Uber, Lyft and Houston’s Policy Leadership


By Steven Titch

Under the guise of needing to review a list of new amendments, the Houston City Council this week once again delayed a vote on granting legal status to vehicle-for-hire services like Uber, Lyft and Sidecar.

At least the Bayou City is making an effort to come to terms with services like Uber, Lyft and Sidecar. New York, Los Angeles, Chicago and dozens of other U.S. cities are trying to ban them, mostly in response to pressure from local taxi lobbies. Houston has the opportunity to buck this trend and burnish its reputation as a city that’s friendly to entrepreneurs and willing to embrace technology models that benefit consumers and their increases their quality of life.

Local political winds are favorable to the new entrants. A few city council members have noted that the success Uber and Lyft have had since entering the Houston market in February indicates that there is sizeable unmet demand for ride services, despite what the city’s taxi companies claim.

Sensing that the city council is willing to introduce more competition to the Bayou City, the taxi industry has been trying to subvert reform by piling on as many regulations it can so as to make it as difficult as possible for Uber and Lyft to operate.

The amendment requiring that at least two-percent of vehicles be wheelchair accessible has been getting the most press as it is the most emotionally resonant. No one wants to see a disabled person denied a ride. Uber says that many of its drivers can accommodate vision and hearing-impaired passengers, but wheelchair accommodation would require more expensive upgrades. There’s no reason this can’t be phased in over time. The proposal is not clear whether the two-percent requirement is must be met before launch, only that there should be regular compliance audits.

Other amendments are much more brash in terms of protecting taxi interests. Uber and Lyft drivers would be prohibited from parking or cruising near hotels and cab stands, or using their cell phones to take ride requests—only requests via the Uber site could be answered. The new proposal also requires all drivers to have $1 million in insurance, and vehicle-for-hire companies must perform background checks through a company designated by the city. Lyft performs driver background checks, but claims the company it uses is more thorough.

Any limits on cruising and parking and cell phone use should be struck down as anti-competitive. As long as cable companies can meet the same criteria for background checks, they should be allowed to choose the company they want.

These might be necessary compromises to grant Uber and Lyft the legitimacy they deserve. Still, much of this regulatory process seems to be about jamming the square peg of Uber into a round hole of legacy regulation. We’re seeing the same reaction to other on-line services like AirBnB (vacation rentals) and Parking Panda (parking spots) that are stimulating what Forbes magazine has dubbed the “share economy.”

Uber and Lyft call the entire taxi regulatory structure into question. Among the anti-consumer rules that have come to light from this debate are that the city requires limousine customers to wait at least 30 minutes from the time they call for a car and pick-up.

But rather than force start-ups like Uber and Lyft to adapt to a decades-old regulatory set-up that have built-in advantages for entrenched taxi companies, why not force the city’s cab companies to adapt to the way consumers want to hail cabs in 2014?

Houston consumers have spoken. More than 15,000 people in the Houston area have signed two online petitions supporting changing rules to accommodate Uber and Lyft. Meanwhile Uber and Lyft drivers continue to operate—and find plenty of riders—without regulatory approval, despite the risk of being caught in a Houston Police Department sting.

These vote delays only postpone the inevitable. Houston has a chance to buck the trend of hostility toward ride-share services. The city council should streamline the current regulations and let Uber, Lyft, Sidecar compete.

Steven Titch is an associate fellow with the R Street Institute covering telecommunications and technology. He is based in Sugar Land.

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  1. says

    Please explain to me again why the city has any business regulating taxi services at all – beyond the standard regulations that all business have to comply with. The system is full of these stupid regulations that do nothing but provide protected niches for established vendors. It’s stupid and needs to be stopped.

    • Ross says

      Most of the regulations were written by the rent seekers that own taxi permits. and they are zealous in their defense of these government controls that enable them to make profits that are far higher than they deserve. Here in Houston, the bulk of the permits are owned by the folks that run Yellow Cab and it’s various other brands. They do not actually operate the taxis, but rent them out to drivers for a set amount per day. The taxi company takes little risk for most of the profit.

      Most of the arguments in favor of regulation limiting taxi numbers is to ensure life safety and that taxis are well maintained. I think that’s a straw argument, and that regulations ought to be fairly limited, ensuring that drivers are properly licensed, that background checks are carried out, and that car owners carry insurance.

    • says

      Frankly, I’ve been in a few taxis here in Houston (more in other cities) they mostly don’t seem all that well maintained, and, depending on the driver, the safety is often questionable. Most of the time the drivers seem frantic to fill enough miles to cover their daily fee so that they can begin to actually earn money.

  2. Phil Kunetka says

    Bravo! Anything that reduces how much we have to use taxis and their ill-mannered, mostly non-American drivers is great.

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