Fare game

It’s valued at around $60 billion. It operates, at last count, in 45 countries and over 200 cities worldwide. It’s gone to war with powerful taxi cartels, and the governments who protect them. Named tech company of the year by USA Today in 2013, it has just been given an “F” rating by the century-old Better Business Bureau, the American non-profit consumer protection organisation. Its CEO, a 38-year-old enfant terrible called Travis Kalanick, has wondered aloud whether he should have called it “Boober” – a reference to the pulling power, he claims, it gives him with the opposite sex.

Uber – the ride-sharing application which connects commuters with drivers of private vehicles for hire – is everywhere. After launching in San Francisco in 2010, its ascent has been vertiginous. Its runaway success is the product of a perfect technological storm: the ubiquity of smartphones, GPS technology, and peer-rated social media. It’s also undercut and exposed traditional taxi industries with mostly lower prices for passengers, and seemingly generous deals for its drivers.

Uber arrived in Brisbane in April this year, after roll-outs in Sydney and Melbourne beginning in late 2012. Its establishment in Australia has mirrored its trajectory overseas: it has been embraced by the public, in the face of howls of rage from the taxi lobby, which has leaned heavily on governments to crush the new kid on the block, citing concerns over safety, insurance, privacy, and the legality of allowing private cars to operate as taxi services.

The Queensland government issued a cease-and-desist order against Uber on 21 May. Since then, 62 drivers have been levied with fines totalling more than $170,000 – for driving without the correct authorisation, and for providing a taxi service without the required licence – and Uber is paying them. “The drivers on the Uber platform are our most important partners, I want to stress that,” says Queensland manager Mike Abbott. “I can assure you we are supporting our drivers 100 percent.”

It’s typical of a company that relies on a crash-through approach, rather than compromise, for its success. While Uber claims to be working constructively with the government to find a solution, for now it’s perfectly content to exist in the black economy: untaxed, unregulated and seemingly unstoppable.

IF you’ve never caught an Uber car, here’s how it works. First, you download the app to your phone. You enter your personal information, including your credit card details and phone number, and set your pickup location. You then request a vehicle. At the bottom of your phone’s screen, it will tell you who’s on the way – the driver’s name, photo ID and phone number, the car’s registration number and model, an approximation of how long you have to wait, and the likely fare.

If there’s a delay, you’ll get a call direct from the driver. That, argues the Taxi Council of Queensland CEO Benjamin Wash, should be a cause for both privacy and safety concerns. But riders have the driver’s details, too. Like eBay and Airbnb, both buyer and seller rate each other after the deal is done. It’s a closed, seamless, cashless model – meaning, for the driver, there’s no obvious motive for robbery, or worse.

My first driver is Connie (who prefers not to give her full, or indeed real name). She’s taking me to my 25-year school reunion at the Caxton Hotel, an event Uber has got behind with a slick promotion to attendees. For my first ride, I get $10 off the fare. (I later get another $10 credit for recommending the service to a friend.)

Connie’s car is a white Honda Jazz that only just fits Uber’s criteria that vehicles must be less than 10 years old, but it’s clean, well-maintained and, even better, she has a selection of lollypops on offer. Connie herself is keeping busy after a long career navigating the financial uncertainties of the arts: “I have periods of time where I don’t have employment at all, or I’ve got very reduced employment, so I’ve got to fill in the gaps.”

Uber relies substantially on drivers like Connie, part-timers supplementing their income. Its relentless Facebook campaigns especially target those willing to work on weekends. But they are not tied to any schedule. While taxi drivers can work up to 14 hours before being logged out in the interests of fatigue management, Uber drivers work as it suits them. “I can work 12 hours straight; I can work half an hour; I don’t have to work at all; I can do whatever I want,” she says.

Women are rare in the city’s cab fleets, but Connie says she’s never felt unsafe. “We’re all connected through the app. I’m not picking up randoms on the street. We’re not exchanging any money, I’ve got their name and their phone number. If there’s any problems, everything’s traceable. When you get into a cab, you don’t know who the guy is. Who ever takes down the number of the cab they’re in?

“It kind of feels like everyone’s part of something really new and exciting and everyone’s up for it. It’s like a secret club in a way.”

WASH prefers to describe Uber, its partners and riders as “cult followers”. The company’s only innovation, he says, is in marketing. “Self-promotion is no recommendation,” he says. “We believe there’s a lot of hype and spin around what Uber is doing, and no one’s actually questioning any of their assertions.”

In the run-up to the busy Christmas period, TCQ has erected electronic billboards around Brisbane as part of a a campaign against ride-share services, which it describes as “illegal, unsafe and uninsured”. Of course, it’s also protecting its own turf. An e-petition signed by Wash warns of “cashed up multinational interlopers [that] will seek to sweep away thousands of Queensland small businesses, potentially doing untold damage in the pursuit of profits.”

Wash is unimpressed by Uber’s cashless model, outwardly the most seductive part of its appeal to both drivers and riders worried about safety: “Personally I’d question whether or not they’re breaching privacy regulations by giving out passenger details to the driver, given that [Uber] drivers aren’t put under the same level of scrutiny as taxi drivers.”

Even for the Facebook generation, Uber’s ability to collect and potentially misuse personal information should be of concern. It’s not just the driver who knows where you live and has your number: your movements are tracked and logged, too. Uber’s global vice president Emil Michael made headlines in November when he suggested Uber could dish dirt on journalists critical of the company, after Sarah Lacy, founder of Pandodaily, accused the company of sexism and misogyny (Lacy, in a piece called “The Trickle-Down of Asshole Culture”, had decried a French advertisement, since deleted, which offered a deal whereby riders would be paired with “hot chick” drivers – model hired by Uber for a curious maximum of 20-minute rides.)

There is so much claim- and counter-claim surrounding Uber that, at times, it’s hard to sift the spin from the substance. The taxi industry claims Uber drivers, and their passengers, are uninsured in the event of an accident. Uber counters that its drivers are required to have comprehensive insurance, and are additionally covered by a $5 million commercial choice policy. “We’re doing hundreds of millions of trips now; we can’t afford to let down riders or drivers anywhere,” says Mike Abbott.

Like taxi drivers, Uber partners require a Driver’s Authorisation, subject to a full medical clearance, criminal background and traffic history check, but the TCQ claims they are not subject to the same ongoing monitoring as cabbies. Taxis are also inspected and their roadworthiness certified on a six-month basis; no such requirement exists for anyone using a private vehicle for profit. And there’s no obligation for Uber drivers to service vulnerable members of the community – for example, anyone with an assistance animal.

But the taxi industry, despite cameras and emergency systems and GPS tracking, has issues of its own. Google “taxi sexual assault” and you’ll get a long list of results from all Australian states, including Queensland. In Victoria, the Institute of Forensic Medicine documented 25 cases between 2011 and 2013. In many cases, drivers had tampered with or removed cameras to destroy or obscure evidence, and because victims were typically intoxicated, they were unable to record details of either the cab or the driver. Many more assaults have likely gone reported.

Such incidents may represent a tiny proportion of overall fares, but in the eyes of the public, perception is reality. A quick straw poll of female friends reveals that many refuse to take cabs, with several reporting incidents that had left them feeling scared and preyed upon. Some have already enthusiastically adopted Uber, which they see as both safer and more transparent than the alternative.

BLOW away all the smoke about safety, insurance and inspections and what you’re left with is an industry fighting tooth and claw to preserve its stranglehold on the market. Allan Fels, the former head of the Australian Competition and Consumer Commission who conducted an inquiry into the Victorian taxi industry in 2011—2012, describes the entry of Uber and other competitors into the marketplace as “revolutionary”. He spares no sympathy for the establishment: “The revolution is even greater than otherwise because the taxi industry for years has failed to progress and innovate due to its self-protectionist attitude.”

The nub of the issue is the value of taxi licences, which change hands for up to half a million dollars a pop. To recoup that investment, taxi fares are necessarily high (if you’re paying by debit or credit card, add Cabcharge’s 10 percent cut, absent from an Uber ride). Whereas licence owners are mostly investors, the majority of drivers lease cabs from their owners under a bailment agreement: they are regarded as self-employed, receive no benefits such as sick leave, and work excruciating hours for a relative pittance.

The Queensland situation, Fels says, is no different to Victoria’s. “The Taxi Council of Queensland and comparable other institutions in Australia and around the world have vigorously opposed competition, and the number one mechanism has been having a restriction on the number of licences,” he says. “The taxi industry has fought tenaciously to stop opening the industry up to real competition. Most other small businesses are not protected in this fashion, and it reflects the political power of the taxi lobby.”

Wash vigorously denies this. “The only way you can improve the industry is through competitive forces,” he says. What he claims his industry is fighting for is for Uber to be subjected to the same standards that cost licence holders tens of thousands of dollars per year. As for the cost of licences, he says: “No more than the cost of purchasing any other small business. I think it’s easy for people to isolate taxis and say it’s inappropriate for a cab to be worth half a million dollars. I can’t buy a newsagency for less than half a million dollars. They’re both small businesses, and the market determines what an acceptable price is.”

Why would a staunchly conservative, free-market loving government oppose a tech start-up that creates jobs and delivers cheaper services to consumers? Initially, the Queensland government gave the green light to Uber, with premier Campbell Newman saying his was a “deregulation-minded government” and that “we don’t believe in more red tape and regulation unless it’s absolutely necessary.” (He did add, however, that he would prefer his daughters caught a “ridgy-didge” cab).

It didn’t take long for the industry to get in the government’s ear. A statement from the Transport Minister, Scott Emerson, echoes many of the same concerns expressed by Wash. “The government’s position has always been consistent and, while we support innovation, we will always uphold regulations that are designed to keep passengers safe,” it said. “Regulation of passenger service vehicles including taxis is undertaken to protect passenger safety and we will continue to crack down on anyone who is breaking these laws.” Pushed on the issue of the cost of licences, Emerson said the government was conducting a review of the Victorian inquiry to determine whether the same issues were relevant to the Queensland industry.

Ken Parry, who drives for Uber around an established limousine business, tells me a story about picking up a staffer from the Premier’s office. Parry, mindful that he was operating against the cease-and-desist order, asked if he was the victim of an entrapment operation. The staffer laughed. “Oh no, we want you to exist,” he said. “How does that work?” Parry replied. “Transport’s killing us and you’re hiring me; is there some internal battle going on?” “No,” the staffer replied. “Just the taxi industry leaning on transport. The minister’s got to be seen to be doing something.”

MIKE Abbott acknowledges Uber is operating in a grey area, where technology and consumers have rushed ahead of the law. “We want ride-sharing to be regulated,” he says. “We are all for having sensible regulations that promote safety. We have been in discussions with the government and the Department of Transport since the launch. Those conversations are ongoing and we’re positive about where they’re going.”

“There is ambiguity, to say the least, about whether [Uber] is operating lawfully or not, but I believe that its arrival is putting very strong pressure on politicians to end many of the anti-competitive restrictions in the taxi industry,” says Allan Fels. “Uber has demonstrated to the public what it can offer, and politicians will find it very hard to block their service.”

I go for another ride with Connie. This time I’m not paying, but observing. Her first customer’s name is Sheldon (though he prefers “Shadz”). He’s a lithe, tattooed young hipster with earlobes stretched by oversized wooden plugs. If Uber is a cult, he is a fully paid-up, card-carrying member. “This is actually my second Uber trip today; I caught one from my house to here before,” he says excitedly.

“The dude on the way here used to be an Olympic weightlifter. That alone was pretty mind-blowing to me. With the Uber drivers, they all have other jobs. They’re like superheroes! You know, the superhero takes off his mask and goes back to his office job. Then he puts on his superhero mask and becomes an Uber driver. That’s how I see it.”

“I think we’ve all grown up with this impression that transport is what it is,” says Abbott. “But it doesn’t have to be. I think it can be a whole lot better.”

First published in QWeekend (The Courier-Mail), December 6 2014

One comment

  1. Dusan Bojic

    Given the highly regulated and virtually monopolistic business model of the taxi industry and the anti-competitive control of the taxi radio networks, I love the disruptive effects of Uber. What allowed the taxi industry to think that it was immune to disruption by new technology and new business models? it’s can now take a number and join the queue of outmoded and antiquated monopolies such as the music, publishing and film industries…and hopefully soon we can add banking and retail to that list….Innovation Uber Allies!