Thursday, April 11, 2013

MY Pre-hearing Conference Notes

I was pressed for time so I'll just make my points with Bold and bullets. Sorry.

The so-called “community driving vehicles” or “peer to peer taxi services” should not be legalized under any circumstances.

It would be impossible to regulate them.
  • How would you tell a Sidecar from any other car? You couldn’t.
  • It would cost the state millions to even try to regulate them and California is already strapped for money.
  • 1. One reason that illegal taxicab services like Lyft and Sidecar got a foothold in the state is that the CPUC only had one investigator for all of northern California.
Legalizing Lyft and Sidecar, etc. would be the same as total deregulation of the personal transportation business.
According to Schaller:

“As the competition increases the amount of money for each driver declines. Drivers thus tend to congregate in the places that are busy already instead of going to the outlying area where they are less likely to get a ride."
  • The quality of the vehicles also declines because there is less money available to buy new ones. 
  • I would like to add that the quality of the drivers declines because experienced drivers will seek other work as income levels decline.
    • More from Schaller: "there appears to be a strong relationship between taxicab crash rates and driver incomes. Higher driver incomes are associated with lower crash rates."
    • In Addition, the public could be exposed to danger from accidents or assaults by untrained and unvetted drivers.
Deregulation is already taking place in San Francisco.
  • Income of drivers is dropping dramatically.
  •  Resulting in many professional taxi drivers leaving the business.
  • They are being replaced by part-time amateurs who are untrained.
The proliferation of illegal vehicles is leading to a drastic decline in the quality of cars.

Classic deregulation theory says that a natural balance will eventually work out between customers and taxis or other personal carriers because oversupply will cease when only so many drivers or companies can make a profit out of the business.
  • However, app suppliers like Lyft and Sidecar have virtually no expenses.
  • They don’t buy cars, pay for insurance, pay for workers comp or claim any responsibility for what happens in the vehicles that are hailed using their apps.
  • If, for instance, a Lyft customer were to be assaulted by a Lyft driver, Lyft has already disclaimed any responsibility in its “terms” that the customer (usually unknowingly) has signed.
Despite the fact that the city is already overflowing with their illegal taxis, both Lyft and Sidecar are continuing to pump out new drivers.
  • Sidecar has so many vehicles in operation that a driver only has 15 or 20 seconds to respond to an order before  it is given to the next nearest five cars.
    • This only would only happen if there were more cars than there is business.
  • Sidecar has come out with a heat map to show their drivers where most of the business is.
    • Which happens to be the same places where taxicabs are usually working.
  • Lyft and Sidecar vehicles are also seen playing flags or lined up at hotels.
    • Which they wouldn’t be doing if they had enough business.
Legalizing Lyft, Sidecar, etc. would lead to massive congestion and pollution.
  • This is already taking place. Even if all the other vehicles were hybrids like San Francisco taxis, the duplication of effort - with all these vehicles competing for the same rides in the same places - would cause (and is causing)  massive congestion and pollution.
  • The vast majority of the thousand+ illegal vehicles put on the street by Lyft, Sidecar etc. are not hybrids but older gas guzzling vehicles.
  • If you add the thousand or so limos cruising the town - you have an environmental nightmare.

If the CPUC were to rule that Lyft and Sidecar et al were to be classified as “ridesharing” or “car pooling” services that could be covered by Personal Liability Insurance, the Personal Liability Insurance rates of every driver in San Francisco, as well as California and probably the country, would have to go up.

"The lower crash rates for cabbies are not so surprising given that taxi drivers are far more experienced than other drivers. They are behind the wheel up to 3,000 hours a year. Their driving records are scrutinized by the Taxi and Limousine Commission and auto insurance carriers. They risk losing their livelihood if they have too many crashes or get too many tickets."

But leaving this aside, even if (and these are San Francisco drivers mind you - arguably the worst in the country) the illegal community cab drivers were A number one the cars would still be more accidents for two reasons:
  • Drivers would be out working for more hours and thus have more accident exposure.
  • They would be working at the times when most accidents take place:
    • Morning rush hours.
    • Noon rush hours.
    • Evening rush hours.
    • Friday and Saturday nights.

 Insurance companies do not loose money. If the CPUC forced them to insure the bogus “ridesharing” services with personal liability insurance, the insurance companies would be forced to raise the rates for everybody else in order to stay profitable.


  1. I value your advice Ed, is a medallion worth 150,000 I have an opportunity to buy soon and would like your opinion on this ..Thank You

  2. I don't know. They haven't made a ruling yet.

    1. what ruling are you waiting for that will affect your opinion on this.

  3. If the CPUC decides to legalize Lyft and Sidecar it would effectively deregulate the cab business and I don't think your medallion would be worth very much. But it might depend upon of the sale.


    1. Thanks for your opinion, I heard NYC fought off Uber I don't have much more info that but heard that by word of mouth and a few random websites..