Why UberCab is in trouble. This is the webpage of the S.F. taxi cartel | Hacker News Reader

Why UberCab is in trouble. This is the webpage of the S.F. taxi cartel

medallionholders.com

47 pointsuvdiv58 comments

So I can understand the argument for taxi regulation and prohibiting unlicensed taxis: when I hail a taxi for a 5 minutes drive, I don't want to expend resources looking at competitors, checking to make sure the meter is legit, checking proof of insurance, etc. Since most people want the same thing out of a taxi (as opposed to, say, buying a car), it makes sense for a centralized government agency to do some regulating.

But what is the rationale for limiting the number of medallions? Why not just allow anyone who wants to become licensed to do so, while charging a fee which covers the cost of the licencing process?

The OP's article lists the obvious dangers of completely deregulating, but it doesn't explain the cap on medallions.

(Please, no comments about "because the taxi cartels control the government!". I understand the incentives for existing taxis to erect barriers to the market. I'm more interesting in the rationale of those who argue that a limited number of medallions is in the public interest.)

Difficulty in regulating at scale? A license is more than just a badge that means "I paid a fee."

>Difficulty in regulating at scale?

The per-licence cost of regulating should go down with increased scale (unless there's something really surprising I'm not considering).

>A license is more than just a badge that means "I paid a fee."

I don't understand what you mean here. I said the licence should reflect the cost to the city for doing the regulating. And the regulating should include stuff like ensuring the meters work, checking insurance, etc.

> The experience of other cities over many years has shown that open-entry "deregulation" of taxis is poor public policy. . . . In a nutshell, the problem is that the capital costs of entering the taxi business are low. In an unregulated market, anyone with the price of a used car can enter the business. While this may sound good to free-market fans, experience with taxis has shown that quality goes down, prices go up, and public safety is compromised.

So there you have it: the taxi cartels want regulation to keep prices low.

>quality goes down, prices go up, and public safety is compromised

That jumped out at me too; I can't imagine how deregulation would raise prices for consumers. I'd love to see a cite for that.

I would have believed "too many taxis == too much traffic," AKA tragedy of the commons, but not this.

> the capital costs of entering the taxi business are low.

Is what I suspect is the key point. Because capital costs are so low, it's easy for anyone to get into the business. Because it's easy to get into the business, you end up with lots of turnover as people come in looking to charge high rates, get tired of it, and move on to some other job.

Medallions artificially raise the capital costs involved in becoming a Taxi driver, and therefore make people more likely to continue as drivers, since they want to recoup their initial investment, and it's not trivial to do so.

> Because it's easy to get into the business,...charge high rates, get tired of it, and move on to some other job.

This doesn't follow at all. All other things being equal, barriers to entry drive prices up, not down. If you want to argue that taxis are different than most other businesses in this respect, you're going to have to explain why.

I'm providing a hypothesis to support the data they claim exist (and I'm inclined to trust that it exists.) Unless you can provide information on case studies where deregulation has provided benefits, I'm going to trust the OP.

Data > intuition.

Also, alternate hypothesis: cabs are less likely to use meters when things are deregulated, so most people don't know what they're paying for, and overpay.

Check the prices on ubercab versus regulated taxis.

2 mile: $7.15 v $17.80 5 mile: $13.90 v $32.50 10 mile: $25.15 v $57.00

idling: $0.45 v $1.25

The expensive ones are the less regulated cars of ubercab.

And for what it's worth, in New York, the only time I've had bad experiences with Taxis were times I waved down a livery, or got another unlicensed taxi.

The reason seems to be to make traffic manageable.

It's similar to the idea of cap-and-trade pollution regulation. Each individual producer profits with pollution, but people believe the environment can only sustain some level, after which we have serious harm to both polluters and non-polluters. This environmental capacity is analogous to SF's (assessment of) traffic capacity.

I don't know why SF doesn't allow trading or transferring the medallion, the way many other cities do.

Seems like a red herring to me. Taxis aren't by any means the majority of the traffic in SF, so I doubt having more of them would cause a major issue. If anything, it would make things more manageable by easing the parking situation (since prices would be lower and people would not need to drive).

There are too few taxis in SF today. The city has been adding medallions[1]; unfortunately the years-old plan to add medallions has been slowed by implementation issues and controversy around details.

However, my point above was more theoretical. There is still some number beyond which each additional driver would have a positive incentive to enter the market, but the net social benefit would be negative (i.e. tragedy of the commons). So it still is reasonable to cap medallions in large, dense cities.

[1] http://www.sfexaminer.com/local/Scaled-down-plan-for-taxi-me...

Well, on the progressive side, when they want rent they argue that market prices are "unfairly low" (or high). Creating artificial scarcity is one way to inflate prices to "fair" levels, e.g. "living wages":

>Ward 1 Councilman Jim Graham introduced legislation Tuesday to limit the number of taxicabs in D.C. through either a medallion system, like ones used in New York City and Chicago, or a certification system. [...] A glut of drivers could jeopardize the chances of any cabbies making an adequate living, Graham has said.

http://www.washingtonexaminer.com/local/Cap-on-D_C_-cabs-sug...

...Though in this particular case the backstory turned out to be "the taxi cartels control the government".

http://www.washingtontimes.com/news/2009/sep/24/dc-council-m...

http://www.washingtonexaminer.com/local/crime/Ethiopian-comm...

Thanks! This is the kind of example argument I was looking for.

(And of course it makes terrible economic sense. If the city wanted to transfer wealth to the taxi drivers from other citizens, it would be more efficient to just have a transparent tax and payment system, rather than a hidden cost through a monopoly. But I figure I don't have to convince you of that...)

Maybe an extra 5000 cars on the road in the most traffic-dense parts of the city isn't ideal.

But is that actually an argument that is given? Is there data showing that taxis are a significant contributor to congestion?

If this were a real problem, it would be better to estimate the marginal cost to the city for having an extra car on the road for an extra day (or minute or whatever) and charge that. Then, let the market decide how that affects the number of taxis. (Also, if this were true, it would be an argument for charging everyone, not just taxis, to drive in the city.)

If there is demand for taxi regulation, there is an incentive for entrepreneurs to supply it (e.g. quality labels).

The need for positive freedom does not proof the legitimacy of positive rights.

I built a Taxi-related app for iPhone, specifically for Singapore [1]. I got several calls and emails from cab companies, first trying to brand my app with their company. Then, trying to buy the app off me for little-to-nothing. Then, threatening to "shut [me] down" claiming that this stuff wasn't allowed.

Months later, they've all tried to copy the crap out of my app. It's OK if they do it, but not anyone else.

[1] - http://taxilah.com/

A "cab" operating in San Francisco without a medallion is illegal...is [not] subject to..meter inspections

Perfect example of regulations not keeping up with technology. If I request a "cab" via an iPhone app, I know exactly how far I'm going and how much its going to cost me before I even get in the cab.

Not only that, but there could be a simple review system for drivers. It could actually improve quality by giving riders recourse. ("A+++ WOULD RIDE AGAIN")

The last thing I want to do when hailing a cab for a 4 minutes drive is check ebay-style reviews. I just want a cab to appear in front of me when I step out of a building.

yep. and as with most review sites, most people don't check them when they want a service right now right where they are.

But they create incentives for good behavior and give those that have the time to plan information with which to make their decisions.

I don't think you're being very imaginative. I'm thinking more along the lines of filters... like a setting that will only call cabs above a certain quality threshold.

But see that's the thing: already, you've agrees that it probably wouldn't be worth the effort to rate cabs on anything besides a single dimension (rating/quality/stars/whatever). At that point, why not simply have the city compile reviews and then require each taxi to paint it's number of stars on the side?

And for me, it's not even worth that. I just want a taxi that's insured.

I'm not against rating systems on top of what we have now. If it's worth it for you to wait a minute for a better cab, more power to you. (Hell, I might want to take some time to find a nice car if I were on a date or something.) But please don't take away the easy, efficient system we have now in most cities.

A+++ Would Ride Again!

This has nothing to do with UberCab because they are not dispatching cabs to their customers. UberCab is pre-arranging a limo/professional chauffeur/personal driver service with valid license and insurance policies required for private transport services to pickup a customer at a select location.

How is that different than calling for a cab to pick you up at a certain place and time?

Well, in SF, you can call a cab and wait for hours with it never arriving.

It seems the key cab/limo distinction is usually reserved/roaming. While both can be dispatched/reserved, only cabs can roam and be hailed streetside.

UberCab is in compliance with that distinction -- they are reserved, just more instantly than ever before, because of the march of technology.

The difference is that instead of a yellow car, you get a black car. What is a limo service but a luxury version of a taxi service? The distinguishing factor is that one can pickup passengers on the street and by hail and the other is only made by prearrangement and is considered a PRIVATE luxury service.

I don't understand the laws; my link was to show that S.F. taxis operate as a cartel, and use city laws to enforce their cartel (through medallions and their quota). I don't know if this is precisely what the UberCab C&D is about (it's not been published), but it does show that the S.F. transport market is explicitly and intentionally anti-competitive.

That said, the other TechCrunch post seems to say the taxi licensing may be relevant -- the functions UberCab is doing can only be legally done by licensed taxis:

>* Ubercab operates much like a cab company but does not have a taxi license.

>...

>* Limos in U.S. cities usually have to prebook an hour in advance, by law, while only licensed taxis can pick someone up right away but Ubercab picks people up right away (again without a taxi license).

http://techcrunch.com/2010/10/24/ubercab/

If limos need to wait an hour to make a pickup, and taxis do not, then UberCab (I think) is doing what only taxis can do and thus needs that license, not the limo one. The fundamental problem is not that UberCab is licensed as a limo rather than a taxi, but rather that it is impossible for it to be licensed as a taxi -- that (as I understand) there is no reasonable way for them to legally do what they are doing.

I am not a lawyer.

They could make a deal with taxi companies, to pass the < 1hr fares to them instead.

Problem solved.

Who needs laws when you've got bribes, right?

Oh no I understood the point of the link. Taxi operations in SF really is mob controlled. The thing is, UberCab was never meant to be a replacement to taxi cabs, it's a way to provide people with expedited black car services.

Ubercab operates much like a cab company but does not have a taxi license.

This is incorrect. They operate much like a sedan limousine company.

Limos in U.S. cities usually have to prebook an hour in advance, by law, while only licensed taxis can pick someone up right away but Ubercab picks people up right away (again without a taxi license).

This is also incorrect, the pertinent statues in taxi and limo commission law is this: ...assuring that affiliated vehicles and the drivers of such vehicles provide transportation only through pre- arrangement made with the base station and do not accept passengers by street hail or other than by dispatch by the base station

Using the phone app is by definition a pre-arrangement. The black cars are not picking random people off the streets, they're picking a preset customer in prearranged fashion.

but rather that it is impossible for it to be licensed as a taxi

Why should they? They are not a taxi company. Not only that, but they don't actually own the cars either, it's an affiliate program basically. They are a layer for independent private chauffeur services and limousine services companies to have ability to make their prearrangements on the phone.

> UberCab is pre-arranging a limo/professional chauffeur/personal driver service with valid license and insurance policies required for private transport services to pickup a customer at a select location.

The limo/chauffeur/driver has a valid license to operate a limo service, not a cab service. They are operating as a cab service when dispatched by UberCab, and so if they do not have a cab license, it would seem that they are operating outside the law.

Exactly. In particular, limos need to arrange for pick-up at least 1 hour beforehand in SF to avoid being classified as taxis (if I remember correctly from the original article).

California law stated that limousines must be dispatched on a private hire prearrangement basis, regardless of if the reservation is an hour before or not. The vast majority of the limousines services in the united states offer last minute dispatch services if available. This is a in all effects and excuse to stop UberCar, not a requirement.

Let's say I arrived at the airport and forgot to book my limo. You're telling me that I can't call a limo service and ask for one? And that if I do I have to wait an hour? That's not how it works nor how its stated by the law.

OK, first, don't get all mad at me. I don't support such a law; I was just quoting my recollection of it from a previous article.

Second, I think I was remembering this quote

> Limos in U.S. cities usually have to prebook an hour in advance, by law, while only licensed taxis can pick someone up right away

which may not apply to SF. Do you have a source that there is in fact no such time-limit in SF?

Oh no sorry if it came of as if I attacking you, I wasn't, I was just making a point! :) That quote is false as almost all Limo services allow you to use their services on a last minute basis if they have available limos. To be honest, I've never been to SF, but I've been to SD and LA and have used last minute limo services (trust me its just a bit more expensive than a cab and it makes a world of difference) there. I've also done so in Florida, Atlanta, Houston, and Wichita. Also this regulation doesn't appear anywhere online, but the part that specifies what makes a limo service in contrast to a taxi service is.

They will, but are they skirting the law in doing so?

I've seen (and taken advantage of) black limos cruising the streets of San Francisco at busy times (New Year's Eve, closing time), picking up passengers taxi-style. It's presumably illegal, but the police generally have better things to do at these times than harass limo drivers.

Nope, because I've checked and the only restriction on limo services is that they can't stop for passengers (what you said is a great example of limo drivers breaking the law). Off course it wouldn't surprise me SF was the only state that has this 1 hour law, even though LA and San Diego don't.

I find it interesting because there is a record of SF not allowing limo services to top for customers, but I can't find any on the one hour restriction. Honestly I think that comment was taken out of context regarding the companies themselves having a one previous hour arrangement policy.

There are limo services advertised, and a courtesy phone that will reach them in the SFO airport right after the baggage pickup. I used one 3 weeks ago, and it took 5 minutes for my limo to arrive.

Why would they be operating a cab service? There are two things that separate cab service and black car service. 1) black car service drivers are not allowed to pick up passengers by street hail or any other method that is not dispatch by base station, and is booked on a private hire basis. 2) black car service is basically a private transportation in which a limo license has been granted, is suited by it's luxurious demeanor as a vehicle appropriate for ceremonies and uses of luxury or prestige.

The cars that UberCab dispatches are in appearance and in license compliant with black car services and are hired on-demand on a prearrangement basis through a phone application. In addition, a customer must register for the service and provide a credit card to use the service.

This are not random people calling a cab station, this are specific customers arranging for private transportation they could do by phone, but do so using an application instead.

> Why would they be operating a cab service?

Because, per San Francisco city bylaws, cab services, and only cab services, can pick up people immediately. Limo Services must arrange pick-ups at least one hour in advance.

Is there a citation for the law requiring arrangements at least an hour in advance? The original article didn't claim such a law exists in San Francisco, just that it was common in many states. So I wonder where you got the specific information about SF laws.

The CPUC says that limousine service must be pre-arranged, unlike taxi service. I didn't see a definition of "pre-arranged", but UberCab doesn't sound pre-arranged to me. You use it when you want transportation now, not when you know that you have an upcoming need for transportation at some definite future time that you wish to ensure is covered.

Yes, you have to sign up for the service first and get the phone app, but I don't see that this makes a difference. What's pre-arranged there is the ability to use the service. When I turn on my TV, go to the "On Demand" section, pick a movie, and watch it, I doubt anyone would say I'm watching a pre-arranged movie, even though I had to previously subscribe to the cable service in order to do so. Seems to me that's essentially the same as what UberCab is doing.

I've used limo services a lot (they're really just a bit more expensive than using a cab really), and I tend to forget to arrange it before I jump on the plane. It has never been a problem to call a few limo services to ask if they have available limos to my destination and I've always gotten them promptly. In comparison, if you do pay per view for example, and the event/show is due in 5 minutes, is it not prearranged?

Let's use your example. On demand would be you stopping a taxi by waving like a madman on the street. That's immediate. UberCab is like me calling a Limo service (which is my example above) asking for a limo to pick me up at the airport and the limo arriving in 10 minutes. Hell I once called from the airport and a flight a different customer was in was delayed by 3 hours, so they gave me his limo sedan. I literally had on demand service, since I didn't have to wait for the limo to get there. I've done this in multiple states and it has never been a problem.

Hailing cabs street-side is really only implementing what Ubercab is doing, but with stochastic pre-distribution of roaming service providers. It's an early industrial-revolution way of doing things because back then we didn't have electronic networks. Really, it should be irrelevant in modern countries.

The page claims that the sedan services are cheaper... let's verify that claim on a few rides:

2 mile luxor cab: $7.15 5 mile luxor cab: $13.90 10 mile luxor cab: $25.15 1 minute idling luxor cab: $0.45

2 mile yellow cab: $7.15 5 mile yellow cab: $13.90 10 mile yellow cab: $25.15 1 minute idling yellow cab: $0.45

2 mile ubercab: $17.80 5 mile ubercab: $32.50 10 mile ubercab: $57.00 1 minute idling ubercab: $1.25

I fail to see the expense the article implies.

What page are you talking about?

The page strikes me as very racist, exactly what is a 'gypsy cab'?

Would you prefer "Roma Cabs"? In all seriousness, I do agree although I don't think the average American even realizes that Gypsies/Roma are an actual, modern-day ethnic group.

There was an interesting thread on Reddit a couple months ago, where an American said he didn't understand why Europeans hate the Roma so much, and wondered if it was just a baseless prejudice like many Americans have toward Mexicans. The discussion was interesting. Here's the link: http://www.reddit.com/r/AskReddit/comments/d3hax/why_does_eu...

I was amazed at how many of the anti-Roma arguments sounded just like the anti-black arguments you'd find in the early 19th century in the US.

The word "gypped" is used indiscriminately by the average American as well.

As an American, I hadn't even thought about that word's origin. I guess it's no different than saying, "He Jew'ed him down on the price." My wife told the story of a co-worker who was raised in rural America and used "Jew" (the verb form) as a normal part of her vocabulary without ever having considered the inferred stereotypes. Another co-worker who was Jewish politely called her out, and the "Jew-er" at first had trouble even understanding why the term might be disconcerting to others. The rural woman was not an anti-Semite in the same way that I'm not anti-Roma because I occasionally use the word "gypped".

I guess that I should proactively note that I'm not in favor of using the word "Jew" as a verb (or as any other part of speech in such a manner).

Languages evolve. They also include lots of ugly history. Fact is, it's part of the language today, and nobody is using the word "indiscriminately" or as an otherwise ethnic slur. In other words, we don't have to feel bad for using it.

Is there any reason we need to use it? How about we leave the feeling bad out of it, but we just don't use it? Would you teasingly call your friend a "retard" in front of someone with Down syndrome? That doesn't strike me as polite. Using an ethnic referent as a synonym for some type of unsavory act just doesn't seem polite either.

After learning that niggardly does not share etymology with 'the N word', I have to admit expending extra mental effort to attempt to use it in daily conversation.

It's an unlicensed cab, roaming around taking what work it can get. Historically, the name probably arose from the similarity to Gypsies, who roam around, taking what work they can get.

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