'E-Hail' Companies Draw Ire From Cab Commissions

Robert Siegel talks with Geoffrey Fowler, a reporter with the Wall Street Journal, about popular ride-sharing and taxi apps like Uber and SideCar. They've begun to run afoul of state and local regulators as they've grown into a convenient alternative to hailing a cab the old-fashioned way.

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ROBERT SIEGEL, HOST:

Raising your arm to hail a cab could be a thing of the past, that's if so-called e-hail companies like Uber and Zimride get their way. They've developed smartphone applications to connect you to a nearby car. In some cases, it's a licensed cabbie behind the wheel. But in others, it's a nonprofessional driving his own car for cash. And now, some of these companies have run afoul of state and local regulators.

For more on this, we're joined by Geoffrey Fowler. He is a San Francisco-based reporter for The Wall Street Journal. Welcome to the program.

GEOFFREY FOWLER: Thanks.

SIEGEL: And let's start with the company Uber. It seems to be the most traditional of these e-hail companies. How does it work?

FOWLER: All of these companies, what they have in common is that none of them have their own cars or their own drivers. They've set up new kinds of systems and apps and using the Internet to connect riders and drivers. What Uber did, and they were one of the first ones to enter this market, is they found a whole world of licensed limousines and town cars that are out there, and they made an app to help connect you with one pretty much when you need it.

You pull up the app, you say, "I need a ride," and it will show you a little picture of a town car coming closer to you, and then you hop in. It'll cost you usually around 30 percent more than taking a regular cab.

SIEGEL: Well, let's move on now to the Wild West of e-hail. There's an app called Lyft, L-Y-F-T, from the company Zimride. I gather basically anyone with a car and insurance can pick up riders in return for a donation, correct?

FOWLER: That's right. Out here in San Francisco, where I am based, there's all this kind of innovation and people trying new things. And one of the ideas that we've had out here in the Bay Area for a long time is called ridesharing or casual carpooling. And with services like LYFT and SideCar or another one called Tickengo, you pull up an app, you tell it where you are and where you want to go, and it will send an ordinary driver, not someone who is professionally trained or even licensed by anybody.

It's just a guy in his car, and then it tells you how much it would suggest on average that you pay for that ride. They claim that it's usually a little bit cheaper, actually, than a traditional taxi, and you're off on your way.

SIEGEL: Well, New York City took issue with Uber's more restrained version of e-hail, and there was a problem there. So what do big cities make of companies like Zimride that are growing what essentially amounts to a shadow cab industry that's largely unregulated?

FOWLER: Cities are in a pickle. Many of these cities, including San Francisco, especially, but New York and other places, they want to be seen as places that are really friendly to technology. They want to be, you know, the next Silicon Valley, have, you know, the epicenter of innovation. And yet, there are established taxi industries and limousine industries and all these places which are really upset about the establishment of what they see as an alternative, unlicensed taxi industry, a whole new world of cabbies that don't have to play by their rules that are out there competing against them.

They also worry about safety for a number of reasons. One, these drivers aren't professional, although there is some level of vetting that goes on before they can participate in a company like SideCar or Lyft. Still, they're not out there all day long, and they haven't necessarily gone through certain training.

And then there's an insurance question. These folks are driving their own car, and they have their own personal insurance. Does that really cover a case when you're acting as a semiprofessional driver? Nobody really has a good answer to that yet.

SIEGEL: If an off-duty limousine driver in New York City were going to give you a ride for just a 20 or 30 percent premium over a taxicab fair, that's an amazing bargain. Those guys are very often demanding two and three times what a taxi would cost when they pull up and offer you a ride in New York City.

FOWLER: That's right. And some of these systems like Uber have on-demand pricing. So I know when Sandy came through New York the prices went way up, because there was a lot of demand. So it really can vary depending on the time of day and the place. But for a lot of people, it's worth it to pay, you know, 20, 30 percent more for the guarantee that you will have a cab or you will have a ride waiting for you exactly when you expect it. It's like a little picture of a vehicle moving your way on the screen, and that makes people feel better.

You know, that raises one of the points that basically, a lot of what these services have done is found a big missing whole in the service that's provided by the traditional taxi industry. There's no reason why taxi companies also can't have apps of their own and give you this, you know, instant feedback and allow you to pay over the phone. I mean, they could be doing all of this as well, but the reality is they haven't needed to for a long time because they've had a monopoly on their industry.

SIEGEL: Geoffrey Fowler, thank you very much for talking with us.

FOWLER: You bet.

SIEGEL: Reporter Geoffrey Fowler. He's been writing about the new e-hail industry for The Wall Street Journal.

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