Until this year, when he became the president of the Los Angeles Taxicab Commission, Eric Spiegelman, a thirty-eight-year-old attorney, was perhaps best known as the producer of the long-running Web series “Old Jews Telling Jokes.” Now Spiegelman and his board have been asked by the city’s new mayor, Eric Garcetti, to take steps to “insure equal competition” in L.A.’s taxi industry—a formidable task, as cab companies attempt to fend off competition from mobile-phone-based ride-sharing applications such as Lyft and Uber. Local authorities across the country and, indeed, around the world have responded to the runaway success of these services by forcing them to operate under new regulations designed to match existing taxi policies—or by attempting to ban such services outright. Court challenges and government decrees have led to bans on Uber in Portland, Oregon, Nevada, the Netherlands, Spain, Thailand, and New Delhi.
This is taking place in California, too—district attorneys in Los Angeles and San Francisco filed a consumer-protection lawsuit against Uber on Tuesday, alleging that the company misleads consumers regarding driver background checks, and that it overcharges passengers. (Prosecutors reached a settlement in a similar suit against Lyft.) But Spiegelman’s draft plan—which was composed after months of hearings, and will be presented to the Los Angeles Taxi Commission on December 18th—takes a new approach. It proposes to require L.A. cabs to become more Uber-like, rather than the other way around. According to the terms of the proposed draft order, every taxi in Los Angeles would have to become accessible via a mobile application similar to the ones used by Uber and Lyft. These applications will require certification by the Taxi Commission, which can then specify things like pricing maximums and limits on hours worked in a single shift, and can perhaps even set up a rating and complaint system for passengers.
Although other jurisdictions have moved to bring their taxi services into line with Uber—Chicago has approved the creation of a hailing app, and earlier this week a New York City councilman introduced legislation that would require the city’s Taxi and Limousine Commission to contract out or create one—the impetus is particularly strong in Los Angeles, which has long been about the worst big city in the United States in which to hail a conventional cab. Taxi drivers here don’t generally drive around looking for passengers—it would be inefficient, given the city’s sprawl and traffic congestion—so it is nearly always necessary to phone a dispatcher. (All L.A. taxi drivers are independent contractors working for licensed firms.) And then, once you’ve made it through the hold music and booked a ride, you might easily wait, perhaps forever, as the driver either gets lost or forgets all about you and your soon-to-be-forfeited dinner reservation. (I exaggerate—but not by much.)
Given these frustrations, Angelenos welcomed Lyft and Uber with open arms. Taxi Commission documents show that in the first quarter of 2014, right after UberX, the company’s low-cost service, began operating in Los Angeles, conventional taxi rides dropped by about twenty per cent. Using the new services, wait times suddenly shrank to minutes; you could pay and even tip with a few swipes on your phone.
“Uber’s value to Los Angeles is different from Uber’s value to any other city in the country,” Spiegelman said. The city has the worst traffic in the U.S., despite efforts to reduce the number of private cars on the road by encouraging the use of car pools, taxis, public transit, walking, anything. “This is the one city where you have the goals of the civic body running in lockstep with the goals of private entities,” he said.
The proposed rules would, first, require that all taxi drivers sign up with a certified app, and, second, create a working group to define the standards for certification. Spiegelman said that he is hoping for a vote in January. With respect to the first criterion, qualifying apps are already available: Flywheel and Curb are established, well-capitalized applications for hailing conventional taxis, and they are already operating in L.A.; those in use elsewhere include Hailo, Gett, and Easy Taxi. These systems use G.P.S. tracking and algorithms to calculate drive times, and allow their makers to earn a profit by taking a commission from completed ride payments to taxi companies.
The aim of the certification standards, Spiegelman said, is particularly important. Making the app companies accountable for the standards would allow L.A. taxis to compete directly with Uber and Lyft while retaining the safeguards that decades of regulation have embedded in the city’s existing taxi industry—covering areas like vehicle safety, driver safety, guaranteed service to all neighborhoods, and service to the disabled. “There are things on the taxicab side that we absolutely have to preserve,” he said. “We don’t have a choice, or we step back twenty years in terms of equal rights.” He added that Los Angeles is a leader among American cities in providing taxi service to the disabled, while ride-sharing companies lag badly behind. Uber recently launched wheelchair-accessible service in Los Angeles, but those, Spiegelman said, “cost ten times as much” as UberX rides. “In comparison, the fare for a wheelchair-accessible taxicab is exactly the same as any other taxicab.” (Uber did not respond to a request for comment.)
In addition to disability access, L.A. cab regulations insure that residents of poorer neighborhoods, such as Boyle Heights and South Los Angeles, have access to taxis. Regulation, too, prevents Los Angeles taxis from charging exorbitant “surge pricing” at peak hours, as Uber does, and it also requires cabs and their drivers to be sufficiently insured.
These regulations might appear to put too onerous a strain on free enterprise—unless, that is, you happen to be involved in an accident, in which case the type of car service you chose could prove extremely important. That is what happened to Claire Fahrbach, a pedestrian who was injured in March, 2012, after an Uber driver drove into San Francisco Fire Hydrant #B2212, dislodging it—whereupon it rocketed into Fahrbach, fracturing her leg and injuring her back. Fahrbach has sued Uber, and the case is still before the courts.
I asked Spiegelman what would have happened to Fahrbach had her injuries been caused by a conventional L.A. taxi driver. Though these drivers are also independent contractors, he said, the city’s taxis are required to be “insured to the hilt... Insurance policies are taken out by the companies and cover the cars and drivers.” There are currently more than a dozen lawsuits pending against Uber, in jurisdictions across the country—alleging, for example, that the company is sidestepping regulations and insurance requirements, stiffing its drivers on tips, and illegally withholding reimbursements from them for fuel and maintenance costs. (Vauhini Vara has written previously about liability and the sharing economy for this site.)
The flip side of regulation, for L.A.’s cab drivers, is that the city’s requirements have sometimes constituted a competitive disadvantage. When Garcetti asked the current Los Angeles Taxi Commission to begin pursuing reforms, they discovered a host of outmoded, vague, even weird regulations, including one requiring drivers to wear “black pants and socks.” Others require drivers to refrain from soliciting rides “in a loud or boisterous tone of voice,” and warn of punishment for “unwanted conversation.” In part, it’s these kinds of rules that have allowed Uber to portray itself as an underdog fighting a massive, calcified, overregulated industry ripe for “disruption.” At a tech conference last summer, the founder of Uber, Travis Kalanick, characterized his company’s efforts as “a campaign where the candidate is Uber and the incumbent is an asshole called ‘taxi.’ ”
Spiegelman told me that he had initially attempted to eliminate the sock regulation, as well as about thirty of the city’s other “passenger-experience rules.” “I thought the taxi companies would like it,” he said, “but they went nuts.” For the city to forego even those rules, they believed, would have left them to define and enforce passenger-experience rules on their own; this, in turn, might have led the I.R.S. to regard their drivers not as independent contractors but as employees—a classification that Uber has been trying to avoid for its drivers, too. That designation would mean far greater costs for insurance, payroll taxes, and the accompanying administrative overhead.
That’s why the solution proposed by Spiegelman and his board seems, on its face, so elegant. Placing the most direct regulatory burden for everything from fare controls to providing a system for commenting on driver courtesies on app providers, rather than on government or taxi companies, could insure higher ride quality while still preserving fair access and insurance-coverage rules—all without drivers losing their status as independent contractors. Representatives from various app providers appeared at Taxi Commission hearings as the plan was drafted. “We have not entered into formal discussions, but they’re supportive,” Spiegelman said. Asked why app companies would welcome more regulation, he said, “Not all taxis use their apps.” The line of reasoning is not unlike the one that led insurance companies to support Obamacare.
Many industry observers consider it all but inevitable that mobile ridesharing will eliminate taxis, but Spiegelman and his board head into their December 18th meeting seeking to take the good from what Uber and Lyft are doing without sacrificing the protections that have been built into the existing taxi system over decades. Could Los Angeles finally become a great city for hailing a cab?
