Industry Unity Strengthens Against Uber and TNCs

BY SUSAN ROSE

Do you follow media reports of Uber and TNCs? If you’ve been watching for a while now, you’ve surely noticed the shift from positive, glowing stories about the merits of Uber back in 2013 to a more critical eye in 2014. The very definition of “disruptive technology” means that it will make as many friends as it will enemies.

We’re not fighting the same companies we were a year ago. Uber was in about 30 U.S. cities at the end of 2013; now it’s in almost 150 U.S. cities alone and 53 countries all over the globe. Its closest competitor, Lyft, is still chugging along as a “me, too” to Uber’s massive wealth despite attempts by Uber to sabotage its investor funding. On New Year’s Eve 2013, Uber made $10.7 million in a single night, and many speculated that it would be 10 times that amount on New Year’s Eve 2014. The company hasn’t seen a drop in investor interest either—it’s nearly tripled its valuation from $18 billion to more than $40 billion. And that’s despite numerous lawsuits from many different angles, tons of public relations blunders, and cease-and-desist orders here and abroad (in places such as Boise, Portland, Toronto, Hillsborough County in Florida, and the entire state of Nevada, and in countries like Taiwan and India). It’s shown that playing dirty is fair game, which has only been reinforced by a ballsy and arrogant CEO who nearly salivates over his negative reputation.

With every new challenge it faced (check out some of its more notable “scandals” of 2014 on pages 52 and 55-58), Uber and its management seemed to relish the fight and then simply overcame the hurdle without a scratch or ding. Anything goes when you have $40 billion, more than 160 lobbyists in at least 50 cities (that Uber will admit to—several media agencies suggest it has many more), superstar political influencers (David Plouffe, the man who got then-unknown Illinois junior Senator Barack Obama elected as president), and a team of local ambassadors who, with the click of a mouse or tap of a screen, can inspire a massive groundswell of Uber supporters to choke the voicemail and email inboxes of those officials who dare to regulate or stop the service from operating altogether. It happens every time. What’s next for Uber? Many in the financial world are hinting that the TNC is ready to go public with the potential for an IPO in 2015. Almost every investment bank is vying for the IPO, but it looks like Goldman Sachs is in prime position. Goldman Sachs not only is an Uber investor but also has said it will underwrite its IPO practically for free.

2014: The Year Our Industry Found Its Collective Voice
Last year wasn’t just a good year—at least monetarily—for Uber and other TNCs. Kudos should go to our industry as well. For the first time, the majority of, if not all, associations were united in their fight against Uber. The National Limousine Association (NLA) officially threw its hat into the ring last summer and has since released a position paper to help associations tackle the TNCs. Taxicab, Limousine and Paratransit Association (TLPA) has been one of the most consistently vocal critics of TNCs through its own lobbying efforts, frequently lending support to local taxi associations that are being pushed around by big money.

The TNC nightmare even sparked the formation of an entirely new association: Advocates for Fairness in Transportation (AFT), which is a coalition of large companies in our industry that are using their influence and excellent reputations to spread the word. AFT was spearheaded (and funded) by Cheryl Berkman of Music Express Worldwide, David Seelinger of EmpireCLS Worldwide Chauffeured Services, and Jonna Sabroff of Integrated Transportation Services, but it could certainly use your help to widen its reach. Uber is on the agenda of every local association from Greater Orlando Limousine Association’s billboard campaign to Greater California Livery Association’s consistent presence in the state’s capital. Every association from Illinois to Houston to Colorado to New Jersey has been dealing with something related to Uber, and we know that many who are fighting feel like it’s a futile effort. They aren’t in vain.

The Message Needs to Evolve
So far, our industry has been combating TNCs on the legislative front, namely through public hearings and direct meetings with representatives. Some of the initial grassroots efforts worked in smaller markets like Upstate New York and some cities in Florida, but the TNCs, with all their money and clout, dragged the fight to the state level where they found success (Colorado, Illinois, California, etc.).

On December 31, Massachusetts was facing a similar predicament. Outgoing Governor Deval Patrick called a public hearing in front of the Department of Transportation on the eve of the new year—when the majority of opponents were out of town enjoying the holidays—to place the illegal ridesharing companies under the control of the Department of Public Utilities (DPU). The ridesharing companies would not have the burden of driver background checks, would allow drivers to operate with personal license plates, and only liability insurance would be required. Local and national associations sprang into action by sending letters to the governor to postpone the hearing.

“This is not how Governor Patrick should use his power to protect public safety,” said TLPA President President Mike Fogarty of Tristar Worldwide in a press release prior to the hearing. “He’s favoring the profits of a corporation over common sense safety. It’s an absolutely shameful way to leave office.” Fogarty was one of the industry players who was able to testify at the hearing, in addition Rick Szilagyi, CEO of the New England Livery Association. The two associations are working together.

Two days later, the state filed its list of rules and regulations that officially recognized rideshares with the DPU as its licensing authority and which goes into effect January 16, 2015. Drivers would be required to pass a background check that includes the National Sex Offender Registry and a driving record check. Drivers must be 21 or older and possess personal insurance on their vehicle. They would be issued a TNC Certificate via DPU and could not accept street hails.

Many in Boston media have speculated that Patrick was angling for a cushy position with the multi-billion-dollar company; only time will tell where Patrick lands and if this rushed, last-minute decision was indeed a strategic one for his future. One entity could barely contain its excitement: “Governor Deval Patrick and his [a]dministration, particularly MassDOT officials, have displayed tremendous leadership in this regulatory process. We are proud that they have formally recognized ridesharing as a new and innovative transportation model in Massachusetts,” Uber wrote on its blog.

Other battles are yet to come. In California, GCLA will make TNCs a focus of its Day on the Hill later this month. GCLA’s newly installed president Kevin Illingworth is primed for the war. This comes at a time when both the San Francisco and Los Angeles district attorneys are suing Uber for misrepresenting its driver screening and charging bogus fees like an airport toll, even though the TNC is banned from picking up or dropping off at airports.

Nevada kicked the rideshares not just out of Las Vegas, but the entire state. They were green-lighted in October then red-lighted in late November after officials could not come to an agreement over regulations. This all might change, however, thanks to an army of tech-savvy Uber lovers. Why? Las Vegas is one of the top convention cities, and is host to the massive international Consumer Electronics Show each January (with upward of 130,000+ people per show). When Uber was noticeably absent as an option, that’s when posts and tweets about the long taxi lines started to appear, claiming that it wouldn’t be the case if Uber were legally operating there. Eh, whether or not that’s true, it sure is the message out there. Uber, which already had a petition going, is using this as a way to force the ridesharing company back into the state.

Limousine, Bus, Taxi Operators of Upstate New York President Kevin Barwell is busy with his own unique situations as TNCs spur a new type of gypsy operator. He reports that an “underground network” of former TNC drivers has formed to provide transportation for their former customers outside the app. Even rideshares have those who want to undercut the market.

As we were going to press, the New York City Taxi and Limousine Commission announced that it had suspended five of Uber’s six bases for not complying with reporting standards. The bases can get a temporary operating order while the appeal is decided (which they did), but it’s more bad press the company doesn’t need. Even more troubling, however, is the steady increase in Uber cars being added in New York City. In December 2013, the collective Uber bases only ran about 4,400 cars. By December 2014, that number nearly tripled to more than 12,300 vehicles. What’s more is that those six Uber bases represent nearly half of all 25,000+ black and luxury vehicles operating in New York. Staggering!

The question remains: Does the public really care about safety? We’ve been using that message for a while now. Tragic things have happened, and that’s usually when calls for regulation are the loudest, but is the safety message resonating with the public? It’s hard to answer. There was another pedestrian death early this month when a licensed UberBLACK driver in New York City fatally struck popular up-and-coming golf trainer Wesley Mensing and seriously injured his girlfriend, Erin Sauchelli. No passengers were in the car at the time, but he was on his way to a pickup. What will happen remains to be seen, but at press time there was no public outcry about safety. Even when Uber surged its prices on New Year’s Eve to more than eight times the normal rate—in other words, a 4.3-mile ride was almost $180—passengers seemed to take the gouging in stride by posting screenshots of the total cost with the hashtag #cheaperthanaDUI. There were plenty of haters as well.

Taking The Fight Directly to The Consumer
Nobody really likes regulation, least of all businesspeople who have to abide by expensive laws that cut into profits or make companies less competitive. We all (at least I hope) do it in the name of operating legally and yes, even with passengers’ safety in mind. It’s often how you sell your business to corporate clients and what separates you from gypsy operators.

The thing about regulations is that they almost always originate from the public’s demand for action to a serious incident. When the free market failed to self-regulate by providing safe taxis with licensed drivers, that’s when regulations began in earnest. Someone gets hurt, a politician is all too happy to step in and use the family’s plight to get a bill passed. Uber now has a slew of incidents under its belt: alleged rapes and assaults, unpopular surge pricing, lax background checks, and inconsistency in insurance coverage. The public is catching on, but so far Uber has artfully dodged its responsibility by pushing it back onto the driver—the independent contractor—and whipping its local supporters into action. While we have no proof, we’re also not stupid: Money talks in politics, and Uber has certainly made the right connections to turn the pressure on or off depending upon the situation. Remember when Uber was almost banned in Illinois? Suddenly, the promise of an Uber satellite office in Chicago smoothed things over. In New York, Uber has hired Matthew Wing, former press secretary to Governor Cuomo, and Michael Allegretti, a former Republican candidate for New York’s 13th congressional district. We get it; it’s politics as usual, and the transportation lobby isn’t immune to this type of dealing either. Uber just seems to be particularly smarmy about it.

Matt Daus, partner with Windels Marx in New York City and president of the International Association of Transportation Regulators, has been one of leading voices calling for the regulation of TNCs. Since day one, he has been championing the merits of regulation and warning our industry that we need to be actively engaged in this fight—the biggest our industry has seen in decades. His message has also been directed to the consumer. If you missed his “In-Depth with Daus” column in our December 2014 issue, it’s worth a read to see how many different ways TNCs are being attacked legally. He recently appeared on Bloomberg TV to debate why TNCs are such a problem, where he discussed the worrying trend of tracking passengers’ data and compared ridesharing to the dangers of hitchhiking.

“The bottom line is, when I put GPS in New York City yellow cabs years ago, we cut a deal with the American Civil Liberties Union where we actually said that we, by law, have to have security provisions [on that information],” says Daus. “No owner will know where you are going in a city cab right now. They have the ability to, but we have laws that say it’s illegal for the vendors that run the system to know where you’re going or use [those] data. We should do the same for Uber and TNCs.”

Uber got itself into trouble when it published its “rides of glory” blog post about cities with the most random hookups based on data from bars to a residence to the Uber passenger’s home several hours later (using data collected between 10 p.m. and 4 a.m.). Uber also ticked off the public when it was announced that executives have access to a tool called “God View,” which literally allows passengers to be tracked in real time. BuzzFeed News’ reporter Johana Bhuiyan broke the story after discovering that she was tracked. After arriving at Uber’s New York offices in an Uber vehicle for a meeting with General Manager Josh Mohrer, the first thing he said to her was “I was tracking you,” motioning to his iPhone. She didn’t give her permission. Venture capitalist Peter Sims was also a victim as his real-time information was being tracked on a large public screen at Uber’s Chicago launch party. He also did not give permission for his data to be used. Needless to say, it has called into question consumer privacy—not to mention the potential for how such information could be exploited if, for example, the person was a politician, celebrity, or high-powered company executive.

Nevada kicked the rideshares not just out of Las Vegas, but the entire state. They were green-lighted in October then red-lighted in late November after officials could not come to an agreement over regulations. This all might change, however, thanks to an army of tech-savvy Uber lovers. Why? Las Vegas is one of the top convention cities, and is host to the massive international Consumer Electronics Show each January (with upward of 130,000+ people per show). When Uber was noticeably absent as an option, that’s when posts and tweets about the long taxi lines started to appear, claiming that it wouldn’t be the case if Uber were legally operating there. Eh, whether or not that’s true, it sure is the message out there. Uber, which already had a petition going, is using this as a way to force the ridesharing company back into the state.

Limousine, Bus, Taxi Operators of Upstate New York President Kevin Barwell is busy with his own unique situations as TNCs spur a new type of gypsy operator. He reports that an “underground network” of former TNC drivers has formed to provide transportation for their former customers outside the app. Even rideshares have those who want to undercut the market.

As we were going to press, the New York City Taxi and Limousine Commission announced that it had suspended five of Uber’s six bases for not complying with reporting standards. The bases can get a temporary operating order while the appeal is decided (which they did), but it’s more bad press the company doesn’t need. Even more troubling, however, is the steady increase in Uber cars being added in New York City. In December 2013, the collective Uber bases only ran about 4,400 cars. By December 2014, that number nearly tripled to more than 12,300 vehicles. What’s more is that those six Uber bases represent nearly half of all 25,000+ black and luxury vehicles operating in New York. Staggering!

The question remains: Does the public really care about safety? We’ve been using that message for a while now. Tragic things have happened, and that’s usually when calls for regulation are the loudest, but is the safety message resonating with the public? It’s hard to answer. There was another pedestrian death early this month when a licensed UberBLACK driver in New York City fatally struck popular up-and-coming golf trainer Wesley Mensing and seriously injured his girlfriend, Erin Sauchelli. No passengers were in the car at the time, but he was on his way to a pickup. What will happen remains to be seen, but at press time there was no public outcry about safety. Even when Uber surged its prices on New Year’s Eve to more than eight times the normal rate—in other words, a 4.3-mile ride was almost $180—passengers seemed to take the gouging in stride by posting screenshots of the total cost with the hashtag #cheaperthanaDUI. There were plenty of haters as well.

Crafting the Message: A Work In Progress
TLPA has the most experience by far with getting the message out to the industry as well as consumers. Through its “Who’s Driving You?” website, it is a direct connection to the public that regularly enjoys ridesharing services and arms them with facts about the limitations and potential dangerous situations that rideshares put passengers in. It’s regularly updated and offers consumers a way to file a complaint against rideshares. To reach a national audience, TLPA promotes its message on Facebook, Twitter, YouTube, and other social media platforms. Like his predecessor, TLPA President Fogarty has made combating the TNCs his primary mission as the association’s leader.

NLA, which had been assisting local associations primarily until mid-2014, is a little newer in crafting its public message. Philip Jagiela, NLA executive director, says that the association will launch a campaign to directly target the consumer this year. In early January, Jagiela, NLA President Gary Buffo, NLA lobbying firm Cornerstone Government Affairs, and select committee members will meet with PR firm Evins Communications to determine the best route to take. NLA and TLPA have also had discussions on working together.

“We don’t want to employ negative publicity as an association at all, whether [the issue] is TNCs or anything else,” says Jagiela. “So many times people use the words ‘level playing field’ in our industry. Unfortunately, it is well-known that we don’t have a level regulatory body across the country [or internationally], so what’s level for you is not level for us. We need to define the parameters that make consumers have a level of comfort, and ultimately our objective would be to use something like a Good Housekeeping Seal of transportation—recognized as NLA members.” He says that it’s important not just to tell consumers what not to use, but to offer them a choice and explain why it’s a better choice.

Jagiela was on a panel with Uber and Lyft representatives for the National Association of Insurance Commissioners in Kentucky this summer. He did learn one thing from the competition: consistency is key. “I sat side by side with representatives from Uber and Lyft,” he says. “They had a canned script from which they never deviated and that, in turn, is what we’re going to do with the NLA. One voice, one message—and we want to be very careful with who is going to share that message, be it in print, TV, radio, or any of those types of things so that we don’t add to the confusion. We want to add to the solution with a positive message.”

The Transportation Company That Isn’t
Uber’s CEO has long maintained that it is not a transportation company but a technology conduit between drivers and passengers. It is an on-demand service of Fill in the Blank Here; it aims to be on-demand for just about anything. From Christmas trees and ice cream treats to its wonky manicures-on-demand in Vienna and breakfast-on-demand in Riyadh, that’s the name of the game. To us, Uber is an unregulated transportation provider that thumbs its nose at local regulations, bullies its way into service, and then continues to operate through cease-and-desist orders. To Uber, it’s a means to an end.

As we’ve reported before, big data is changing how we operate. Collecting all kinds of data points about our customers and using it to customize service has been trending for some time now, and those who do it effectively have surely profited from it. Guess which company does it better than anyone else?

What Uber really cares about—and always has, actually—is collecting data on its passengers. When you download the app and click “agree” to install it, you give the company access to things like your phone’s pictures, map data, Facebook and other social media, and, of course, Internet surfing habits. That’s how most apps operate. It cares that you were picked up at your office and were driven to a posh new restaurant after work. It cares that you frequently get dropped off at Whole Foods on Thursday nights. The more you use it, the more it learns. It cares because, like it or not, it’s building a profile on you that can be sold and resold to other retailers that may target you for advertising. Uber knows that we’ve fundamentally given up on the myth of privacy, and big data is where the true dollars reside. You didn’t think Google Ventures, the financial arm of the world’s largest data suck, would invest in transportation for nothing, right?

“Uber isn’t about transportation. They’re for finding anything and everything about you as a consumer and they are selling that information to everybody and anybody who [has something to sell] to consumers,” says Jagiela, who has a 20-year-old daughter who frequently uses and loves Uber. He says that by using the app, it knows where she’s frequently picked up, likes to shop and dine, and what her patterns and habits are. That information is then sold to retailers who could target her with coupons or special deals.

This could raise a larger concern for us to address as an industry. If Uber is holding this much data about its customers, is it protecting those data from breaches? All companies collect and store massive amounts about us; it’s what we’ve come to expect. But what happens when the next security hack is Uber and data reveal the pickup and drop-off habits of a congressman-turned-presidential hopeful? It’s not outside the realm of possibility, considering that companies in our own industry have been hacked before.

Are We Closer To An Industry App?
This is a tough one to answer. The majority of chauffeured ground transportation still consists of smaller operators (up to 10 vehicles) who can’t afford to develop their own apps. Customers have made it clear that they adore the convenience of TNCs, so we, as an industry, have to find a way to make it happen.

One of the biggest stumbling blocks was cleared back in November when The coNext Project was announced. Because there isn’t one central reservation system, it was imperative for our different software to be able to communicate with each other. After all, an app isn’t going to work unless it can connect available vehicles to passengers who just requested service, and the entire industry isn’t going to adopt one type of system. The coNext Project offers completely neutral integration by an open API via GRiDD Technologies and works with most major dispatch systems. While we will have to figure out how to operate on demand, you will be able to keep your current customers happy with a cashless, paperless system that effortlessly delivers transportation to them. Using your own dispatch software and reporting, you can likely determine where most of your last-minute service is coming from and at what time of the day and have cars in the vicinity. This is one area to watch.

We aren’t there yet. Even as larger companies, which have the advantage of more working capital and assets to develop an app, progress one step closer, they too have been struggling with their setbacks. However, the last thing we, as an industry, need is dozens or even hundreds of apps. It would be impossible to manage affiliate work because we rarely work with just one network.

Where you can get more information.
The first and most important place to start is with your local association. They have been the frontline in the TNC battle since those companies stormed your market—and trust me, they could really use a fresh infusion of soldiers, money, and support. Local associations are the champion in the TNC battle; don’t just read about their successes in the pages of Chauffeur ­Driven. Grassroots efforts will always be worth your time because this industry does not operate on one consistent playing field. Your association knows your market best.

The national associations have a treasure trove of information and knowledge to share with you. Starting with the TLPA’s “Who’s Driving You?” campaign (whosdrivingyou.org) and members-only Facebook group, those maintaining these sites mine daily for the latest information about TNCs and post it. AFT has also created weekly NewsWatch, an email newsletter that details nothing but relevant TNC information. Joe Jordan, industry veteran and editor of LimoInsider, also frequently shares links to articles about Uber (limoinsider@aol.com). Chauffeur Driven also consistently posts articles and breaking news on Facebook, Twitter, and in our bimonthly newsletter. We even have recordings from our Uber Panel and State of the Industry available on our show website—all you have to do is listen. All of these sources are worth your while to sign up for. If you want even more, you can set a news alert through Google with Uber and your market (e.g., Uber Philadelphia) and you’ll get all the timely articles you can stand.

Meetings and special events are also great ways to share and gain knowledge. NLA has published a position paper on its website on how to handle the fight with TNCs. Many associations have taken the battle to their statehouse; others have organized events like a Day on the Hill. Manpower is always needed for a collective front. You must get involved like your company depends upon it—because it does!

Final Thoughts
Jagiela made a fantastic comment about TNCs that we should all remember: “The greatest thing the TNCs did was on the technology side. What I tell the regulators is that I’m really happy that the TNCs taught my 20-year-old that she is entitled to car service.” Our goal as an industry is always to attract newer and younger passengers so that they use our services over a lifetime. TNCs may actually be helping somewhat with that.

Our industry still outshines Uber in many ways. We provide that personal touch with luxury transportation. Our chauffeurs are professionals and know how to be discreet and respect the privacy or sensitive information of our passengers. We’re customer service and convenience, but it will require us to get with the program when it comes to technology and on-demand service. With the advent of an industry-wide app, we could make our services more valuable than ever. [CD0115]