Tag: Uber

Madison Officials Recommend Misguided Rideshare Regulations

Earlier this week, members of a Madison, Wisconsin city subcommittee recommended misguided rideshare regulations relating to insurance, surge pricing, and hours of service that reveal a confused understanding of how ridesharing works.

If the subcommittee’s recommended regulations are implemented, companies such as Uber and Lyft, both of which provide ridesharing services, will have to provide at least $1 million worth of insurance coverage once a rideshare driver is logged into their app, regardless of whether there is a passenger in the car. In Madison, taxis are required to be covered by auto liability policies worth at least $1 million per accident. 

The $1 million insurance requirement in place for Madison taxis is higher than the insurance requirements in many other cities. In New York and Los Angeles, regulations require taxis to have at least $300,000 of coverage per incident. In Washington, D.C., taxis must have at least $50,000 per incident in coverage. Chicago requires taxis to be covered up to a combined single limit of $350,000 per incident.

It should be noted that both Uber and Lyft already have a $1 million policy in place from when a driver accepts a ride request to when a passenger is dropped off. What ridesharing companies will almost certainly object to is the recommended $1 million of coverage for the time when a rideshare driver has a rideshare app open but has not accepted a ride request. As it stands, both Uber and Lyft offer coverage for this time period worth up to $50,000 per individual per incident, $100,000 per incident, and $25,000 per incident for property damage. This coverage is designed to kick in if a driver’s personal auto insurance declines a claim.

California and Colorado, which have both passed legislation related to ridesharing insurance, mandate coverage very similar to the coverage already offered by Uber and Lyft for the period when a driver is logged into a ridesharing app but has not accepted a ride request. The differences between Uber’s and Lyft’s policies and the California and Colorado legislation are that the laws in Colorado and California require that the coverage be primary and that the property coverage be $30,000 rather than $25,000. The laws’ requirements go into effect on January 15, 2015 in the case of Colorado and on July 1, 2015 for California. 

In addition to insurance requirements subcommittee officials have also recommended a ban on “surge pricing” at times of peak demand. Both Uber and Lyft change the price of rides at busy times such as holidays when demand is high. Uber’s surge pricing policy was in the news shortly after Halloween this year when it emerged that a few individuals had paid enormous fares after they took an Uber ride during a time of increased demand. While some might think that Uber fares during “peak demand” are excessive, it is worth keeping in mind that before an Uber passenger can request a ride while surge pricing is in effect she must input the amount of the surge in the Uber app. In addition, the Uber app allows for users to estimate their fare. Likewise, Lyft informs users “prime time” fares are in effect before they request a ride.

What the surge price ban proposal reveals is a misunderstanding of how ridesharing works. Ridesharing drivers are not professional drivers and drive whenever they want. During popular times of partying or celebration (such as New Year’s or Halloween), rideshare drivers may have to decide between partaking in the festivities and driving. Surge pricing helps incentivize rideshare drivers to meet demand during busy times by allowing for increased profit. If passengers do not like surge pricing, the market will reflect that very quickly, so there is no need for Madison officials to interfere with the surge pricing systems in place.

Another set of recommendations made by the Madison subcommittee relates to hours of service. According to the recommended regulations, ridesharing companies will have to ensure that drivers are available 24/7 after one year of licensed service in Madison. This requirement, like the surge pricing ban, reveals a misunderstanding of ridesharing. Uber and Lyft do not control when drivers turn on ridesharing apps, rideshare drivers drive when they want. Regulators ought to leave the issue of driver availability to market forces rather than concern themselves with when private car owners use an app.

The regulations proposed by the Madison subcommittee betray a misunderstanding of an industry officials ought to welcome rather than burden with unnecessary regulations. Let’s hope that when the recommendations are put before the Madison Transit and Parking Commission next month, its members will realize how misguided these recommendations are. 

Google Ventures Chief: Uber’s Long-Term Market Value Could Be at Least $200 Billion

Last month Uber, the San Francisco-based transportation technology company that connects drivers and passengers via its app, raised $1.2 billion in a funding round valuing it at $18.2 billion, making it worth about the same as Hertz Global Holdings Inc. and Avis Budget Group Inc. combined. In a recent Bloomberg interview Bill Maris, the managing partner of Uber investor Google Ventures, said that Uber’s long-term market value could be “$200 billion or more,” about the market value of Toyota.

Maris not only expressed confidence in Uber’s management, he also said that the company could become a large logistics company.

From Bloomberg:

“I am confident in Travis and his team,” Maris told Bloomberg News in an interview at Fortune’s Brainstorm Tech conference in Aspen, Colorado. “His vision is huge and he has showed he can execute,” Maris said of Uber’s co-founder Travis Kalanick.

As Uber disrupts the transportation market around the world, it’s also experimenting with delivery services and could become a huge logistics company with a market value of $200 billion or more, said Maris.

“It’s an incredibly creative team – their growth shows they are clearly onto something,” he said of Uber. But Maris also warned that, like any startup, “it could also go down to zero.”

Uber board member and investor Bill Gurley has said that the company’s market opportunity is between $450 billion and $1.35 trillion per year and that Uber could be considered an alternative to private car ownership. Indeed, Uber CEO Travis Kalanick said in an interview with The Wall Street Journal that the company’s vision is “Basically make car ownership a thing of the past.”

While Uber is certainly innovative it is a long way from making “car ownership a thing of the past” or becoming a large-scale logistics company. That said, it is clear that some investors foresee huge growth in Uber despite the regulatory barriers it has been facing. The technology that allows Uber and other so-called “sharing economy” companies to work is not going anywhere, and when one considers Uber’s growth since it launched in 2009 (it’s now operating in about 150 cities in 41 countries) it is not hard to see why Maris believes the company’s long-term market value could be at least $200 billion.

FDA Decides Not to Walk the Cheese Plank… for Now

FDA:  You know that artisanal cheese you love, that you have to age on wood planks? That’s dangerous and we don’t approve.

Fancy Cheese Lovers:  Hey, FDA, these cheese wheels will be your tombstones.

FDA:  Oh. What? Did you think we meant we were going to regulate your much loved, centuries-old practices out of existence just because we’re a regulatory agency that stops people from doing things for a living? Of course we’re not doing that… right now… while the media spotlight is so bright it’s hurting our eyes… but you’d better convince us we should allow you to do that anyway.

The latter bit is what has apparently played out this morning, according to Forbes online.

But as Cato’s Walter Olson explains, this apparent victory for sanity and liberty may simply be due to the fact that the usual advocates of regulatory encroachment in every aspect of our lives happened to have been personally inconvenienced this time around, and may have had the subject-area knowledge to realize how ridiculous this encroachment was. So, for once, they pushed back instead of rooting for leviathan.

If so, let’s hope they learn a broader lesson from this experience: maybe other people should also be left to make their own choices in the areas about which they care deeply. Maybe all that stifles is not gold.

And if you call Uber or Lyft to pick up your fancy cheese in Virginia, be prepared to get busted…they’re still banned.

Taming the Cyberlibertarians

New York Attorney General Eric Schneiderman made some interesting rhetorical choices in a New York Times op-ed yesterday taking after share economy leaders AirBnB and Uber. The challenge they present to outdated regulation leads him to call these businesses “cyberlibertarians” and “cybercowboys.” The latter awkward metaphor inhabits the title of the piece: “Taming the Digital Wild West.”

It’s an awkward metaphor because “Wild West” was an epithet leveled at the Internet itself in its early days. Thank heavens the forces of stasis didn’t prevent us from inhabiting this place—and here’s hoping they won’t prevent us from finding new terrain. How safe and impoverished we would be, both materially and spiritually, if we didn’t have the rollicking, wide-open Internet.

But the most interesting rhetorical choice is his effort to push community-enhancing job-creation into the “libertarian” corner of Times’ readers’ vistas. His hope, it appears, is that readers’ revulsion around the word “libertarian” (if not liberty itself) will overcome what they know about car- and room-sharing. People all over New York and the world are operating small businesses, and these small businesses bring them in close personal contact with others. They build wealth, and they build community.

Calling that “cyberlibertarian” may just cause some reflexive progressives and conservatives to take a fresh look at liberty. While we’re working toward miracles, maybe people will drop the “cyber” prefix, too!

(Disclosure: I’ve used both AirBnB and Uber with generally wonderful results.)

Customers Don’t Need Protection from Low Prices

Some things seem obvious: Puppies are cute. Freedom is good. Paying less for something is better than paying more.

Unless you live in the Tampa area and work for the Hillsborough County Public Transportation Commission (PTC). The PTC was created, ironically, to protect Tampa’s transportation customers. Apparently, that means protecting those customers from low prices.

This is not one of those stories about unintended consequences or safety regulations that, in the long run, result in higher prices and therefore unsafe practices. The PTC left the agencies that impose those sorts of economics-challenged agencies in its dust. Instead, the PTC actually passed a rule requiring Tampa’s sedan and limo drivers to overcharge their customers. The rule mandates that all drivers must charge at least $50 per ride – no matter how short the ride, and even when the driver is willing to charge much less.

Let me repeat: The PTC is expressly protecting customers from low prices.  What’s next for the PTC?  Protecting us from pillows that are too soft or food that’s too tasty? (Don’t give Michael Bloomberg any ideas.) There are many good things in this world that undoubtedly must be stopped, so the PTC is going to be quite busy.