DC City Council members move against Uber sedan service

Christopher Bedford Former Editor in Chief, The Daily Caller News Foundation
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Members of the Washington, D.C. City Council haven’t given up on their efforts to bring the efficient and reliable luxury sedan-on-call service, Uber, under the authority of the company’s competitors in the taxicab industry.

Council members previously tried to establish a price floor for the company. More recently, at a July 10 meeting, a number of City Council members voted to bring the sedan service under the authority of the D.C. Taxicab Commission, a regulatory body strongly influenced by the taxi industry.

The move was only slowed by four council members — Michael Brown, Tommy Wells, David Catania and Jack Evans — who pushed through an amendment to stay the order for six months, until Jan. 1, 2013.

“I was opposed to them not being regulated, period,” councilman and former D.C. Mayor Marion Barry told The Daily Caller. “This was a compromise. I think if it’s not a regulated service, it really has an impact on the D.C. taxi industry.”

Barry, who remains popular in D.C. and is infamous for not paying taxes on time and for a 1990 sting operation that caught him smoking crack with a prostitute, added, “I’m going to do everything I can to protect the hardworking taxi drivers.”

Uber is not thrilled.

“The long history of corruption with regards to the taxi industry and the District government — including indictments and jail time of city officials — along with our own experience dealing with the agency, makes us take pause,” Uber founder Travis Kalanick told TheDC.

The initial price-floor legislation was scuttled after a quick reaction from Uber and its customer base.

“I don’t think they expected that we would be able to react as quickly as we did,” Kalanick reflected.

“There were 104 million social media impressions in 18 hours because we rallied our user base” with an email warning the night before the vote, which was announced at 4 p.m. the day before it came before the council.

And, Kalanick added, they will activate that base again.

“He [Barry] and I disagree on that,” D.C. council member Brown said of Barry’s efforts to bring Uber under the control of the Taxicab Commission. “I want to make sure it’s a level playing field for all.”

“More than 80 percent of the taxicab drivers do not live in the District of Columbia,” Brown told TheDC, adding that “they take their dollars outside the District of Columbia, and Uber has a different approach to hiring D.C. drivers.”

Brown did not know what percent of Uber drivers live in the District, but he said he was working with the company to determine that.

“It is odd to me,” Brown said, “because Uber has shown a much more proactive approach to going to [economically depressed] parts of the city where cab drivers have traditionally not gone, which includes Councilman Barry’s ward, Ward 8.”

Uber users download a mobile phone application and click a few buttons when they need a car. Within a few minutes, a luxury sedan arrives, announces its presence with a text message, drives to a destination and charges a credit card. It’s more expensive than a cab ride, but comparatively more convenient.

The council’s move is unprecedented. The city’s Taxicab Commission has traditionally regulated taxi companies, which maintain their own fleets of cars, while Uber is simply a call service for independent limo drivers — a sort of middle man.

“We don’t own limos,” Kalanick told TheDC. “We connect them with riders.”

But “the council has the authority to give the Taxicab Commission the regulatory powers that it needs,” Barry told TheDC.

“It’s hard for me to understand the angle,” Kalanick said. Speaking of Councilwoman Mary Cheh, who sponsored the original price-floor legislation, he said: “What I can say is it’s pretty clear with all legislation that she’s put forth, that there’s a number of provisions there attempting to protect the taxis from services like Uber.”

“If you look at the rationale for the law, which is in every law that the District passes — you’ll find in this rationale that it was actually really clear — they said they’re trying to keep Uber and services like it from competing with the taxi industry,” Kalanick added.

Cheh declined TheDC’s request for comment, but she said after her legislation’s initial defeat that she would like to work with Uber to find a mutually beneficial settlement.

“That’s a Republican point of view,” Barry responded to the charge that the Taxicab Commission would ruin Uber. He challenged his opponents to prove how the commission would hurt taxi competitors. “No regulations,” he said sarcastically. “Let capitalism work.”

“This is called regulatory capture,” explained Dr. Matt Mitchell, an economist at the free-market Mercatus Center, a research hub based at George Mason University. “And it’s the idea that government agencies that are supposed to regulate certain businesses have a tendency to get captured by the business they’re supposed to be regulating, and can become a tool by them. It’s been long recognized by economists.”

“This story illustrates that, quite often, the power of government and the power of business move in the same direction,” added Mitchell, who has has written about the Uber-city council battle in the past. “So here is one example where regulations are being used to benefit entrenched interests, meaning the taxicab interests. Regulations can be very helpful to firms, because they can be used to hobble ones competitors.”

“Of course business likes big government,” Mitchell continued. “If you can’t get customers on your own, you can always use government to box out your customers, and I think this is a perfect example: The taxicab lobby is very powerful, they’re very well connected to politicians in D.C., and they’ve had a very strong impact on this policy.”

Barry stuck to his guns, saying he is also worried about protecting his constituents who have complained that Uber is too expensive.

Barry’s office failed to provide copies of constituent complaints when TheDC asked him to document that claim.

The New York Times reports that the typical town car service is 40 to 100 percent more than a cab fare; a cheaper fleet proposed by Uber is estimated to cost between 10 and 25 percent more.

“If this had been done by a private individual, that person would be in jail,” Kalanick told TheDC. “But if the taxis are able to do this through the government, it’s legal.” He said he is “hopeful” that Uber will ultimately escape the Taxicab Commission’s authority, “but obviously through the legislative process we have a lot to do and work on.”

“I’m hopeful this [stay] will be extended beyond the six-month window it’s in now,” Brown told TheDC. “I think Uber is an extremely important part of our multi-mobile transportation system in our city, and as we continue to go through the legislative process, our colleagues will understand the importance of Uber and it will be extended.”

The sedan-linking service has not encountered similar trouble in other cities it operates in, including New York City, San Francisco, Los Angeles and Paris.

“Why shouldn’t Uber be able to offer services at the best price?” Kalanick asked. “We’re on the side of riders and we’re helping to create thousands of jobs in the District.”

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