by Steven Hill, San Francisco Chronicle, October 11, 2015
Uber, the $51 billion global ride-hailing company, has quickly become not only a leader in the urban transportation industry but also popular among many of its users. My friends especially love its handy app, which allows the waiting passenger to track the arrival of his or her Uber ride. But truth be told, the app is not Uber’s greatest innovation.
No, what has made Uber popular is that you usually don’t have to wait too long for a car. And that’s due to the fact that Uber has flooded the streets with as many drivers (and their cars) as it can enlist. This strongly suggests that the taxi medallion system, which for years has restricted the supply of taxis, has been the blame for lousy service. This is a clear example of new supply meeting pent-up demand.
But now the question becomes: Might we reach a saturation point?
Has anyone noticed (as I have) how congested downtown San Francisco has become over the last year or two? Is ride-hailing contributing to this congestion? It’s a difficult thing to measure. But anyone who has visited Shanghai or Beijing, and witnessed the clogged traffic and toxic smog that prevents you from seeing buildings a couple of blocks away, knows that there can be too much of a good thing.
The commercial transport of passengers goes back centuries, with a history of proliferation during economic downturns. Horse-drawn coaches-for-hire appeared on the streets of Paris and London in the early 17th century. When millions of Americans were thrown out of work during the Great Depression, suddenly the number of cars-for-hire exploded, clogging the streets.
The public and government officials cried out for relief. The policy response was what we know today as the taxi medallion system. Most major cities instituted regulations governing the number of cars, insurance, safety, background checks and more.
With ride-hailing’s popularity, it’s not hard to imagine how this new service could result in returning to the good ol’ days of too many drivers and inadequate consumer protection. How happy will customers be if they can hail a ride right away, but then are stuck in traffic for 40 minutes longer because the streets are jam-packed?
That is why it is important to view our streets as a public utility, just as we view our electricity, sewage and communication systems, and regulated as one. The buses, personal autos, trucks, taxis and now on-demand ride-hailing vehicles together form a transportation system for moving people and goods from place to place. Finding the right mix can make the difference between whether transportation is efficient and environmentally friendly, or clogged by congestion and more polluting.
Stepping back for a second, can we think about what kind of transportation system makes sense, and what would be in the public interest? Let’s start with:
* End the battle between Uber and Big Taxi: The different components of the transportation system must be coordinated, particularly in dense urban spaces. A balance of “competing conveniences” has to be weighed, with the public good kept at the forefront of these discussions — instead of who wins. Besides, there is a strong likelihood that over time taxis and ride hailing are going to merge until they are substantially the same. Already, taxi companies are incorporating their own apps into their service.
* Include ride-sharing: Uber’s technology shows real promise, and there is unquestionably room for it in the big picture. For example, Finland has launched an Uber-like app for public transportation. Instead of dispatching individual cars, it pools riders on a public mini-bus, with each customized route being calculated in real time.
* Assess new rider options: Uber also is experimenting in San Francisco with Smart Routes. Drivers are picking up and dropping off multiple passengers at the same time along a specific, predetermined route, similar to traditional buses. This service shows potential, but there again we have to think through the overall impacts. Otherwise, Smart Routes could undermine the public bus system. If ride-hailing companies begin offering vans that sprint up and down the busiest (and most profitable) routes, such cherry picking would destroy revenue for public transit that delivers passengers throughout the city.
* Use fees to limit congestion: Because it is now technically possible to track any kind of vehicle, policymakers could decide how many vehicles of whatever type the city can accommodate within its downtown core and use the Uber technology or something similar to it to accomplish that. When it reaches that limit, “overflow vehicles” could be required to pay a higher fee, kind of a version of London’s congestion pricing. An algorithmic limit on the number of drivers during peak periods could solve this problem and keep the city moving.
But this would be much easier to figure out if Uber were willing to share its data, so that its drivers can be tracked. Uber could be a lot more helpful in developing a modern transportation system, if it would drop its “us against the world” posturing.
The Uber technology could be integrated into a technology-driven, 21st century solution for urban transportation, one that balances the needs of the public with the different commercial stakeholders. It’s important to get these details right, and find the sweet spot between competing interests.
Steven Hill is a senior fellow with the New America Foundation and author of “Raw Deal: How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers,” forthcoming Oct. 20. To comment, submit your letter to the editor at www.sfgate.com/submissions.