Yesterday, the full City Council attended what was originally intended to be the final meeting of the Taxi/For-Hire/Limousine Regulations committee. Before another packed house, and with only a brief window for public comment this time around, the council discussed detailed amendments to the working proposal. They took votes on some issues, deferred others, and showed that the normally consensus-craving council is divided on the  issue of TNC market caps.

The full video above is exceptional for those interested in wading into the weeds. Public comment was substantive, on-point, and emotionally charged, with opinions hardened and clarified on both sides. The council moved through a series of amendments that generally moved in the pro-TNC direction.

Here’s where things stand:

Insurance: The council fully agrees on requiring that drivers be covered whenever ‘active’ on a system, including in between rides. O’Brien offered an amendment looking for ways to lower insurance costs for commercial drivers but the council ran out of time before discussing it.

Hourly Caps: The Council passed an amendment removing the requirement that limited TNC drivers to 16 hours per week. TNC drivers will be able to work full-time, but will retain daily limits and mandatory time off between shifts.

Pilot Program Review: CM Burgess introduced and passed revised language relating to the data collection at the end of the 2-year pilot. In short, the review of the program will now include an expanded series of performance metrics, such as average dispatch time for taxis and TNCs, % and location of rejected rides, and much more. The intent seemed to be to get a better handle on the relative service quality offered by the different options.

Training: Councilmember Clark introduced and passed an amendment removing a separate permit layer and separate  training requirements for TNC drivers. Instead, all training will be harmonized between taxi/for-hire/TNC drivers, the curriculum will be updated, and emphasis will be on safety. Trainings will be flexible to focus on some issues and minimize others depending upon the audience (i.e. Cash-free Lyft drivers wouldn’t have to be trained on cash-handling)

Market Caps: This was the meat of the debate, and was the only portion of the regulations not to be voted upon. Weeks ago the committee proposed a cap of 100 drivers per company, which was then revised by CM O’Brien to 300 total TNC driver permits which would be portable between TNCs. At this meeting two additional amendments were offered. Likely recognizing pushback from the community on the caps issue, CM Clark offered to double O’Brien’s portable TNC permits from 300 to 600, with Clark arguing that a 2-year cap would ease the way for a likely “capless future.” Bagshaw proposed removing market caps entirely, arguing that a denser, growing Seattle can absorb the new supply, and that in the context of transit cuts that Seattle needs more options. Rasmussen seconded Bagshaw’s call for removing caps, though he proposed that the Council retain authority to impose caps if the market becomes too saturated (a cap-as-you-go approach).

O’Brien and Harrell defended the original cap of 300, making immigrant rights and social justice arguments while sharply criticizing TNCs for flouting the law. O’Brien held that industry support for TNCs was hypocritical (“Would the hotel association support an unregulated AirBnB? Would the restaurant association be ok with unregulated food trucks?”)

Burgess, Licata, Sawant, and Godden stayed largely silent. Sawant criticized the lack of mass transit in the city and proposed eventually having a publicly-owned and unionized TNC company. She supported market caps, saying that it was the taxi driver “Davids” against the “Goldman-Sachs-Jeff-Bezos” Goliaths.

Burgess responded later in the day with a long and substantive blog post defending an approach that caps the market for street hails but leaves the dispatch market unregulated. However, he also said he would support Clark’s limit of 600 if a majority wants caps in some form.

In sum, currently a majority supports caps (Clark, O’Brien, Harrell, Sawant, and Godden), 3 members oppose caps (Bagshaw, Rassmussen, and Burgess), and Licata is undeclared.

The final committee vote on this issue will be on February 27 from 4-6pm. It will then proceed to the full council.

See the draft legislation and proposed amendments for more details.

73 Replies to “TNC Regulation Update”

  1. The big story is that the Seattle City Council is going require that Sidecar. Lyft, UberX(SLUX) provide commercial insurance on their vehicles from the time that the drivers log in to when they sign out. The Mayor and all the city councilors agree on this point.

    Once the City passes this bill, other juridisdictions will follow suit. Even the Incompetent California Public Utilities Commission(ICPUC) will probably fix the insurance gap that they allowed to continue when they regulated the TNCs last fall.

    It is the insurance requirements that are going to cost either SLUX or their drivers major money, not caps.

    1. Absolutely. Insurance for private vehicles is not in force if you use that vehicle for commercial use, be it carrying paying passengers or delivering pizza. This means individual drivers could be bankrupted by a minor accident. Insurance protects everyone. No one who chooses to work with these companies should even consider going without coverage.

    2. People drive friends and family members around all the time and have been doing so for the past hundred years, as long as there have been cars to drive. Which should the mere fact that you are charging money for the ride vs. offering it for free mean you should need additional insurance? Especially during times when you aren’t even carrying a passenger?

      Along the same lines, why should a person on the way to pick up a passenger need insurance not required of someone delivering pizza?

      1. Pizza delivery drivers are also committing insurance fraud. But the risk class is lower because there are no passengers.

      2. When a Lyft driver is driving to where a passenger wants to be picked up, he/she is also carrying no passengers. There is no difference in the risk class until a passenger is actually in the car.

        And even then, the risk of an accident doesn’t magically increase just because the car has a paying customer in it. The only thing that does increase is the potential medical bills in the event that an accident does occur (e.g. medical care for the pasenger, not just the driver). However, all the ridesharing companies have been providing insurance for passengers in the car from the get-go, so this is hardly an insurance gap.

      3. Commercial phone lines and electricity also cost more than residential service. It’s about giving individuals a break when they’re living paycheck-to-paycheck and juggling bills. Commercial entities are deemed to have more money and be more able to pay, so their rates are higher.

      4. The City Council has no power to influence or change the way commercial versus individual auto insurance policies are written. Its goal is to ensure that there is no insurance gap when a driver is not covered by the company’s policy and also not covered by the driver’s personal policy because there is no passenger in the car but the car is on the way to or from a call and therefore from the insurance company’s standpoint it is being used for commercial purposes. That is actually exactly the one place where this regulation makes sense for everyone. If that cost is not reflected in the current cost of the service, then someone is projecting a risk on someone completely innocent, i.e., the person who might be injured by the surprisingly uninsured driver.

      5. No, the risk class for taxis or pizza delivery vehicles is higher also because they are on the road for more hours in an urban environment than a non-commercial vehicles. The insurance companies know that these usages have more accidents and charge significantly more in premiums.

      6. @asdf,

        When someone is using their personal vehicle for company purposes (which definitely includes transporting clients), their personal insurance ceases to be in effect for the duration of that task. While commercial insurance is not necessarily legally required, that’s what the driver and company need to have to cover liability.

        FWIW, I would strongly discourage anyone from driving their personal vehicle for company purposes unless they know they are covered by commercial insurance. For the rideshare industry, I don’t think this is a point of controversy. What is controversial (but the council has it unanimously right, IMHO) is requiring the commercial insurance to cover the time from when the driver logs in to when the driver logs out. I support that common-sense requirement. One of the rideshare companies is trying to get out of liability in a wrongful death case because the driver was merely logged on, but had not accepted a pick-up. That gray area needs to be made black-and-white, for the sake of the industry and public safety.

      7. If the driver has merely logged on, but not accepted a pick-up, where is the commercial activity? This sounds more like an insurance company trying to weasel out of paying a claim than a rideshare company trying to weasel out of insurance.

      8. @asdf: If I pick up my wife at the airport, she thanks me not just for driving her home, but also for coming to the airport. That’s because I drove to the airport just to give her a ride.

        In most cases when you go to pick someone up the same thing is true. You’re driving to pick them up in order to give them a ride, and you wouldn’t do that if you weren’t getting paid to do it.

        A big part of this is simply how much you drive. Personal auto insurance limits itself to covering your personal trips. Even though they usually doesn’t track mileage directly insurers limit the mileage they cover by only covering personal trips (this is a good thing, because it keeps rates lower for those of us that aren’t racking up tons of miles doing business with our personal vehicles). The amount of driving any person does in a month is limited by personal travel needs. Most people have fairly limited personal travel needs; while there’s some variation, there’s a limit to how much most time they spend driving around (I have President’s Day off; I could drive around by myself for 8 straight hours, but insurance companies know this sort of behavior is not very common, and figure people occasionally make long road trips but don’t routinely drive around the city all day). Once you start getting paid for it, that limit goes away — you’re profiting, so it could be your full-time job. If you drive on Lyft for 8 hours, even the time you spend without a passenger in your car goes far beyond your personal driving. Insurers don’t want to cover this extra mileage in personal policies.

      9. It’s not insurance fraud, ClaimsAdjuster. The last policy I read didn’t say “You must not work for hire” — it simply said “We do not cover damage caused while working for hire”. Big difference. It may be a violation of state insurance coverage laws (driving uninsured) but that’s quite different from insurance fraud. If you’re a professional, you should be careful to be clear about such things.

      10. “The City Council has no power to influence or change the way commercial versus individual auto insurance policies are written. ”

        Well, it does have that power, but that would require a lot more work than the city council really wants to do.

        City councils have set up their own insurance companies in the past.

      11. “When someone is using their personal vehicle for company purposes (which definitely includes transporting clients), their personal insurance ceases to be in effect for the duration of that task.”

        I was given the option of saying “Yes, my car is used for business” when I purchased car insurance. I would have been issued a personal policy which allowed for business use of the car — for instance, if I were a real estate agent driving people around to see houses.

        It’s not as if these policies don’t exist; they’re easy to get.

        The exclusion on the standard personal policies I’ve seen is strictly an exclusion for operating a taxi service. If you’re operating as a taxi service it looks like you have to get insurance which is written completely differently. For ordinary business use, it’s just a different rate, they don’t even change the text of the policy.

      12. “Insurers don’t want to cover this extra mileage in personal policies.”

        Actually, as I said, they’re happy to cover the extra mileage from business usage. They’ll just raise your rates.

        Similarly, if you don’t commute, you get one rate. If you do commute, you get a (much) higher rate.

        This is just pricing. Insurance companies mail you pretty much the exact same insurance contract whether you declare business use, commuter use, or neither.

      13. nathaniel, it is fraud to not report previous or existing conditions (i.e. livery usage of vehicle) in order to obtain a lower premium on their insurance policy. It also fraud for a subscriber to withhold pertinent information, such as business use of vehicle, in filing an accident claim.

        TNC drivers are filing collision claims in at fault accidents and hiding their livery usage of their vehicle because they know that their policies will be cancelled and their claims denied.

        http://blogs.kqed.org/newsfix/2014/01/20/ride-sharing-insurance-lyft-uberx-sidecar/

      14. OK, you completely left out the statement that TNC drivers are filing collision claims and hiding their livery use of the vehicle. I’ll agree that that’s insurance fraud.

  2. Thanks to Councilmember Sawant for bringing up service I think is missing. Would like to see her follow up with a serious program of action. Same for her mention of the underlying economic and class divide developing in Seattle and every other city of its size and prosperity in the world- though not sure her connection of the four names she mentioned with each other or the transportation question was fair or accurate.

    Note: Goliath went in with old weapons against modern. A a shepherd’s sling of those days might as well have been a .45 caliber automatic, with a range way beyond a spear, an axe, or a club. Careful, established industries all around!

    Also, need to be convinced why it’s necessary to limit number of licenses by any means besides the rules on insurance, training, and maintenance. If these requirements are enforced as they should be, the expense of meeting them should itself limit the industry to the number of people who confident they can meet them.

    Banks, credit unions, and insurers will likely be a powerful control on the size of the TNC community.

    Mark Dublin

  3. I’ll repeat a question I asked on Twitter: is there already organization behind a citizens’ initiative to remove TNC caps, in case the Council institutes them?

    1. If there is, the initiative should also attempt to remove caps on the number of Taxi drivers in the city. There is no point in capping either.

      1. The fundamental problem with any form of caps is that TNCs and taxis aren’t really competing with each other, or even with transit; they’re competing against private car ownership.

        It’s possible to have a market where there’s so much demand for rides, and so little space, that you need some way to reduce supply to avoid congestion. But it seems like you could solve this problem more equitably by charging a road use fee for any vehicles that drive on the streets in question. In Seattle, this might mean the main streets that run through the center city (including Capitol Hill); in New York, this might mean all of Manhattan.

      2. No, TNCs, taxis and for-hires really are competing against each other for a finite amount of business..Add to that the limousines, which have flooded the streets with vehicles over the past few years.

  4. While I understand O’Brien’s reluctance to condone law-breaking, I disagree with him that the TNCs are flouting the law. I think they’re operating in a legal gray area, but I also think they’ve demonstrated that they will respond quickly and completely to any change in legal status. For example, they have periodically shut down completely in cities that have explicitly banned them, and they canceled the TAXI service in NYC when they were told to.

    If the TNCs truly didn’t care about the law, they wouldn’t have bothered to show up to orchestrate a rally. They would have just ignored the caps.

    1. No, the TNCs and most of the drivers knew that they were commiting insurance fraud and that there flouting the licensing requirements.

      Lyft was the first company to dispatch private cars as taxis. Before UberX started, Uber just dispatched limousines. The following quote by Travis Kalanik, CEO of Uber, is from that period:
      “A Lyft driver does what a driver on Uber does.The only difference is they don’t have a license and they don’t have commercial insurance.”

      http://voices.suntimes.com/business-2/grid/car-strangers-lyft-banking-it/

      How can they just ignore the law? The city can pull their business license and issue a cease and desist order.

      1. If the city believes that the TNCs broke the law, then fine them and revoke their business licenses. Don’t impose caps on prospective new competitors who haven’t broken the law yet, and don’t pretend that the caps are supposed to be punitive, when they’re primarily punishing riders.

      2. Who said the caps are punitive? They are in place to prevent flooding the market with transportation providers that will not make enough money to meet their obligations. The TNCs have yet to show that their model can do that since they have been cutting corners.

      3. If the city believes that the TNCs broke the law, then fine them and revoke their business licenses.

        Oh, it’s just that simple, isn’t it? It’s not like UberX, Lyft, et al broke the law so much as incited hundreds of people to commit a criminal misdemeanor offense (RCW 46.72.100) and the city’s enforcement options were limited to giving them all criminal records or letting it slide.

        There are numerous recent examples of our council adapting to changing circumstances. Consider the reform of the overly restrictive laws on street food that have led to a thriving food truck scene. Or the special legislation needed to bring car2go to Seattle. But these companies have no time for such process. They’d rather flaunt the law, gain a foothold, and then dare the authorities to shut them down.

        I don’t think the caps make sense. But I also don’t like rewarding this behavior.

      4. I don’t think the caps make sense. But I also don’t like rewarding this behavior.

        I’m being completely serious here. I don’t understand why we can’t pass a law that revokes the business license for each of these companies, unless they pay the $500 fine for each driver that’s ever been part of their system in the City of Seattle. Or, heck, multiply the fine by 3, or 5, or 10. Be as punitive as you want.

        For all we know, there are several other companies that have considered entering the market, but have hesitated to do so specifically because of the questionable legality. It seems unfair to punish those potential new entrants because of the actions of the existing players.

      5. They clearly broke the law — their claim to be operating something different from a for-hire service is plainly ridiculous and they’re not operating it within the standing laws regulating that industry, and furthermore there are real insurance problems. At the same time, they’ve managed to build popular, visible support for reforming regulations on such services. The police and politicians are aware that their popularity matters. Of course, their awareness of this didn’t manifest the same way (historically in various cities) when poor, mostly black people without global tech and venture capital connections started taxi and for-hire services outside the law.

        I’m pretty sympathetic to the idea that the Internet can protect consumers and drivers in ways that eliminate some need for regulation, and that capping the number of for-hire drivers is a bad idea. I think the council is moving in the right direction and should be applauded for that even if they aren’t moving as fast as some may want. In general it’s probably better that a bunch of people don’t get hauled off to jail while the council gets its regulations in order. If the TNC founders had went to the council first they probably wouldn’t have got what they wanted because they wouldn’t have proved it could gain so much popular support. (That said, the Car2Go people basically did that.)

        But there’s a real fairness issue when one class of people is rewarded for breaking the law and another is punished. That’s not something we should take lightly.

      6. @Aleks: I don’t think the companies, up to this point, have needed any particular business presence in Seattle. It might be hard to bring them to court when it was actually the individual drivers on the street breaking the law.

      7. “How can they just ignore the law? ”

        How can anyone just ignore the law? The NSA (and therefore President Obama and AG Eric Holder) ignore the law all the time, so does the CIA, so does the LAPD, so do major banks like Goldman Sachs and JP Morgan Chase, so does ExxonMobil. You can ignore the law if nobody arrests you for ignoring it. This means that “law enforcement” is the most likely place to find flagrant lawbreaking criminality, because too many “law enforcement” agencies believe in covering up for their colleagues.

        Although your King County Sheriff doesn’t pull nonsense like that. Sheriff Urquhart is *awesome*, and a role model for managing a police department. I’d trust him to go after any lawbreaker evenhandedly.

        http://www.king5.com/news/cities/seattle/King-Co-Sheriff-fires-deputy-who-threatened-to-arrest-reporter-243391961.html

        http://blogs.seattletimes.com/today/2014/01/king-county-deputy-arrested-after-passing-out-in-patrol-car/

  5. One big reason why I think it is very critical to not have caps of TNC licenses from the get-go is to avoid the hoarding effect.

    For example, let’s suppose you current drive for Lyft, are successful in the lottery, and get a TNC license to allow you to continue driving. Not let’s suppose that in the future, your schedule gets busier and your salary at work increases so that the income you receive from Lyft becomes less and less worth your time. You gradually drive less and less, and eventually stop altogether. If the TNC licenses are capped, the question becomes do you give up the license you won for someone who has more interest than you in using it? Considering the TNC license represents an emergency source of income you can still fall back on if you lose your job, and that getting it back again later could be difficult or expensive, the answer is obvious – once you have it, you don’t give it up.

    Of course, what’s best for the individual is not always best for the community at large, and when everyone acts this way, the number of active TNC drivers would gradually decline, even though the license cap would nominally prevent new drivers from signing up. The result would be gradually worse service for the public at large.

    Furthermore, once you impose a cap of licenses, you create a constituency of existing license holders that will lobby to keep the cap indefinitely, as it makes their license more valuable. If we want an open system, we need a cap-free system right from the get-go.

      1. So, in order to stay within the cap, some drivers have to be let go in order to bring on more drivers. This sounds more like a professional sports players’ salary cap than anything that could be considered pro-worker.

    1. In all likelihood the TNCs are going to require that their drivers get commercial insurance for their vehicle. It is not worth it to operate an expensive business if you can’t put the hours in.

      1. The whole business model of the TNC’s is a lot of drivers working a small number of hours. For this, buying commercial insurance by the vehicle does not work – the insurance will be priced for people who a drive large number of hours as a full-time job.

        Instead, insurance needs to come from the TNC company itself, so the price in some way reflects the number of actual hours its drivers are on the road.

      2. @asdf, the city draft says that the TNCs are responsible to provide the coverage including primary. But the TNCs are not going to pick up this expense, in fact, they have already said they won’t. Instead the TNCs will require that the drivers provide the primary commercial coverage and their insurance will provide excess liability.

        The part time owner driver model is not feasible. In the taxi and for hire industry, part timers lease their cabs.

      3. You don’t buy liability insurance for a vehicle, you buy it for a driver.

        Are you *sure* you work in the insurance business? I spent a while learning the weird details of car insurance policies, and you keep getting stuff wrong, ClaimsAdjuster.

      4. Nathanael, no, you buy insurance for a vehicle, not a driver. That is why your car can be covered in an accident when the owner lends the vehicle to someone.

      5. ClaimsAdjuster, you’re wrong. I guess that’s because you’re not on the sales side — or maybe because only collision & comp get “adjusted”, and you don’t mess around with the medical side of things?

        I’ve read through the policies very carefully.

        Collision and comprehensive coverage are coverage for a *vehicle* and cover the vehicle regardless of driver.

        Liability and casualty are coverage for a *policyholder* and cover *any vehicle which that policyholder is driving*.

        This particular set of details is incredibly important, as it determines things like
        – do you need to buy liability & casualty coverage from the rental car company for a rental car? (If you’re a policyholder, no. Otherwise, yes.)
        – can you lend your car to someone who has a drivers’ license but doesn’t have a car or their own insurance policy? (NO. They need their own liability & casuality policy. You can get one of those WITHOUT owning a car, although insurance companies are rather stupid about the rates on those.)

      6. In general, insurance follows the car, not the driver. Most policies will provide liability coveragae to named drivers on a car’s policy if they borrow a friend’s vehicle but that insurance is secondary. If the friend’s vehicle is uninsured, you would not be covered because the secondary won’t kick in unless the primary is valid.

        On the flip side, if a friend who does not have insurance borrows an insured vehicle, any accident would be covered.

        http://www.carinsurancecomparison.com/does-car-insurance-follow-the-driver-or-the-car/

        http://www.carinsurance.com/kb/content10655.aspx

    2. This is part of the problem we have in regulating the TNC’s. When we say that we have 800 taxicabs, we mean that we have 800 vehicles and enough drivers available to keep the majority of them operating 24/7.

      When we say that the cap is 300 rideshare vehicles, we are talking about something else. Some drivers are indeed full time, which would at most represent a vehicle operating a maximum of 12 hours/day (or more likely 8 or 10). And not every day. Most of the drivers and their vehicles are operating perhaps around the 16 hour/week point, and many of them less. Some are only out there occasionally.

      The new regulations are being written as if each vehicle were available on a continuous basis. I think it is important to remember that the TNC model is not that of the professional driver. Perhaps, yes, a commercial driver who has a proper license and insurance. But in this case, the proposed regulations punish the TNC driver because they DO only appear on the street when demand is higher.

      Apples and oranges.

      1. The majority of taxis and for hires in Seattle/KC do not go 24X7. Most are operated by owner drivers who work 60 hours a week with no lease driver.

  6. Sawant criticized the lack of mass transit in the city and proposed eventually having a publicly-owned and unionized TNC company. She supported market caps, saying that it was the taxi driver “Davids” against the “Goldman-Sachs-Jeff-Bezos” Goliaths.

    She’s never going to exit campaign mode and enter governing mode, is she?

  7. It’s great that Sawant “criticized the lack of mass transit in the city”. Now what’s she going to do to increase it? Not everybody can or wants to use a carshare (what does TNC mean?), and if everybody did there wouldn’t be enough drivers to go around. So improving mass transit means either raising more service hours for Metro or starting a city transit agency. When the issue of the Metro cuts came up, she did not say, “We must support plan B to ensure bus service for the poor.”; instead she said, “We should tax the 1%.” Well yeah but we can’t do that right now this year, so if that’s your only solution it means the cuts will happen and you think taxing the 1% is more important than bus service.

    1. Honestly, I think Sawant is going to be the worst thing to ever happen to socialism in this city in the long term. People are going to associate the movement only with her reactionary, inconsistent positions and complete willful ignorance of the real world.

  8. Just for a complete understanding of the situation, I would like to see someone with some years’ personal experience in the taxicab industry, preferably an owner-driver, join this discussion.

    Mark Dublin

  9. Can someone explain why caping would be a good idea? I don’t understand why this debate is even going on. We don’t limit the number of grocery stores, gas stations, or cars on the road why limit TNCs?

    1. The caps are in place to prevent flooding the market with transportation providers that will not make enough money to meet their obligations. The TNCs have yet to show that their model can do that since they have been cutting corners.

      That is what happened during Seattle’s disastrous deregulation of the taxi industry from 1979 to 1987. The results are summarized in the hyperlinked report as:

      1. A significant increase in new entry;
      2. A decline in operational efficiency and productivity;
      3. An increase in highway congestion, energy consumption and environmental pollution;
      4. An increase in rates;
      5. A decline in driver income;
      6. A deterioration in service; and
      7. Little or no improvement in administrative costs.

      In the past few years, the Seattle area has implemented defacto deregulation. The city issued 200 For Hire Vehicle licenses over the past five years. King County still issues these licenses. The FHVs are two tone taxi lookalikes that are flat rate instead of metered. The second biggest cab fleet in King County is Eastside For Hire which just started as a company five years ago.

      Now on top of that are the TNCs and a huge increase in limousines. Taxi drivers are not making it up that they are losing business.

      1. And this is another reason why transportation services is best provided by part-time drivers, not full-time drivers. With part-time drivers, the number of drivers can easily ramp up and down based on demand. With full time drivers, you have to choose between a glut of drivers chasing few customers at off-peak times or customers stuck with hour-long waits for a cab at peak times.

        This is why if we want good service, we cannot have a regulatory scheme that makes it unprofitable to operate without each driver working full-time.

      2. If a grocery store was not making money it would shutdown. I don’t understand why taxis, TNCs, or whatever other acronym you have would be any different. If a companies supply exceeds demand it sounds like something the company should handle not the city. It seems to me all of the issues you highlighted should be addressed by any business that wants to be successful.

      3. Ben, the difference comes down to this: grocery stores are immobile.

        Because grocery stores stay put, neighbors can count on them being there. A completely unregulated taxi system will result in many people who would otherwise be dependent on taxis not being able to catch a ride. Instead, all the taxis will be circling downtown, trying to pick people up to take them to the airport or to the Eastside.

        The city has the obligation to enable mobility of all of its citizens. It considers fostering a functional taxi service to be part of its mandate. It also considers ensuring access to groceries part of its mandate, but the market is able to sort that one out much better because of the immobility.

      4. It is not the regualtory scheme that makers the part time owner driver model unprofitable. It is the built in expenses such as insurance that make it unfeasible.

      5. It only appears that way because of the mechanisms traditionally used to price insurance today. Clearly, the total risk of accident per month or year that the insurance company could be liable for does go up relatively proportionally with the number of miles driven. However, as today’s pricing model does not allow the insurance company to actually know how many mile are driven, the insurance companies instead have to rely on heuristics, and the result is some people are under-changed, while others are over-changed, depending on how their personal situation reconciles with the heuristics used by their insurance company to set the premium.

        In addition to sex, age, etc., insurance companies use the obvious heuristic that people who drive their cars for commercial purposes tend to drive a lot more miles than people who don’t. After all, if you’re driving around 8 hours a day to earn your living – be it people or cargo – you are probably driving significantly more hours and more miles than the average person who just drives to work and back once a day, plus errands.

        However, there are many situations where this heuristic breaks down. People who drive others around for money only a couple hours a week is one example. Another example is contractors who might drive to people’s homes to do remodeling, etc., for their business, but remain at a particular job site long enough that the total amount of driving they do each week is not that much more than a person with an office job commuting to work.

        And of course, the premium for commercial driving isn’t just heuristics. It’s also an implicit assumption that businesses have more money than individuals and are willing to pay more for the same service – just like business owners are expected to pay a lot more for phone lines and electricity.

        On the flip side, people with ordinary office jobs, but extremely long daily commutes, or people who are taking a month off work to drive across the country and sight-see, are the ones benefiting from all-you-can-drive pricing.

        If an option existed for pay-as-you-drive commercial insurance, that would solve the part-time driver problem. However, to my knowledge, mainstream insurance companies do not offer such a service because, at least currently, the need for such is a small enough niche to make it not worth their while to go through the bother of figuring out how to price it, or how to measure miles driven without a bunch of administrative overhead. However, the insurance provided by the ridesharing companies today does effectively provide just this, and that sounds like a much easier model to peruse than to require the drivers to purchase a separate policy.

        Also, as an aside, the meaning of “commercial driving” is quite vague an open to interpretation. Is driving from the building you work in to another building for a meeting considered “commercial driving”? How about a small business owner driving to the store to purchase materials? How about taking a client out to a restaurant to convince him to buy something? Minimum-wage parking lot attendant driving between lots to issue tickets to illegally parked cars? How about ordinary commuting to work? If commuting to work is not “commercial driving” and an Uber driver going from home to where a customer wants to be picked up is effectively like commuting to work, why is the latter treated differently?

        If you interpreted “commercial driving” to the letter, and insisted that any person making one single trip that constitutes “commercial driving” purchase an all-you-can-drive commercial insurance policy, the result would be a huge number of low-wage workers in all sectors of the economy suddenly burdened with an additional huge additional expense, many of which would become unable to pay their bills and be driven to welfare, homeless shelters, and becoming a burden on society. Why should one particular industry be treated differently than all the others?

      6. The caps on everything except street hails should obviously be thrown out. Councilman Burgess wrote an EXCELLENT essay on this and y’all should read it.

        http://timothyburgess.typepad.com/tim_burgess_city_view_/2014/02/thoughts-on-taxis-flat-rate-for-hires-and-app-based-car-services.html

        There is no other industry in which we have “production caps” in order to prop up the income of the businessmen in the industry. This sort of thing — official promotion of cartels, price-fixing to guarantee profits to businessmen — was done rather heavily in the 1920s (read the papers from that era, and you’ll read about it), but it went out of favor for obvious reasons — it’s usually a subsidy to an elite which hurts everyone else.

        Now, why is there a cap on street-hail taxis? In order to prevent road congestion from taxis cruising for hails and clustering at a few points, which is an actual public nuisance. In New York City, they have problems with all the street-hail cabs cruising up and down Manhattan Avenues, clogging up the street, while leaving no taxis to be found in the other four boroughs. That sort of problem is real and caps are one way to deal with it.

      7. “However, as today’s pricing model does not allow the insurance company to actually know how many mile are driven,”

        They ask.

      8. ClaimsAdjuster, your interpretation of the effects of Seattle’s deregulation of the taxi industry is…. from the report written by the incumbent taxi industry. Pardon me if I don’t believe a word of it.

        Find me some independent, unbiased sources. By all reports, Seattle has appallingly bad taxi service *right now*.

    2. Nathaniel, the report on deregulation was written by a city regulator, Craig Leisy, not the taxi industry.

  10. Ben: “If a grocery store was not making money it would shutdown.”

    Passenger transportation is littered with the bodies of private companies that shut down. Black Ball Ferry lines – bought out by the state in 1951. Heavy rail passenger service – abandoned by the railroads leading to the creation of Amtrak. Interurban Light Rail – bankrupt by 1927 due to competition from automobiles, only reemerging 70 years later as taxpayer funded Sound Transit. SeaTac/King County airports – funded by port and county. Metro took over private bus companies Seattle transit and a number of suburban bus lines that were facing bankruptcy in 1972.

    Taxis and long distance bus lines are really the only forms of passenger transportation left that are unsubsidized private businesses. Taxis are public utilities with regulated rates. They are available to those without credit cards or smart phones.

    Part of the bargain is that the number of taxis are capped so that the operators can make enough money to meet their responsibilities such as insurance. That is something that the corner cutting TNCs have not demonstrated that they can do.

    1. The old model of taxis simply does not handle sharp and relatively short surges in demand. The notion that you need to buy an extra car and hire an extra person to work a 12-hour shift every day just to handle a demand surge for a few hours on Friday and Saturday nights is ludicrous.

      With full-time drivers, the level of service becomes one-size-fits-all. Great availability at 6 AM on a Sunday morning, terrible availability at 10 PM on a Saturday evening. Until recently, the attitude towards problems like this was for people to shrug their shoulders and say if you don’t like it, go buy your own car. But with 21st century technology, people now have better options.

      With all the hubbub about TNC’s, I still observe regular taxis driving around carrying people just like they always have. I don’t see TNC’s driving them out of business anytime soon.

      1. No, the taxi and for hire drivers respond to demand. There are part timers who rent cabs only on weekends. There are very few out on a Sunday.

        “The notion that you need to buy an extra car and hire an extra person to work a 12-hour shift every day…is ludicrous”

        It is the TNC drivers who are buying the extra cars because they are trying to fit into a part time owner-driver model, which is economically unfeasible. The TNCs are dumping more cars on the street because they insist in building their own fleets when they could be dispatching to taxis and for hires as well, the way Fly Wheel does to Eastside For Hire.

      2. “No, the taxi and for hire drivers respond to demand. There are part timers who rent cabs only on weekends. There are very few out on a Sunday. ”

        Except there’s a cap, y’know? So they don’t respond to demand ’cause they aren’t allowed to…

    2. So what you’re saying, ClaimsAdjuster, is that taxis and dispatch cars need to be subsidized, like all other transportation.

      Fine. Probably true.

      You’re also saying that we should subsidize them in the least effective possible way, by limiting supply, creating angry people who don’t get taxi service.

      No, that doesn’t make sense. We don’t subsidize the railroads by limiting the permitted railroad routes. (This WAS actually tried, back in the 19th century. I could go through the whole gory story, but it’s a bad idea because it creates awful service, high prices, turns the public against the railroads, and eventually the idiotic supply cap gets dismantled. Watch as the same thing happens to Seattle’s taxi cap!)

    3. (Long-distance buses are, of course, subsidized as well. They freeload on the roads and the sidewalks, and sometimes on city bus stations. The ones which tried to build their own bus stations are doing poorly, and none of them tried to build their own roads.)

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