Uber’s fight for New York

Photo by Alexander Torrenegra, courtesy of Wikipedia Commons

Around 11 p.m. at Siena College, a small Catholic college, students are getting ready for a night on the town. Soon, they’ll be tearing down the streets with hands pumping in the air, draining pitcher after pitcher, shot after shot at bar after bar, finishing up well into the wee hours of the morning. When it’s all over, they’re just trying to get back from whence they came, which for students like Sarah Green, a fourth-year accounting major, is where issues start to arise.

The ride to and from downtown Albany or Troy can be a problem for students like Green, who often end up in decrepit yellow cabs or in the backseat of cramped sport vans with nearly a dozen other people. In those cases, the cabbie simply collects $5 per head rather than charging for distance and time.

“I’ve been in some cabs where you can see evidence of drugs or the driver’s been drinking,” Green said. “If you even try to argue with him, they can just kick you out. I’ve seen people get kicked out in Arbor Hill before.”

These instances are concerning but that’s assuming the students are even picked up in the first place. Green said there have been multiple times when she called a cab and it didn’t arrive, opting to pick up another group of riders instead while ditching her in the cold.

Enter Uber, the ride-sharing giant with plans to expand to upstate New York. Green, who has had positive experiences riding with Uber in Florida, says the company offers “safe, reliable and convenient” services. Green appreciates that customers are provided with their Uber driver’s picture, rating, vehicle details, and most importantly, their ride’s location as it arrives for pick-up.

Using the Uber app

Millennials in college towns like Loudonville have been impressed with Uber and its streamlined features, with millions using the app on a daily basis. Accordingly, a sizable demand has grown for ride-sharing in upstate New York, especially for students from New York City, where the service is legal and widespread. And while the shortest distance between point A and point B is a straight line, in New York that’s easier said than done.

State leaders had debated whether to convene for a special legislative session in December to address a potential pay raise for legislators as well as outstanding ethics reforms. However, the issue of ride-sharing quickly crept to the forefront of discussions between the Legislature and New York Gov. Andrew Cuomo, who indicated his support for ride-sharing, which was long the subject of intense speculation.

Yet in spite of a recent groundswell of support, including from the NAACP and Rev. Al Sharpton, ride-sharing has faced a difficult path toward legalization in upstate New York. State Attorney General Eric Schneiderman announced in June of 2015 that the state would not allow ride-sharing apps like Uber and Lyft to operate beyond New York City. This leaves upstate New York and Long Island — roughly half of the state’s population — without access to what some consider an innovative and burgeoning transportation service.

This has not been for a lack of trying on the part of Uber, Lyft and their dedicated supporters. Both companies are perhaps the most prominent business success stories in recent American history, reshaping Silicon Valley and transportation services in hundreds of metropolitan cities. Additionally, both had their sights set on 2016 being the year that they could break through in New York state, with Uber spending over $750,000 in lobbying efforts during the 2016 Legislative Session alone.

In early February of 2016, it became clear that they would press for the passage of Senate bill 4108, which would have expanded ride-sharing in New York state, by the end of the Legislative Session. The measure began its journey a year earlier in February of 2015, when it was introduced to the Senate Insurance Committee by Sen. James Seward with co-sponsors Sens. Boyle, Funke, Kennedy, Marchione, Griffo, Murphy, Serino and Valesky.

Senator James Seward

From there, the bill endured a combative legislative odyssey, buoyed by supporters who viewed ride-sharing as an inevitability in a society built on expansive technology as well as a potential boost for the stagnated upstate New York economy. Meanwhile, opponents lambasted the bill for what they saw as a flagrant lack of oversight regarding public safety, coupled with concerns about how it would affect the traditional taxi industry.

In the contentious final weeks of session in June, Green — the Siena College student — was among the thousands who took to Twitter using the hashtag #NYNeedsUber to push for ride-sharing to be legalized. There was even a petition that garnered more than 6,000 signatures urging the Assembly to pass the companion bill, Assembly bill 6090. Ultimately, on June 17, the state Senate passed the bill by a 44–17 margin, though the champagne was put on ice as the measure never reached Cuomo’s desk. Instead, it was tabled along with its sister bill in the Assembly and won’t be reintroduced until the 2017 Legislative Session in January.

In preparation for the political battle ahead of them, Uber and Lyft are gearing up. They’ve announced significant ad buys since Election Day and sought high-profile lobbying support in order to succeed in Albany.

Uber is also not above playing coy with its upstate ambitions. During the summer, they serviced three upstate cities as part of their #UberIceCream campaign and provided a ride to a few Buffalo Bills players stranded in Baltimore during the NFL preseason. Consequently, Uber sent an open letter to Bills owner Terry Pegula in which they promised free rides next season for players and staff if ride-sharing became legalized in New York state in 2017. In mid-December, Uber went a step further and announced their planned partnership with the Bills and Buffalo Sabres for postgame transportation of the fans as well.

Now, as 2016 winds down to an end, fervent activists on both sides, along with experts on issues relating to public transportation, have weighed in on what they think will happen to ride-sharing in New York state next year and beyond.

 

What is Uber?

Aside from the heated rhetoric, one question remains: what exactly is Uber?

Uber is a transportation network company — or TNC — defined by the law firm Best Best and Krieger as “ride-share companies that connect users and drivers through smartphones and a peer-to-peer network.” Simply put, in states and cities that allow it, users can download the Uber app and, after a brief registration, request a car to come pick them up. Uber offers four price options: economy, premium, accessibility and carpool, and afterwards, users can rate their driver and leave comments about their experience on the app.

How an Uber ride is tabulated is simple, too. It is $1 per mile, as well as 18 cents per minute, topped off by a $1 rider fee. The variable in the equation is the “surge pricing.” This index multiples the cost of a ride slightly by a factor of usually 1.3 or 1.5, and is installed depending on location and the pace of traffic at a certain time in the city. This small price multiplier maintains fair, but competitive prices for consumers as well as offering incentives for drivers to join the company as independent contractors.

One of Uber’s most appealing and defining traits has been their unique ability to relate to people through their socio-economic identity. In late 2011, at the height of the nationwide Occupy protests, The Boston Globe columnist Scott Kirsner described Uber as a “car service designed for the 99 percent.” In that vein, Green added that she prefers Uber because the cost is controlled to an extent, a fact which has indelibly redefined travel in American metropolitan areas.

Getting off a plane and into a cab at the airport is typically a person’s first taste of a city. Now, Uber and Lyft have added themselves to the front of the long line of cabbies awaiting their pickups at airports. Uber, in a very short amount of time, has made itself a nearly omnipresent service, earning dozens of shout-outs in rap songs while simultaneously creating a nationwide conversation about the future of the transportation infrastructure. Even President Obama joked about the prospect of becoming an Uber driver after he leaves office.

Currently, Uber operates in 45 states and 204 cities across the United States. It has expanded in record time, from its initial beta launch in 2010 to its breakout year in 2014. Perhaps nowhere else has the Uber effect been as widely felt or analyzed than in New York City.

According to a study by the New York City Taxi & Limousine Commission, there were approximately 19 million Uber rides in New York City from April to September 2014 and January to June 2015. Brooklyn saw a 525 percent increase in Uber pickups between June 2014 and June 2015. Some, like New York State Sen. Martin Malavé Dilan (18 — D), have remarked on the dynamic growth of ride-sharing in New York City, commenting that “it won’t be long before their success expands statewide.”

The idea behind the transportation startup that has challenged conventional taxi services was conceived in March of 2009, during the deepest portion of the recession. The company, originally named UberCab, was created by Garrett Camp and Travis Kalanick. Camp, the founder of StumbleUpon, a web discovery engine, provided the $250,000 seed fund for the project.

The company has cultivated an innovative reputation in the world of transportation; assembling a team of heavyweights in the Bay Area and gaining assistance from within the Beltway. In 2014, Uber welcomed aboard David Plouffe, former campaign manager of then-Senator Barack Obama’s successful 2008 presidential campaign. By the next year, Uber announced that Plouffe would be taking on a full-time position with the company. Recently, Sen. Ben Sasse, (Nebraska — R), drove an Uber car for charity.

Ultimately, for better or worse, both Uber and Lyft are exactly what their slogans suggest: Uber is “where lifestyle meets logistics.” Lyft is “a ride whenever you need one.” Transportation network companies reside at the intersection of transportation needs and virtual convenience.

 

Austin v. San Francisco

As far as hip, modern metropolitan destinations for millennials, Austin and San Francisco are really not that unalike. They are both cities with budding technology scenes while embracing a vibrant neo-bohemian culture. However, there is a stark divide in their stance on transportation network companies.

Uber’s headquarters are located in San Francisco, a city which has served as the homebase for other startup technology companies as well. Meanwhile, Austin essentially forced TNCs out of the city by passing strict regulations that require drivers to undergo “a fingerprint-based background check in order to work for a ride-sharing company.” The battle lasted for months, but ultimately Uber and Lyft lost and promptly left on May 9. Now, Austin’s 1 million citizens are serviced by only 900 taxi drivers and the 10,000 former Uber and Lyft drivers who have continued their business underground on Facebook groups.

For Dave Sutton, a spokesman for the whosdrivingyou.org initiative created by the Taxi, Limosuine and Paratransit Association, what happened in Austin should serve as a warning to other states and cities as they evaluate whether to legalize ride-sharing. Sutton believes that criminals or ne’er do wells would be less likely to apply as Uber drivers if they were required to undergo backgrounds checks.

“Single-print background checks create a deterrence at a very basic level, law enforcement agrees on this,” Sutton said. “Taxi cab services and TNCs should be required to follow the same rules. Taxi drivers have to go through these checks, their cars must have auto-liability insurance in addition to following local laws. [TLPA] is saying that it’s the same service. We have to agree that it’s obvious.”

TNCs have found some of their greatest opponents in people who argue that they aren’t doing enough to address concerns over consumer safety and driver compensation. These include concerns that drivers aren’t being adequately vetted by the companies that provide them with work. The movement was bolstered by an emphatic speech on the floor of the state Senate from Sen. Jose Peralta (13 — D), in which he read incident after incident of assaults carried out by Uber drivers on passengers.

Senator José Peralta

Peralta said that while he understands the appeal of such convenient technology, he focuses his concerns on the labor aspects of Uber’s drivers as well as protections for consumers. He questioned Uber’s policy on overcharges and fees, saying that while consumers are given the opportunity to appeal, they are not guaranteed a refund for any incidents that may occur while they’re in the car. He also added that while New York City’s model isn’t perfect, it is a step in the right direction, though he preferred Austin’s system of background checks.

“It’s an industry that’s getting away with a lack of regulations,” Peralta said. “Upstate [New York] doesn’t have as many taxi drivers, so these small bases of taxis will be eliminated. Instead, black car services will be there.”

Another fear of such rapid expansion has been how to effectively monetize it via taxes and licenses. In August, Massachusetts became the first state to tax TNCs. The tax, which will be a ‘per-trip subsidy’ to the state, totals 20 cents. One-quarter of the revenue raised will be allocated to state taxi services, for “new technologies and advanced service, safety and operational capabilities.” Uber expressed reticent support for the bill’s passage into law but saw it as a necessary step in its expansion plans.

Earlier in the year, two New York State legislators proposed a similar bill that would direct 25 percent of the sales tax on Uber rides to the Metropolitan Transportation Authority (MTA). The bill sponsors argued it was a practical way to increase revenue for the agency, which currently collects 50 cents from every yellow and green taxi trip in New York City.

 

Insuring the Unknown

Hudson Valley Assemblyman Kevin Cahill (103 — D) and the New York Insurance Association (NYIA) backed a bill in the Assembly, A.8195, that would have addressed the most prominent insurance concerns of ride-sharing. In an op-ed for The Buffalo News, Cahill said that his measure, “provides for insurance coverage at all times during ride-sharing activity, grants drivers access to workers’ compensation benefits and establishes comprehensive consumer protections.”

Cahill said the initial bill, which came from the ride-sharing industry, provided one level of insurance until the Legislature decided to raise it to the same requirements of taxi drivers. He said that the Legislature took its own “reasoned approach” to the issue. Uber ultimately opposed it, arguing that it would not be economically feasible for their drivers to afford advanced insurance coverage.

In their memo of opposition to Cahill’s Assembly bill, Uber pointed to the proposed insurance costs for drivers, which they said were six times for Uber drivers in New York City. Cahill disputes Uber’s assertion, noting that his office’s research contradicts their findings. Cahill emphasized that it was not a “mandate that drivers take” the insurance, arguing that the bill’s goal was to “provide the authority to have appropriate coverage for TNC drivers.”

“TNCs have raised that point that the cost of insurance would increase, but they have not come forward with specific numbers to support that claim,” Cahill said. “Our own research points to an increase of pennies on the ride and anomalies where they would even go down.”

Assemblyman Cahill

There are three main pillars that Cahill wants addressed before ride-sharing is legalized: local government controls, protecting the commercial transportation industry and consumer protections. Cahill affirmed his support for background checks of ride-sharing drivers by citing similarly strict measures in Georgia and Newark, New Jersey. He also commented on ride-sharing in New York City, praising it as a “working system” while contrasting the resistance of TNCs to “show who their drivers were, who is registered or what cars they drive.”

Cahill anticipates that even after legalization, TNCs might be subject to additional revisions and regulations. He cited the case of AirBnB, which opposed a bill that banned advertisements for sharing multi-home family homes for less than 30 days, as another example of an innovative technology service “flaunting local laws until the passage of the bill.”

“The approach that Uber has used in other states is either they get their way or bully their way,” Cahill said. “It was their own volition that the bill failed. We make laws for industries, not companies. What I will not stand for, is for one company to dictate terms to the state.”

 

Driven Out

Given Uber’s unprecedented growth as a transportation option in cities across the country, the taxi industry has seen the demand and composition of their work change. Cabbies, once the bedrock of a traditional service market, are now at the center of an industry that is rapidly metamorphosing before their eyes. Some, like Sutton, claim that the ‘gig economy,’ where people utilize part-time jobs like taxi driving to make ends meet, undermines the full-time taxi economy and works off of people’s “desperation.” Even Green acknowledges that while Uber is popular among millennials, it does so at a cost to the taxi drivers.

Mark Ilacqua is the director of communications for the Upstate Transportation Association, which oversees taxi drivers and livery companies in Buffalo, Rochester and Syracuse, Ithaca and Albany. A veteran of the taxi industry, Ilacqua said his biggest concern with potentially legalizing ride-sharing would be trading in full-time jobs for part-time jobs.

“Large-scale trading is a major concern,” Ilacqua said. “[UTA] drivers are employees, which is not the same case for Uber drivers. We’re talking the differences between full-time jobs versus gig jobs.”

In central New York, Syracuse Mayor Stephanie Miner and State Sen. James Seward (51 — R), have been leading proponents of Uber and Lyft’s expansion upstate, noting how it would affect transportation there. In addition to the services that would be offered to low-income citizens, they believe there would be incentive for people to sign up as drivers.

Photo by Aaron Parecki
A protest against Uber in Portland, Oregon in January 2015

Both Uber and Lyft promote the ‘gig economy’ lifestyle, highlighted by part-time work with flexible hours and consistent income. Lyft’s online advertisements promote work that can pay around $35 per hour, while The Washington Post reported that drivers can make up to $17 per hour in D.C. and Los Angeles, $23 in San Francisco and $30 per hour in New York. But some statistics argue that Uber drivers make less than $15 and for drivers in some cities like Detroit, it’s less than $9, which is below the minimum wage. To those who do not have ride-sharing, it can feel like standing outside the looking glass. But Sutton argued that New Yorkers desiring ride-sharing should not let TNCs leverage their economic strength against them, as they have done in smaller states.

“Our goal is to make people aware of the subtle way Uber’s ride-sharing model undercuts traditional standards,” Sutton said. “The situation in New York [state] is a little different from Austin, because the groundwork hasn’t been laid out yet. If it is legalized, [Uber] will apply to the laws of the state of New York. Why is it that Uber would agree to operate by one set of standards in New York City but not in New York state?”

The governor’s stance early on had been relatively hidden, keeping both sides at bay. He had previously expressed interest in the potential of ride-sharing services, but in signing the AirBnB bill, some questioned his support of the technology community. Additionally Cuomo signed a measure in August that gave the Capital District Transportation Authority, (CDTA), control of the taxi services in four Capital Region counties. The measure intends for the CDTA to “bring regulatory uniformity to the area’s patchwork of taxi services.” Cahill was encouraged by the measure, though Green said she was skeptical that additional funding would encourage people to ride public transportation.

Some hope that if municipalities can improve their services, then customers will be less likely to make demands for the expansion of ride-sharing. Ilacqua suggested that advancements in technology could help taxi companies that were “behind the curve.” He pointed to NEEDACAB Taxi Booking, a taxi app used in Syracuse, as a way for upstate cities to compete with TNCs.

As the Technology Policy Institute stated in its 2015 report on competitiveness in the ride-sharing economy, “controlling for underlying trends and weather conditions that might affect taxi service, Uber’s increasing popularity is associated with a decline in consumer complaints per trip about taxis in New York.”

Nothing could be more predictable in Uber’s saga in New York than the emergence of more palatable copycats. Juno, a TNC launched in February of 2016 by Talmon Marco, the founder of the messaging app Viber, derives their success off the same crowd that Uber caters to. However, their goals are to do it without any of the baggage that Uber carries with it. Juno actively promotes the fact that it only takes a 10 percent commission from its drivers, as opposed to Uber’s 20 percent.

An unintended consequence has been the emergence of fake Uber drivers, who often charge a faux sales tax. In more dangerous scenarios, fake Uber drivers have picked up and sexually assaulted female passengers.

Ilacqua reiterated Sutton’s assertion that livery vehicles are equivalent to ride-sharing services, adding that the difference lies in oversight of the drivers. Ilacqua said that while taxi drivers have dispatchers who see them every day, “Uber allows for just an app sign up and nobody knows them.” The two different models can coexist on a level playing field as long as taxi drivers aren’t put at a disadvantage, he said.

“Any time you allow a company to expand with regulations, you sacrifice public safety,” Ilacqua said. “Every local municipality should be addressing this issue.”

Ilacqua advocated for a statewide regulatory agency to house the registration for TNCs. He argues that the New York State Department of Motor Vehicles already has the infrastructure to handle drivers licenses, classification and insurance, adding that to create another section for TNCs would be “seamless.” Additionally, Ilacqua emphasized Cahill’s point that local governments would still continue to control local transportation regulations.

While Cahill considers himself “agnostic” on ride-sharing itself, he said he remains optimistic about the future of the industry in New York, calling himself a “strong supporter of making this possible.” Cahill remains confident in ride-sharing’s future, accurately predicting that Cuomo would come into the fold and offer his support. Peralta expressed more hesitance regarding the future of ride-sharing, believing that it would not pass until the end of session in June.

Ilacqua said that UTA isn’t trying to prevent TNCs from operating in New York but said that they want a level playing field for the taxi industry, urging state legislators to “get it right the first time.”

“I hope our elected officials will do what’s right to ensure public safety,” Ilacqua said.