’s the next step in making this technology really effective, to get all the city’s taxis in one sort of data stream that then private application developers can use to make taxi service more reliable.”

In other words, to make all the city’s cab information available to companies like Uber, but to keep control over what that information is, and how it’s used.

[Related Story: Data Art -- NY Transit System as  a Lite-Brite City Map]

Steve Webb is a taxi driver in San Francisco. He’s been driving his cab for 25 years. It’s how he put his daughter through college. He shares some of the city’s worries about Uber’s safety, but he says his biggest problem with Uber is something he thinks will bring them down: the price.

“I’ve had numerous people tell me they were standing on a corner, they were very very cold, there was four of them, and Uber charged them sixty dollars for a $12 cab ride.”

That sounded familiar. I asked Webb what he thought of my $50 ride from Ocean Beach to the Mission. He guessed that would have been a $14 meter.

I did my own calculations based on the cab fares listed on the MTA website. Taking traffic into account, it looks like that cab ride would have cost me more like $20 or $25. Unfortunately, I never got to test either calculation with a real ride, because the cab I called from Outer Richmond never showed up. Instead of forking over another $50 for an Uber car, this time, I took the bus.

(photo by David Carmelo via flickr)

(Washington, D.C. -- WAMU) The battle between Uber the taxi hailing app and the District of Columbia is over.

After clashing for months over proposed regulations that Uber's CEO once claimed would cripple his business, the D.C. Council voted Tuesday to approve legislation creating a sedan class of vehicles-for-hire – separate from taxis – that will allow Uber to charge its customers fares based on distance and time as "digital dispatch" vehicles.

D.C. had been one of the more drawn out and contentious efforts to expand for Uber, and that says a lot. Uber has taken a confrontational approach to growing it's business from it's start in San Francisco a few years ago. Chicago sued the company for violating local regulations on pricing disclosure and safety. San Francisco has fined the company for breaking regulations on driver insurance. This summer Boston issued a cease and desist order to Uber.  New York chased the company out of it's iconic yellow cabs saying it violated safety regulations among others. Taxi unions in several cities have also filed suit against the upstart tech company.

The D.C. ruling isn't likely a harbinger of amity between those other cities and Uber. The D.C. council created a separate class of cab that can use Uber. Official metered city taxi cab drivers still can't use the app to snag passengers. New York, for example, already has such a category for non-metered livery cars that are permitted to use Uber all they want.

The ruling is, however, is certain to embolden Uber's confrontational growth strategy.

“Today was a fantastic victory for Uber but also for innovation, for our consumers here, and the drivers that partner with us,” said Rachel Holt, Uber’s general manager in Washington, D.C.  She thanked customers for helping convince the council as well as the District’s taxi cab commissioner to back away from more stringent regulations CEO Travis Kalanick once described as “from the draconian to the inane.”

“It's not about anything we did or won. I think what really won was that the fact that we have a passionate consumer base here,” she said. Over the past several months Uber customers flooded council members with complaints about proposals that threatened the company’s business model.

Uber’s black sedans are not hailed on the street. Instead, customers use Uber's smart phone app to order a car to their location using the phone’s GPS and pay with a registered credit card number.

The new legislation requires greater pricing transparency.

(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.

(photo by Martin DiCaro)

(Washington, D.C. -- WAMU) A pitted battle in Washington, D.C. over taxi technology, rights and safeguards turned testy Monday, with hints at compromise as well.

The chief executive of a rising, internet-based sedan-for-hire service accused D.C. regulators of pushing “crippling requirements” that threaten to drive its partners out of business, during a day-long hearing before a city council panel.

Uber CEO Travis Kalanick said proposed regulations range from “the draconian to the inane,” pointing to one rule that would require sedan companies with which it partners to possess fleets of at least 20 vehicles.

Uber allows customers to order rides directly from its smart phone app, a work around to regulations common in many cities that license and regulate which cabs can be "street hailed." In D.C. "black cars" may not be hailed on the street, but with Uber they can be summoned through a few clicks. Passengers are billed to their credit cards and receipts are emailed. Uber charges a base fare of $7 plus time and distance; drivers keep 80 percent of the total fare.

Kalanick criticized a slew of proposed regulations, saying “grey areas” could lead to interpretations that would harm his business. The CEO’s testimony reflected his faith in the marketplace: if Uber drivers don’t do their jobs well there will not be demand for his product.

“It sounds like hyperbole but so many of our customers literally feel like we have changed their lives,” Kalanick testified. “We hear from families that chose to sell their second car, couples who can finally go on date night in hard-to-reach areas, and from women who feel totally comfortable heading out of their office late at night because they have a photo, license plate and phone number of their driver.”

Monday’s testimony marked the latest move by Uber and district lawmakers to find common ground as the D.C. Taxicab Commission (DCTC) attempts to protect the city’s own regulated taxi industry from a completely unregulated enterprise.

Uber announced it would equip yellow cabs in New York City with the service pushing the NYC Taxi and Limousine Commission to remind its drivers they cannot accept prearranged rides, nor use mobile devices while driving, pending a review of regulations. Uber plans to find a way to expand in New York City.

D.C. Taxicab Commissioner Ronald Linton has called Uber “arrogant.”

“The commission is in the process of adopting a regulation to add a new class of public vehicle-for-hire known as the sedan class for consideration and approval. This new class of service shall provide for rules to provide minimal regulatory requirements,” Linton testified on Monday. “I would also emphasize that this is a proposed regulation.”

D.C. Councilmember Mary Cheh, who chaired the Environment, Public Works, and Transportation Committee hearing, sought a conciliatory tone during Kalanick’s testimony, but the CEO refuted her claim that the district is attempting to work with Uber, not against it.

Cheh conceded that some of the proposed regulations may not make a lot of sense and suggested that Kalanick might be misreading the proposal to require sedan companies own at least 20 vehicles.

“The attorney general has read those regulations… you don’t have to have 20 taxis. So I’m not defending that. I’m just saying the rhetoric about the [regulations] being designed to put companies out of business or eliminate them is a little over the top and not correct,” Cheh said.

“I’ve read the regulations,” responded Kalanick. “And we’ve had my attorneys read them and I’d say at best it’s a grey area,” referring to confusion about rules governing the differences between taxis and sedans.

“That may be true,” Cheh said. “But I just wanted to make a statement… that these regulations are not law. I don’t want the rhetoric of the taxi commission trying to put people out of business to take hold.”

“But that is the reality of it,” Kalanick responded, adding that the DCTC “has been on the attack since the moment we got here.”

Proposed restrictions on makes and models and requirements that sedans only be painted by the manufacturers would add unnecessary layers of regulations that serve no purpose other than to make doing business in the district difficult, Kalanick said.

Uber sedan driver Saad Hamadi, who owns a single town car, testified that fleet requirements would drive him out of business. “The requirement for most cars to be 2009 and newer would cause me hardship because it is a 2008 model. It’s clean, looks nice inside and out, and my customers have never complained about its age.”

Despite the testy exchanges, Councilmember Cheh sought to emphasize that the district wants to welcome innovative companies as the landscape of vehicle-for-hire services changes. Earlier this year a survey posted to Cheh’s website revealed deep dissatisfaction with D.C. taxis among the public, a reason Uber supporters say the sedan service should be left alone: if the city-licensed taxis were more dependable Uber sedans wouldn’t be so popular.

Uber’s flexible pricing policy is considered by regulators to be unfair to the city’s taxicab industry because it allows Uber drivers to raise their prices during periods of high demand while traditional taxis charge a set minimum fare plus mileage and time measured by dashboard meters.

A traditional Washington, D.C taxi. (Photo CC by Flickr user Matt Peoples)

Elected officials in Washington, D.C. are having a tough time trying to regulate an upstart taxi company. The Uber sedan car service escaped the District's first official attempt to bring the  internet-based company  limiting city rules last week when Council member Mary Cheh dropped a proposal to establish a minimum fare for the luxury alternative to traditional cabs. Still, Uber's independence may not last.

(Listen to the WAMU radio story here)

Traditional Washington, D.C taxis are metered and charge a fee based on distance regulated by the local government. Livery limousine services in D.C. must agree on a fixed price before they pick up a passenger. (See regulations here.) Uber cars are in between. They are luxury sedans that charge a fluctuating, and unregulated rate calculated by a GPS meter held by the driver. The rate depends on the time of day and the number of available cars, passengers pay at the end of the ride, so ... is it a taxi or a black car, or something else? And how to regulate it, if at all?

That freedom to charge anything irks some elected officials like Cheh who plans to revive her proposal in the fall. The chairman of the D.C. Taxicab Commission says Uber will not be allowed to operate unregulated in the city, especially after the company introduces a cheaper, hybrid car service at an unknown date. It's a fight the Washington Post characterized as a clash of philosophies between Silicon Valley and Washington.

More broadly, the policy fight is a testing ground that might serve up important data on how much regulation is right for taxis. Will more competition and new tiers of taxis raise or lower the average fare and average customer satisfaction city wide? Will a tech-based upstart shake up the phone and street hail-based system that has reigned for decades? And is it fair for a regulated taxi to compete with an unregulated one if their price scales overlap? All of these questions are compounded because Uber and D.C. government just don't get along.

Commission Chairman Ron Linton says Uber is an "arrogant" company that "believes it should have total freedom from any government interest." Linton previously made statements hinting that he wanted to shut down Uber all together.

Uber is growing in popularity in D.C., as it has in other cities, because it's use of technology makes it easier to reserve or hail a car. Customers use Uber's smartphone app and make payments digitally with a credit card. A receipt is emailed after they reach their destinations.

The sedans are more comfortable and modern than many city taxicabs. They are also significantly more expensive, with fares climbing to $20 or more for short trips, sometimes as much as 6.5 times the metered rate. But enough working professionals are willing to pay.

"When I'm taking Uber, I want to be in comfort or I want to know it will be there when the bars are closing, says Tim Shea, 25, a project manager at George Washington University, who says he uses the car service frequently despite its high price. "They are in a completely different class of vehicle, in my opinion."

A proposal earlier this year to upgrade the District's 6,500 taxis angered taxi drivers.

Council member Cheh's proposal attempted to establish a sedan classification for taxis under would force Uber to offer a minimum $15 fare and a require Uber to provide an estimated total fare before a transaction is completed, she says. A $15 minimum would price out Uber for many short trips, giving a regulated monopoly to metered taxis. A proposal to allow street hails of livery cabs in New York drew intense criticism from existing metered drivers.

Uber did not return multiple emails seeking comment.

"I thought we were all on board," says Cheh. "It would have given Uber its legality, which was crucially important."

Both she and Chairman Linton insist they are attempting to protect consumers, not only the city's regulated taxicab industry.

"It is not necessarily the fare that has to be regulated," Linton says. "What has to be regulated is the protection of all the parties involved. There has to be recourse to resolve disagreements."

Uber is currently relieved of any liability between the driver and the passenger under the contract it signs with drivers, Linton says.

"We find that it is in the best interest of all the parties if the driver is licensed and knows all the rules he or she has to adhere to," he says.

Customers have complained to the Taxicab Commission about exorbitant fares after receiving receipts showing they were charged significantly more than they thought they agreed to pay. The confusion over fares stems from Uber's use of market-demand, or surge, pricing and hand-held meters. The commission was unable to pursue the complaints because Uber was unregulated.

A $5 ride in a traditional metered cab can cost $10 or even $20 or more with Uber depending at bar closing time, or from Union Station on a rainy night.

But Shea says the company has improved its system of notifying customers when fares may double or triple during peak demand.

"When Uber is in surge pricing there is a little logo in the corner that says 'surge' and when you click 'request a car' a big screen pops up to notify of the higher fare," Shea says. "It will show a chart that says if the normal fare is $18, it will be $36."

Uber's flexible pricing policy is considered by regulators to be unfair to the city's taxicab industry, whose fleet charges a set minimum fare plus mileage and time measured by dashboard meters.

"That's why I want to hold a hearing," says Cheh. "What demarcates taxis from the Uber service? Then we shouldn't regulate the taxis, either, and let that be a free-for-all."

While the controversy over Uber's sedan service festers until the D.C. Council returns from recess this fall, Uber is preparing to launch a new product that promises to invite another confrontation with regulators: an inexpensive service using hybrid-electric cars. The service has started in San Francisco and New York.

It's unclear if an opening for such service will be available. Chairman Linton is not granting additional taxicab licenses, and he vows that Uber will not be able to become a "predator" by running unregulated hybrid vehicles in the city that charge very low fares to undermine the city's regulated taxicab fleet. "This is a public policy issue," he says. "The community has to decide through its elected representatives if they want to allow a business operation that can change its prices any time it wants to, and you never know what you are going to pay."

As far as Tim Shea is concerned, the marketplace is working and Uber should be left alone. The more competition with city cabs, the better. "Let Uber bring in the hybrids, and I think you would see very quickly taxicab drivers learning to provide what people want," he says.