How much difference is there between raising your hand to hail a cab or using your index finger to open the smartphone app of a ride-sharing company?
It’s a question that’s facing Charlotte and cities across the country as they decide how, if at all, to regulate Uber and Lyft, a new breed of “transportation network companies.” These companies connect consumers with non-professional drivers who use their personal cars to give rides, often for small fees that make yellow cabs turn red.
That’s why Charlotte’s traditional taxi companies want Uber and Lyft regulated by the city’s Passenger and Vehicles for Hire Board. The cab companies say that Uber and Lyft shouldn’t be allowed to evade safety regulations – and the cost that comes with them. At a meeting this week, a number of Charlotte City Council members seemed to agree.
The ride-share companies say they are different than taxi companies, and that’s certainly true on some levels. Lyft was created in 2012 as a digital carpool of sorts, allowing community members to get and give rides with others, lessening the carbon footprint while helping people make a few extra dollars. Uber officials and attorneys are fond of saying they’re a technology company, not a transportation company.
In reality, they’re both. While their fee structures and personnel are different from taxis, Uber and Lyft are for-profit companies that charge for a service. Innovative as they may be, the ride-shares are vehicles for hire. (Plus, cab companies have apps, too.)
But the ride-share companies are correct when they argue that they shouldn’t be penalized for their smart business model, and if the city discourages Lyft’s and Uber’s part-time drivers with a burdensome and expensive permitting process, the companies won’t have enough cars to be viable here. That would cost Charlotteans a convenient, low-cost service with a solid safety record across the country.
Fortunately, there’s room for compromise. Lyft and Uber boast of already stringent standards regarding background checks, vehicles and insurance, and cities and states are finding ways to share the regulatory responsibility. In Washington, D.C., new rules call for district officials to audit ride-share companies regarding those standards. In Colorado, the legislature passed a bill last month that reaches a similar middle ground, and this month, the city of Detroit signed interim agreements with Lyft and Uber that allows them to operate under certain rules while working with officials on permanent regulations.
Charlotte also should pursue a temporary agreement, and it can use that opportunity to revisit rules for traditional taxi companies, too. Regulations, after all, should be for the protection of consumers, not as protectionism for businesses.
Ride-shares aren’t the first companies to use technology in innovative ways – hello, eBay and PayPal – and they certainly won’t be the last. Charlotte shouldn’t shoehorn new business models into old regulatory structures. It should protect consumers and allow entrepreneurs to be entrepreneurs. The free market will take the keys from there.