Cabulous, Uber, and San Francisco's Poor Taxi Industry Part 2, by John Han

Photo by John Han.

Comments to the previous post entitled, "Cabulous, Uber, and San Francisco's Poor Taxi Industry" has raised some very interesting and valid responses.  And I felt compelled to go ahead with Part 2 of that blog.  So here goes...

With respect to all my fellow cab drivers, I have no problem with the concept of what Uber is doing... to offer a medium through which people can order limousine services without having to call a specific company.  That is a type of centralized dispatching system in itself, only it’s for the limousine industry not the cab industry.  Cabulous is a similar type of centralized dispatching system, except it’s for the cab industry.  They are both fine concepts and I applaud the entrepreneurs who developed them.  

Whether Uber is implementing and administering its business model in compliance with state laws that regulate limousine services, I have little to say about that, as I am not an attorney or a regulator and have little knowledge about the inner workings of the company.  I would prefer to leave that up to the regulators, the attorneys, and the company’s CEO.

So why is Uber so threatening to San Francisco’s taxi industry?

First off, I doubt it’s because Uber and its customers are evil, malicious people who are resorting to breaking the law in order to get even with bad, bad cab drivers who were rude to them.  Or maybe they are, but I wouldn’t know.

I prefer to think that it may be because the City’s taxi industry, including the regulators, are to a degree, controlled by the economic and political will of the cab companies, that own most of the City’s dispatching service infrastructure.  They have successfully monopolized that infrastructure long ago.

Therefore, the cab companies’ strong and tight grip to maintain control could be doing its share to withhold the taxi industry, and its drivers, from being able to evolve to where it needs to, in order to stay competitive in a more rapidly changing world of technology.

Uber is a threat to taxi drivers, not because they are evil as many taxi drivers may presume, but because it is not beholden to the cab companies the same way taxi drivers are and it is not being controlled by them.    Uber can expand as any independently established business in America may.  Taxi drivers, generally speaking, may not.  Taxi drivers are naturally and inherently questioning if this is fair as it would not seem to be.   But that is not Uber's fault.  It is the fault of the industry's structure that has been maintained for over thirty years, which has given cab companies too much power to set the standards for everyone.  Uber is an attempt by individuals and entrepreneurs to successfully address the industry's broken system, since regulators so far have been unable to do so.  The problem is much more complex than I could address in a single blog.

Just as one small example, Uber can effectively take away customers who might normally take cabs, but otherwise could be persuaded to pay more money for limousines, if they could acquire one easily through a service like Uber.  

This is the free market and healthy competition brings out the best in competing industries.  So there is nothing illegal about that.   

The part that is troubling, and has taxi drivers very concerned, is that taxi drivers attempting to compete with this have their hands tied to a degree by their cab companies, because Uber’s service is a centralized dispatching system not limited to a single company fleet, but a universal fleet, and it may be expanding.

Taxi companies, by contrast, control the City’s dispatching system yet are not willing to pull their resources together to form a more efficient centralized dispatching system, demanding that regulators allow them to remain as they have for so many years... individually branded companies.  For those in the know, they are not, by the way, in business to provide transportation services to public passengers, yet they retain control of that aspect of the City's transportation service.  That is what is appalling. 

Therefore, calls issued through cab companies may not be issued as efficiently between passengers and cab drivers who both depend upon the cab companies as their medium.  Thus, Uber has an advantage in the means with which they may issue their calls.  It is more efficient.  And this is worrying taxi drivers.  

The City must address this issue as we are being subjected to an unfair competitive disadvantage. 

Enter Cabulous, which meanwhile is attempting to expand and impact San Francisco’s taxi industry, and may become an industry-wide medium between passengers and cab drivers in the future if it is allowed.   

The City and County of San Francisco seems to be inviting the company to enter into the fray.  One question though… does the proposal to redefine “Dispatch Service” include Cabulous?  The proposal for the new definition reads as follows.

"’Dispatch Service’ shall mean any person, business, firm, partnership, association or corporation that holds a Dispatch Service permit issued by the SFMTA, and that receives communications from the public regarding taxi service and Found Property for the purpose of forwarding such communications to drivers affiliated with a color scheme that is affiliated with the dispatch service, and shall include any owner, manager, employee, lessee, and any agent of said service.  ‘Dispatch Service’ shall not include any service through which the public is able to communicate directly with drivers, and shall not include any effort on the part of a driver to market his or her services to the public.” (Underlining mine)

Cabulous is not affiliated with a color scheme, and does enable the passenger to share their location with drivers when they’re on their way.  Would this exclude Cabulous from being considered a dispatch service by regulation, since it isn't affiliated with a color scheme and allows the public to communicate directly with drivers? 

Nonetheless, the SFMTA is endorsing the company and is encouraging people to use it.  Perhaps the key is in the phrase, "any agent".

And if I’m not mistaken, the SFMTA may be considering licensing the company, or one like it, to broker the centralized dispatching system this City needs.  That is fine.  If Cabulous can expand to the point where it could service San Francisco's entire taxi fleet, drivers will be all the better off.  

But in the meantime, it is unfortunate that the City seems so uninterested and unwilling in administering the system itself, by exercising its regulatory powers and make cab companies be the ones to provide it.  

But then again, does the City and County of San Francisco ever dare to piss off the cab companies?