Really Ride Sharing

TPP-2014-11-Really Ride SharingBy Josh Kavanagh, CAPP

Transportation options are expanding rapidly in communities across the United States, and that’s a good thing; expanding choice is good for consumers and can spur innovation and economic development. However, when those choices come in the form of disruptive technologies and business models, they create unique challenges. With no history to serve as reference, consumers may not understand what they’re buying and local leaders lack a regulatory template to ensure that the public interest is protected.

Among the most dynamic cases of innovation outpacing consumer information and regulation is the rapid expansion of transportation network companies (TNCs) that include Uber and Lyft. Describing themselves as “ridesharing” services, these companies mounted a challenge to established taxi and livery services in large and mid-size cities nationwide.

Consumers have, by and large, welcomed these new entrants enthusiastically, viewing them as an antidote to the perceived high cost and complacency of the taxi and livery industry. That industry, which is heavily regulated, was quick to cry foul, citing an uneven playing field and calling for regulation of the TNCs. Similarly, consumer and social justice advocates raised questions about everything from safety, driver screening, and insurance coverage, to the risk of inequities in service to ethnic minorities, low-income communities, and physically disabled riders.

Recognizing the need to strike a balance between supporting innovation, establishing a level playing field for business, and protecting consumers, city councils, state legislatures, and regulatory agencies leapt into the fray and attempted to create a regulatory framework for TNCs. Unfortunately, with most jurisdictions acting independently and without a regulatory template for these new companies, the results have been a patchwork quilt of regulation that places a burden on TNCs, which operate nationally, and often comes with unintended consequences for consumers, public agencies, and existing industry.

Need to Know Information

The nonprofit Association for Commuter Transportation (ACT), representing ridesharing and transportation demand management (TDM) professionals, recently highlighted the unintended consequences of this effort on its industry with the publication “‘Ridesharing’: What Legislators and Regulators Need to Know.” It focuses on the TNCs’ self-description of their operations as ridesharing and the implications when local leaders regulate ridesharing without realizing the difference between for-profit driving services such as Uber and Lyft, and traditional, noncommercial ridesharing.

California and Arizona, for example, recently drafted legislation and policies meant to regulate TNCs such as Uber and Lyft, but definitional ambiguity almost led to the unintended regulation of those engaged in traditional carpooling and vanpooling. ACT argues that well-intentioned efforts to address policy issues raised by TNCs that fail to distinguish between TNCs and traditional, non-commercial ridesharing could place extraordinary burdens on carpoolers and vanpoolers. Examples of potential unintended consequences could include requiring commercial insurance, commercial driver licenses, background checks, and registration for acts as simple as two colleagues riding together in an employer-coordinated carpool program.

In attempting to bring definition to the services provided by TNCs, some jurisdictions and agencies became overly focused on the technology used to connect driver and rider. For example, in some cases, Arizona would have even required carpoolers and vanpoolers who were matched with ridematching software to register with the department of motor vehicles, among other things.

We at ACT say the focus on technology misses the point. The unique defining attribute of TNCs is not how drivers and riders are connected, but that drivers for TNCs operate like businesses—with a profit motive—unlike carpool or vanpool drivers who do not profit.

Traditional ridesharing, carpooling, and vanpooling, are not for-hire commercial services. Riders do not hail a carpool or a vanpool, and drivers do not profit or collect fares as they do with a taxi or TNC. Traditional ridesharing involves people pooling from a common origin, such as a residence or park-and-ride lot, or to a common destination, such as an employer or business park. In some cases, an arrangement is made that allows carpool or vanpool drivers to recoup the cost of the commute or receive some de minimus consideration, but the pool driver is simply a volunteer commuter whose goal is getting to the same destination and home again, not to profit as a commercial driver.

A Good Example
California’s Public Utility Commission made one of the more effective attempts to bring reasonable regulation to this new market while limiting unintended consequences. The state’s findings and California Assembly Bill 2293 represent current best practices and are an excellent point of departure for leaders in other jurisdictions attempting to navigate this new space. Copies are linked online in the advocacy section of the ACT website, ACTweb.org.

Because all parties benefit from clear and standard terminology, ACT released a matrix that describes the various categories of personal mobility options, including standard names, definitions, methodologies, public benefits, and rider/driver motivations (see p. 42–43). This quick reference guide is a must-have tool for local leaders looking to make their intentions clear, whether in public statements or legislation. It is also a critical tool for transportation industry and media professionals seeking to help the public navigate new options and follow the regulatory debate.

At the end of the day, consumers have made it clear that TNCs such as Uber and Lyft meet a need in the marketplace and that more choice is arguably a good thing. Local leaders have the opportunity to bring clarity to and even stimulate that marketplace while protecting consumer interests through thoughtful regulation, and that starts with a complete understanding of existing personal mobility options and with standard terms and definitions.

CAPP, is director of transportation services at the University of Washington and president of the Association for Commuter Transportation (ACT). He can be reached at joshkav@uw.edu or 206.685.1567.

TPP-2014-11-Really Ride Sharing