Taxi Owners Sue NYC Over Uber, While Court Overrules Class-Action Appeal (thestack.com)

An anonymous reader writes: Taxi owners in New York have filed a lawsuit against cab-hailing app giant Uber, citing damaged revenues and a hefty fall in value of NYC's 'medallion' business. The case against the city and its Taxi and Limousine Commission claims that the regulators have unfairly permitted Uber to steal away business from the regulated cab industry. Getting away without regulation has enabled Uber drivers to compete directly, and drown out official taxi companies. A further lawsuit case hovering over Uber this week, is its request to immediately appeal an order approving class certification filed by its own drivers. The appeal was denied by a U.S. court yesterday.

Comments

NYC taxi system could DESTROY uber

[ZorinLynx]

The taxi system already has good infrastructure in place and could destroy Uber if they wanted to, simply by competing fairly and adopting the "choose where you want to go before the cab gets to you" model.

But instead of doing this, they try to take the easy way out and sue.

Think of how optimized the cab system could be if they used Uber's model? But no, it's still based on the old "hail a cab and tell them where you're going" system.

Re:NYC taxi system could DESTROY uber

[U2xhc2hkb3QgU3Vja3M]

I don't see what they're complaining about. In a few years, the drivers for both taxis and Uber will be replaced by computers too.

Re:NYC taxi system could DESTROY uber

[ottothecow]

Plenty of cab companies and taxi associations have tried to create "official" taxi apps.

They are all god awful. People use uber partly because it is cheaper (is it even cheaper in NYC? I thought it cost more than a yellow cab there)...but they also use it because it is seamless, the cars are clean, and the drivers aren't smelly dudes yammering away on their phone. See the use of the more expensive "Uber Select" and "Uber Black" as proof that it is not just about undercutting the taxis.

Most NYC rides aren't dispatched anyways...they are flagged down on the street.

Re:NYC taxi system could DESTROY uber

[Krishnoid]

You know things have degenerated when suing is the *easy* option.

Re:NYC taxi system could DESTROY uber

[aXis100]

The main difference in the business models is that Taxi companies have to pay hundreds of thousands of dollars for a taxi license/plate/medallion, the supply of which has been artificially restricted by government regulation. This forces costs up for them and prices up for customers.

There is no such regulation on Uber and so they are competing on unequal terms.

I'm not a big fan of taxi companies but they have a point. In order to be fair, the Government may need to start handing out some refunds on taxi licenses / medallions.

Re:NYC taxi system could DESTROY uber

[BitterOak]

I'm not a big fan of taxi companies but they have a point. In order to be fair, the Government may need to start handing out some refunds on taxi licenses / medallions.

It's more reasonable to assume they'll simply require Uber drivers to carry medallions.

Re:NYC taxi system could DESTROY uber

[Firethorn]

The main difference in the business models is that Taxi companies have to pay hundreds of thousands of dollars for a taxi license/plate/medallion, the supply of which has been artificially restricted by government regulation. This forces costs up for them and prices up for customers.

Given that this is specifically about NYC, which I've done a bit of study on, it's actually worse than you say. NYC taxis are some of the most highly controlled in the world. London's Black Taxis are up there too, but at least they require quality drivers. NYC, from my understanding, is much more concerned with the vehicle, medallion, and operating methods.

Peak price for the medallion was over $1M, and the loan using one as collateral ran roughly 10%. So the 'permit' to operate a taxi in NYC ran, as an opportunity cost, roughly $100k/year. Before the costs of the car, insurance, fuel, and driver. If you figure on 3 rides an hour, 24 hours day, 365 days a year(they hand off the permit to successive drivers in the company), that's 26k rides. Or the permit being $4 for every ride.

2014 factbook: 13,437 medallions, 485k per day. That's 36 rides per medallion(I was figuring 72, double theirs), which increases that to $8/ride. Though I think the value of medallions have dropped from their high, and interest rates are lower. $740k@7% is only $142 per day, or still around $4/ride. ;)

Re:NYC taxi system could DESTROY uber

[stephanruby]

I don't know much about Uber, I don't see how their model is different from a regular taxi. They both need to pick you up at your current location and then you need to tell them where to go.

I don't see how Uber knowing in advance where you want to go could change the outcome.

No, in fact it's the taxi drivers that usually have more information about rides than Uber drivers.

Once booked, an Uber car can not be flagged someone else, it can not hear about other people needing rides to other locations, and it can not make itself available for other tentative bookings. First in, first out. That's how it works. There is no inventory sitting in queues waiting midway to be processed (if you don't mind me using the metaphors of lean manufacturing).

In the case of a taxi however, even if they're using a taxi app, there is no guarantee that they're coming to pick you up, because someone else could flag them on the way, they may get a more attractive offer of someone needing a ride to the airport (instead of a five minutes ride), they may not like the color of your skin or the way you're dressed or the way you speak, and they're always trying to book their next ride before they're finished with their existing one.

In the case of Uber also, the inability to do double-booking is important, but it's not the only thing that makes the service better. Since the transaction goes through whether you're picked up or not, you better be there when the Uber driver shows up. And the Uber driver better pick you up, because otherwise he'll get a charge back on his account and he'll get a very bad customer rating on his profile (assuming the gps data from both phones do not contradict the story of the customer).

Not only that, but as a user using the Uber app, you're instantly reassured after ordering the Uber car, since you're seeing its dot immediately moving towards you. In the case of a taxi however, even if you were to pinpoint its real-time location on a map, you would probably see the dot moving away from you as it is trying to finish its last ride.

Combine that with the fact that the medaillon system is archaic and highly inflexible, it's no wonder medaillon holders are not happy. During peak hours, Uber drivers can come out of nowhere. Their marginal costs for Uber are constant. In the case of a medaillon holder however, during peak hours, he can't split his medaillon(s) in two. The most he can do is to force a rotation of drivers to use his medaillon 24 hours a day 7 days a week even during low peak hours, to make sure he squeezes out every penny that he can out of that medaillon (or medaillons) so he can try to recoup his investment. And that doesn't solve the problem, that in places like New York or San Francisco, there are not enough taxis during peak hours, so it's not even worth trying to get one during those times. So before services like Uber came along, people opted for public transportation if they could during peak hours, or they opted to bring in their own car, and paid outrageous amounts for parking.

Re:NYC taxi system could DESTROY uber

[un1nsp1red]

Taxis are quickly becoming obsolete, and in a decade they will be as common as pay phones.

That would be great! Right now, pay phones outnumber taxis in Los Angeles by several orders of magnitude.

Re:NYC taxi system could DESTROY uber

[angel'o'sphere]

In the case of a taxi however, even if they're using a taxi app, there is no guarantee that they're coming to pick you up, because someone else could flag them on the way, they may get a more attractive offer of someone needing a ride to the airport
That is nonsense. Legally questionable, and what taxi business would allow that?

The rest of your post shows you never really dug into the matter.

Re:NYC taxi system could DESTROY uber

[Chris Johnson]

It's different in that when Paris was attacked by terrorists, regular taxi drivers rescued victims and people in danger of being killed, and Uber shut down and was gone during the crisis.

I suppose it could've been worse, they could have hit new highs for surge pricing.

Odd how Slashdot hasn't seen fit to mention this interesting data point...

Re:NYC taxi system could DESTROY uber

[gumbi west]

Not in NYC. In NYC undispatched rides are regulated an dispatched rides are unregulated(ish).

The regulation is mainly about keeping the streets from becoming overcrowded and reducing throughput. It would probably make the most sense to just tax time in the street for all cars equally. Then you could even do peak taxing and improve efficiency.

Re:NYC taxi system could DESTROY uber

[Firethorn]

The permit is to run "plenty of taxis".

The permit is to run ONE taxi at any given time. As I mentioned, they hand the permit off to successive drivers, so nominally speaking the permit is in operation as close to 24/7 as they can manage. Though maybe I should have been more explicit that they'll trade off cars as well.

There are single taxi drivers with their own medallion, there's restricted medallions where the owner can only own 1, and must drive something like 210 'shifts' a year with it, it's an owner-operator medallion, and is somewhat cheaper than an unrestricted one.

The company they are driving for has one.

Actually, the company they're driving for probably has 'numerous' medallions. As I said, they need 1 for each taxi on the road collecting fares.

Re: NYC taxi system could DESTROY uber

[lymond01]

I was in NYC for a taxi strike in the 90s. For a person who walked and took the subway, it was heaven. Half the cars disappeared from the streets. So much quieter.

Re:NYC taxi system could DESTROY uber

[AK Marc]

I've been stranded waiting for a taxi. The taxi that was sent never made it. This happens about 50% of the time for a pickup where hailing is common, and never in locations where hailing isn't common. Taxis are allowed to take a hail while going to a dispatched call. If the dispatched call is too short of a distance, they'll try to get out of it. An airport fare is much better than a shorter in town fare.

That you think it shouldn't happen isn't proof that it doesn't.

Uber doesn't steal from taxis. People hail taxis. People dispatch Uber. Dispatched cars in NYC don't need medallions. They are private cars.

Re:NYC taxi system could DESTROY uber

[Akili]

Personal anecdote:

I live about three miles from my local airport, and I have learned that while taxi drivers will take me home from there, they outright refuse (using silent neglect) to pick me up. I called not one but two different taxi services, the first one with over an hour's notice, and neither one could get a taxi to me. The dispatcher apologized, but that was all they could do. I ended up driving to the airport myself in a rush and paying for multiple-day airport parking instead. Subsequent occasions faired no better, and I eventually stopped trying.

Regardless of how one thinks they should work, evidence so far suggests that you're only guaranteed service once you're actually sitting in the taxi.

Re:NYC taxi system could DESTROY uber

[zippthorne]

They're both regulated. The regulations are not the same, nor should they be. Dispatched rides are also rationed, and for some reason the ration books (i.e. medallions) are transferrable between private parties, raising barriers to entry for newcomers and allowing a cartel of entrenched speculator/investors to control the industry, to the detriment of both drivers and riders.

Re:NYC taxi system could DESTROY uber

[tompaulco]

The "hard" option is to compete, and taxis can't do that. That'd be hard.

It would be easy to compete if they didn't have to obey the law. If the city would reimburse all of their sunk costs on Taxi medallions, remove the regulations which regulate the prices that taxis can charge and remove the insurance and inspection requirements, then taxis could easily compete with uber and due to their economies of scale, they could crush Uber. But unfortunately, Uber chooses to continue to operate without paying any attention to the rules which other companies in the same sector have to obey.

Re:NYC taxi system could DESTROY uber

[TapeCutter]

That only works in the center of certain large cities (eg: NYC), everywhere else more taxi's are dispatched than flagged down, except for Fri/Sat night shift, I know this because I drove one for 3yrs. Suburban work is mostly shuffling old people around and trips to the airport. IMO Uber are parasitic rent seekers, they are an old fashioned limo company "on a computer" and should be regulated as one. Whether you agree with the current law or not, the authorities should not have allowed Uber to continue to profit by ignoring it.

Re:NYC taxi system could DESTROY uber

[TapeCutter]

I drove taxis 25yrs ago, we had computerised dispatch back then (with a dispatcher entering the data), all of them now have their own app where the user fills out their own details. The taxi dispatchers are there to answer the phones, the dispatch company is usually owned and operated as a co-op between the individual taxi owners. AFAIK Uber doesn't offer the "human on a phone" option, it's web form or nothing.

Since there are thousands of taxi owners paying for a few drones in a call center it is an insignificant part of the cost of running a taxi. By far the biggest cost of running a cab is maintenance, fuel, insurance, and the interest you pay on the loan you took out for the "medallion".

If hipsters want to change the law into a race to the bottom for owner-operators, then the first thing they must do is buy back those medallions at a fair price. People have worked their entire lives to pay for a single medallion, a bunch of parasites who believe the law doesn't apply to them are rapidly making them worthless.

Re:NYC taxi system could DESTROY uber

[Sylak]

This is what Virginia does for Uber and Lyft, at the very least for picking up and dropping off at the airports (DCA and IAD)

Re:NYC taxi system could DESTROY uber

[ragefan]

By far the biggest cost of running a cab is maintenance, fuel, insurance, and the interest you pay on the loan you took out for the "medallion".

Uber drivers have all of these costs too, with the exception of the Medallion, and probably cost more for the one-off Uber driver as the cab companies are able to pool their costs across their fleet. Also, what would prevent a cab company from converting cabs to Uber cars and flying under the radar without medallions?

Re:NYC taxi system could DESTROY uber

[david_thornley]

In some places, some Uber services are completely legal. In others, Uber drivers do not have sufficient licensing or insurance, and can be breaking more laws than that.

Customers aren't property.

[jcr]

Uber is eating their lunch because cabs SUCK. I have no sympathy at all for those rent-seeking bastards.

-jcr

Re:Customers aren't property.

[swillden]

There is exactly no point in Uber's business model where the drivers are any better than the average taxi driver.

Have you ever been in a taxi? Or an Uber car?

I could debate the theoretical ins and outs of the business models and how they might affect quality, but there's really no need because simple observation demonstrates that you're wrong. I have occasionally encountered a taxi that was clean and in good condition, with a driver who is polite and friendly. I have also encountered many cabs that were old, dirty, smelly and with a driver who was rude and ornery. I've yet to find an Uber car or driver that wasn't very pleasant.

Last weekend I took an Uber from my hotel in London to Heathrow, and took the opportunity to ask the driver about his background and his motivation for driving for Uber. It was really interesting. He was a well-spoken, neat, polite black man with five children, and a bachelor's degree in some sort of I/T (I didn't ask for details). He was originally from Somalia, but had left to escape the turmoil when he was 17, moving first to Dubai and then to London, where he's been living for 15 years. He drove for various minicab services until he got his degree, then went to work doing tech support. He liked the tech support job, but found he didn't make as much money as when he was driving a cab, so he decided to try Uber. He loves driving for Uber. He makes roughly as much money as when he was driving a cab, but loves the flexibility that Uber gives him. If he wants to go do something with his kids, he just logs off and does it. If he needs a little more cash, he works a little more, and makes sure to be working during surge times.

He still does tech support from time to time, but only on a short-term contract basis, which he says pays better than the full-time job he once had but doesn't provide a stable income. Uber provides him with a flexible alternative work option that makes it possible for him to do the intermittent contract work. He likes the variety, though his family prefers the times when he's driving, because they see more of him then.

His goal is to build up a nest egg of about $200K US and then move back to Somalia and open a retail business focused on selling imported goods. He says he took a lot of business classes while doing his degree and feels confident that he can be successful. I think he will.

All in all, he was a pretty impressive guy. Definitely not the sort I've found typically driving cabs.

my niece doesn't understand dial telephones

[turkeydance]

you know...watching an old movie with my sister (she LOVES movies) and her daughter asks about the tech in the movie. "why would anyone...?" take your pick: landline, taxi, whatever. well, she does LOVE horses, so there. bottom line: her generation doesn't care about medallions/taxis/etc.

Re:my niece doesn't understand dial telephones

[dbIII]

I don't have to ask about cranking the phone because when I was young my dad pulled an old phone out of a box and said - "hold these two wires while I turn this handle".

Re:my niece doesn't understand dial telephones

[Anonymous Coward]

ladies ride horses to get off

Amazon

[tlambert]

Look what Amazon has done to local retail in America - decimated it!

Dude, that was, in order:

(1) strip malls put individual storefronts out of business, and raised rents when they were gone

(2) shopping malls put many strip malls and individual storefronts out of business, and raised rents when they were gone

(3) Walmart put many "anchor stores" in shopping malls out of business, which then killed individual mall stores dependent on foot traffic, and killed many strip malls with limited varied compared to Walmart, and remaining storefronts, all by buying in bulk, undercutting prices (even if good had to be sold at a loss to do so), and then raising prices once the others were gone

It's all about driving down aggregate costs (which is one reason many places in California have ordinances on maximum store size: to keep Walmart out, or at least from realizing a high enough economy of scale to drive smaller stores out of business, because they are more or less the same size

Amazon was pretty much uninvolved with any of that.

Re:It's a tax

[Dynedain]

The city is not getting $1m for each medallion. That's the artificial market created by middlemen trading in medallions.

But uber is bitcoin only

[Anonymous Coward]

I'm not sure how a bitcoin-only system like Uber can win over the traditional taxis.

Re:Uber in NYC *is* regulated.`

[Dynedain]

The complaints and lawsuits aren't about the Uber Black and above service tiers which you rightly identify as legally licensed livery services.

The complaints are about the low-cost tiers which are essentially the same thing as Lyft. Unlicensed individuals selling rides for hire through Uber as a booking agent. The drivers and vehicles aren't licensed as limos or taxis, and the cars don't have the special plates or stickers. Uber is taking a cut and claiming it's OK because there's no licenses required for dispatchers. According to Uber it's the individual drivers who are breaking the law and that they are independent contractors. It's a nice huge legal grey area that's unregulated.

Same thing about Air B&B. There's a service gap between "loan my apartment to a friend while I'm out of town in exchange for a few bucks" and hotels. The companies that have used technology to insert themselves in this gap as a middleman have facilitated a lot of abuse of the legal grey areas. Where do you draw the line between renting, hoteling, and sharing? It's easy to identify the extremes that are clearly abuse, but very hard to draw clear delineators that trigger different regulations.

How do you draw the line between carpooling, ride sharing, and operating a taxi?

Re:Summary wrong: Uber is NOT being sued

[AK Marc]

In NYC, Uber does follow the law. That's why the Taxis are pissed. They essentially want to sue NYC to change the law to outlaw the currently legal Uber.

Re:Taxi establishment digging its own grave

[tompaulco]

Taxi companies can't just "do what uber does" because that would be illegal. They can't bid rides out and change prices during "peak pricing" because prices are regulated. They can't offer a price in advance because pricing is regulated by the mile and they do not know in advance what route they will end up taking. It is not the taxi companies that would have to change to compete with Uber, it would require the regulations to change to allow what Uber is doing to be legal, and then the cab companies could follow suit and shortly after would probably put Uber out of business.

liability and insurance are the big ones also labo

[Joe_Dragon]

liability and insurance are the big ones also labor laws.

The taxi company's may abuse the labor laws. But they have full liability for accidents lift and uber look for loops holes even when a 6-year-old girl is killed by a uber driver that is on duty but uber has there system setup so they are not in there book.