Last year Mayor Eric Garcetti asked the city's Board of Taxicab Commissioners to look at scrapping unnecessarily burdensome rules that were putting taxis at a competitive disadvantage with app-based ride services such as Uber, Lyft and Sidecar. The mayor's request came at a crucial moment for licensed taxicab companies in Los Angeles: In the first half of 2014, they saw their total trips drop 21% compared with the same period the year before. The companies complain that they can't match the price or convenience of ride-share apps because of city regulations.
But rather than streamlining the rules, the board has decided to double down on taxicab regulations. Last week it voted to require that all taxi drivers in L.A. use a city-approved mobile app that would allow customers to hail a ride via smartphone. Over the next six months, a working group that includes policymakers and industry representatives is supposed to determine the requirements for certifying an app or apps, and how the apps will comply with city policies on fares, customer service and enforcement of safety violations.
The result will not only be another mandate for cab drivers and cab companies, but will also, for the first time, impose bureaucratic rules on apps that serve them — which could end up making the taxi industry slower to respond in a rapidly evolving, innovative marketplace.
By all means, taxi companies should be allowed to adopt Uber-style apps that let customers summon a ride, rate drivers and pay via smartphone. But why should government dictate the business model? What happens if the city gets it wrong and certifies an app that doesn't work or can't compete?
The city's proper role is to ensure the safety of passengers and the accountability of drivers, and that should remain its focus. If current rules — which cover taxi operations in excruciating detail — prevent the industry from embracing innovation, then L.A. needs to streamline them, not add a host of new ones to impose innovation from the top down.
Certainly, the Board of Taxicab Commissioners is in a tough spot. Its members have been asked to level a playing field that is fundamentally unlevel. Cabbies, who are licensed to drive a commercial vehicle and can be hailed from the street, are heavily regulated by the city. Ride-share drivers use their personal property (their cars) for commercial use for pre-arranged rides, and are regulated not by the city but by the state as “transportation network companies” akin to limousines and shuttle buses. They compete for the same customers as licensed cab drivers, but they have a different business model and operate under different rules.
This exemplifies the larger challenge facing Los Angeles and other cities as they confront the so-called sharing economy, which blurs the lines between what is a business and what is a hobby, between professionals and amateurs. Legislators have to figure out how to create a regulatory environment in which professionals and businesses can compete with amateurs and upstarts — without creating a race to the bottom that sacrifices customer protection and without putting unnecessary burdens on businesses.
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