OP-ED: Uber

by Brady Schickinger

I TOOK MY first Uber ride in downtown Memphis this past summer from Gus’s “World Famous” Fried Chicken to my hotel. Walking to supper down Beale Street and along the Mississippi, the Blues City was alive in the evening’s August heat. But, as the restaurant is fond of saying, “This is not fast food.” By the time I had finished a spicy wing dinner, the neighborhood had turned sketchy.

My partner, who frequently travels for work to America’s larger cities, pulled out his smart phone, opened an app, and with two quick finger taps told me, “an Uber is on the way and will arrive in three minutes.” Looking at the screen, I could see a photo of the driver, the make and model of her vehicle including license plate number and a rating. We were able to watch in real-time on Uber’s map as she made her way to us and pulled up exactly three minutes later.

Having taken taxis before in Chicago and other cities, I recognized what a revolutionary alternative Uber was for private transport. Peppering the driver with a series of tough questions, I came away from that ride deeply impressed with its efficiency, cost and quality of service. Vaguely aware that Uber had entered Grand Rapids a month previous, I applied to be a driver to earn some extra spending money when I returned home.

After uploading my driver’s license, vehicle registration, proof of insurance and watching a required 15 minute instructional video, I waited while the company put me through a three part background check. Six days later, I got a call and was directed to visit a local hotel for an “onboarding” meeting, then left with an iPhone and approved “active status.” That afternoon, I got pinged by my first passengers. The ride request was from a young couple from Detroit in Grand Rapids for a brewpub tour in, “Beer City, USA.” I dropped them off at Brewery Vivant five minutes later and left with a $7 receipt and an unexpected $3 tip.

I am now in my twelfth week driving for America’s largest, and increasingly well-known, ride-sharing service. Uber is significantly different than traditional taxis. The privately owned cars are usually of higher quality, the drivers friendlier, the service much faster and the fares cheaper. And, unlike taxis, Uber operates outside of the often monopolistic and highly regulated structure of cab services.

That lack of regulation has livery companies and some municipalities crying foul. At the same time, it is has been touted as an example of the success of modern libertarianism by free market proponents. And, it has powerful supporters on both sides of the political aisle including Obama’s 2008 campaign manager, David Plouffe, who Uber recently appointed as its Senior Vice President of Policy and Strategy.

In Michigan, its biggest champion is State Representative Tim Kelly (R-Saginaw Township), a legislator entering a second term who has become an advocate of the high-tech initiatives driving Michigan’s new economy. On November 12th, Kelly introduced House Bill 5951 which repeals the Michigan Limousine Transportation Act and creates a new act which regulates transportation network companies (“TNC’s”), like Uber and its smaller competitors Lyft and Sidecar.

In reality, Kelly’s bill mirrors the existing self-regulatory policies of ride sharing companies. Uber’s insurance system, driver background checks, vehicle safety inspections and prohibition against, “Street hailing” are all written into the bill. It also include the requirements for driver identification, customer service, traveling the most direct route and proper billing that have made Uber a popular alternative to taxis.

What is not included in the bill is the heavy regulatory and fee structure many Michigan municipalities impose on taxis. In fact, the bill preempts local units of government from enacting and enforcing ordinances on TNCs.

Kelly’s legislation was given a hearing in the House Energy and Technology Committee the day after its introduction and an enrolled bill is expected to reach Governor Snyder’s desk by the conclusion of the upcoming “Lame duck” session. Snyder, already facing criticism for signing a bill hindering direct sales of domestically manufactured Tesla and Elio vehicles in the state, is likely to be more supportive of innovation and sign HB 5951.

What does this mean for the future of traditional taxis in Michigan? They may get higher rates and off-the-meter flat fees approved by the City of Detroit: (http://www.freep.com/story/money/business/michigan/2014/10/27/taxi-regs-rewrite-detroit-uber-lyft/17963613/). Grand Rapids may lower its exorbitant fees on cab drivers. But, neither of these cities will be able to regulate ride-sharing companies. And, while taxis will continue to enjoy a monopoly on curbside pickups, the expanding market share of riders switching to Uber and Lyft is going to force the industry to modernize its dispatch methods and service quality in order to compete.

Market changes provide less opportunity for public sector regulators. At the House committee hearing, the Michigan Municipal League seemed to be unable to cite any positive consumer benefit provided by government regulations that self-policing by ride-sharing companies do not exceed.

As one legislator argued, taxi regulations have not demonstrated an increased level of rider safety. One of my riders told me that when she called the city to file a complaint against a reckless cab driver, she was told to contact his employer. Representative Kelly has openly suggested taxi companies convert to a TNC model to escape the uneven playing field.

Some may follow his suggestion.

The real winner in this debate, beyond Uber and its IRS-1099 drivers, are the tens of thousands of Michigan residents who rely on private transportation services to take them to the airport, to work, shopping and home from bars and restaurants after having too much to drink. With Uber already having cut fares to $1.20/mile in Detroit and $1.30/mile in Ann Arbor, and lower fares expected in other cities outstate, the cost of Uber is becoming cheaper than monthly car and insurance payments for many customers.

In the decade ahead, Uber may change the face of transportation in Michigan the same way Ford’s Model T did a century ago. More certainly, it will cause a free market-oriented Michigan Legislature to take a critical approach to the harm caused by needless regulations and fees.

This was originally posted to Dome.com. Brady Schickinger Schickinger is the executive director of the Michigan Coalition for Responsible Gun Owners, the editor of Dome Magazine, and a part-time Uber driver. He previously served for 15 years as a Democratic legislative assistant in the Michigan House of Representatives. He can be reached at bradymsu616@gmail.com and at facebook.com/bradymsu. His promo code is LXK7X, allowing new riders $20 off their first Uber experience.