The SFMTA'S Comments on the CPUC's Rulemaking on Ridesharing

No, I 'm not on the MTA payroll. I've earned my gold star for SFMTA bashing by writing twenty some posts criticizing them for trying to cure San Francisco's shortfall by taxing cab drivers and killing the waiting list.

But that fight is now in the past and possibly in the future. At the moment we're both lined up against the same adversary - illegal app mongers out to destroy the taxi business.

That's right! Contrary to urban myth, the SFMTA is as strongly against the illegal encroachments of Uber, Lyft and Sidecar as anybody. 

The government officials actually responsible for keeping attack dogs off the techie, snake-oil, sales-persons are the California Public Utilities Commission (CPUC), Mayor Ed Lee and pro-corporate, anti-environment Supervisor Scott Weiner.

The SFMTA has actually gone beyond mere opposition to help organize and lead the fight. Director Christiane Hayashi, for example, has been instrumental in showing Barry Korengold of the San Francisco Cab Drivers Association and myself how to jump thorough the CPUC's hoops so that we could become part of their rulemaking process.

The below comments were put together by the Taxi Services staff with the final version being written by City Attorney Mariam Morely. The paper was okayed and signed by Director of Transportation Edward D. Reiskin. 

It's an excellent, well-thought out and thorough presentation that I thought I'd share with you. 

I. Introduction

As the SFMTA stated in its Initial Comments, the use of electronic hailing applications to deliver transportation for hire services does not change the underlying nature of the services.   Electronic hailing can and is being widely used to support delivery of both state-regulated charter-party service and locally-regulated taxi service.  It is also being used to support completely unregulated service.  With or without electronic hailing, transportation for hire services like those offered by Uber, Lyft and Sidecar must be regulated to protect the public health and safety and to meet many other critical public policy goals served by local taxi regulation. 

Services like Uber, Lyft and SideCar meet the statutory definition of charter-party service; however, as we review the record, we note that electronic hailing applications have effectively dissolved the previously coherent regulatory distinction between charter-party service and taxi service.  While meeting the statutory definition of charter-party service, Uber, Lyft and Sidecar offer services that can equally  be characterized as taxi service.  The solution to this regulatory problem is not double regulation; nor can it be the solution suggested by the CPUC's recent interim settlements with Uber and Zimride -- a weakened halfway form of charter-party regulation.  Existing California law provides two distinct frameworks for regulating transportation for hire.  The regulatory problem triggered by electronic hailing will not be solved by  "charter-party lite" or "local taxi lite" regulation.    Because transportation for hire services are critical to maintaining environmentally sustainable and economically vibrant urban areas, we urge the CPUC to work closely with local taxi regulators to develop a regulatory scheme that that ensures the availability of safe, reliable, affordable, environmentally-sustainable and nondiscriminatory transportation options for all segments of the market.  

The transportation for hire market in California cities can sustain two classes of service -- both of which can be supported and improved by the magnificent opportunity reflected in electronic hailing innovations.  As public servants, we must deliver a solution to the regulatory problem we face that does not abandon the critical goals that have historically been served by regulation of transportation for hire.  Our solution must ensure that unregulated services do not drive regulated providers out of business and, in so doing, undermine our state and local goals for reducing greenhouse gas emissions and ensuring access to safe and reliable transportation for all California residents -- including seniors and people with disabilities.  While born of innovation and opportunity, this challenge is formidable.   We can meet it effectively only by working together.

(To read further Click below.)

MTA Board Okays Electronic Taxi Access

The SFMTA Board unanimously approved Electronic Taxi Access (ETA) which will lead to the development of a platform allowing smart phone apps to show all the available taxis in San Francisco on a single map.

Director of Transportation Ed Reiskin (photo), who introduced the measure, said that he thought ETA should have been implemented two years ago.

President John Lazar and Charles Rathbone of Luxor Cab along with Nate Dwiri and Bill Gillespie of Yellow Cab spoke against the measure as did a spokesman for Taxi Magic. They talked about the money that they had spent developing wonderful apps of their own which made a universal app unnecessary. Gillespie said that Yellow was working on a new advanced app that would let drivers talk directly to the customers.

Well ... I could talk to customers on Cabulous (now Flywheel) three years ago which is my way of pointing out that much of what these companies are doing is re-inventing the wheel. In any case, most of their innovations are beside the point. The creation of multiple apps from multiple companies merely exacerbates the problem of the customers having too many choices with no way of knowing what the best choice is.

ETA will allow the customers to find the closest available cab and will eliminate the problem of two or three cabs from different companies going to the same address. This should greatly reduce the dreaded no-go, free up more cabs to pick up more orders and lead to better coverage in the neighborhoods.  It's best idea to improve service that anybody has come up with in the thirty years I've been in the taxi business.

The details of how this will be implemented have yet to be worked out. After the Board meeting, Director Chris Hayashi said that she will be holding meetings involving Frias Transportation Infrastructure, the cab companies and the public as to how best to implement the technology. Issues such as allowing companies to keep their own dispatch systems and brands as well as pre-tipping will be studied and discussed.

Too Many Cabs

The indefatigable Tariq Mehmood brought in somewhere around fifty drivers to speak against more cabs and Electronic Waybills. He handed out a script that they were supposed to follow which ended with a call for Tariq's favorite fetish - firing Director Hayashi. It turned out that Electoronic Waybills were Okayed by the Board over a year ago and were not on the agenda. As for Hayashi ... apparently only a couple of drivers shared Mehmood's weird obsession.

What most of the drivers did speak about was the decline of income caused by unfair competition from the illegal, uninsured vehicles of Lyft and Sidecar etc. Many drivers said that their were making 50% less than they were making a year ago. One driver said that he had started driving for Uber but quit and went back to Yellow after Uber put out so many fake cabs that his income at Uber dropped in half. Medallion holders spoke about being unable to find drivers to fill shifts. A little humor was injected by a driver named Ben who talked about a date that didn't go too well with a woman who turned out to be a Lyft driver.

Director Ed Reiskin, who is apparently powerless to go anything about this, suggested that the drivers tell their tales at the CPUC hearings that begin on April 10th.

Good idea.

Malcolm on Top

Might as well start with Jim Gillespie (photo, below). He walked up to me with a big smile as I headed across the square toward the MTA board meeting last Tuesday.

"Going to write something in your blog?" he asked with a smile.

"I just found out that Heinicke (photo left) appears to be be violating the Sunshine Ordinance. The meetings are a farce," I told Gillespie. "The proposals are decided in advance behind close doors."

"I thought that's the way it worked," Jim said.

If anybody would know about such things it would be Gillespie. He was seen making one of those back door visits with his pal John Lazar and the way he jauntily bounded up the steps to City Hall told me how the vote would go.

MTA Board did indeed choose to lease 150 to 200 medallions or permits to taxi companies. The permits are supposed to go to the best run companies but "word on the street" is that Yellow will get more than its share anyway.

Jim used the incompetence of his company during the meeting as a reason for the City to give him more cabs. He especially mentioned that a high percentage of the people who call Yellow hang up before the dispatcher answers or cancel before Yellow picks them up.              

What he didn't bother to tell the Board was that Yellow often deliberately fails to answer the phone and then holds the orders for 9 to 12 minutes before dispatching them.  That way the company can use their poor service to ask for more taxis. And, the City is going to do it. Another doublethink classic.

The board will lease the taxis to the companies despite the fact that a study being done by Hara and Associates will not be finished until January.

This caused some discussion and the only dissenting vote. Chairman of the Board, Tom Nolan (photo left) thought that they should wait until the study was completed. He also wanted to revisit the decision if Hara came to the conclusion that no cabs were necessary. But, as one driver said, that's like closing the barn door after the horses are out.

There was an extended discussion by the Board members but it was one of those experiences where reality trumps satire.

Not that there is necessarily anything wrong with ignorance. But, it does take humility to learn and the Board has adamantly refused to listen to anybody - the Taxi Advisory Council, the drivers at the Town Hall meetings, the drivers at the MTA Board meetings, Director of Taxi Services Chris Hayashi, Dan Hara - who could teach them what's what.

The tone was actually set a few Board meetings ago when Director Joel Ramos (photo right) fervently thanked Director Malcolm Heinicke for helping them understand the taxi business. I have nothing to add. This is the level at which the Board functions.

Ramos thought the fact that Uber, Sidecar and other illegal Apps started in San Francisco was a priori proof that there must be a shortage of cabs. It couldn't have anything to do with the fact that this city is one of the Tech start up capitals of the world and that the businesses are being set up in such a way that it's almost impossible for them to lose money. Not to mention that these Apps are invading cities like Washington D.C. and Chicago that are flooded with taxis.

"Word on the street" has it that Director of Transportation Ed Reiskin (along with the Mayor's office) is responsible for raising the payout to medallion holders back up to $200 thousand from the $150 thousand that Heinicke wanted them to suck on. Although Reiskin is clearly being pressured from above to "show them the money," he appears to be struggling to do as best he can by the drivers and the cab riding public.

The problem is that he clearly does not understand the most basic things about the cab business. Nor does he know the characters in it.

And, why should he? He has the entire MTA under his purview. How could he know the nuts and bolts of every division? Especially one as complex as taxicabs? That's what the Director of Taxi Services is supposed to be for. But, of course, the Board has her on the top of their list of people not to listen to. (Hmm. I've just ended two perfectly good sentences in a row with prepositions. Take that Sister Pauline!)

Director Reiskin thought it was refreshing to hear from people outside the cab industry during public comment - after the usual collection of professional shills (most of them paid by Luxor or Yellow) came up calling for as many 700 more cabs. My favorites were the hotel rep and the woman from the Chamber of Commerce. They always want more cabs no matter what the situation. They wanted more after 9/11.

The hotel guy said that they couldn't find cabs at the hotels. Of course not. With all the limos lined up to grease the doorman, where would a cab park? The Commerce lady, as always, cited the expanding population of San Francisco as a reason to put out the taxis.

 She's right of course. In 1950, the population of San Francisco was 775,357. By 2010, it was 805,235. At that rate, one additional medallion a year should do the trick.

When another speaker and myself told Reiskin that, even if they started the process tomorrow, the additional cabs still wouldn't be ready for the Blue Angels, he was disconcerted. He thought about it for few moments and decided that "we have to get them out as soon as possible." He seemed to be unaware of the fact that, if the taxis were needed at all, it wouldn't be until May. Yes - there are no tourists between October and the summer.

The ideal time to add taxis would be in April. That way they wouldn't lower the incomes of current drivers and they'd be ready for the boat races next summer. There was no need to rush. Reiskin had plenty of time to read Hara's study and still add cabs if needed. Anyone in the taxi business could have told him so - if he'd been willing to listen.

On the other hand, someone else is clearly pushing Reiskin's buttons. (See the title of this post.) The only real reason to put the permits out fast is to funnel funds into the income streams of a few cab companies and the SFMTA.

One thing the Board members did right ...

was finally come out in favor of an Uber like App for taxicabs. Finally?

I wrote my first post on Cabulous and Open Taxi Access(OTA)  on January 28, 2011. The idea has been presented to the MTA Board on numerous occasions. The Taxi Advisory Council voted in favor of it. Cab drivers almost universally support it. Chairman Tom Nolan even said that the Board should look into the idea.

Cabulous started at approximately the same time as Uber in 2010. If OTA had been supported by the Board when it first came to their attention, everyone might be talking about how Uber is like Cabulous and not the other way around.

About the only people against it were the managers of Yellow and Luxor Cabs.

So what happened?

"Word on the street (dude sees all, hears all, knows all)" is that OTA died when President and General Manager of Luxor cab, John Lazar (photo), told former Executive MTA Director Nat Ford to kill it.

On the other hand, funds have recently been allocated to Taxi Services for electronic dispatch (The new name for OTA). Hopefully the Board will follow through this time.

Why $1,900 a month?

Of course this figure was not vetted (What is these days?) but the going price for medallions leased to taxi companies is currently $2,500. Yet here is the SFMTA selling permits on the cheap. To say the least, this runs contrary to their normal behavior. It also gives credence to the "word on the street" that John Lazar and Jim Gillespie worked out a back door deal after threatening to sue the SFMTA. At $1,900 a month Yellow and Luxor will make out like bandits - which isn't too far from their normal behavior.

Yellow takes in between $8,000 to $12,000 per day by encouraging its drivers to "voluntarily" tip. And, of course, John Lazar was asking for $10 per day plus $2 for the gasman at Luxor when I was there three years ago. At that time, he was also asking his cashiers to "voluntarily" tip him.  This meant that John's cashiers had to make $100 per shift in tips from drivers through Luxor's dispatching window (photo below) before they could make anything for themselves. This gives the word "voluntary" a whole new meaning.

What we have here, then, is the SFMTA getting together with two of the most dubious taxi companies in the business to divvy up money that had been headed to ease the old age of working cab drivers. This would appear to leave Director Malcolm Heinicke with a profound moral quandary:

Should the MTA take 15%, 33% or 50% from the companies' tipping jars? For the public good - as is, of course, understood.