Do Texas Cities Need Rideshare Services Like Uber, Lyft, and Sidecar?
Getting around in Texas cities without driving your own car is a challenge. That part isn’t really in dispute: even in cities that have good public transportation infrastructure (i.e., trains, comprehensive bus routes) don’t meet all of the consumer needs. Trains only reach certain parts of the area, and buses don’t run 24 hours.
In Texas cities, where transportation infrastructure is often a problem to begin with, Uber, Lyft, Sidecar, and others are particularly tantalizing prospects. These companies offer a solution that’s worked in other cities around the country. But that solution, in Texas as elsewhere, raises an issue: are these services taxis, limos, or something else entirely? And depending on the answer to that question, are they legal?
The services are all fairly similar in how they operate, at least from a user’s perspective: You open the Uber/Lyft/Sidecar app on your phone, which sends your location to the service, and allows you to input your destination. The app then matches you with a driver in the area, who picks you up and takes you to your destination for a fee charged to your saved credit card via the app. Some of the awkwardness of the typical taxi transaction is spared—a passenger knows how much his or her ride will cost in advance, he doesn’t have to fumble for cash or swipe a credit card while he’s sitting in the backseat, and he doesn’t have to calculate a tip. Everything is resolved via the app—people who fear talking with strangers don’t even have to tell the driver their destination outloud.
Lyft describes itself as “your friend with a car,” and encourages passengers to sit in the front seat and to “think of your driver as your friend,” and allows both passengers and drivers to rate one another at the end of the trip. Uber, with its German name and stark white-on-black display, feels a bit more foreboding and business-like. Sidecar, which purchased the similar Austin-based startup Heyride in early 2013, also falls on the more informal side of the spectrum. But regardless of how these services present themselves to users, the question of whether or not they require taxi permits is an important part of whether or not they’ll be able to survive in Texas.
At issue is the fact that many Texas cities cap the number of permits they allow for taxis. This makes sense, as too many cabs on the road makes it difficult for drivers to make a living. There are 2,020 taxi permits available in Dallas, for example, and every one of them is claimed. (Though, as the Dallas Observer reported last year, approximately 15% of them are claimed by cab companies that aren’t using them.)
Regulating services like Uber, Lyft, and Sidecar is important. Companies that profit off of public infrastructure (i.e., roads) need to pay taxes that help maintain that infrastructure, but that’s just the beginning of the question. Are the unlicensed, part-time, “your driver is your buddy” chaffeurs of Lyft and Sidecar safe behind the wheel, if there’s no regulation? Cities have a legitimate interest in regulating taxi franchises for multiple reasons: safety, tax purposes, and ensuring that there are enough cabs on the road—i.e., that the business model remains profitable enough that people continue becoming cab drivers—to provide travelers with the ability to, say, get to and from the airport in a reasonable manner.
But over the past year, as these startups have attempted to move in to Texas, the regulations have disrupted their business models to the point that they don’t really function. Uber drivers in Houston have been banned from taking payment for their rides; Lyft and Uber have faced similar challenges in San Antonio. Lyft allows for passengers to make a “donation” to the driver, while Uber announced last week that it would allow drivers to charge for rides, and that it would support drivers who face citations as a result.
All of this has led to a showdown between the services that operate in the somewhat grey-area between “taxi franchise” and “innovative startup” that’s finding much of its resolution in City Halls, but also some of it in federal court. Houston and San Antonio cab companies sought a restraining order blocking those services from being used—but a federal judge yesterday denied the order.
Houston-based U.S. District Judge Vanessa Gilmore set a July 15 date for an injunction hearing, which could result in stopping the smartphone-based companies from operating or give city ordinances a chance to catch up with the technology.Gilmore said she had some “real concern” about whether the taxi and limousine companies had standing for a temporary restraining order, and added that she was particularly concerned about doing anything that stands in the way of a political process that already is under way.
The city of Houston’s Department of Administration and Regulatory Affairs has proposed revisions to the city’s ordinances related to vehicles-for-hire that would allow ride-sharing services, such as Uber and Lyft, to operate in Houston. A city council committee is expected to take up the issue Tuesday.
That’s a small win for the embattled startups, and the fact that the process is being allowed to continue politically—at city council meetings and with the formation of new committees—is probably better news for them than if it plays out exclusively in the courts, where the laws as-written seem to make it pretty clear that the functional difference between a taxi franchise and an informal ride with your “buddy” who is also a stranger who is being paid to give you a ride via a third-party that takes a cut is minimal. A similar process is playing out in Dallas right now, as well.
Ultimately, transportation issues in Texas cities need to be resolved one way or another, and services like the ridesharing startups allow for some flexibility with supply-and-demand that, say, capped taxi permits do not. What the resolution looks like—and whether anybody is happy with it—remains to be seen.