Sunday, June 9, 2013

Revises Opening Final Comments to CPUC's Ridesharing Rulemaking

My opening final comments to the CPUC hearing are something of a summary of my thoughts on ridesharing. Although I repeat ideas that I've written and said before, I've hopefully phrasing them more concisely than I did in earlier versions.

Because of the length of my comments I'm going to put them into two post. The first one will deal with deregulation. The next will be about Lyft and Sidecar's spurious claims to being ridesharing services.

The End notes, surprisingly, can be found at the end.

The photo is of Kristen Sverchek,  the General Council of Zimride incorporated, who personifies (for me) the true Lyft and Sidecar sense of community.

Revised Opening Final Comments 

The so-called “ridesharing” businesses of Lyft, Sidecar, Uber and others are not legitimate and should not be legalized. To do otherwise, to legalize them, would lead to an extensive and destructive deregulation. It would create congestion, pollution and endanger the people who drive and ride in the vehicles as well as the general public.


If the CPUC allows the use of personal vehicles for transporting passengers (i.e. as taxicab or livery services), It would be impossible to tell whether or not any car was a legal rideshare.  There would be no way to control the number of illegal taxis. In fact, this is already happening.

Ever since the CPUC gave Lyft, Sidecar and Uber free passes to grossly expand their businesses a plethora of illegal cars and taxis (including cars with fake pink mustaches) have hit the streets. Instant Cab, Ur Cab Service, Uberx, Tickengo, Rickshaw and Jitney are either operating here or on the way. There’s a Sarah’s Taxi Service with a limo body and a taxi top, a phone number that doesn’t work and no online listing. A cab driver I know has developed his own app and just can’t wait for ridesharing to be given the official thumbs up so he can buy a junk car and start making some extra money.

And why not?

Deregulation is one of those ideas that sounds good but doesn’t work out so well in practice. It’s got that Social Darwinism thing going for it that’s ingrained in the American psyche. You know. Competition necessarily improves everything. Yes, sometimes. But don’t forget that for the fittest to survival often means wasting everybody else.
Taxicab services have been deregulated almost everywhere in the world at one time or another. And they’ve been re-regulated almost everywhere a short time later. (1), (2).

Lyft and the other bogus ridesharing companies criticize city regulators for protecting taxicab companies. Well, protecting business is a natural function of government agencies – just like the CPUC appears to be protecting investors from Silicon Valley (3). However, City regulators are also protecting the earnings of drivers and the safety of the public. It’s not clear, on the other hand, how the CPUC’s refusal to allow people to see whether or not they are riding in insured vehicles protects the public’s interest.
Indeed, the major reason that deregulation fails is that it does not protect the public’s interest. According to Bruce Schaller: (4)

“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 less money is available to buy new ones. And, as income levels decline, experienced drivers leave the business to untrained drivers, thus endangering the public. More from Schaller: (5)

"There appears to be a strong relationship between taxicab crash rates and driver incomes. Higher driver incomes are associated with lower crash rates."

Negative Effects of “Community” Deregulation
Lyft, Sidecar and the other fake “community” taxis are already deregulating the business with the predicted results.
1. The income of cab drivers has declined about twenty-five percent over the last year, causing many experienced professions leave the business.  
Keeping the 25% decline in mind, Cab, Lyft and Sidecar drivers all make about $20 per hour. (6), (7), (8)
  • ·      Cab drivers are entitled to Workers Compensation benefits and if they work enough years, have a chance to become the one taxi driver in five who owns a medallion worth $250,000, which brings in $2,500 a month on top of what the owner makes from driving. This is down from $300,000 a year ago. 
  •    In addition, there is a driver’s fund created primarily from a 5% fee on the sale of medallions currently worth 3.1 million dollars that might be used to help reduce medical insurance payments for cab drivers.
  •    If Lyft, Sidecar and the other pseudo rideshares are legalized and not restrained, the medallion would be worth little or nothing in a few years. If this happens, the quality and professionalism of drivers would take a nosedive.
  •       If Lyft and Sidecar drivers use their own cars, which AAA says, costs them $0.596 per mile to run. At 100 miles = $59.60. If they work 10 hours, they make $200-$59.60 = $141.40 or $14.40 per hour. The minimum wage in San Francisco is $10.55
  •     Cab and limo drivers are carefully vetted and trained. There is a 28 hour course for cab drivers which includes: geography (maps/ routes/locations), defensive driving, vehicle and pedestrian safety as well as vehicle codes and traffic safety. Drivers have to pass a test on the materials before they start working. I understand that limo drivers take a 70 hours course.
  •        Lyft and Sidecar drivers are minimally vetted and trained mostly by rumor. (9), (10)

2. Lyft and Sidecar are putting vehicles on the street that are inferior to taxicabs.
  • ·      Over 95% of the cabs in San Francisco are hybrids that undergo a though mechanical inspection at the Airport before they are put into use. Furthermore, they are checked at the end of every shift.
  •     Less than 20% of Lyft and Sidecar’s vehicles are hybrids, and the companies do not mechanically inspect the cars. (9) (11)
  •     A San Francisco taxicab cannot be older than 2006. Lyft and Sidecar accept vehicles as old as 2000.

3. It’s way too early to tell what the accident rates for the “fake ridesharing” companies will be. As a former insurance underwriter, I can tell you that Lyft and Sidecar haven’t been in business long enough to generate meaningful statistics. Sidecar claims to have stats showing that their drivers are safer than cab drivers, but they also claim to train their drivers and mechanically inspect their fake cabs, and they don’t do either one. 

Come now. Cab driver bigotry aside, does it really make sense for untrained drivers to be safer than ones that are trained? As much as I hate to say something nice about Uber, they at least are smart enough to hire experienced taxi and limo drivers who have been the subjects of driving studies. Once again, from Schaller:

"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 Commissions and auto insurance carriers. They risk losing their livelihood if they have too many crashes or get too many tickets."(12)
(Click Below for End Notes.)

End Notes

1. TAXI DEREGULATION: INTERNATIONAL COMPARISON by Choong-Ho Kang, BS (English), MS (Engineering)

3. Lyft gets $60 million from Andreessen Horowitz et al.
4. Entry Controls in Taxi Regulation by Schaller Consulting
6. Anonymous comment by a Lyft Driver to my blog post 100,000 Uninsured Rides and Counting: Undercover at Lyft and Sidecar Note the Anonymous post following the comment.

7. Xuxu Blazer in another comment to the same post, “I work for Lyft. I make on average over $20 an hour…”

8. Life Behind The Wheel In The New Rideshare Economy,  Justine Sharrock

“Lyft emailed me my “estimated earning” report, predicting I would get $38 for two hours. The estimated earning, though, can be significantly lower than the “actual” earning deposited into Lyfters’ bank accounts. But I earned $40. Not bad.”

9. 100,000 Uninsured Rides and Counting: Undercover at Lyft and Sidecar Thanks to the CPUC, I guess I should change to the title to “1,000,000 Uninsured Rides …”

10. Justine Sharrock, “”If you could give a Lyft to anyone, living or dead, who would it be?’

It was the first question during my initial phone interview to become a Lyft driver.”

“The hardest question during the in-person interview was, ‘How will you make your car unique?’”

“Our training focused on using the app, signing up for work hours online, and being friendly. In teams of two, we sat in chairs side by side (Lyft riders are supposed to sit shotgun), acting out welcoming and fist-bumping the rider, making small talk during the mock drive, and using the app on tester phones. We never actually got in a car.”

“I got my driver’s license at 21, which I used in my twenties to get into bars, not to drive. I bought my first car last year. I know the city by bus and bike routes. The maze of one-way streets in downtown San Francisco is as much a mystery to me as it is to my prospective passengers. My driving history does not fit the profile of a cab driver.”

“Lyft’s vehicle safety inspection, which it claims is stricter than those of taxicab services, consisted of checking that my car was clean inside and out and having me demonstrate that my break lights, blinkers, and headlights worked. They copied my driver’s license and insurance card and photographed my license plate — there was no need, they explained, to see my registration as long as I had the sticker.

Unlike at a cab company, there was no driver safety test or quiz on city geography. They didn’t check references or ask for a résumé. I don’t think they even Googled me. “

12. NYC Cabbies Less Crash Prone Than Other Drivers, Schaller Consulting


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