Uber cannot catch a break in Washington, DC. The city taxi commission tried to shut the private car service down last January over rule violations that it wasn’t actually committing. Now the local government is taking another shot, considering a legislative amendment tomorrow that would force sedan car services like Uber to charge at least five times the minimum cost of cabs.
[Update, 7/10/12: Uber appears to have caught a break, at least for now. Mary Cheh, the amendment's author, says today that she is shelving it. But, she also says the council will look to pass it as a separate bill this fall.]
The section’s name is literally “Uber Amendments,” and comes with a layman’s explanation that “[t]hese requirements would ensure that sedan service is a premium class of service with a substantially higher cost that does not directly compete with or undercut taxicab service.” (I’ve obtained the full amendment from Uber, and you can check it out below.)
What does this mean? Because Uber is already operating as a sedan company, it can’t introduce its new Uber X service, the discounted cab alternative that it began launching in other cities last week.
We’re trying to get in touch with the city government to better understand its side of the story. But right now, the message is that it will make rules against startups to protect incumbents.
In January, the taxi commission (known for its widespread corruption issues over the years) pulled an Uber driver off the road because he wasn’t properly licensed to be a taxi. But, nothing came of that, because it turns out Uber was officially a “sedan car” service. City councillor Mary Cheh even wrote a public letter to the commission asking it to back off. Now, in what seems to be some relationship-building with the taxi lobby, she’s the one making the amendment.
Uber, meanwhile, is launching a public campaign to get the council to back down. You can see the full letter that it sent out to users just a few minutes ago, beneath the amendment.
[The proposed amendment.]
Part B. — Uber Amendments
6. Sec. 2 (c)(5A) (Page 5) is amended as follows:
(a) Strike the phrase “public vehicle-for-hire ride” and insert the phrase “taxicab ride” in its place.
Explanation and Rationale
· This section would clarify that the 50-cent taxicab surcharge applies to taxicabs.
7. Sec. 20m (a) (Page 36-7) is amended as follows:
Strike the phrase “The Commission is authorized to promulgate rules and regulations governing the conduct of such vehicles, including, but not limited to” and insert the phrase “On or before July 1, 2013, the Commission shall promulgate rules and regulations governing the conduct of such vehicles, which may include, but not be limited to” in its place.
Explanation and Rationale
· This section would require the Commission to issue rules regarding sedans within 1 year.
· Currently, the bill permits the Commission to issue regulations but the Commission is not required to do so.
8. New subsections (c) and (d) are added to the new Sec. 20m (Page 36-7) to read as follows:
“(c) (1) The minimum fare for sedan-class vehicles shall be five times the drop rate for taxicabs, as established by 31 DCMR § 801.3 (a).
“(2) The time and distance rates for sedan-class vehicles shall be greater than the time and distance rates for taxicabs, as established by as established by 31 DCMR § 801.3 (b) and (c).
“(3) On or after July 1, 2013, affected persons or businesses may petition the Commission to change the requirements of paragraphs (1) and (2) of this subsection by rule for good cause shown.
“(d) For the purposes of this section, a business that connects its customers to sedans shall be exempt from regulation by the Commission, provided that:
“(1) The business provides an estimated fare to the customer when a sedan is booked;
“(2) The method for calculating the fare structure and the applicable rates are provided by the business to the user of the mobile application prior to booking a sedan;
“(3) Upon completion of the trip, the customer is provided a receipt that lists the origination and destination of the trip, the total distance and time of the trip, and the total fare paid; and
“(4) The sedans operating this service are licensed and comply with the requirements of this section.”.
Explanation and Rationale
· This section would clarify how sedan services operate.
· Sedans would be required to charge a minimum fare of 5 times the drop rate for taxicabs.
· Sedans would be required to charge time and distance rates that are greater as those for taxicabs.
· These requirements would ensure that sedan service is a premium class of service with a substantially higher cost that does not directly compete with or undercut taxicab service.
· This section would also clarify that businesses that connect passengers to sedans are exempt from regulation so long as they provide an estimated fare, disclose rates, provide a receipt, and use sedans licensed by the Commission to operate in the District.
[The email that Uber just sent out.]
On Independence Day, Uber announced a roll out of a lower cost service that we call UberX. A less expensive Uber option on an all-hybrid fleet. We’re pretty excited about it and think it’s a great idea for cities across the country. What some of you probably noticed is that there was no roll out of this service in the District. That is because, only days earlier, the DC City Council informed us that they intended to pass an amendment to the taxi modernization bill that wouldmake it illegal for Uber to lower its prices or to offer a low cost service in any form.
The Council’s intention is to prevent Uber from being a viable alternative to taxis by enacting a price floor to set Uber’s minimum fare at today’s rates and no less than 5 times a taxi’s minimum fare. Consequently they are handicapping a reliable, high quality transportation alternative so that Uber cannot offer a high quality service at the best possible price. It was hard for us to believe that an elected body would choose to keep prices of a transportation service artificially high – but the goal is essentially to protect a taxi industry that has significantexperience in influencing local politicians. They want to make sure there is no viable alternative to a taxi in Washington DC, and so on Tuesday (tomorrow!), the DC City Council is going to formalize that principle into law.
For obvious reasons, Uber is seriously concerned about punitive government intervention in a well functioning marketplace. Because of this we felt it was our responsibility to let our riders know about the issues at hand.
THE COUNCIL VOTES ON THE UBER AMENDMENT TOMORROW!
If each of us writes or calls our DC Council people, we could make an impact on this law. What are we asking for?
Strike down the MINIMUM FARE language from the Uber Amendment.
Here are the City Council members’ contact info. Call/write as many of them as possible!
Keep the #UberDCLove alive. See full blog post here.
Travis Kalanick, Uber Co-Founder and CEO