NYC Taxis and Regulation 2.0

This week, the NYC’s black car association (limos and car services) filed suit to block the e-hail pilot that was set to begin today. 

The argument is that there has traditionally been a formal divide in NYC between taxis you hail on the street (yellow cabs) and cars you reserve in advance (black cars / limos / car services); that that divide serves an important public interest goal; and that e-hail crosses that divide.

This raises two questions: 1) why do we distinguish between street hails prearranged pickups?  and 2) does e-hail actually cross that line?

I’d like to start with the first one because I think it’s more interesting.  

What we have is a rule — a bright line between heavily regulated, street hail-only yellow taxis and more lightly regulated pre-arranged rides in livery cars.  Why do we have that?

My suspicion is that there are good reasons why that rule was originally created — but that we now have a Regulation 2.0 opportunity — to satisfy those public interests using tools and techniques not available when the original rules were written.

So, why do we have this divide? I can think of:

  • Passenger safety – since you are hailing on the street, you need to know that you can trust the driver and car. Therefore yellow cabs are subject to greater regulation — when you call a car service you are vetting the company in advance. 
  • Discrimination — yellow taxis must accept all passengers and must take passengers to any destination within the five boros.
  • Driver safety – it might be unsafe for drivers to be interacting with dispatch equipment (on a smart phone, on a radio, on some other kind of console).
  • Street safety – this is maybe a lesser concern, but roaming cabs make the city safer to walk around. They are another form of “eyes on the street”

Maybe there are others, but that’s a first pass.  To take them in order:

  • Passenger safety: This seems like an argument for why black cars can’t take street hails, not vice versa.
  • Discrimination: clearly an important topic.  So: does discrimination happen now?  Anyone who takes a taxi in NYC would say yes — either on the will-this-taxi-pick-me-up angle, or the will-this-taxi-take-me-where-i-want-to-go angle.  It’s true that taxi drivers can choose not to accept e-hails, and they could conceivably discriminate based on the first-name of the hailer (which is also happening already, just by appearance, not name).  I’d argue that destination discrimination will decrease with e-hail as drivers will have to commit to the ride before they know the destination (and NYC could enforce this limitation).
  • Driver safety: taxi drivers interact with in-car tech in nearly every city already.  In this case, accepting or rejecting a hail would be limited to a single button press if the car is in motion.  Non-issue.
  • Street safety: I think this one is interesting, and it relates to the second question which is whether an e-hail is more like a street hail or more like a prearranged pickup.

If anything, the distinction that black cars shouldn’t be able to accept street hails seems to be more relevant, primarily for #1 above.  But I also suspect that that could be solved with a regulation 2.0 approach as well.

So, on the second question: is an e-hail more like a street hail or more like a prearranged pickup?  This is less of a “public interest” question, and more of a “does this break the law as currently written” question.

You could kind of argue it both ways, because clearly e-hail is a form of pre-arrangement.  But so is street-hailing.  Between the time the driver sees me and I get in, we are arranging the ride.  With e-hail the driver doesn’t see me with his eyes, but with his phone. Since e-hails in NYC would only work within a half-mile radius of the caller, and they only work in real-time, it is actually quite a limited form of pre-arrangement and may actually be more similar to a street hail.  i.e., I can’t reserve a car for a future time at a distant location.

If anything, I might argue that the e-hail revolution (including Uber which primarily focuses on black cars, not taxis) should help the livery industry as much as the taxi industry, as it vastly increases the surface area through which they can connect with customers.  Web 2.0 and regulation 2.0 techniques for building trust generally work in favor of groups that traditionally haven’t been as trusted (and consequently may have been regulated out of business).

I’ll end with a money quote from TLC commissioner David Yassky: 

This suit seeks to keep the taxi industry and New Yorkers in the dark ages,” he said. “Next thing, they’ll be suing restaurants to go back to wood-burning stoves. Our rules allow for e-hail now, and the only question is, do we embrace these new services and ensure that consumer protections are in place, or listen to obstructionists and watch e-hail apps proliferate without any regulatory input.”

My hope in thinking about Regulation 2.0 is that we can use the tools we now have available (primarily: tons of real-time data) to allow for more innovation and room to experiment, since we now have ways of understanding the impacts of these changes much more quickly and in much more detail.

(disclosure: Hailo, one of the e-hail companies in question, is an investment of USV, where I work)

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Nick Grossman

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