photo-1While Seattleites are both generally dissatisfied with traditional taxis and broadly impressed by TNC innovators such as Uber and Lyft, their highly disruptive market entry has left everyone scrambling to catch up. With a year of study and process coming to a close, the City Council mostly agrees on a set of regulations to provide common standards for insurance and safety. The more fundamental policy question – whether the Council should regulate supply – has sharply divided the normally consensus-driven council. The working proposal calls for caps of 300-600 drivers (an 80% or 40% cut from estimated current supply, respectively). Though the entire special committee (Clark, O’Brien, and Harrell) supports market caps, those who oppose caps (Bagshaw, Burgess, and Rassmussen) are taking their arguments public.

First up was Councilman Burgess, writing a thorough blog post last Friday on the issue of caps:

[W]e face a supply problem in the dispatch market as there are data and anecdotes about long waits for taxis, or taxis that never arrive. The walk-up market needs caps on supply, the dispatch market needs more supply. This distinction makes a strong case for regulating the two differently.

Moreover, the TNCs have quickly changed what’s possible in the dispatch market and have done so with much higher customer satisfaction rates, according to a City-sponsored survey.

….

Given the market dynamics discussed above, I favor removing limits on vehicles and drivers in the dispatch market for the two-year pilot program being proposed.

This would seem to be a great compromise. Refusing to cap TNCs would greatly expand vehicle availability and protect a culture of innovation, while preserving  hailing rights for traditional cabs (and partially expanding those rights to for-hires) helpfully limits the inefficiencies of trolling for fares.

Next was Sally Bagshaw on SLOG last Monday:

Caps impose inappropriate limits to the growing rideshare industry, and unfairly reduce job opportunities for current and interested new drivers. Caps will slow the growth of burgeoning rideshare opportunities and frustrate those of us who want to get around our city without a car.

Caps compromise our ability to experiment within the marketplace to see how great the demand is for transportation alternatives. Data shows that a significant percentage of Seattle residents would love to live car free, if fast response time for rides were consistently available. Let’s see how fast we can make it.

Rather than mandating artificial limits, Seattle should take full advantage of all available technology to respond to consumers’ transportation needs.

With the divided council leaning 6-3 towards arbitrary supply caps, Mayor Murray has been a source of hope for transportation advocates, stating quite clearly that while he supports common sense safety and insurance regulations on TNCs, he believes they are an asset to the city and does not want to see caps chase out this public good. Whether or not he would oppose the council if they coalesced around a cap (perhaps Clark’s proposed compromise of 600) is unclear.

Hopefully with a couple more weeks to consider the various options and possible repercussions, the council and mayor can work out a path where these needed regulations on insurance and safety are implemented but innovation and mobility are not cut off at the knees.

Seattle Transit Blog’s editorial on TNC policy is here.

64 Replies to “Arbitrary Caps on Taxi Alternatives Divide Council”

  1. Not only would a cap be a bad idea now, imagine the process of increasing the cap as the city grows. They’re politically incapable of increasing taxi licenses and I’m sure they’ll be the same for TNCs.

    1. Worse, drivers who acquire a TNC license and gradually lose interest in driving others around will have little reason to give up their license and the emergency source of income it could provide if they lose their job. Over time, the majority of the TNC licenses will be held by people who are sitting on them and never use them – the real number of active TNC drivers will be way below the cap in the number of licenses.

      2. So is there a provision in the draft ordinance to see how often licensed individuals are actually driving, and to yank their licenses if they fall below some limit? If not, then how will they be replaced?

  3. Are these services only franchised to urban cores? Are they active in the suburbs of East and South King?

    Does anyone have experiences using them in the suburbs, at the edges of King County say, or beyond?

    1. Uber is active throughout King County, and Lyft recently expanded its pick up area to Shoreline and SeaTac/Tukwila. Most trips still begin in Downtown Seattle or near Seattle’s urban villages, and most suburban trips are probably still airport drop offs, but suburban service will inevitably become a bigger part of the service model.

    2. I have driven for Sidecar in Bellevue and other drivers report that there is demand for rides over here. I’ve seen drivers available in the south end. I’m waiting for the insurance gaps to be filled before driving more. I used Sidecar to pull me out of the house with the car when I have errands to run. I can set a pickup radius and a destination radius around a preferred destination. Apparently, I can also set pricing now which allows me to give a discount to passengers since they are generally headed my way anyway. I’ve always preferred Sidecar’s model since their end goal is “true ridesharing”. The capabilities of their driver app show that they are serious about that, even if many use it at a source of significant income.

      I have chosen to have a car (again) because I live in suburbia and often have to go into work before the buses start running. Sharing out my extra seats is a way for me to mitigate the impact of my car ownership while providing others another option to get around. Setting a cap will eliminate any possibility of me sharing out my extra seats when I’m out and about…

      1. So if you had to pay $4K per year for commercial insurance on your ride plus 0.55/hr for Workmen’s Compensation, would you still work part time for Sidecar?

      2. Maybe a better question would be: Why should commercial insurance for a hugely-part-time driver be $4K/year?

      4. ClaimsAdjuster,

        I think you’ve made it pretty clear what you don’t like, namely TNCs. What do you like? Aside from the abolition of TNCs, what do you think would be the ideal situation for the taxi/for-hire/town-car situation in Seattle and King County?

      5. I don’t “work” for Sidecar, they send me leads on individuals who’d like to fill the empty seats in my car and are willing to pay for it. They also provide insurance, albeit currently inadequate. Assuming they figure out a model where they provide leads/payment minus a cut for them and proper insurance, I’m game and obviously, so are people.

        I suppose you also think Metro Mile insurance should not be allowed to operate and that automobile owners should only be allowed to purchase “all you can eat” style insurance?

      6. @VeloBusDriver, the people on this blog are so busy trying to reframe and quibble about my question, that it doesn’t get answered. I know UberX drivers that are paying $4K a year for commercial insurance and 0.55 an hour for L&I. But they work full time. Would you shell out that money for part-time?

      7. That’s an overpriced policy for a part-time driver. If there are no suitably-priced policies on the market, I think there’s an opening for a new insurance company.

        Actually, it’s not that hard to start an insurance company. You just need a pile of money (which mostly sits there, being invested) and no criminal record. The rest is paperwork or attempts to become more profitable.

        If they accumulate enough capital, Uber could start a captive insurance company and sell part-timers policies by itself, bypassing obstreperous insurance companies. Hell, the City of Seatlle could start its own insurance company if it wanted to.

        This is probably not necessary. You name a niche, some existing insurance company will be willing to move in, and that includes part-time livery insurance.

      8. Given the lack of answer to my question, I think it’s safe to say that ClaimsAdjuster simply wants to watch the world burn.

      9. Nathanel: “If they accumulate enough capital, Uber could start a captive insurance company and sell part-timers policies by itself, bypassing obstreperous insurance companies.”

        The deep pocketed investors behind the TNCs (Bezos,Andreesen,Goldman Sachs, Google, Horowitz) already have that capital. They haven’t done it yet because no jurisdiction in the country is making them step up.

        The Seattle City Council legislation requires the TNCs to provide insurance from the time that the driver logs in to the app until he signs out. The most likely scenario is that UberX will go from “recommending” that their drivers carry commercial insurance on their ride to requiring it. Even with that, the Seattle law is going to cost the TNCs major money because their excess liability insurance will cover the entire time drivers are logged in, not just when their vehicles are occupied or in transit to a fare.

        Once Seattle does it, other jurisdictions will follow suit. Even the ICPUC (Incompetent California Public Utilities Commission) will have a hard time explaining why they cannot do the same thing.

        Nathanel: “Hell, the City of Seatlle could start its own insurance company if it wanted to.’

        Seattle taxpayers in this city are not that willing to subsidize millionaires. That is why the Super Sonics are in OK City.

  4. I know the cab drivers will complain about being capped while “rideshare” drivers aren’t (yet).

    But it isn’t the number of cabs that need to be capped. It is the locations their vehicles can take up space that need to be regulated. There are way too few cabs, which is helping feed the rideshare market. The city council aren’t the right people to set a right number. Good safety and space regulations, rather than arbitrary caps, will allow the market to sort that out.

    Concerned about wages for cab drivers? Set a floor.

    1. Concerned about wages for cab drivers? Set a floor.

      Taxi drivers aren’t employees. They don’t earn wages. They are independent operators whose income is fares. We already regulate those fares.

  5. Question for readers with experience as Innovative-TNC passengers: How good is drivers’ handling of their cars, and also their knowledge of location, direction, and best route at the time you ride? Last year in San Francisco, I had a talk with a young Russian car-service driver, who also owned one or two other cars.

    He told me that when he opened his business about ten years ago, there were fewer drivers and companies, but individual level of skill was higher. Now that entry to the market is easier and service more plentiful, passenger has more chance of ride with someone who doesn’t quite know what he’s doing.

    One man’s opinion, and hardly unbiased. But I’m honestly curious about service quality with the new drivers and companies- and more curious about where they get their experience and training.

    I personally don’t like the idea of arbitrary caps on any service, and I don’t like either Port of Seattle’s method of awarding airport privileges, especially because of its last result. But one other perspective I can see:

    It may very well be that limiting numbers of market entrants to the number who can meet a high standard of service will be sufficient regulation. But I can see both the Council and the industry worrying about a period of uncertainty and disruption while “the market” finds its balance- as real-world markets often struggle with doing.

    If service providers across the spectrum can get together with a plan for an orderly transition and present it to the council, result will be better for everybody, not least the passenger public.

    Mark

    1. Uber (Black Car and SUV) drivers are amazing. I’ve always been impressed with everything about them: their driving skill, their navigation skill, their professionalism.

      UberX drivers are pretty good on that account, though not always quite as good as regular Uber.

      Lyft and Sidecar drivers don’t really compare, especially outside of downtown. UberX appears to be mostly people who have professional driving experience, but don’t have a fancy fleet car; Lyft and Sidecar are mostly people who have a car and want some extra money. I’ve been taken on some pretty ridiculous routes: one driver decided to get between Seattle Center and Greenwood by going up the Counterbalance.

      The main reason I use Sidecar is that I like their app and their payment model. You type in your destination, and get the final flat price, before even requesting a driver. This makes the ride less stressful, since I don’t have to worry that extra traffic (or a driver who makes strange navigation decisions) will end up increasing my fare. Even so, if I really need to get somewhere fast, I’ll still take Uber Black Car.

      1. Uber is pretty ruthless about weeding out drivers with complaints / accidents. I drove for UberX for a short time but gave it up once I realized they didn’t offer insurance that covered the driver. (They recommended that you get commercial insurance, but let you drive without proof that you had it. That, quite frankly, is why I won’t ride with UberX – at least for now)

    2. To date, I have ridden Sidecar once and Uber twice. I have observed no difference whatsoever in the quality of driving between Sidecar, Uber, and the taxis/for-hire vehicles I was using before.

  6. it is not an Arbitrary Cap at all, it was an opinion expressed by more than one council person that because Uber had refused to release any specific data as to how many drivers they had signed up that the concerned council members could not in good consciences determine what, if any number of TNC’s would be appropriate?

    http://www.seattlechannel.org/videos/video.asp?ID=2161405

    wouldnt it be great if we didnt get run over today?

    1. Perhaps they could look at the size of the Uber Drivers’ Facebook group, like some of the commenters here have been doing?

      1. perhaps uber oughta quit being as shifty as a New Jersey Bridgegate operative that just took the 5th and refused to hand over routine data/documents and just play above board, apply for the very same permits as existing compliant companies and current drivers do by taqking pre requisite and random drug screens, pass real background checks, get real liver for hire insurance? I mean really?

        http://www.salon.com/2014/02/17/youre_not_fooling_us_uber_8_reasons_why_the_sharing_economy_is_all_about_corporate_greed/

      2. Bagshaw’s SLOG post already did that. From Uber’s petition signing numbers (600) and ‘conversations with Lyft drivers’, she estimated a total current TNC fleet of 1,200.

        Even if it’s entirely the TNCs’ fault that the council lacks the information to make a good evaluation of the market, the proposed caps are still arbitrary in an economic sense. When they throw around round numbers like 300 or 600, they’re clearly flying blind.

        If I were the council I’d play hardball with these companies, getting the data the council needs by dangling the huge carrot of deregulation while threatening the stick of a cease-and-desist order.

    2. Maybe the city should just keep proposing higher caps until the TNCs stop complaining, and then they’ll know how many drivers there are. :P

    4. Ah, central planning. Does the city council really need to determine how many rideshare cars this city needs by central planning?

      Central planning is fine when necessary, but if you can get results while avoiding it, I sure suggest avoiding it. If you default to central planning, you make the mistakes of the Soviet Union.

  8. As a philosopher, one of my jobs is to ask questions that get people to think a level deeper than they otherwise might have. My question today is are we witnessing selective outrage by some? If caps are inherently evil, why can’t I find a post or comment criticizing taxi caps before TNC’s were ever a topic of discussion?

      1. Why can’t I find a post or comment criticizing taxi caps BEFORE TNC’s were ever a topic of discussion? A few years back, TNC’s were rarely talked about. Why weren’t there occasional posts or comments decrying the cap on regular taxis? Find me a stand-alone post from a few years back that called for the lifting of caps on taxis. Don’t bring me a link to a post where both taxis and TNC’s are discussed.

        PS, I’m not a troll. This blog doesn’t put up with trolls. If I were one, I would have been banned long ago.

      2. Because this blog didn’t exist before 2007, and back then (judging from my occasional delves into the archives), it was a lot more narrowly focused?

      3. If you dig through the comments in early years of this blog, complaints about the low supply of taxis and lower supply of for-hire cars appear in the comments more than once, before the blog editors saw fit to discuss the matter in the main blog entries.

      1. The action by the city of NY in the 1937 was frankly stupid. The problem in the 1930s was that everyone was out of work and bankrupt. So people were trying whatever they could think of, including trying running taxis.

        Limiting the number of cabs… well, it helped the remaining taxi drivers, but everyone else was still out of work and bankrupt. Not really helpful.

    3. @sam, the caps issue is the last stand of the Ubertarians who manage STB. They have consistently resisted regulating the TNCs. They lost on the insurance issue and the whole notion of not regulating the TNCs at all. All they got left is harping on caps.

      Look at the last article by Matthew Johnson, “The Future isn’t Going Away”, which boiled down to “The Borg(TNCs) are the future. Assimilation is inevitable. Don’t regulate TNCs too hard or they will go Napster on you.” In case you didn’t get the point, Johnson displayed a pirate ship as a graphic.

      After the inanity of that post, the only direction left for Johnson was up.

      1. Yeah, Lyft and Uber got some Seattle House reps to file a bill on a Friday with hearings scheduled for the following Monday. They were hoping that they could sneak the bill through without anyone noticing. It did not work out the way they hoped. The bill died.

    2. The problem with the ICPUC (Incompetent California Public Utilities Commission) ruling is that they left the big insurance gap in the TNC’s coverage that was exposed in the San Francisco fatality accident on New Year’s eve involving an UberX driver. Although the ICPUC was warned repeatedly by the CHP, the California Insurance Commissioner and the insurance industry that they had left this gap, the Commission charged ahead with their ruling. They still have not fixed it.

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

      1. Doesn’t sound like there’s any insurance gap in California.

        California simply doesn’t require a bunch of insurance which I’d expect them to require (such as uninsured motorist). Since they don’t require said insurance…. you can’t call it an “insurance gap” unless you’re a salesman. Lots and lots and lots of cars, even most of the cars on the road, may lack insurance of that sort in California.

      2. Nathanel: “Doesn’t sound like there’s any insurance gap in California.”

        Really? An UberX driver, fiddling with his Uber smartphone app, runs over a family and kills a six year old. Uber says it won’t pay because the driver was not servicing a fare. The driver’s insurance denies coverage because his policy was non-commercial.

        So nobody is stepping up to cover this accident and you say there is no insurance gap. Fortunately the Seattle City Council is not listening to the likes of you.

      3. Apparently that can happen with any car in California. I’m a little surprised, but there you are.

      4. No, not “any car”. Just vehicles operating as taxis insured by non-commercial policies.

  10. Explain why the Seattle City Council should bend over backwards for these TNCs? They have been operating illegal for more than a year. Most of their vehicles still are not carrying commercial insurance leaving the big gap that was displayed in the New Year’s eve fatality accident in San Francisco involving the UberX auto. Their drivers are still not covered by Workman’s Compensation exposing the taxpayers to picking up the tab for their on-the-job injuries.

    The TNCs refuse to show the City Council their insurance policy, claiming it is proprietary. They have turned down requests to provide the city with figures on the number of drivers. They have decided instead to take pot shots from the sidelines instead of seriously engaging with the Council.

    The TNCs have been successful in other states in corrupting the political process. They thought they could get away with the same stuff in Seattle. They are wrong. The Seattle City Council is leading nationally on regulating the TNCs. Expect other jurisdictions, such as the Incompetent California Public Utilities Commission (ICPUC) to follow Seattle’s lead.

    1. I support their carrying insurance as well. But could you please explain to me what limiting the number of vehicles under what demand warrants has to do with any of these goals? And how is making institutions respond to public pressure corruption of the political process?

    2. Explain why the City of Seattle should bend over backward to keep taxi drivers happy, while simultaneously screwing over constituents by giving them less choice and poorer service?

      1. The taxi drivers have been playing by the rules while the TNCs have been waving their middle finger at the Council, why don’t you start there?

      2. But t taxi and for-hire drivers have not been playing by the rules. Look up any number of stories from the comments of this very blog, of taxi drivers wantonly violating the taxi regulations, or for-hire drivers wantonly violating the for-hire regulations. Presumably think they can get away with it because *who else are you gonna call*? (With the low cap on taxis and lower cap on for-hire cars.)

        One taxi driver actually dumped someone at the side of the road — not at his destination — and wanted to be paid!

  11. Probably not a good idea to let pet political hates on other topics prompt my STB comments. Getting OT-averse. But the “public option” I think this country still needs in its health care is worth some discussion in the cab industry, too.

    From three years or so driving cabs full time and thirteen years driving transit, the first three for private employers and the last thirteen for Metro, I can’t be hard-and-fast about pay arrangements for the two trades.

    “Private” covers many work-situations, from owner-drivers with either one car or several to drivers who are simply employees, with a variety of caliber of management. On the other side, in both part-time and full-time divisions, a huge difference between publicly-employed individuals involves basic personal attitude to the work far deeper than contract language.

    I know that many cab drivers would not consider present lower wages and benefits a fair trade for Metro’s work rules- especially ironclad demand re: time and location. And many of my union brothers and sisters “in the day” would think privately, though not talk in the bull-pen, about how much pay they’d trade for the leeway to handle their job to a higher standard than dictated.

    So for me, the cab I’d choose for my standard ride in is the one I’d like to drive: in modern symbols, “Slash” across Exploitation symbol, “Slash” across (somebody create symbol for Subgrade Service). Preferably owned by its driver, either as an individual or as a working member of a cooperative.

    Same, incidentally, and increasingly so with age, for public transit. When I first took the wheel for Metro, I honestly thought that at the levels that mattered, either I really was joining a worker-owned cooperative, or something I could help turn into one. Now think that public employment itself depends on exactly that attitude in resurgence of that attitude in people 37 or younger when they first click the trolleybus in “Forward.” Or become King County Executive or Councilmember, and Sound Transit CEO.

    Mark Dublin

  12. With regards to insurance, one potential solution that could please all parties would be for the TNC companies to get together and offer their own TNC-driver-friendly insurance policy that would replace, rather than supplement the driver’s personal insurance policy. It would be priced so that any difference in premium over a standard policy would be proportional to the amount of miles the driver is actually carrrying passengers, and people who have the potential to drive for a TNC, but don’t actually do so would pay nothing more than what they would pay for a regular personal insurance policy with someone else. It would also have no gaps like the current model (i.e. drivers would explicitly be covered when signed into the app, although it could still exclude commercial activity for services outside the sponsoring TNC companies).

    If the three major players got together on this, they could use their combined clout to negotiate a discount with insurers. I’m sure insurers would be willing to offer some sort of a discount in exchange for a policy that is officially-recommended by all three companies, especially when it includes the drivers’ personal driving, not just driving affiliated with a TNC itself. It would also allow people to drive for multiple TNC companies without needing to switch insurance. The policy would also be priced with the assumption that only drivers with good driving records would be eligible which, for a service that’s carrying passengers, is something you would have to have anyway.

    1. The investors behind the TNCs (Bezos, Andreessen, Horowitz, Google, Goldman Sachs) have lots of money and clout already. They don’t want to dirty their hands with the transportation side of the cab business – they just want to suck money out of it with an app that has no employees and no liabilities.

      1. Your view of those investors sounds sort of like the general view most people who’ve had to deal with them of insurance companies — they just want to suck money out in premiums without ever paying out claims. :-)

        In other words, so what else is new.

      2. @nathanael, another specious comparison by you. Insurance companies do in fact routinely pay out claims. To the extent that they try to weasel out of their contractual obligations, there are insurance regulators and lawyers eager to make them meet their responsibilities.

        The TNCs and their drivers, on the other hand, routinely engage in insurance fraud. It is part of their business plan to operate illegally.

        The point that you are tring to deflect is that the deep pocketed investors behind the TNCs have the resources to bridge the insurance gap. They just do not want to.

      3. “The point that you are tring to deflect is that the deep pocketed investors behind the TNCs have the resources to bridge the insurance gap.”

        I’ll accept that point.

        “They just do not want to.”
        And I’ll accept that in *car insurance*, the companies usually do pay out.

        Health insurance… is different. They don’t.

  13. I think Burgess’ solution would work well. Today, TNC technology only helps supply match demand in the dispatch market; it doesn’t do anything for matching supply with hails.

    Another approach might be to use the technique the city used with on-street parking prices. The number of medallions released could be slowly increased until a certain percentage of cab time becomes idle during peak demand–as measured by meter data. If there is too much idle time, the city offers to buy back medallions using money the city collects from the medallion program; too little, issue more medallions.

      2. @Brent, no. You seem to forget that taxis are public utilities with regulated rates. They can’t change their rates when they feel like it and $415 to go a few miles as Uber did in NYC to Jessica Seinfeld.

        http://instagram.com/p/h93iXKxyPa/

        The purpose of the caps is to ensure that the cabs make enough money so they do not cut corners on insurance etc. the way the TNCs have been doing.

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