Why NOT Uber?

What do people really want when they say they want Uber to come to their community?

Once they learn about all the scandals, lawsuits, riots and demonstrations, the many lists of reasons not to use Uber, most people come away with a nuanced opinion. But typically, at first blush, many people have a very positive reaction to Uber. Why?

One reason could be the marketing. Uber is a poster child for the “sharing economy” — a feel-good marketing term that is inaccurate and “needs to die.” In his excellent book What’s Yours is Mine: Against the Sharing Economy author Tom Slee digs into the hopes and promises of the new rash of sharing economy companies, and shows how they fail to deliver and can actually damage our society.

A key objective of marketing is generating demand. Recently in Kelowna Uber Canada held two information sessions to “gauge interest”. Uber is really good at this. They turn their users into lobbyists, use social media effectively (see the recent province-wide #bc4uber hashtag campaign), and they get local governments to lobby on their behalf. As of last summer they had 250 lobbyists and 29 lobbying firms registered in capitols around the US. Earlier this year our provincial political leaders jumped on the bandwagon and spent money on their own ad campaign for the sharing economy.

Uber is able to get many people on its side through marketing, but that cannot be the only reason people like (at least the idea) of Uber. There seems to be some deep-seated dissatisfaction with the state of transportation as it is today.1 Let us examine some of these arguments.

Often Uber proponents say 1) taxis are expensive and there is no competition; 2) that they can never get a taxi when they need one; and 3) the Uber experience is better.

Price

Of course, taxis are more expensive than Uber for a number of reasons that have nothing to do with “market competition.” Taxis are bound by consumer protection laws to provide barrier-free and safe services as well as working conditions, something Uber avoids to gets a price advantage (Daily Courier and CBC radio covered these points with taxi co interviews). Furthermore, in BC taxi prices are set by the the Passenger Transportation Board (the most recent rates for Kelowna can be found in this document). We have this system to protect us from price-gouging, which is actually a feature in Uber’s revenue model.

And of course, since it is backed by so much venture capital, Uber is selling its services at a loss to gain marketshare. Like Evgeny Morozov points out when writing about Uber’s true cost:

Wall Street and Silicon Valley won’t subsidise transport for ever.

Once all the competition is defeated, they will be free to raise the costs of a trip. A little story about Uber’s CFO: last year, during a meeting with an investor, the Uber CFO said they could raise their cut of driver rates up to 30% and improve Uber’s profit margin. The investor asked why they would do that if “[y]ou’ve got happy employees, you’ve got happy customers, you’ve got happy shareholders.”? The CFO merely replied: “because we can.”

Price is not the key metric that Uber should be judged by.

Availability

Having to wait too long for taxis seems to be a common problem referred to by Uber proponents. People want to be picked up faster, which requires more cars on the road. Looking at this analysis of Uber traffic in NYC compared to taxis, you can see that Uber puts a lot more cars on the road.

Chart showing Uber cars on the road

However, two reasons the number of taxis on the road are capped by regulators is to combat traffic congestion and mitigate emissions pollution. People complain about traffic all the time in Kelowna. Congestion is a problem the city has been trying to mitigate for a while. Uber will simply add to the problem. As for emissions, since 2007 the PT Board has created legislation to encourage eco-friendly taxis. Uber is testing electric vehicles in China, but it is not clear (at least to me) if they will follow that route here, at least in the short term. I doubt they will expect all their employees contractors to have EVs or hybrids.

Another way to get picked up faster is coordination. We have 8 taxicab companies in Kelowna. Granted, a couple are limo companies, but the point is if you use one of the taxico’s apps, you are only seeing taxi’s from that company. There is an opportunity here for a single app that aggregates the locations of taxis from all local companies, and allows you to hail them. Oh yeah, there is Hailo (which has its own problems) and alternatives like Gett.

There is a ceiling to how many cars are on the road, but there is some room for optimization within that ceiling.

Experience

Taxicabs are often criticized for the experience of the ride compared to Uber, which includes the hailing, wait time, ride experience, and the customer service provided by the cabbie. Some of this dips into working conditions (consider a part time driver vs the 12 hour days of a cabbie), a huge topic in itself. Customer service is very personal and subjective, but I can sort of agree with the Uber proponents here, only in that I think almost all customer service in North America is lacking. That is another post. However, I would like to point out that taxis in Japan are just as regulated as they are here and yet are able to provide clean, fast, safe and extremely polite rides. There are definitely cultural reasons for this, but also the working conditions are very different.

The alternatives

The Central Okanagan has an overwhelming car-centric culture. 60% or more commute in single-occupancy vehicles. Each day, only 4% use public transit (PDF, pp 25). Out of our population of around 170K there is an estimated annual rider base of just 7500 people, and nearly half of those are UBCO students. Appalling for BC’s 4th largest city. Kelowna has increased the number of buses from 65 in 2013 to around 100 now. Despite the small user base, 62% say that transit is “Very Important” to the community and that jumps to 86% when you include “Important” (see pp. 39).

Chart of perceptions

The bus system is cheap to use, but not the most convenient since they will not take you door-to-door like a cab or Uber would. Furthermore, they only benefit you if you live close to a transit service point. Since I live in Central Kelowna the bus system serves me pretty well. I live within 2 mins walk of 4 bus stops where buses arrive every 8/15/30 mins depending on the time of day. Generally though, I walk or ride to work. Like I have said before, I don’t own a car and get along fine.

Maybe if the city had less sprawl and more affordable housing downtown, people would not have to live in cheaper, far-flung neighborhoods and own cars? Getting around would certainly be easier, cheaper and more sustainable. Walkable/rideable neighborhoods seems like the best policy solution. But, we have already had this conversation.

Why this is a debate

I am not against ride-sharing in principle. Ride-sharing companies and consumers alike need to recognize that there are good reasons for regulations. Slogans about market competition are simplistic and misleading. Adding a new competitor that plays by completely different rules is short-termism at its worst. What I fear is that once rideshare companies do take on all the rules, we will just end up with a similar system to what we have now — a system that people seem to be dissatisfied with — but with a more precarious labour situation.2 If that is the the likely endgame, and people truly are dissatisfied with the current state of things, why not reform the system we currently have? Lodge a complaint with the PT board if you think taxi fares are too high. Do the same if you think more should be on the road.

Like most arguments about technology, this debate is not about new tech or “innovation,” it is actually about politics. It is a much deeper debate than just the price of a cab. I think we should be hearing more discussion from our political leaders about these wider issues rather than cheerleading because they want look “tech savvy.”

I reached out to each member of our city council to ask them about their stance on Uber. Two councilors replied quickly saying that they have taken no stance and are looking forward to the province’s decision. One councilor said she hasn’t given it much thought, but would need more information on how it would work in Kelowna before making a decision. Councillor Tracy Gray sent me a lengthy reply stressing her desire for “a level playing field.” It turns out she actually served on the PT Board from 2010 to 2012 (I did not know that at the time I contacted her). Even councilor Ryan Donn, who has done a lot of cheerleading online, says:

I know there’s lots of regulation to go through, but really when you talk to my friends and peers and a lot of the folks that voted me in,3 the voice that I represent would be our young professionals that do want the option to reach the sharing economy and all the things that go along with it”

Emphasis added. He knows it is not as simple as just opening the doors, even if that doesn’t come across in his tweets. Even Dan Albas, my Conservative MP suggested a co-op model (see footnote 3 for my thinking on this). Since the decision will be made at the provincial level, I tried to get in touch with my MLA Steve Thomson, but never got a reply.

Luckily, it seems that some of our local leaders are treating this issue with proper care and are not just caving to marketing or consumerism. Transportation is one of the key pieces of infrastructure for our daily lives. The debate deserves more than a hashtag.


Footnotes

  1. This piece focuses on the common thinking of Uber as merely a replacement for taxis. Their long term goal seems to be a fleet of automated door-to-door delivery vehicles, for transporting people and goods — an “internet” for the real world. This is an even bigger debate. ↩︎
  2. I have tried to stay focused on the “consumer” perspective in this piece, and am completely skipping over the complex labour issues that also should be taken in consideration. ↩︎
  3. He should have come by StartupCoffeeKL, a tech meetup of “young professionals” that I am involved with. We have covered the detriments of the gig economy and even tried to re-imagine Uber as a co-op. ↩︎
 
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