Hailing a ride in D.C. has changed. No more standing on a street corner waving your arms in the air. No more fumbling with cash and coins.
After years of complaints about a taxi system that was less than dependable, smartphones have opened the door to upstarts such as UberX, Lyft and Sidecar. And these app-based ride-sharing services are giving cab drivers in the District and around the region serious competition for customers.
Uber currently operates in more than 100 cities, including the District and surrounding communities, offering its premium sedan service and a lower-cost option, UberX, where private individuals drive their own cars. Lyft is in 60 cities, including the Washington region and Baltimore.
The ride services are part of a new “sharing” economy that is upending industries ranging from taxis to hotels and creating headaches for policymakers eager to promote innovation, but wary of the potential risks and the loss of revenue from the unregulated industries.
“These platforms are enabling people to do business in ways they never could before,” said Janelle Orsi, executive director of the Oakland, Calif.-based Sustainable Economies Law Center. “These platforms offer ways to connect with each other really easily, which has a lot of benefits in creating income for people but is really shaking up the market.”
For their part, Uber and similar services argue that they are not transportation companies but rather go-betweens that link drivers who have vehicles with customers who need a ride. Therefore, they say, they shouldn’t be subject to the same rules and oversight as taxis.
“We’re a technology company,” said Zuhairah Washington, Uber’s general manager in the District. “We deliver everything from people to kittens.”
But a series of incidents, including a case in which a California girl was struck and killed by an Uber driver, has legislators beginning to rethink whether such businesses should be policed. For example, because the services aren’t regulated, there is no government agency with oversight or regulatory power where users can file complaints.
In the District, the arrival of such services has pitted the D.C. Council against the D.C. Taxicab Commission, both of which are seeking to regulate the services.
Last month, the two panels released dueling proposals. The Taxicab Commission wants to limit the number of hours drivers for these services can operate unless they have a taxi license, require more-stringent background checks and institute insurance requirements for drivers. It also wants to give taxi drivers the freedom to use surge pricing, where the cost of a ride is linked to demand, similar to that used by the app-based services. But some consumers and policymakers worry that surge pricing will lead to price gouging.
By contrast, the rules proposed by council members Mary Cheh (D-Ward 3) and David Grosso (I-At Large) place fewer limits on drivers for the new services, but would require the services tighten insurance requirements, driver screening and training. A hearing on the proposed legislation is scheduled for Monday .
Grosso said the proposed rules ensure passenger safety, but allow competition to flourish.
“It’s a balancing act,” he said. “We don’t want regulation to stifle innovation.”
Maryland and Virginia also are moving to regulate the services. In Maryland, after nearly a year of study, the state’s chief public utility law judge said Uber should file an application to operate as a for-hire carrier. A final decision on that order is pending. In Virginia, officials have levied more than $35,000 in civil penalties against Uber and Lyft for operating in Northern Virginia without proper permits. Portland, Ore., New Orleans and Miami are among the cities that have blocked Uber from operating in their jurisdictions altogether.
But the companies are fighting back. Uber has been particularly adept at mobilizing fans to lobby lawmakers on its behalf. And Lyft recently announced a partnership with MetLife designed to counter some of the criticism by creating insurance coverage focused on the services.
The start-ups maintain that they offer insurance coverage above a driver’s own personal insurance. Insurance companies and legal experts say there are loopholes that could land drivers in trouble and leave victims with nowhere to turn if they are injured.
Six-year-old Sophia Liu was struck and killed by an Uber driver in San Francisco on New Year’s Eve. Her mother and 5-year-old brother were injured. Sophia’s parents have filed wrongful death suits against the driver and Uber. The dispute centers on who is responsible: Uber says it’s not liable because the driver didn’t have a passenger in his car when he hit the girl, nor was he on his way to pick up a fare. The company also maintains that the driver should be covered by his personal insurance. The plaintiffs contend the company is liable because even though the driver didn’t have a fare, he was driving for the company at the time of the crash.
Bob Passmore of the Property Casualty Insurers Association of America, a trade group, said insurers aren’t opposed to the new business model, but are concerned that drivers and passengers may not be aware of the risks involved with such services.
“These services have gotten started and individuals are under the assumption that, or given the impression that, their personal [insurance] is going to provide coverage, but in all likelihood it’s not,” he said.
For cab drivers, who are subject to inspectors and a bevy of fees, the main issue is fairness.
Prospective D.C. cab drivers can spend more than $600 on training, testing and licensing before they begin driving. They are required to renew their licenses each year and must have their vehicles inspected on a regular basis. The city requires no special licensing or fees from those who work for ride-sharing services.
The app-based services generally are less expensive, too. Uber advertises that its UberX rates are 18 percent cheaper than D.C. taxicab fares, with the base fare starting at $3.10, a per-mile charge of $1.40 and a per-minute charge of 29 cents (It charges a minimum fare of $4.70). Meanwhile, Lyft charges riders $2.03 for a pickup, $1.26 per mile, 26 cents per minute and a $1 “trust and safety fee,” with a minimum $5 charge. The company also offers special “happy hour” rates during off-peak hours — so a trip that might normally cost $14 would cost only $7. Sidecar allows drivers to set their own prices.
D.C. taxicabs all charge the same rate: $3.25 to start and then $2.16 per mile unless there are special circumstances such as a snow emergency, during which drivers are allowed to add special surcharges.
“We have one set of [rules] for cab drivers and one set for the Uber,” said Eartha Clark, a veteran driver. “And we’re being shafted by that.”
Grosso said he’s aware of complaints from cab companies and drivers. “It’s like I’ve told taxi drivers for a long time — I always have trouble getting a cab, [but] as soon as Uber came along I no longer had trouble getting a ride. That’s a problem that they have to overcome.”
Customers say UberX and similar services offer a much-needed alternative.
Mari Belalcazar said she grew weary of cab drivers who were rude and didn’t take credit cards — though D.C. cabbies are now required to do so. The arrival of Uber was a godsend, she said, because the cars are clean and the transaction is hassle-free.
Most important for Belalcazar, who travels frequently on business: “I know it will be there.”
The cab industry has launched its own public relations effort with a social media campaign dubbed “Who’s Driving You?” designed to raise awareness of how the ride-share companies operate.
And cab drivers are doing their own lobbying. At a recent hearing before the D.C. Taxicab Commission, several drivers showed up to voice their frustration.
“It’s not getting better, it’s getting worse,” said Stanley Tapscott, a cab driver and commission member. “We as cab drivers in this city are doomed.”
Despite the dire predictions, some say it’s an opportunity for the industry to innovate.
“I think the market is always going to have space for people who are professional drivers,” said Orsi. “Not everybody is going to be comfortable with this concept. Some will still feel a greater sense of security with a taxi driver.”