Sep 09, 2015
With an eye on future development, it becomes increasingly important to view our streets as a public utility, as much as our electricity, sewage and communication systems. The subways, buses, personal autos, trucks, taxis and now on-demand ridesharing vehicles together form a transportation system for moving people and goods from place to place. Particularly in crowded urban areas, getting the right mix of these various options can make the difference between whether transportation is efficient and enviro-friendly or clogged up by congestion.
Despite the controversies that mar its still-short legacy, the Uber app could end up being a big part of the solution toward modernizing transportation. Stepping back for a second, can we think about what kind of transportation system makes sense, and what would be in the public interest?
Uber's CEO Travis Kalanick and what he calls Big Taxi have been at loggerheads, with battle lines drawn and the public and politicians taking sides. Yet the likelihood is that over time taxis and ridesharing are going to merge until they are substantially the same. Already taxi companies are incorporating their own apps into their service. But we can learn some valuable lessons from the past. The history of commercial passenger transport gives us a clue as to how this is likely to play out.
The commercial transport of passengers goes back centuries. Horse-drawn coaches-for-hire first appeared on the streets of Paris and London in the early 17th century. These independent operators were unregulated and freewheeling, and proliferation and chaos soon ensued. King Charles I of England finally ordered in 1635 that all the vehicles on the city's streets had to be licensed by the state "to restrain the multitude and promiscuous use of coaches."
Centuries later in the United States, the Great Depression threw millions out of work, some of whom owned a car. Suddenly the number of cars-for-hire exploded, clogging the streets. Uninsured drivers regularly got into accidents that injured passengers, and unsavory drivers engaged in criminal activities.
Things got so bad that in 1933 a U.S. Department of Transportation official wrote "the excess supply of taxis led to fare wars, extortion, and a lack of insurance and financial responsibility among operators and drivers. Public officials and the press in cities across the country cried out for public control over the taxi industry."
The policy response was that most major cities instituted regulations over licenses, fares, insurance, safety, background checks and other parts of the rapidly evolving taxi service. Crucially, they also imposed limits on the number of taxis permitted within a city. Indeed, this is where today's much-reviled medallion system came from.
Medallions and other regulations capping the number of vehicles are often derided as Big Taxi protectionism, and there is a degree of truth to that. But this history shows that many of these regulations were enacted for good reasons. Certainly careful study should be conducted to figure out the causes of the recent surge in traffic congestion in San Francisco, New York City and elsewhere, and how much ride-sharing contributes to it or how much is the expected result of a growing economy. But looking at the history, often what has driven regulatory interventions is the proliferation and resulting chaos of having too many vehicles on the road. With ridesharing's popularity, it's not hard to imagine how this still relatively new service could eventually result in city after city returning to the "good ol' days" of too many drivers, not enough safety, and inadequate consumer protection.
How happy will customers be if they can hail a ride right away, but then are stuck in traffic for 30 minutes longer because the streets are jam-packed with congestion? Anyone who has visited Shanghai or Beijing, and witnessed the clogged roads and highways and toxic smog that prevents you from seeing buildings a couple of blocks away, knows that there can be too much of a good thing. Might we reach a saturation point, when limiting the number of liveries on the public roads fulfills other important policy goals, such as cutting down on traffic, air pollution and carbon emissions, as well as safety?
In many ways, this discussion is another version of the age-old argument about the public commons vs. individual freedom. The history of livery services shows that it is important to regard our streets as a public utility, with the subways, buses, taxis and now ridesharing vehicles together comprising a transportation system that the public depends on. Particularly in dense urban spaces, the different components of the transportation system must coordinate. A balance of "competing conveniences" has to be weighed, with the public good kept at the forefront of these discussions instead of which companies win in the battle between Uber, Lyft and Big Taxi.
Unquestionably there is room for ridesharing in that big picture. The Uber technology shows real promise. Finland has launched an Uber-like app for public transportation which, instead of dispatching individual cars, pools riders on a public mini-bus, with each customized route being calculated in real-time. Such efforts to incorporate ride-sharing technology into public transit are in their infancy, and it remains to be seen if they will be scalable. Though with government's control of the purse strings, it could subsidize such efforts if it makes sense.
Travis Kalanick also has launched UberPool, which is experimenting in San Francisco with a new ride option called Smart Routes. Drivers are picking up and dropping off multiple passengers at the same time along a specific route, similar to traditional buses that follow a predetermined path between two points. This service shows potential, but there again we have think through the impact on the overall transportation grid. Otherwise UberPool could undermine the public bus system. If ridesharing companies begin offering vans that sprint up and down the busiest and most profitable routes, such cherry picking would destroy revenue for public transit (I will have more to say about this in a future post).
Interestingly, policy makers actually could use the Uber technology to modernize the transportation system. Since it is now technically possible to track any kind of vehicle using GPS, a city could decide how many vehicles of whatever type it can accommodate within its downtown core and neighborhoods. When it reaches that limit, no more of that type of vehicle would be allowed; or "overflow vehicles" could be required to pay a higher congestion fee, kind of a version of London's congestion pricing. An algorithmic limit on the number of drivers during congestion times could be a win-win approach to solving this problem.
But this would be much easier to figure out if Uber and other ridesharing companies were more cooperative and willing to share their data, so that its drivers can be tracked. Uber could be a lot more helpful in developing a modern transportation system, if it would drop its "us against the world" posturing.
It's important to get these details right, and find the sweet spot between competing demands. In short, the Uber technology could be used to get rid of the unpopular medallion system, and replace it with a technology-driven 21st century solution for urban transportation that balances the needs of customers, the public and the different commercial sectors and stakeholders. That's the way to the future.
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