Cab companies say proposed rules give Uber, Lyft unfair advantage

The city of Charlotte is proposing to regulate new smartphone-based “ride-sharing” companies such as Uber and Lyft by requiring their drivers and cars to pass city background checks.

But ride-sharing services and the cab companies they’re challenging are both unhappy with the proposed new regulations. Some cab companies say the regulations are too lax and will give Uber and Lyft an unfair advantage, while Uber and Lyft say the rules are too strict.

“They’re going to kill the taxi industry,” said Universal Cab owner Mohamed Mustafa. “It’s going to give (Uber and Lyft) a bigger advantage.”

On the other hand, Republican City Council member Kenny Smith said Friday he’s concerned the proposed rules for the new ride-sharing services may “regulate the companies out of business.”

“I’m not sure the city understands this industry,” said Smith.

The city’s 11-member Passenger Vehicle for Hire Board, which regulates services such as taxis and limousines, plans to meet with cab companies and ride-sharing services Tuesday to discuss the updated guidelines. The City Council’s public safety committee could vote on the new ordinance in September.

Uber and Lyft began operating in Charlotte last year. Here’s how the services work: You can hail a ride on Uber or Lyft with your smartphone. The company’s app pairs you up with a driver in their personal vehicle, who is directed to your location. You get in the car, they drop you off at your destination, and you pay automatically with a credit card that’s already loaded into the system.

No physical money changes hands, and the experience can feel more like getting a ride with a friend than taking a cab. Uber and Lyft say their services are safe, and that drivers are required to pass background checks, carry appropriate insurance and operate clean, safe cars.

When the City Council’s public safety committee discussed possible regulations in May, representatives from Uber and Lyft objected to any city regulation, saying their industry was self-policed. They fear that any red tape might discourage their drivers, many of whom are part-time, from working. Both companies said the proposed rules are too restrictive.

Though the draft ordinance would subject Uber and Lyft to city regulations for the first time, traditional taxi companies say those regulations are less burdensome than the ones they face.

Patchwork of regulations

The rise of Uber and Lyft, both based in San Francisco, is a case of technology outpacing regulations and disrupting an established business. Throughout the nation, a patchwork of new laws and regulations are popping up as cities and states struggle to deal with the new services.

And even as cab companies dig in to defend their turf, Uber in particular is becoming a colossus, operating in 42 countries and valued at $17 billion.

Virginia ordered Uber and Lyft to stop operating in the state last month, though the companies said they wouldn’t do so. The companies have been sued by coalitions of cab companies in Virginia and Maryland, and are tangling with Raleigh/Durham International Airport over whether and how to pay for airport permits.

And from London to Washington, D.C., cab drivers have protested in the streets against the new companies, which tout their lower prices and threaten cabs’ market share.

Other areas have been more receptive. Colorado became the first state to formally legalize ride-sharing services last month. The companies will need to get permits from the state government, but drivers won’t have to face the same fingerprinting and background checks as taxi drivers.

Ride-sharing companies are not subject to the same regulations as taxi companies in most places they operate. In North Carolina, the General Assembly passed a bill last year forbidding cities from imposing regulations on the companies themselves.

Uber and Lyft don’t pay the same licensing fees that cab companies in Charlotte pay, and their drivers don’t either. Cab companies also complain that Uber and Lyft vehicles aren’t subject to the same inspections as taxis.

Although Charlotte can’t regulate the companies, “we still felt like we could regulate cars and drivers,” said Charlotte Assistant City Manager Eric Campbell.

Campbell added that the city hasn’t picked sides between the Uber and Lyft and the traditional cab companies.

“The city’s perspective has been this: This is about community safety,” he said. “At no point did the committee direct us to not let them operate.”

Background checks, inspections

The new ordinance being considered would recognize, for the first time, ride-sharing services as their separate category and formally allow them to be dispatched by smartphone apps. The regulations also remove a section forbidding “non-metered” vehicles from operating as on-demand services, such as Uber.

Drivers would be subject to the same city-administered background checks and registration as cab drivers, however. Their cars also would be inspected for safety.

Representatives of Uber and Lyft said the city’s proposal to subject their drivers and cab drivers to the same background checks and registration would be too restrictive.

“As independent contractors who may only drive a couple hours a week, going through that driver registration process would be less efficient and less effective,” said Uber spokesman Taylor Bennett. Uber and Lyft both said they plan to continue working with the city to find regulations they can agree to.

Smith, the council member, said he’s worried that an Uber or Lyft driver who works 10 hours a week won’t want to deal with the hassle of getting a city background check.

He said Charlotte should be doing everything it can to nurture the new technology companies. Having companies like Uber and Lyft makes the city more progressive, Smith said, and will help attract a young, highly educated workforce.

“I don’t think this is about community safety,” he said. “I think this is about (protecting) taxi companies.”

The companies still wouldn’t have to pay the same licensing fees as locally based cab companies, because the state law passed last year forbids the cities from regulating the actual companies.

“Since you can’t stop Uber, how about letting us compete on the same lines?” asked Diamond Cab co-owner Obaid Khan, voicing the cab companies’ major complaint. He said Charlotte should loosen regulations on local cab companies to match whatever regulations end up applying to Uber and Lyft.

Fighting for airport business

The conflict over the new ordinance comes as cab companies in Charlotte are fighting among themselves and with the city for access to lucrative passengers at Charlotte Douglas International Airport. Several cab owners, including Mustafa and Khan, have sued the city, alleging that a 2011 deal that allowed only three companies to pick up passengers at Charlotte Douglas was tainted by corruption.

The airport is in the process of re-bidding the controversial contract.

Uber and Lyft aren’t allowed to wait at the airport for fares – only Yellow Cab, City Cab and Crown Cab, the three companies that Charlotte Douglas picked in 2011, have that privilege. But several checks of Uber’s mobile app last week showed up to five Uber cars that appeared to be in the airport’s cell-phone lot.

That gives them another advantage, cab owners say.

“We’re hurting if we can’t get to the airport and they can,” Mustafa said. “If you can’t go to the airport, you’re dying.”