London gives Uber green light – but should we really let it skirt around regulation?

Derek du Preez Profile picture for user ddpreez July 3, 2014
Summary:
Transport for London has said that it doesn't believe that Uber is currently breaking the law and that it will not be taking any action against the disruptive application.

Good news for Uber in London this week – the city's transport regulator, Transport for London (TfL), has ruled that the application is lawful and that it won't be

Uber-Taxi
taking any action against the company (despite ongoing protests from the iconic black cabbies and their union). If you recall, early last month, London and a number of other cities across Europe were brought to a standstill as taxis flooded popular areas with vehicles in an attempt to draw extra attention to the issue. That has obviously fallen on deaf ears as TfL issued the following statement today:

“In relation to the way Uber operates in London, TfL is satisfied that based upon our understanding of the relationship between the passenger and Uber London, and between Uber London and Uber BV, registered in Holland, that it is operating lawfully under the terms of the 1998 PHV(L) Act.”

Thank goodness – well, that was my initial reaction to the news. And I still mostly stand by that. As a consumer, and given that I'm an advocate of digital disruption, I think we should have the choice whether to hail a black cab, or to use Uber to find a private hire vehicle. But then I read a really interesting blog by a high profile cabbie that has been blogging on the issue, and has appeared on BBC news and the like, which highlighted a number of points to me that made me think that maybe we shouldn't be giving Uber a free ride.

But before I progress let me just clarify something for those of you that are unaware of how the system works in London. We have black cabs in the city, which are operated by licensed drivers that undergo extensive two year training to get 'The Knowledge' and are heavily vetted. As a result they are legally given the privilege of being able to deal directly with the punters (i.e. you can hail down a black cab). But then we also have private hire vehicles, which are also licensed, but don't really undergo any professional vetting process. TfL relies upon minicab operators, such as Addison Lee, to check documentation and if you want to book one you have to go through the operator – you aren't legally allowed to deal directly with the driver.

But back to the Uber debate. Most of the discussion has been around the use of meters to arrive at a cost for the journey. Black cabs are allowed to use meters and the prices of this are controlled and regulated by TfL. However, private hire vehicles and minicabs are not legally allowed to use meters, you are quoted a price before your journey and that's what you pay. Black cabs, as a result, argue that smartphones are effectively operating as a meter because the fare is worked out based on the distance of the journey and Uber shouldn't be allowed to operate as a result. But TfL disagrees:

“TfL’s view is that smart phones that transmit location information (based on GPS data) between vehicles and operators, have no operational or physical connection with the vehicles, and receive information about fares which are calculated remotely from the vehicle, are not taximeters within the meaning of the legislation.

“Nevertheless, given that the legislation predates the advent of smartphones, TfL accepts that this judgment is finely balanced.”

MANIFESTATION DE TAXIS A PARIS
Do services like Uber need some regulation?

I read a story about Uber in Chicago that said the free market should make a decision about the app, not regulation. In essence it states that customers have a choice between a heavily regulated service and one that isn't – in which it makes a comparison between eating at a restaurant and eating at a friend's house. The choice is yours.

However, I think that there are a number of points, which are raised by the cabbie's blog, that do need addressing and we should have a think if Uber should be allowed to bypass them:

  • The metering issue. To be honest I do think the smartphone is operating as a meter and Uber is getting around this because it isn't attached to the vehicle (thank goodness for mobile internet). And to be honest I don't really care. But what I do have a problem with is that it is using this system and its prices aren't monitored by anybody. This means that Uber can push up and drop prices when it feels like, which is obviously fine in a free market. But we can't expect regulated black cabs to compete on this front when their pricing is controlled – so either deregulate black cab pricing, or regulate pricing for cab apps.
  • Safety. Black cabs are allowed to deal with punters directly because of their extensive training to get that point, whereas private hire vehicles are meant to be checked by their operators. Although the safety record is still rather poor for mini-cabs and private hire vehicles, at least there is some mechanism in place via the operators to keep checks on people. By allowing private hire vehicles to deal directly with punters on Uber, I think there is a risk involved and this needs to be considered. Is Uber now the go-to company for any attacks that happen? If so, there needs to be processes in place to deal with such situaitons.
  • It has been claimed that because Uber is based in the Netherlands, this may have implications for how much corporation tax it will pay in the countries it operates in. As is with a lot of other technology companies. Not sure how I feel about this, but at the moment taxis and their operators are currently all based in London and hopefully pay their taxes in full.

Verdict

Basically, we aren't going to be able to stop this. No one is. As Stuart said in a previous piece, you can't hold back innovation, especially digital innovation, and Uber and other similar apps will prevail eventually. But I'm just not 100% convinced that we should let them have a free ride because they are new, use a different model and there is big demand from the consumers. Essentially they are taking a slice of the taxi-revenue pie and should still have to follow some rules. Address the above points, plus others I've probably failed to mention, and give the traditional cabs a chance to compete with a bit of light touch regulation.

 

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