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Controversial cab, ride-share apps reshape the face of transportation

Caitlin McGarry | April 2, 2013
Cities around the country are adapting to a new world in which transportation apps let you hail cabs, reserve private cars, or share rides with a few taps on your smartphone’s screen. Here's a status report from the front lines.

Last November, the three services were fined $20,000 each by the California Public Utilities Commission for operating without permits. However, after months of negotiation, the CPUC rescinded its decision and made ride-sharing legal in California, settling its case against Uber, Lyft, and SideCar.

That's not to say there aren't still complaints about the startups, most notably from cab drivers, who claim that the apps are unfair competition. But taxis will soon have a way to compete, at least in San Francisco.

The city's Municipal Transportation Agency on March 19 approved a plan to develop a taxi-dispatch app so that San Franciscans can hail a cab from their smartphones. The transit authority won't be developing the app; instead, it authorized the use of Frias Transportation Infrastructure's RideIntegrity technology to create a real-time database of cabs.

All taxi companies and drivers must participate in the new Electronic Taxi Access system. Developers can then use that database to create their own apps for the city.

"Any time that we can put more information in the hands of our customers, that can only improve service," says SFMTA spokesman Paul Rose. "We've seen the trend of ride-sharing applications throughout the country, and this would allow our taxi service to compete with those ride-sharing applications and provide much of the same service and information that they do."

To the East Coast and beyond

Like California, other states are now facing the decision of whether to crack down on transportation apps or open up the market.

SideCar cofounder Nick Allen says his company carefully examines transportation laws in cities where SideCar wants to expand, but the startup still runs into trouble.

In February, the company chose Austin, Texas, as its next market after building a customer base on the West Coast, and planned a promotion to coincide with the South by Southwest festivals.

The city of Austin had other plans. After the city passed an ordinance that would have impounded vehicles suspected of offering rides for hire, SideCar gave festival attendees free rides and paid its drivers as brand ambassadors. Then the company sued the city.

Allen says SideCar is still in talks with Austin to resolve the situation.

"Transportation really hasn't seen a lot of innovation. This is all very new," Allen says. "Politicians and regulators are well intentioned to protect the public [out of] safety and fairness. They try to apply existing regulatory code to this new medium, and it doesn't apply. The regulation has to catch up to the innovation."

How you define it

The heart of the matter is the definition of transportation service. Taxi-dispatch and black-car apps let you hail a car and typically set a base rate plus mileage, just as a traditional cab company does.


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