Original post date: November 19, 2013
Article by: Ben Douglas

6/6/2023 Edits: Some links that were no longer working have been fixed.

Finding a more textbook example of regulatory capture than the taxicab industry is difficult, as the case of the innovative on-demand taxi service Uber clearly demonstrates.

Despite the highly regulated nature of the American taxicab industry, newcomer Uber continues to grow, due partly to its politically active clientele.  A recent attempt by the D.C. taxi commission to establish a $15 “minimum fare” (i.e., price floor) was met with tens of thousands of emails protesting the measure.

Uber’s victories in Dallas and D.C. are accompanied with a mixed ruling from the California Public Utilities Commission, which regulates taxis for the state of California. The ruling “created a new class of regulated transportation companies,” and thereby “rendered moot a cease-and-desist notice — which no one actually followed — sent by the Los Angeles taxicab administrator, who had warned the companies they were not licensed to operate in the city.”

Both Uber and entrenched taxi interests are fighting the ruling, from opposite perspectives. “Uber … reiterated its earlier claim that it is not subject to regulation by the Public Utilities Commission because it is a technology company that does not provide transportation services.” Indeed, Uber has managed to avoid the numerous regulations and licensing fees facing taxicab companies because it is not, in point of fact, a taxicab company, as its website makes very clear:  “Uber itself does not provide transportation services, and Uber is not a transportation carrier. It is up to the Transportation Provider to offer transportation services, which may be requested through the use of the Application and/or the Service. Uber only acts as intermediary between you and the Transportation Provider.”

The ruling did not affect airport ridesharing policies, however. “According to [Los Angeles International Airport] rules and regulations, casual ride-sharing drivers may not pick up passengers in the Central Terminal Area.” Not to be deterred, Uber drivers and passengers have found creative and covert ways to subvert LAX policies. Whether it’s arranging a surreptitious pickup, loading their own luggage, or sitting in the front seat, users of the tech-savvy car service have far from given up.

The Uber wars continue to wage on with no indication of relenting. The established firms and the public agencies that regulate them are powerful, but Uber’s management and clientele have proven themselves remarkably persistent. Regardless of who wins, one thing is clear: The taxi industry is evolving. The regulatory framework surrounding it must evolve with it or risk obsolescence.

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