TNC’s ARE DRIVING THE TAXIS INTO EXTINCTION

Transportation Network Companies (TNC) are companies that use online-enabled platforms to connect passengers with drivers. While connecting passengers with drivers is nothing new in the for-hire vehicle (“FHV”) industry, the use of high tech software to do so is a more recent phenomenon. The TNCs initially sparked controversy with the FHV industry because TNCs came into the marketplace, especially in New York City (“NYC”), and operated illegally for such a long period of time. During this period of time, when the TNCs operated without license and without being subject to regulation, gave them an unfair advantage. Regulations, especially in NYC, are costly and very burdensome. Some regulations are good because they protect the public, but others are nothing more than bureaucratic red tape that is created and used to justify the existence of certain people who are employed by the governmental regulatory agency. In NYC, the Taxi and Limousine commission (“TLC”) has become an albatross crating regulation upon regulation, much without any need or justification. These regulations place the traditional FHV’s (car services, luxury limousines, clack cars, etc.) in a world in where they are not permitted to operate outside of. When Uber first hit the scent in NYC, they claimed to be a technology company and not a transportation company. Time has proven that Uber and other TNC’s are surely transportation entities, albeit very sophisticated ones. But the TLC regulators in NYC bought into the Uber Kool aid and let them operate for so long and without any restrictions to the point that once they came under the regulatory umbrella of the TLC, they already created a massive network of users that is virtually impossible to duplicate. Putting aside, for the moment, that the TNCs have billions of dollars to literally buy drivers, subsidize rides for passengers and pay of politicians (oh…sorry…I mean donate to their political reelection campaigns). The lack of regulation of the TNCs and the unconscionable delay of the TLC in regulating the TNC’s created an unfair competitive advantage that, at this point in time, has caused the demise of the taxi industry in NYC. The taxi industry deserves some fault in their demise because they refused to innovate by embracing new technology and/or because they refused to see that technology would one day be used to provide a similar but better service that would eventually lead them down the path of the dinosaur (i.e. extinction). I focus this piece on the effects of the TNCs upon the taxi industry and not the rest of the FHV industry in NYC. I do this because while the TLC does regulate all FHV’s, the NYC government has a massive financial interest in the taxis and since the advent of the automobile, the taxi medallion was sold to investors with the virtual guarantee that money would be made. Today, the City of New York and its elected leaders have turned their backs on the taxi owners and the banks and credit unions that lent money to the medallion buyers. They are all failing and the City of New York takes the hands-off approach, not because they want the free market the rein and work out the kinks, but because the elected leaders have a financial interest in seeing the TNCs prevail. Remember, TNCs bring in a massive amount of money via sales tax. While TNC’s provide transportation in areas of New York state where less than desirable and plentiful transportation was previously available, the focus of this piece is on the NYC market because taxi medallions in NYC are like no other taxi in the world.

No one can deny at this point in time that TNCs generally have shorter wait times, cheaper prices, and increased convenience, aspects that appeal to consumer preferences. But keep in mind that the cheaper prices are mainly due to subsidies from each TNC that artificially lowers the cost of the trip. Once the taxis and other FHV’s are driven out of the market, what do you think the TNC’s will do with their prices. If you think they will keep prices the same, you are sorely mistaken. Also, increased convenience is due to the fact that TNCs can afford to pay driver subsidies. These subsidies put more money directly in the pockets of the FHV drivers. Once the taxis and other FHV’s are driven out of the market, what do you think the TNC’s will do with their driver subsidies. If you think they will keep paying subsidies to drivers after the marketplace for competition has significantly decreased, you are sorely mistaken. Once the driver subsidies are gone, the drivers may seek alternate jobs b3cause as it is now, some drivers are actually making a bit more than minimum wage. The benefits of driving for a TNC are illusory……..but the public simply ca not yet see the forest from the trees. TNCs have billions of dollars to burn and will keep burning them until the competition is driven from the marketplace. When competition is significantly lessened or extinct, then a monopoly is created. Remember, the U.S. Supreme Court broke up Standard Oil over 100 years ago because monopolies are a bad thing.

Since the emergence of the TNCs, the taxi industry fought to increase TNC regulation, but has done little to create innovative technology and had done nothing to modify its service to appeal more to consumers. Why stand in the street like an idiot and wait to hail a cab when you can use your smartphone, which you were already probably using, to virtually hail a cab, but instead of hailing a yellow cab, the public is virtually hailing an Uber.

In NYC, the night takes on a different meaning. Dinner turns into drinks, drinks turn into the club, and the club turns into wherever the night ends. Instead of spending an arm and a leg on metered city parking or waiting to hail an overpriced taxi, partygoers now catch a ride with Uber and/or Lyft. The TNCs appeal not only to partygoers, but also a wide range of other groups including families, businessmen, and travelers. An innovative blend of technology, transportation, and low-cost convenience, Transportation Network Companies (TNC) appeal to the interests of all people with a smartphone, which is virtually everyone. TNCs utilize three major technologies: GPS navigation, smartphones, and social networks, each serving a distinct purpose. GPS navigation systems provide ride efficiency in both distance and time, smartphones allow for convenience and accessibility, and social networks build trust and accountability for both the drivers and the riders. These companies operate similar to a taxi service, however they differentiate in that TNCs use online-enabled platforms to connect riders to. Providing a service called “ridehailing”, the user-friendly apps operate with only one click, locating not only the location of the potential rider, but also the density of drivers nearby and the wait time for the closest driver. They also provide driver information and a method of contact in order to arrange the one-time ride. The payment system is simple—price is calculated with respect to speed and distance, and customers are billed directly, with receipts sent via email. Convenient and fast, these apps remove stress from both the driver and the rider, providing a very strong incentives for riders to switch from taxis to TNCs.

However, accompanying all their success, TNCs confront controversy and outrage from the taxi industry. Even though TNCs promote their service as a way to fill up empty seats in passenger cars, they function similarly to a taxi service, and as such, they are a massive threat to traditional taxicab drivers competing for the same consumer base. The biggest complaint the taxi industry has is that TNCs operate without proper regulations, avoiding the licensing costs, driver insurance, standard employee training, and routine background checks that taxi drivers are subjected to. Taxi drivers argue that since TNCs and taxis serve an almost identical purpose, they should have the same restrictions and costs. This argument surely makes a great deal of sense. But the law does not always keep up with the times and the law will always be behind advances in technology. As such, legal action against TNC’s and the government relators have failed. In the end, TNCs have acted as a price and quality substitutes for taxicab service and thus have lead us all down the path of elimination of the taxi industry.

Similar in method of transportation, TNC services follow a point-to-point route of travel; therefore these services are often perceived as entrants in the taxi market. However, there are contesting opinions on the debate between taxicabs and TNC services. Supporters of the latter service claim that TNCs such as Uber and Lyft fulfill a previously unmet demand of quick and convenient mobility, as TNC services require as little effort as the tap of a button. This opinion suggests the consumer base of TNCs is not identical to that of traditional taxicabs. Instead, people entered this transportation market specifically due to the unique and convenience of app-based mobility. In opposition, critics claim that TNCs serve identical roles as taxi drivers, but without proper regulations that are used to counteract negative externalities such as “job misconduct” in taxi services. While some may believe TNCs and taxicab companies operate differently, I believe in equality and that TNCs should be regulated the same as other FHVs. To do otherwise may not be illegal, but it is surely a distinction without a difference. My prediction is that in the long term, TNCs will be fatal to the taxi industry, acting as a substitute and not a complement.

Regulations are used to be favorable for taxi drivers. Generally speaking, government regulation is implemented because it is demanded by the regulated industry and provides favorable gains for the industry. Economic regulations in taxicab markets exist because of the presence of negative externalities such as air quality, traffic congestion, and asymmetric information. With an unlimited amount of taxis, quality is bound to decrease which is bad for the consumer and incentivizes taxi companies to cut corners when it comes to costs such as vehicle maintenance. Favorable to cab companies, government regulation theoretically allows for higher fares than those that would exist in the free marketplace. Regulation of Taxis and other FHV’s is fine, but when all other FHVs are heavily regulated and TNCs are not regulated or regulated with minor disruption, then there will be an oversupply of drivers and the devaluation of taxi licenses. This is exactly what happened in NYC.

While it still claims to be simply an app-based technology rather than a transportation company, Uber is essentially a modernized version of the traditional taxi. Operating free of regulations, Uber and similar companies compete against the taxi industry at a lower cost, making each ride cheaper for the consumer and more profitable for the business. The increase in supply makes each taxi medallion license lower in value and each taxi driver less profitable.

By nature, TNC apps have an advantage due to accessibility. With the exception of upfront costs such as the purchase of a smartphone device, these transportation apps are free to download and easy to use. In order to reach a driver, a rider simply opens his app and taps “set pickup location.” The app uses GPS services to locate the exact location of a smartphone, send the location and contact information to the nearest driver, and notify riders of the remaining time before a car arrives. Fast, reliable, and efficient, TNCs take the guesswork out of transportation. One of the top reasons people use a TNC service is the ease of payment. TNC’s provide an added convenience by allowing consumers to pay directly from their phones. At the end of a trip, the rider is billed directly to a preset card in the app, and both parties are ensured that payment has been received. For some, this method of payment is definitely preferable, however it is less attractive to others. The perception of these services is likely to be linked to the use of technology, and younger populations associate technology with efficiency. Older generations who have not grown up in a technological world are often less trusting of online payment methods, generally find it more convenient to pay manually at the end of a trip, with the option to use alternative forms of payment. But the baby boomers are getting older and older and the millennials are soon going to be running the major corporations of the world.

At the very least, TNCs have provided consumers with the freedom of choice. These companies expanded quickly and have made an impact within a matter of years, however this impact is not solely positive. Although TNCs have the potential to improve welfare for some individuals, it is likely to be at the expense of others. To gain a thorough understanding, it is important to weigh the costs and benefits associated with the eventual demise of the traditional taxicab and the taxi driver.

While my opinions on the impact of TNCs on the taxi industry is not conclusive, it does lean towards one particular outcome. The combination of minimal regulation, low prices, short wait time, and certain preferences gives TNCs an enormous advantage over taxis. And although TNCs have come under fire recently, the barriers to entry have been and remain relatively low. Additionally, the new age of technology refuses growth to taxicab companies, who have made few technological changes throughout the years. Despite their success, TNC’s continue to find new ways to innovate. Recently, Uber introduced UberPool, a carpooling services that allow riders to share rides and split costs with others traveling a similar direction. Uber has also introduced Uber for Business and UberRush, each with features that appeal to different demographics. Assuming that TNCs continue to function under current circumstances, I predict they will drive out the taxi industry.

The taxicab industry is heading towards extinction; but I believe that certain modifications could change its direction. First, regulation for TNC must be the same as other FHVs. Without the same level of regulation, taxicabs and TNCs are competing for a similar consumer base on uneven playing fields. Next, taxis must improve their technology and communication methods—an update that is long overdue. By evolving with the general population’s interests, the taxi industry is more likely to be successful. It would be beneficial to create an app similar to those created by TNCs. Lastly, the taxi industry must seek innovative ways to re-recruit riders. Taxis have the advantage of time and experience, and unlike TNCs, they have been around for over a century, surviving through the darkest economic times. In order to stay competitive with a company like Uber, taxi companies must be innovative and strategic in their methods.

Since their inception six years ago, TNCs have already made a significant impact on the taxi industry. These companies entered the market without the restrictions and regulations that serve as barriers of entry for traditional taxicab drivers. As a result, this advantage allows TNCs to operate with lower costs, and therefore provide better prices to consumers. Like all other service-oriented industries, the transportation industry is reliant upon consumer demand. Riders will always choose the service that provides them with a higher utility based on individual preferences. For transportation, the top three preferences are variations on speed, convenience, and low pricing. Weighing the evidence, I predict that TNCs will eventually cause the taxi industry to go the way of the dinosaur. Despite the odds, traditional taxicabs do have the power to stay competitive as long as changes are made. Unfortunately, the odds of such change being made is minimal, if at all. The elected leaders in NYC and New York State are heavily in favor of TNC’s and governor Cuomo’s budget bill that legitimized Uber all across New York State will cause the demise of taxis throughout the state. Time will tell, but one thing I believe for sure is that while the needs and desires of the marketplace created an opportunity for TNC’s, the elected leaders of NYC and New York State have turned their backs on traditional FHV operators. And remember, these FHC operators in NYC who are now facing foreclosure and extinction are the ones who provided transportation in NYC at a time and place in history when it was not so pleasant to do so. (i.e. remember the crack epidemic of the 1980’s and the scene on 42nd Street before Rudy Giuliani came to town). Also, many traditional FHV operators are immigrants who came to this country to live out the American dream. For decades, immigrants lived out the American dream and used their taxi medallions to pay for their kids to go to college. Now, these same immigrants are facing foreclosure of their taxi medallions and financial ruin, all because the NYC regulators failed to do what they were supposed to do in the first place, which is to regulate for-hire vehicles, including Uber. The regulators failed in their jobs and the effects of such failure, whether good or bad, will not be fully known for decades to come.

When will the Elected Leaders of the State and City of New York Learn from Its Past Mistakes?

During the 1920s and 1930s, easy entry into the taxi cab industry led to an oversupply of taxis, resulting in traffic congestion, fare-cutting wars, low driver wages and other unsafe and sometimes illegal activities. The Great Depression created an influx of unemployed workers which worsened these problems, with the number of cabs spiraling to 21,000 in 1931.

To address problems of oversupply, in 1937 the City of New York enacted the “Haas Act” (sponsored by City Alderman Lew Haas) in order to freeze the number of taxi medallions. In 1996, 2004 and 2006, the City auctioned off a total of 1450 medallions. Thus, by 2012 the total cap was set at 13,237. While being a passenger in a taxi was not always the most pleasant of experiences, it was just another option for the millions of New York City residents and the multi millions of City visitors to obtain transportation for-hire on demand. Of course, demand always exceeded the supply of available taxis. That is why the value of the yellow medallion soared from $10 in 1937 to approximately $1,000,000 (one million dollars) in 2012. The purchase of the yellow medallion was one the best, if not the best investment in the world. It also provided many immigrants with the ability to realize the “American Dream”.

While the yellow taxis have traditionally served those persons who live and seek transportation in Manhattan, the non-medallioned “livery” industry has always served the residents of the 4 outer boroughs of New York City. The residents of Brooklyn, Queens, the Bronx and Staten Island always had a reliable car service to call to obtain transportation by pre-arrangement. By 2012, the livery industry has some 38,000 licensed drivers in 23,000 vehicles that were affiliated with approximately 450 bases.

As far back as January 2011, Mayor Bloomberg first proposed allowing non-medallioned livery vehicles to accept street hails (i.e., a person standing on the street waving to vacant taxicabs to be picked up, as opposed to a trip pre-arranged by telephone or other means) outside of Manhattan. With the help of the Mayor Bloomberg and then TLC Commissioner Yassky, the State legislature created a law, later known as the “Street Hail Law” that allowed the Mayor to issue up to 2,000 new taxicab medallions and allowed the TLC to issue 18,000 “HAIL licenses,” valid for street hails outside the Manhattan Central Business District. Thus, the creation of the green taxicab. These granny apple green cabs were supposed to provide the residents of the 4 outer boroughs of New York City with more transportation options.

Those who had been heavily involved in the for-hire transportation industry and knew much more than the elected leaders in Albany about what was good and what was bad for the transportation industry in New York City were essentially ignored. The leaders of the taxi and livery industry knew that the Mayor’s proposal and the state’s new law was a bad idea and vigorously fought it all the way to the New York Court of Appeals, New York State’s highest court. The Court of Appeals upheld the law as it is required to give great deference to enactments of the State Legislature when it comes to matters of health, safety and welfare of its citizens. Of course, transportation always involves the health, safety and welfare of the citizens of New York State and New York City.

On the implicit promise from the City of New York that these green cabs would be money makers, similar to the yellow medallions, and because the City was offering incentives for green cabs retrofitted to accommodate passengers in wheelchairs, many small time investors bought into this bad bill of goods. A new generation of immigrants who were looking for the same “American Dream” that their predecessors did via the yellow medallion, bought into the green cabs. All the while, there was this little know company named Uber that was lurking in the background.

The leaders of the taxi and livery industry knew at the time that Uber was operating illegally. They surely complained to the City Council, the TLC, the New York State Attorney General and even the Federal Trade Commission. All elected leaders and those in power ignored the pleas of the leaders of the taxi and livery industry to stop Uber from operating illegally. It was not a matter of Uber taking away business from the yellow taxis and the livery bases, but a matter of fairness. Two entities that provide the same service were being treated differently. The taxi and livery industry have always been heavily regulated, but Uber was not being regulated. This created an unfair playing field that is the antithesis of our American way of life that has thrived on fair play and substantial justice. This was the seed of the downfall of the industry. The City’s failure to regulate Uber created a vacuum that allowed it to expand in ways that Uber surely planned, but the City’s leaders refused to acknowledge.

The elected leaders of the City and the TLC took no action to regulate Uber. They all bought into Uber’s claim that they were not a transportation company, but a technology company. While I believe that Uber’s technology was surely excellent, I also believe in the old saying of don’t pee in my ear and tell me it is raining. By the time the City and the TLC got around to regulating Uber, it had become a behemoth with money, political power and influence. In no time at all, Uber’s fleet of vehicles eclipsed the number of yellow taxis….and then some.

I and many of my friends and colleagues in the for-hire vehicle industry pled to the City Council Transportation Committee and the Mayor to place a temporary cap on the growth of Uber until all interested parties could get a handle on what the effects of Uber were likely to be. The City’s leaders took no action and the City’s transportation regulators even took affirmative action to let Uber thrive. Before Uber’s explosive and unchecked growth, the yellow taxi industry was still doing well and the livery industry too. Then the TLC allowed a driver of a for-hire vehicle to accept dispatches form more than one base. This old requirement that a livery or black car vehicle be affiliated with only one base and its driver only be allowed to accept dispatches from that base was created for the safety of the public. All of a sudden, without any real reason or justifiable explanation, the TLC allowed drivers to accept dispatches from bases in which there was no affiliation. This was the equivalent of the ability to mint 18 carat gold bars for Uber because it allowed them to send dispatches to virtually anyone it wanted and thus expand its fleet in ways that few, except Uber, ever imagined.

Today, Uber and other companies such as Lyft, have an army of nearly 50,000 licensed vehicles that transport hundreds of thousands of people across the city every day. Uber and Lyft are rapidly transforming transportation in New York. They not only threaten the existence of the taxi industry, but they siphon passengers away from subways and buses, all while raising concerns over worsening street congestion. According to city data, the proliferation of Uber and Lyft appear to be contributing to increasingly gridlocked streets. Average travel speeds in the heart of Manhattan dropped to about 8.1 miles per hour last year, down about 12 percent from 2010. Uber and Lyft are also succeeding at the expense of others. The Metropolitan Transportation Authority has taken a hit to its budget because it receives financing from a 50-cent surcharge on taxi trips. Officials at the MTA say the shift from taxis to Uber has cost the MTA about $28 million since 2014.

So back to the taxis industry. Many of those who invested in yellow or green cabs have seen their investments wiped out. For-hire vehicle drivers are flocking to Uber with their false promise of making large sums of money all while being your own boss. Since 2013, approximately 5,000 taxi drivers have thrown in the towel. Those who own yellow medallions are either barely paying their loans back or are in foreclosure. Last month Queens-based Melrose Credit Union, one of the largest lenders of money to those who purchased taxi medallions, was seized by state after delinquent taxicab loans soared tenfold in just 18 months. The stock price of another one of the City's taxi lenders, Medallion financial Corp., has fallen so far that one share of its stock now costs less than a ride on a NYC subway. And lets not forget that the City itself has a financial interest in the sale of medallions as it takes a 5% transfer tax on each sale/transfer. This is much less money to go to the City coffers.

Moreover, the drivers that have flocked to Uber and Lyft are not looking at the big picture. Uber has made its plans to develop a self-driving vehicle very clear. In other words, the day will come very soon, when Uber will no longer need drivers. Then the for-hire vehicle drivers will have no work. The taxi industry will be on life support or dead and the out of work drivers will then cause the unemployment lines to swell.  Worst of all, the public just does not see the ills inherent in Uber and Lyft. Their explosive growth was made possible by luring riders away from taxis and the traditional modes of for-hire vehicle transportation (livery/community car services) with artificially low prices because they are being subsidized by a massive influx of cash by large pocketed investors. Uber has engaged in anti-competitive conduct since its inception. Competition has always been good for the consumer as it keeps prices low and the incentive to innovate high. This is why the law prohibits monopolies. So all while Uber and Lyft take all measures necessary to kill off the competition, they continue lure the public to their apps.

The public and the elected leaders of the City and State need to wake up and realize that at some point in the near future, the combination of significantly reduced competition with the eventual need for Uber to turn a profit, will lead Uber to drastically increase prices. When Uber has little or no competition, what options will the public have? Taxis may very well be gone, community car services will slowly be wiped out and the MTA is always in disarray, financial and otherwise. Uber will then be in the position to raise prices to whatever it wants and will be able to fleece the pockets of anyone with a smartphone. If we stay on this path, the public will have two options. One is to walk to their destination or be financially raped by Uber. Neither sounds like a very good option to me. And what will the elected leaders do then? Will they seek to regulate the prices of Uber trips? Will they create further regulations to stagnate the vitality of for-hire transportation in the City? Will they do nothing and just let the public deal with the problems? At this point in time, all I know is that the City and State have not learned the lessons from their past errors and mistakes. Someone needs to force the elected leaders of the City and State to open their eyes…or perhaps the public should just vote those with blinders on out of office.  

So at this point in time, what can the public do, short of voicing their opinion through the power of the ballots? The public can support their tried and true local car service. Don’t turn your backs on the liveries that provided transportation to the City during a past time in recent history, such as the late 80‘s and early 90s, when it was unsafe and unpopular to so, especially in the outer boroughs. Car services such as Carmel Car and Limousine Service and Dial 7 Car and Limousine Service have been in business since the late 1970's/early 1980’s and have apps that are just as good as the one created by Uber and Lyft. Carmel and Dial 7 have been there for the public in its time of need and now the public should return its loyalty to Carmel and Dial 7, and other livery bases, by refusing to utilize Uber and Lyft. Support your local car service is akin to only buying American made goods. Sometimes it may be hard to do so, but in the end, who will be the loser by continuing to use Uber which will allowing Uber to kill off the competition. The public will suffer. I speak my peace not because I have the magic 8 ball that allows me to see into the future, but because I care. I take the time to think about the future of our City, the needs of the public and the path to destruction that the transportation industry is now on. I hope that some elected leaders take a good long look at history, think about what I am saying/preaching in this article and give my opinions its due consideration and not let campaign donations and the desire to stay in office cloud their judgment. I also hope that members of the public think about what I am saying and use your good sense to realize that Uber is not the solution, but is the problem. 

The Reign of the Yellow Cabs is Surely OVER...but What Will the Riding Public Do When Uber is the Only Game in town?

The reign of the yellow cab in NYC is surely over. While the yellow cab itself may be a symbol of the city itself, the actual number of yellow taxis on the road is dwindling. The yellow cab may be as synonymous with New York as pizza, Broadway and the Empire State Building, but for more and more people, it is no longer the ride of choice. The yellow cab was once the main alternative to subways and buses, hailed by rich and poor alike. Cabdrivers were a kind of ambassadors of the streets. But the Yellow cab owners did not see what havoc that was going to be caused a few years back by a new form of technology. Now, fleets of cars are summoned by an army of "ride-hailing apps" like Uber and Lyft.

The yellow cab numbers are comparatively bleak: today, there are 13,587 yellow cabs on New York City streets. The total number of black cars: 60,000, more than 46,000 of which are connected with Uber, though they may be hooked up to other car services as well. Back in the pre-Uber days (the good ole days) around 2010, yellow cabs made 463,701 daily trips and brought in $5.17 million in fares during the month of November alone. Six years later, the numbers have not just dropped, but yellow cabs are on a fast downward trajector.

Uber and Lyft have flooded neighborhoods where taxis once flourished. And they appeal to a new generation of tech-skilled riders who live on their phones, ordering everything from groceries to books and movies. Uber and Lyft  (the so called “Ride-hailing apps) have gained a huge market share in a short period of time. They have expanded the market tremendously, but have also stolen market share from taxicabs and all other for-hire vehicle services alike. Yes, I said stole because they entered the market and operated illegally for so long that by the time the NYC Taxi and Limousine Commission got around to regulating them, it was too late to do anything. The means by which the public can obtain for-hire transportation has changed along with the expectations of the riding public. The new generation of tech-skilled riders want pretty much what everyone else wants, transportation on demand. 

Black cars have long served Wall Street banks and law firms, but they were not for casual or last-minute users because they had to be prearranged. Traditional livery services primarily provide transportation to those in the people who live in the outer boroughs of NYC. Both the liveries and the black cars have been hit hard  by the rise of Uber. Many of the long standing car services, like Carmel Car and Limousine Service, have been able to overcome the "Uber challenge" and adapt by having an app of its own that provides pre-arranged transportation and what also amounts to transportation on demand.  

While the yellow taxis have ben hit hard, the livery and the black car bases have been harmed as well and such harm to the car services has caused harm to the public in ways that most people are not aware. Since traditional livery services primarily provide transportation to those in the people who live in the outer boroughs of NYC, the rise of Uber has caused many drivers to deflect from the traditional car services in order to drive for Uber. This has caused those people who live in Queens, Brooklyn and the Bronx to have less means available for transportation. Unlike in Manhattan, not everyone who lives in Queens, Brooklyn and the Bronx (and Staten Island too) have quick access to the subway or other public transportation. These residents have always relied upon livery bases to provide reliable transportation. Contrary to popular opinion, Uber is not so readily available in Queens, Brooklyn and the Bronx. So what are those residents supposed to do to get to work, to the doctor and to the food store. 

Fortunately, some car services, like Carmel, have been able to adapt to the changing needs of the public and continue to provide the arrangement of safe and reliable transportation for the riding public. But this is not true of all livery bases. Many have either died or are dying a slow death. They don't have the money or technology to compete with Uber. Just like the taxi's, some car services have been rendered irrelevant. 

While most people will take a hands off approach and say that if Uber is winning the transportation game by having a better product and service, then so be it. But the problem is that it is not that Uber's service is better than anyone else, but that Uber has gotten to where it is by competing on a unfair playing field. Uber has engaged in many underhanded tactics in order to lure drivers away from other car services and to get people to use their service rather than the service of the long standing car services. The Federal anti-trust laws were set in place in the late 1800's in order to prevent illegal monopolies and unfair competition. The problem is that the NYC government and the NYC Taxi and Limousine Commission let Uber operate in an unregulated manner for so long, that it expanded in ways that those who are properly regulated, were not permitted to do so. This is tantamount to improper favoritism by a municipal entity. This is not competition on the merits, but an un level playing field that the City of New York was instrumental in causing.  

 In the old days, taxis were the only ones allowed to pick up people on the street. But now, with smartphone apps that can dispatch cars in minutes, there is little practical distinction between taxis and Uber. This is the whole point....while there is little practical difference between the means by which Uber and other for-hire vehicles operate, the New York State government, and particularly the governor, is trying to push legislation forward that will allow Uber to essentially operate throughout the state with very little if any regulations. It is important to keep in mind that compliance with regulations is a large cost of doing business for the for-hire transportation industry. If Uber does not have to be regulated or regulated in the same manner as other for-hire transportation providers, then the State Government is also seeking to become complicit in creating an unloved playing field between Uber and all other for-hire transportation providers. 

In the end, this un level playing field is going to be detrimental to the riding public. Most people do not see it just yet, but consider this: what will the riding public do when Uber is the only game in town? and what will the riding public do when Uber decides to no longer subsidize the cost of trips for the public. When Uber becomes a true monopoly and there is no other service available, do you think Uber will still charge competitive prices. Of course not. They will squeeze every last nickel from the riding public and there will be nothing anyone can do about it. Then the public will have no choice but to pay the high prices Uber will demand. This is true because the public has become so heavily reliant on obtaining transportation on demand that they will pay the high costs, but what about those who previously relied on the car services in the outer boroughs for transportation. Livery services that used to be the low cost means by which those in the outer boroughs relied upon, will not get transportation because the car services they used will be gone and this sector of the public will not be able to afford to use Uber. 

So service expands in Manhattan but severely contracts in the outer boroughs. Isn't this what happened with the yellow cabs? They became a government backed monopoly that provided service primarily only in Manhattan and had no incentive to innovate and provide better service. So what will Uber do when it is the only game in town. They will not only charge high prices for transportation, but will have less incentive to make their app more user friendly to the public....and once again the cycle continues.... with the public having little choice in service providers and being forced to pay high prices. The difference here is that the City and State Government have taken away the government backed monopoly of the yellow cabs and made Uber a defacto government backed monopoly.  

Lets face it, the yellow cab industry is in sharp decline and long standing car services being forced from the market because Uber pays politicians to write laws that are favorable to them....and the politicians are all too happy to take campaign contributions from Uber. That’s it. End of the game. Politicians who make the laws are favoring one company over another and are seeking to change the laws to allow Uber to operate essentially how Uber sees fit. The best thing that the riding public can do is to contact their local City Council member and the elected officials in the Assembly and Senate in order to express frustration and outrage over what the state is proposing. Write a letter to your elected official, make a call or do anything to bring awareness to the public of the ills that Uber is causing. 

Remember, it is you, the riding public, that elects the officials that are allowing Uber to wreak havoc on the for-hire transportation industry. You have the right to call them up and tell them your opinions. You have the right to vote for someone else who does not so obviously favor Uber. You can do many thing, but the option to do nothing is not a good option because doing nothing now will only cause problems later on. Remember the old saying...you can ignore your problems, but ignoring them will not cause your problems to go away. 

Take a look into the future and think for a moment what will happen when Uber is the only game in town. In the 1800's, Standard Oil was essentially the only game in town and look how they caused harm to the public. This is why the US Supreme Court ordered Standard Oil to be broken up into many smaller entities. Because consolidation of power in the hands of one is a danger to the public that is anathema in our democratic society. 

How risky is your Uber ride? Much More than you think

An Uber ride is different from hopping into a taxi or a traditional car or limousine service. When you download Uber's app and get into a car summoned with the mobile reservation system, you agree to a host of terms and conditions by default. Uber claims it puts potential drivers through a background check so that they can become an impromptu taxi driver using their own car and Uber's tech platform. The incidents, injuries, assaults and accidents involving Uber drivers and the riding public are too numerous to detail. But the real issue is that the public should understand Uber's responsibility to passengers (or lack thereof).

What exactly do passengers agree to when they use Uber? That depends on whom you ask. Most people don't know what they're getting into when they get into one of these Uber cars and they surely don't know what they're getting into when they download the app. The public is essentially giving Uber a free pass -- up to and including possible death.

Uber's terms and conditions are a way for the company to absolve itself of any liability in cases of injury or accident and to avoid responsibility for a driver's actions. It is a way for Uber to attempt to cover their ass and claim they are not responsible for anything that happens to you. Uber's public statements on safety contradict its terms and conditions. It is akin to an outright deception on people. They surely do not in any way seek to warrant that their product/service is safe.

The fine print of Uber's  terms and conditions clearly says that passengers accept a risk by using the service. "You understand, therefore, that by using the application and the service, you may be exposed to transportation that is potentially dangerous, offensive, harmful to minors, unsafe or otherwise objectionable," Uber's terms and conditions read, "and that you use the application and the service at your own risk." Lyft essentially operates the same way as Uber.

In essence, Uber and Lyft are basically trying to show through their terms of use that they are ride-matching services, rather than transportation companies. No one is really buying that they are merely tech platforms, but people continue to use these services without knowing the true potential dangers

While there are some Uber and Lyft drivers that are safe, courteous and competent, several incidents have occurred during the past few years that have called into question the safety of the services. The most severe incident was the death of 6-year-old Sophia Liu, who was  struck and killed by an Uber driver on New Year's Eve in San Francisco. There have also been more than a dozen allegations of sexual assault and groping; kidnapping; and physical assault, according to several media stories.

Uber claims its drivers are independent contractors rather than employees, which if true, it protect Uber from liability. But the company's terms and conditions can be trumped in court if it's shown that Uber exercises a certain amount of direction and control over its drivers and they more are akin to employees. Such factors of control include the ability to hire and fire drivers, decide where their services are performed, or provide them with specialized equipment, along with other considerations -- many of which, some would argue, including myself, Uber has.

Soon enough, the time will come when the issue of whether Uber's drivers are independent contractors or employees will hit the appellate courts and if it goes bad for Uber, then their entire business model may be placed in grave danger...the same type of grave danger that Uber often places its customers.....the danger of death.

Uber investors expect big results, but can Uber produce? Not so far.

Uber’s business strategy has involved trampling government regulations and daring the relevant regulators to do something about it. That strategy has been worked so far, but regulators and the public have begun to show more spine in the face of Uber’s arrogance. Meanwhile, financial analysts have been turning a more critical eye on Uber’s growth and profit potential, and not always liking what they see. Whether the company can sustain its putative $65 billion valuation — derived not from actual financial results, but on the expectations of private investors — is in question.

Uber’s current strategy of dominating local taxi markets depends heavily on the cooperation of regulators (or on intimidating them) and maintaining a positive image with the public. As far as their image, Uber seems to follow the old adage that there is no such thing as bad public relations. To them, all news on Uber is good news. But in public view there are so many horror stories of customers getting assaulted that it astounds me that anyone would ever use them.

On the regulatory front, just two weeks ago Uber agreed to pay $20,000,000.00 ($20 million dollars) that it had systematically deceived drivers about their potential earnings and the terms of a lease deal it offered to help them acquire cars. Uber got away without admitting or denying the charges, but a picture has been painted as a result showing a company that engaged in wholesale deception in order to recruit drivers. In 2014 and 2015, the FTC said, Uber asserted on its website that its UberX drivers earned median incomes of more than $90,000 a year in New York. The truth, according to figures from 2013 to 2014, was that the median driver’s income was only $61,000 in New York. Fewer than 10% of all drivers in New York made as much as Uber had claimed.

Meanwhile, in 17 markets including Los Angeles and Orange County, Uber placed help-wanted ads on Craigslist offering the enticing prospect of making as much as $25 an hour, even driving part-time. In truth, the FTC said, only a fraction of drivers could clear that much. For example, in L.A. and Orange County, where Uber quoted fares of $20 an hour, fewer than 20% of the drivers reached that mark.

Uber’s representations about its auto sales and leasing program were also deceitful, the FTC said. From 2013 through mid-2015, some 7,000 drivers signed up with three subprime auto financing companies with which Uber made deals for a four-year “lease to own” arrangement or installment credit exclusively for its drivers. Uber claimed the drivers would get preferential interest rates, the FTC said; instead, many were saddled with higher rates than other buyers with similar credit scores — in some cases more than double. The bottom line is that Uber has ahabit of doing what it wants regardless of law

Uber is also running up against labor regulators calling foul on its claim that its drivers are independent contractors not entitled to the benefits of employment. The New York State Department of Labor has ruled that two former drivers are entitled to unemployment compensation. The ruling follows a similar one in 2015  by the California labor commissioner for a San Francisco driver. And in Seattle, Uber has just filed suit to invalidate a 2015 city law that gave its drivers, and those for other such services, the right to unionize. 

These battles strike at the heart of Uber’s business model, which depends on flooding markets with platoons of drivers, sticking them with such expenses as gas, insurance and maintenance, and skimming 25% of the fare off the top. Drivers get the benefit of being linked with passengers via Uber’s ride-hailing app, but they’re powerless to control their fares, which Uber sometimes discounts to attract passengers, or the level of competition. Uber’s interest lies in hiring as many drivers as it can for a given market; the drivers, however, end up cannibalizing each others’ opportunities.

This looks like a win for Uber and its investors, but the scanty financial information that has dribbled out about the firm’s revenue and earnings suggests that it’s nothing like a profit-making machine. Bloomberg, reporting from unofficial sources, calculated that Uber lost more than 2.2 billion in the first nine months of 2016, including $800 million in the third quarter alone. Is that really a path to profitability?

Financial analysts are beginning to question whether Uber’s profit potential is all it’s cracked up to be. Transportation industry experts have interpreted Uber’s losses as implicit subsidies to attract riders, meaning that riders were paying only 41% of the cost of their trips. The question is how Uber would keep their business if fares had to more than double to allow the company to break even.

Additionally, Uber’s growth seems entirely explained by its willingness to engage in predatory competition funded by Silicon Valley billionaires pursuing industry dominance. Uber’s business model is focused on the pursuit of monopoly power. But that’s an expensive global quest, and there’s no telling how long Silicon Valley venture investors will bankroll it. Uber already lost the battle in China, potentially a transportation goldmine. Uber gave up the battle in China last year, selling its subsidiary there to domestic company Didi Chuxing — which has hinted that it might wish to expand to new national markets. 

Perhaps in recognition of the limitations of the ride-hailing market, Uber is investing heavily in self-driving cars. But launching its own fleet of vehicles would mean a drastic transformation of its business model. Whether its investors will keep their money in a hardware company rather than a purveyor of software isn’t clear.

Vision Zero- the Mayor has no Vision

New York City’s Mayor Bill de Blasio said in an interview Monday that he would categorize drunk driving “that doesn’t lead to any other negative outcome” a minor offense. This is absolutely absurd. Is Mayor de Blasio serious about this. Drunk driving a minor offense so long as no one gets hurt!!!! I guess all that really matters to Mayor Bill de Blasio is that traffic accident statistics go down. The means to achieve such are irrelevant to him. In other words, driver fatigue rules look good on paper, but in reality all they will do is add window dressing for Vision Zero. To say that drunk driving a minor offense so long as no one gets hurt is kin to dying that armed robbery is a minor offense so long as no one gets hurt. Driving drunk or walking into a bank with a gun, both have potential to cause massive harm and are akin to a scourge on society, but according to this Mayor, no big deal.

How about the big deal of limiting the ability of for-hire vehicle drivers to make a living. Limiting the number of hours they can work without any proof, statistics, studies or data (data and/or studies that apply to New York City) is an absolute outrage. For-hire vehicle drivers are doing the best they can to make a living in this day in age. considering the state of the market right now, that i a hard feat to do. the market is flooded with part-time Uber drivers, thus limiting the amount of jobs a regular full time professional driver can perform. Less money for drivers means they are going to seek a job elsewhere. NYC will be left with nothing but part time in experienced drivers. Would you rather be driven by an experienced driver who knows how to manage their time and fatigue or a part time inexperienced driver who knows how to manage neither.

How many NYC taxi medallions need to be foreclosed upon until the Mayor understands that limiting the number of hours a for-hire vehicle driver can operate is not going to be good for local small businesses in the outer boroughs of NYC, is not going to be good for persons who drive people for a living, is not going to be good for the ability of drivers to continue to service those persons most in need of transportation, is not going to enable the driver to make his/her car payments, etc, etc. In other words, limiting the ability of drivers' ability to operate is not going to be good for the consumer or the the economy.

If the Mayor or the NYC Taxi and Limousine Commission had some empirical data or studies to support their arbitrary time limit, then there may be nothing to complain about, as we are all in agreement that limiting accidents in NYC is a laudable goal. But limiting drivers ability to work and make a living based upon no proof of a problem and no proof that the means sought to be imposed by the NYC Taxi and Limousine Commission are the best means to prevent accidents wholly unreasonable.

It is clear that the Mayor and the NYC Taxi and Limousine Commission are more concerned with what looks good to the public rather than what is good to the public. Accidents in NYC will never reach zero. It is a fact of life, just like crime in NYC. It will always be there. We can try to limit it, but both will be there. Police don't go after criminals and solve crimes without proof, evidence an/or data. They don't operate based upon a hunch. The NYC Taxi and Limousine Commission should not be allowed to make rules based upon a hunch either.

The Mayor's comments about drunk driving not being a big deal so long as no one gets hurt is proof that the Mayor is not really concerned with limiting accidents, but simply with the appearance that he is doing something to limit accidents. That is fine, but before you take away the ability of a for-hire vehicle driver to make a living, perhaps the Mayor should consider having some proof or evidence that the NYC Taxi and Limousine Commission proposed rules on driver fatigue be based upon some proof or evidence. Otherwise, the for-hire vehicle driver is being hurt and punished more than the drunk driver who does not cause any accidents or harm to others. Think about it. It is not just the end result that matters. The means used to achieve those results are often the difference between a well executed plan that leads to good results and a poorly executed decision that causes harm to many without any justifiable basis.

Time to Consider Deregulation of the FHV industry

Deregulation in the for-hire vehicle industry is something that should be seriously considered these days. It is obvious that the New York State government, in its various versions of the TNC (Transportation Network Company) bills it has recently created, proves that while there is virtually no difference in the service provided by a TNC like Uber, from that of the traditional car and limousine service, the various services are being treated differently, all without any real reason or rationale. Can someone really tell me with a straight face that providing transportation via a TNC is not transportation for hire? Is the State Legislature and the Governor going to serious claim that the provision of transportation via a TNC is not a commercial transaction. Ride Sharing is simply a misnomer. While the ride can technically be shared by more than one person, we are no talking about legalized hitchhiking. It is a commercial transaction for which a service is being provided to one person and that person is paying for the service. At least create rules that are the same for all services. Otherwise, the playing field is hardly level and will only lead to destruction of all for-hire transportation providers other than Uber and Lyft.

While new competition from all sides of the car service industry are forcing operators to improve their business, it is impossible to adapting through improved driver retention and customer service when Uber and Lyft are able to operate the same type of business as a traditional car service but can play by rules which are either non-existent or so lenient as to make it unfair competition. If there is going to be regulations, then there should be regulation for all that provide the same service. Otherwise, the government should de-regulate the entire industry.

Transportation deregulation in the airline, railroad and shipping industries have produced enormous benefits for consumers. Airfares are down sharply; trucking rates have fallen; the nation’s railroads are offering new services. A few years ago, passenger and freight transportation were among the most heavily regulated industries in the United States. Now much of the red tape regulation has been totally eliminated.

This wave of deregulation stems from a growing recognition that government controls of transportation have not fostered the public interest. Regulatory agencies tend to protect the interests of the industries they regulate. Studies by experts representing the whole spectrum of political persuasion have confirmed that regulatory agencies reduce competition at the expense of the public. Typically, industry-oriented individuals are appointed to commissions, often from industry itself. Once in office, regulators perceive their duty as protecting the financial health of the companies they regulate. The easiest way to accomplish this is to reduce competition, thereby increasing rates and creating monopolies. This seems to be the exact case in New York City and soon to be throughout New York State. 

Uber and its Destructive Revolution is Bad for the Consumer

Creative destruction is a process through which something new brings about the demise of whatever existed before it.  The process of creative destruction stems from competition and innovation, which drive changes in the market. The success of Netflix is an excellent example of “creative destruction. Netflix has driven the video tape/disc rental business, along with companies like Blockbuster, into extinction. Federal Express created the overnight delivery industry and all but decimated the U.S. Postal Service. Kodak was an iconic American company synonymous with photography. But long entrenched in film manufacture, it did not see the shift to digital photography, one that required no film. But the iconic exemplar of creative destruction was Apple. Its story needs no re telling as it is the stuff of culture and legend. Apple unified the worlds of computers, internet, phone, photography and music by bringing them all together in a single device.  Last, but not last, there probably has not been a better example of creative destruction than the ascendance of Uber.

In New York City, the taxi industry continues to collapse under the forces of Uber’s disruption. Traditional taxi drivers and medallion owners, after being protected from competition by government regulations for many generations, are the obvious losers from the “Uber effect”. Some people believe that consumers are the winners from Uber’s creative destruction in the transportation industry, as we now have more choice, better and faster service, friendlier drivers, cleaner cars, and most importantly — lower prices. Competition is said to breed competition as it forces business to rethink their methods of doing business and to devise methods of doing business in a better and more efficient fashion. At the very least, competition often causes businesses to maximize their responsiveness to consumers. But for competition to be beneficial to the consumer, competition must be fair. In New York City, Uber can hardly be said to have been competing fairly. They burst into the market claiming they were not a transportation company subject to regulation by the New York City Taxi and Limousine Commission (“TLC”), but were a technology company. Their business model was the same as the traditional car services, yet they refused to abide by the rules of the TLC, which all other car services that provide identical services must play by. Compliance with government regulation is very costly, but by the time the TLC got around to regulating Uber, it was too late. The damage had already been done. Uber’s methodology was to break the law, and obtain absolution from the TLC by eventually agreeing to submit to the rules that all other car services in NYC had to play by. Misclassifying its drivers as independent contractors is just another example of how Uber not only continues to take advantage of their drivers, who in my opinion are employees and not independent contractors, but also avoids having to pay the massive costs associated with paying employees (e.g. health insurance, payroll tax, time and a half for overtime, compliance with labor laws). Of course, there are the stories of Uber engaging in a concerted effort of calling other car services for transportation and then eventually cancelling the trip at the last minute, thus upsetting the driver who lost a fare. All this causing the driver to reconsider working with Uber rather than staying with the traditional law abiding traditional car service. And we should not forget about Uber’s massive subsidies of each trip for its drivers and Uber’s obscene subsidization of “sign on bonuses” given to for-hire vehicle drivers to lure them away from the local community car service. With a $65 Billion dollar valuation, Uber can afford to provide subsidies to drivers to lure them away and even to prospective customers to get them to become customers. The list of unfair business practices can go on and on. All of this may seem like legitimate business operations, but in my opinion, it is not only not legitimate but it is destructive to the for-hire vehicle industry in an extremely negative fashion.

Uber did do one good thing in its creative destruction. It caused the for-hire transportation industry to modernize. The yellow taxis had a government backed monopoly for years with no end in sight. As such, there was no incentive for them to modernize or pay more attention to customer service. Car services were forced to modernize by obtaining smartphone applications to allow its customers to book a trip or summons a car, just like one may do with Uber. If a company is forced out of business because it refuses to modernize and adapt to the times, just like Blockbuster and Kodak, then that is the forces of the market that caused their demise. But by engaging in unfair business practices, Uber is forcing the competition out of business for reasons other than market forces. This is patently unfair and should not be condoned.

The City of New York turned its backs on the yellow taxis and is also turning its backs on community car services. Many of these small car services are mom and pop shops, mostly minority owned and operate a legitimate business that have served the transportation needs of the local communities in the outer boroughs of NYC for decades. They provided a service to the City in the 80’s and 90’s in areas of the city that most people did not want to travel to. These small businesses are being forced out of business not just because of Uber’s unfair competition, but also due to the onslaught of new, burdensome and irrational government regulations. The cost to comply with most of the irrational government regulations are so high that small car services cannot afford it. When government regulations serve a genuine purpose, and are rationally related to a legitimate goal, then compliance is required, regardless of the cost. But for the past 6 years, the TLC has been engaging in a pattern of creating new regulations that serve no legitimate goal. Most importantly, government regulation, while sometimes mandatory, is not a market force, but is a governmental requirement.

Most of the governmental leaders of the City of New York have allowed Uber to grow and grow at an unchecked rate. This has caused many unfortunate circumstances. First, it has caused the demise of the yellow taxi industry. Medallions that were worth 1 million dollars a few years ago are worth about half of that now. Even with the plummeting values, medallion owners are still unable to meet their loan obligations because the unchecked rise of Uber has shifted the actions of consumer base from hailing a cab to summonsing a car on demand from Uber. Taxi and car service drivers were once able to make a legitimate and decent living. Now, most can hardly afford to make their car payments. Full time professional drivers are a thing of the past. Uber and the actions and inactions of the TLC have created a market filled with part time unskilled drivers. So what happens to the full time drivers….they become unemployed, unable to pay their bills, unable to feed their families and eventually bankrupt.

I believe in the free market. So if all of this destruction was caused by market forces, then I would have no problem. But when the government turns its back on long standing, law abiding businesses and allows a super-rich and super powerful entity like Uber to operate outside of the law, then the end result will be another government backed monopoly…..all in the form of Uber. So back to the consumer, because that is really what matters here. Right now, the consumer is happy. No more stinky yellow cabs. No need to wait for a car service to pick you up. No need to be concerned about costs because the cost of an Uber trip is the same as a trip with a yellow cab or a traditional car service. But the public usually does not realize the inherent problem until it is too late….and that problem is that non-market forces in the form of unfair completion from Uber along with irrational and needless regulations from the TLC are all combining to cause all other car services to go out of business and make the yellow taxi extinct. So the typical question from the consumer is this….what is wrong with that ultimate scenario since Uber will be left standing the consumer can always use Uber’s app to get transportation? The problem is that the end game of Uber’s creative revolution is a destructive revolution where only one company is left standing….and when Uber is left to be the only company in town, they will be free to jack up their prices because there will be no competition to keep their prices in check. It also reduces their willingness to serve the public interest or provide top customer service. All of this surely make us all worse off. This is why the government is supposed to prevent monopolies from being created or from continuing to operate. Since the late 1800’s monopolies have been largely outlawed. But in the meantime, Uber continues to make massive “donations” to politicians’ campaigns, all to get them the lawmaker to see it the “Uber way”.    

If the history of transportation in NYC has taught us anything it has taught that we need to move away from the ubiquitous crony capitalism that protects well-organized, well-funded, concentrated companies like Uber. In the long run, it will only lead us down the same vicious cycle of high prices and poor service. Think about what I am saying here. Look at the dynamics of the industry. Take a thoughtful view of the future and decide if creating another government created and government backed monopoly is in the best interest of the public. I think you know that my opinion is a resounding “NO”.

The Uber Monopoly- Don't Let It Happen

It is obvious (or should be) that Uber's long term objective is to create a monopoly and to undermine all traditional legal/regulatory obstacles to exploiting anti-competitive market power. Again, please realize that Uber's game plan is to hold out until they have a strong enough market dominance, so that many of the risks go away, and the IPO price is inflated by all the monopoly power it can readily exploit....and if Uber gets to monopoly power, then like any other robust monopoly, it will be able to make big profits by raising prices — especially surge prices — and ultimately charging customers more than they were paying before Uber came along.

It is true that Uber really has figured out ways to make the for-hire transportation market more efficient, but that is not the point. You have to look at the bigger picture. In economics jargon, there is something known as a network effect. It’s the reason that eBay has a stranglehold over the collectibles market and Craigslist dominates online classified ads. Sellers list their goods on these markets because they have the most buyers; buyers go to them because they offer the largest selection. Once a dominant company is established in a two-sided market like this, it’s hard for anyone else to create a viable competitor. This is why Uber is offering lavish subsidies to both drivers and passengers to try to become the dominant operator in as many markets as possible.

Competition has almost always driven p[rices down. Competition is healthy and good for the consumer. But an Uber-dominated market will prevent a competitive market, leaving much room and the amity to raise for fares, further decrease competition and create massive profits for Uber shareholders.

As a consumer, you should consider these things because it is you...the consumer...that is the one who will be crying when Uber is the only game in town and they jack prices up so high that you are once again, forced to take the subway.....and the driver, it is you what is making Uber a monopoly. They can't exist right now without you. But you can exist without them. You can go back to the traditional car service, livery base or black car company you came from and help prevent Uber dominance. By continuing to driver for Uber, all Uber drivers are creating their own demise. Once the self-driving vehicle comes out, you will all be unemployed. All of your traditional companies (taxis and car services alike) will be gone and you will have to find a new profession. You will be kicked to the curb in a few years. Why do you think Uber is investing so heavily in the self-driving vehicle market. Because they are planning on replacing you. Don't let them do this. Get out now.

So here it is in a nutshell.......

1. Consumers- stop using Uber because your continued use will lead to an Uber monopoly which will surely driver prices up sky high, which you will ultimately pay and be unhappy about it

2. Drivers- stop driving for Uber as you are allowing Uber to render you useless to them. There will be no Uber drivers in a few years because they will not need you anymore. Your old car service affiliations will be done because you enabled Uber to get rid of the competition

3. For-Hire Vehicle Industry Stakeholders- get involved, call your politicians, call your trade organizations, take a stand, yell out loud, help others get involved, do whatever you can to stay alive and fight the good fight. To do anything less will surely lead to your demise.

Uber and the Demise of the Taxi industry and the Dawn of the Tyranny

New York state took over a small credit union in September of this year because of the “unsafe and unsound conditions” at the institution. The real reason for this is Uber. One third of Montauk Credit Union’s portfolio of $170 million in outstanding loans were to taxicab operators, all of which have been struggling to pay their loans to their lenders.

Since the dawn of the Hass Act, a taxi medallion was likely the best investment in the world. Enter Uber and the technological revolution they brought to the for-hire vehicle industry in New York City. Taxicab operators typically take out loans for medallions, the city-issued licenses that they need to operate. Yellow taxi medallions were always a hot commodity in New York City because the city always severely limited how many licenses it issues, thus driving up the demand for them and their value. Just two years ago or so, a single license could sell for as much as $1.3 million.

When Uber entered the marketplace, they exploited loopholes in the system by skirting existing rules and regulations or by simply ignoring them. By the time the TLC got around to bringing them under their regulatory umbrella, Uber was already entrenched in the market. The loopholes exploited by Uber let the company’s fleet of drivers grow over the past five years to about 60,000 drivers in New York City. Keep in mind that there are only 13,237 licensed yellow cabs in the city. 

As Uber’s estimated value has skyrocketed to an estimated $65 billion in the past few years, the value of the city's taxi medallions has shrunk from $1.3 million to less than $700,000. The plummeting value of taxi medallions doesn't just hurt taxi owners. Much like how the housing bust in 2008 shook the home loan industry, banks across the country that specialize in medallion loans are now taking a massive hit. With the crash in prices, many loans are now underwater, many borrowers are in default and lenders are reluctant to continue to refinance as the borrowers struggle to make payments.

A group of Credit Unions have sued New York City and the Taxi and Limousine Commission for allowing Uber to operate, saying the company is destroying their businesses and threatening their livelihoods. The situation will get worse before it gets better for taxi owners and their lenders. Financial institutions with large exposures to the taxi medallion industry have had to take appropriate steps to measure and mitigate this increasing credit risk. As Uber and the other so called “ride-sharing companies” have overtaken the on demand transportation market in New York City, medallion prices will to continue to decline. The end result is still unknown. No one, except a few people, would have predicted the housing market crash in 2008 and look what long term ripple effects that caused. While the Taxi industry is not quite as large as the housing industry, the fact remains that the “Uber effect” has not only decimated the taxi industry in New York City, but is harming, and sometimes destroying, the credit unions that loaned taxi owners money to purchase the medallions in the first place.

I don’t blame Uber for this. I blame the City of New York. The allowed Uber to operate outside of the law, allowed them to proliferate over time and caused the value of the hottest commodity in town (the taxi medallion) to plummet…and that decline will only continue and the ripple effects will be harmful not to just the taxi owners and their lenders, but to the public. If things continue as they are, there will likely come a time when Uber is the only game in town….and when they are, they will do as all monopolies do, they will exert their power and influence in a manner that is detrimental to the interest of the riding public. The only difference between Uber and Standard Oil is that once the medallion industry is decimated and the car services are no longer in business, there is no going back to the “old days”. A theoretical break up of Uber, if it were to become an illegal monopoly, would not make the price of the yellow medallions rise, will not prompt people to go out and purchase medallion and will not prompt lender to loan money to those who may seek to purchase a medallion. Hence, any theoretical break of the Uber Monopoly that is set to occur in the future will not increase competition because there will be no competition.

And remember, Uber is not the Salvation Army. They are not here to save the world. They are here to gather your information and data for their own purposes. Uber is not just a ride sharing company. Look further into the future, remember George Orwell’s 1984 and consider what happens when an almighty entity controls all the data on the comings and goings of the citizens of New York City. The consolidation of power has been a danger since the dawn of time. Our country was founded upon the principle that the consolidation of power is bad and leads to tyranny. Where do you believe Uber is headed? Think about It and Draw your own conclusions.