It’s easier to catch a cold than a cab standing on a Los Angeles street corner.
In a city known for ridiculous traffic, underwhelming public transportation options and impossible commutes, hailing a cab is still a futile endeavor in L.A. As such, I’ve been a big fan of the rideshare revolution that allows me to electronically hail and pay for my ride through an app on my smartphone. Better still, with SideCar or Lyft, I can grab an empty seat in a private car that’s already headed in my direction. It’s good for the environment. It’s good for the economy. The options are great, and the upside is immense.
It seems like such a smart, simple solution to a frequently-ignored problem. And it really is, unless you’re the City of Los Angeles or a taxi driver. Taxi drivers have staged rallies outside City Hall to protest new competition from rideshare "bandit taxis."
The problem is, taxi companies and rideshare providers seem to be living in different centuries. Taxi companies have failed to embrace the potential of modern, consumer-friendly technologies. Their narrow-mindedness opened the door for a new wave of disruptive innovators, who seized opportunities and created a revitalized customer base. Meanwhile, the taxi industry struggles to maintain its weakened stranglehold on the marketplace.
So far the taxi industry has managed to keep their grasp, even persuading the Los Angeles Department of Transportation to take their side. The Department has sent threatening cease-and-desist letters to rideshare operators. These letters warned of "criminal prosecution" if companies such as Lyft, SideCar and Uber didn’t stop operating immediately.
Wait a minute! If carpooling is a criminal offense, should I retain an attorney before I drop my daughter and her friends off at school?
Of course I shouldn’t be concerned, and, for the moment, I’m not, thanks to the leadership exhibited by California Public Utilities Commissioner Michael Peevey. In reaction to the highly-charged situation around ridesharing services, Peevey, the President of the Commission, has put forth a proposal that balances the interests of California consumers and the two competing camps in the transportation industry.
The Peevey proposal is not without complications though. In true governing style, his proposal is 59 pages long, littered with footnotes, and hard to understand for all but those who enjoy regulatory minutia. Even the title of Peevey’s document is a mouthful: "Decision Adopting Rules and Regulations to Protect Public Safety While Allowing New Entrants to the Transportation Industry." The natural acronym – DARRPPSWANETI – doesn’t really roll off the tongue without a lot of practice.
But here’s the thing. If you’re able to wade through all the policy lingo, you’ll find Peevey’s proposal is a smart one. It’s a forward-looking, thoughtful reaction to a perplexing problem.
The Peevey Decision would classify rideshare operators such as Lyft, SideCar, and Uber as "transportation network companies." This newly-created classification would place them under the watchful eye of the California Public Utilities Commission. More importantly, it addresses objections from the taxi industry by requiring criminal background checks on all drivers, frequent vehicle inspections and increased liability insurance policies up to $1 million per incident. These are all good consumer protections.
Actions – and solutions – like Peevey’s are not often seen in the regulatory world. That’s why Commissioner Peevey deserves to be praised. By actively working to solve regulatory gridlock and propose solutions, he’s acknowledging that new technologies often require new rules, and that old rules don’t always apply to new tech. The rideshare companies certainly bring new ideas and advancements to the table, and the Peevey Decision gives them a chance to compete for customers.
This is innovation at its core, taking the archaic and modernizing it to meet consumer need. Peevey’s Decision is the regulatory equivalent of the rideshare app revolution. He’s taken a fresh look at an antiquated law that allowed for jurisdictional confusion and put forth a common sense solution.
As the taxi vs. rideshare fight makes clear, the old way of regulating business is not always the best way to encourage industries to grow. And, at least in this case, the old rules are certainly not the best way to encourage competition in a marketplace starving for choices. So, thanks to Commissioner Peevey, customers who just want a ride may have more reliable ways of getting one.
