With Uber, Less Reason to Own a Car; Traffic Snarls in Europe as Taxi Drivers Protest Against Uber

With Uber, Less Reason to Own a Car

JUNE 11, 2014

Farhad Manjoo

With a near record-setting investmentannounced last week, the ride-sharing service Uber is the hottest, most valuable technology start-up on the planet. It is also one of the most controversial.

The company, which has been the target of protests across Europe this week, has been accused of a reckless attitude toward safety, ofprice-gouging its customers, of putting existing cabbies out of work and of evading regulation. And it has been called trivial. In The New Yorker last year, George Packer huffed that Uber typified Silicon Valley’s newfound focus on “solving all the problems of being 20 years old, with cash on hand.”

It is impossible to say whether Uber is worth the $17 billion its investors believe it to be; like any start-up, it could fail. But for all its flaws, Uber is anything but trivial. It could well transform transportation the way Amazon has altered shopping — by using slick, user-friendly software and mountains of data to completely reshape an existing market, ultimately making many modes of urban transportation cheaper, more flexible and more widely accessible to people across the income spectrum.

Uber could pull this off by accomplishing something that has long been seen as a pipe dream among transportation scholars: It has the potential to decrease private car ownership.

In its long-established markets, like San Francisco, using Uber every day isalready arguably cheaper than owning a private car. Uber says that despite dust-ups about “surge pricing” at busy times, its cheapest service, UberX, is usually 30 percent less expensive than taxis.

Now that Uber, Lyft and other rivals are embroiled in a vicious match for dominance across the globe, ride-sharing prices over all are sure to plummet. The competition is likely to result in more areas of the country in which ride-sharing becomes both cheaper and more convenient than owning a car, a shift that could profoundly alter how people navigate American cities.

Over the next few years, if Uber and other such services do reduce the need for private vehicle ownership, they could help lower the cost of living in urban areas, reduce the environmental toll exacted by privately owned automobiles (like the emissions we spew while cruising for parking), and reallocate space now being wasted on parking lots to more valuable uses, like housing.

Paradoxically, some experts say, the increased use of ride-sharing services could also spawn renewed interest in and funding for public transportation, because people generally use taxis in conjunction with many other forms of transportation.

In other words, if Uber and its ride-sharing competitors succeed, it wouldn’t be a stretch to see many small and midsize cities become transportation nirvanas on the order of Manhattan — places where forgoing car ownership isn’t just an outré lifestyle choice, but the preferred way to live.

“In many cities and even suburbs, it’s becoming much easier to organize your life car-free or car-lite,” said David A. King, an assistant professor of urban planning at Columbia University who studies technology and transportation. By car-lite, Dr. King means that instead of having one car for every driver, households can increasingly get by with owning just a single vehicle, thanks in part to tech-enabled services like Uber.

Transportation scholars are just beginning to study whether the ride-sharing industry will encourage us to give up our cars, but results from some related studies look promising.

Susan Shaheen, the co-director of the Transportation Sustainability Research Center at the University of California, Berkeley, has found that car-sharing services like Zipcar and bike-sharing services have already led to a significant net reduction of car ownership among users. While she is beginning a study into whether Uber-like services have the same effect, she said it was plausible to guess that they would also reduce levels of car ownership.

“I’ve been studying this area for about 17 years, and what we’re seeing now is a ubiquity of mobile devices that is really altering this industry,” she said.

To see why Uber and its ilk could prompt many of us to give up our cars, it helps to understand the role that taxis play in urban transport. Taxis and other car services are usually seen as the province of the rich, but that’s only partly true, studies show.

The richest Americans do use taxis more often than middle-class Americans, but so do the poorest Americans, who rely heavily on taxis for trips that aren’t practical through public transportation — shopping trips that involve heavy parcels that wouldn’t be convenient to take on the bus, say, or a ride back home after a medical procedure.

And though you may think of taxis as a competitor to subways and buses, several studies have found just the opposite.

In one recent study based on GPS data from New York City cabs, Dr. King and his colleagues found that many taxi trips are “multimodal,” meaning that riders mix taxis with other forms of transportation. For instance, people from other boroughs might get to Manhattan by train, and then use cabs to return home late at night.

“The one-way travel of taxis allows people to use transit, share rides and otherwise travel without a car,” the researchers wrote. “In this way taxis act as a complement to these other modes and help discourage auto ownership and use.”

A survey commissioned by regulators in San Francisco found that if taxis were more widely available, people would use public transit more often, and would consider getting rid of one or more cars.

There’s only one problem with taxis: In most American cities, Dr. King found, there just aren’t enough of them. Taxi service is generally capped by regulation, and in many cities the number of taxis has not been increased substantially in decades, despite a vast increase in the number of miles people travel. In some places this has led to poor service: In the San Francisco survey, for instance, one out of four residents rated the city’s taxi service as “terrible.”

Ride-sharing services solve this problem in two ways. First, they substantially increase the supply of for-hire vehicles on the road, which puts downward pressure on prices. As critics say, Uber and other services do this by essentially evading regulations that cap taxis. This has led to intense skirmishes with regulators and questions over who has oversight to maintain the safety of the blossoming new industry.

These questions are likely to be worked out as these services mature; like most new technologies, this one too will attract increased legal oversight and a gradual regulation of the business.

But Uber has done more than increase the supply of cars in the taxi market. Thanks to technology, it has also improved their utility and efficiency. By monitoring ridership, Uber can smartly allocate cars in places of high demand, and by connecting with users’ phones, it has automated the paying process. When you’re done with an Uber ride, you just leave the car; there’s no fiddling with a credit card and no tipping. Even better, there’s no parking.

Compared with that kind of convenience, a car that you own — which you have to park, fill up, fix, insure, clean and pay for whether you use it or not — begins to seem like kind of a drag.

“And if your car sits there five out of seven days, suddenly you’re starting to look at that fixed cost as being a waste,” Dr. King said.

 

Traffic Snarls in Europe as Taxi Drivers Protest Against Uber

By MARK SCOTT

JUNE 11, 2014 2:59 AM 64 Comments

Updated, 7:35 p.m. | 
LONDON — Europe’s taxi drivers on Wednesday picked a fight with Uber, an increasingly popular smartphone car-paging service, and dared consumers to choose sides.

From London to Lyon and Madrid to Milan, thousands of taxi drivers protested the rise of Uber, an American upstart, stopping in the middle of streets and shutting down major portions of cities.

The public display laid bare the growing tension between some of Europe’s traditional industries that have barely changed in decades and the rising influence of companies from Silicon Valley, for which disruptive technologies are badges of honor.

Time and again in the United States, when new technologies have raised issues about consumer choice and convenience versus traditional workers’ rights, consumers have regularly won out. But in Europe, as is evident by the anti-Uber protesters disrupting the daily routines of tens of millions of people on Wednesday, that conflict is still playing out.

In Europe, taxi drivers represent the heavily regulated and closed-shop way of doing business. Before London drivers can join the work force, for example, they must navigate byzantine licensing procedures that include memorizing the city’s maps, street by street — a process that can take years.

Uber drivers, by contrast, are freelancers who employ G.P.S.-enabled smartphones to link up with passengers. The company has expanded globally into more than 100 cities in 36 countries and is considered such a growing force that some of Silicon Valley’s biggest investors have poured money into it, raising the company’s value to $17 billion.

The drivers who went on strike across Europe on Wednesday argue, each in their own contexts, that Uber does not comply with local rules and fails to pay the same level of taxes as conventional taxi owners and drivers.

“There’s room for everyone, but you have to obey the law,” said Mario Dalmedo, a London taxi driver who joined about 10,000 other cabdrivers in an hourlong protest in the British capital that clogged the roads. “Uber isn’t properly regulated. It’s a slippery slope. Quality of life will go down if these services are allowed to operate.”

But Pierre-Dimitri Gore-Coty, Uber’s regional general manager for northern Europe, rejected claims that the start-up was breaking local rules and did not pay enough tax in the European cities where it operated. Instead, he said that the company was offering competition where little had previously been available.

“In Paris, the number of taxis hasn’t changed since the 1950s,” Mr. Gore-Coty said. “The strikes are an attempt to desperately fight against competition in the market.”

The strikes might have also produced the opposite effect of what the protesters wanted — a lot of free publicity for Uber. On Wednesday, Uber said it had an 850 percent increase in people signing up in Britain, compared with last Wednesday. In other European cities like Paris and Lyon, France, Uber offered a 50 percent discount to woo new customers.

“I signed up today,” said Andy Williams, an American near Milan, who moved to Italy four years ago. “I’ve been following the protests for a couple of weeks. I don’t like the Italian business mentality. They are just about getting your money. There’s no customer service.”

Europe’s taxi industry is the latest sector to face new technological rivals. When WhatsApp, the Internet messaging start-up, began in the region, many telecom operators like KPN of the Netherlands blocked the service because it undercut their own text messaging business. Local regulators were eventually forced to intervene, demanding that the companies open up their networks to the start-up.

Taxi drivers in London join a continent-wide protest by licensed taxi drivers in Europe against apps that allow users to book freelance cabs through smartphones.

The strikes against Uber on Wednesday added to the criticisms. In Paris, hundreds of taxi drivers converged to protest at the city’s two main airports, and many taxi drivers gathered at the École Militaire in central Paris later in the day. A mediator appointed by the French government prepared new legislation to resolve the conflict.

One proposal, which has the potential to challenge Uber’s business model, would allow consumers in France to see only licensed taxis on an app that would be created by a government-run body called Etalab.

Taxi drivers in Paris said on Wednesday that they were upset that they pay 20 percent more in taxes than Uber chauffeurs, as well as a 10 percent value-added tax on fares that is not required of Uber cars.

“Uber cabs are stealing our clients,” said José Losada, 36. “We are regulated to death, while they circumvent the law.”

In Madrid, Julio Moreno, the president of the Spanish taxi federation, told local news media that “100 percent” of taxi drivers had answered the call for a 24-hour strike, and passengers arriving at the city’s main airport and train stations were greeted by deserted taxi stands.

On Serrano, one of Madrid’s main thoroughfares, Pedro Vargas, a frustrated businessman who had hoped to travel by taxi, said that “it seems absurd to strike about a threat rather than a known problem,” in reference to the fact that Uber has not started offering its services in Madrid. (The company recently started in Barcelona, its first Spanish city.)

In Brussels, Uber was banned this year after a court ruled it did not have the appropriate permits to operate in the city. Uber drivers would face big fines if they picked up passengers through the company’s app.

And in Berlin, Richard Leipold, the chairman of the Berlin Taxi Association, won an injunction against Uber in the German capital in April, barring the company from operating there. The injunction, however, is not being enforced while Uber appeals the ruling.

On Wednesday, several hundred taxi drivers converged from Berlin’s main airport and railway stations on the Olympic stadium, parking their cabs and protesting for fair competition regulations. Yet, the stadium is on Berlin’s outskirts, allowing traffic to flow largely uninterrupted throughout the protest, despite fewer taxis being available.

While Europe’s taxi drivers balk at technology companies like Uber entering their industry, the protests have helped to raise consumer awareness about Uber’s product.

Since the protests were first announced last month, the company’s smartphone app now ranks as the most downloaded travel app on Apple’s download store in Britain, and is rated fifth on the Google Play store for phones using the Android operating system, according to App Annie, which tracks smartphone downloads.

“I’m glad that more taxi apps have arrived,” said Chris Fox, an installer of security systems who got caught in the traffic congestion in central London on Wednesday. “In the end, everyone knows taxis overcharge you.”

Reporting was contributed by Liz Alderman and Assia Labbas from Paris, Melissa Eddy from Berlin and Raphael Minder from Madrid.