By Matt Kelly
The ridesharing technology company Uber has created quite a controversy overthe past year for its unprecedented disruption of the traditional taxi industry. Users praise the California-based company for shorter wait times and cheap fares, along with features like its driver rating system. Given the mobile app’s popularity with customers, many are now questioning the merits of local and state regulations, which continue to inhibit existing taxi companies. Florida is currently considering reforms to address commercial insurance mandates and automobile safety standards while easing fare regulations and permitting.
Florida state Sen. Jeff Brandes recently filed SB 1326, which would regulate Uber and Lyft not as taxis or limousines but as newly classified Technology Network Companies (TNCs). TNC drivers would need to purchase commercial automobile liability insurance to operate, and be barred from accepting street hails. Another bill, HB 817, filed by Rep. Matt Gaetz, goes further and would transfer regulatory authority from county and local governments to the state. The state would then decide how best to streamline the permitting process.
But as lawmakers ponder ways to police safety, Uber itself has already devised a mechanism to the same effect: ratings. After using Uber, passengers signal the quality of their experience to future users by giving their driver a 1-5 score. Drivers likewise rate passengers with a score that other drivers can consider before picking them up in the future. In most areas, Uber does not allow drivers with an average rating below 4.6 to work for them. These rating systems give both parties an avenue for feedback, improving service and safety.
Given Uber’s success in the absence of strict safety laws, the case for regulation of the taxi industry looks weaker now than in past years. However, automobile insurance requirements continue to gain political traction and are provided in both SB 1326 and HB 817.
The bills differ as to what level of insurance coverage should be required. Should coverage extend to times when drivers haven’t picked anyone up, or apply only when passengers are present? While Sen. Brandes’ bill would require commercial insurance policies to cover accidents occurring anytime a driver is logged into the Uber mobile application, Rep. Gaetz’s bill would mandate coverage only when drivers have accepted passengers. Insurance costs will impact fares as well as driver wages, and are thus relevant to both drivers and customers.
A number of other regulations besides pricing and safety requirements also impact taxis, and could be streamlined. For instance, research conducted at the DeVoe Moore Center suggests that having a company permitting process increases market concentration in an area’s taxi industry. Higher market concentration tends to limit supply, often resulting in longer wait times and higher fares where fares aren’t fixed by regulators. Rep. Gaetz’s bill, which would turn over local and county permitting authority to the state, could potentially simplify this process and allow ridesharing services to better meet demand.
Regardless of what regulatory regime eventually emerges from this debate, the hostility among taxi companies, drivers, regulators, and market disruptors like Uber can’t continue for long. Officials in Broward County have ticketed over 250 Uber drivers for operating illegally, while traditional taxi companies’ drivers have staged occasional protests in Miami and Ft. Lauderdale. Yet Uber has created over 10,000 new jobs in South Florida alone. Every stakeholder in this issue needs a legislative solution to provide clarity in order to ease these tensions.