London Must Choose Uber or Nostalgia
A disruptive technology has arrived from the U.S., in the form of Taxi-app Uber, to threaten the protected markets that have allowed cab drivers around Europe to keep fares high and competition low. No surprise then, that in London today, thousands of the city's iconic black cabs were snarling up traffic in Trafalgar Square to protest.
They're Luddites, right? Well "Up to a point, Lord Copper." London's cabbies have some good arguments.
Uber says it isn't a taxi company, just a kind of dating site that matches passengers to drivers and handles the money. Famously, and hilariously, its website includes the small print: "*Uber is not a transportation company." Based on that position Uber has argued across the U.S. and now the world that it shouldn't be regulated like a taxi company -- with enough success to give the company a valuation upwards of $17 billion.
Uber also says its app -- which calculates distance and time spent in the cab, thus producing a price at the end of the journey like a taxi meter does -- is not a taxi meter, it's an app, which is technically true nonsense.
Transport for London, the regulating authority for taxis in the capital, agrees. It says the Uber app isn't a taxi meter, because it isn't physically attached to the cab (so what if a driver superglues his cell phone to the car -- is it a taximeter then?):
TfL set out its provisional view that smart phones used by private hire drivers - which act as GPS tracking devices to measure journey distances and time taken, and relays information so that fares can be calculated remotely from the vehicle - do not constitute the equipping of a vehicle with a 'taximeter'.
However, given the level of concern among the trade, and the fact that some of the legislation in this area is unclear and able to be interpreted in various ways, TfL is to invite the High Court to give a binding determination on this issue.
Taxi meters are strictly regulated under U.K. law and can only be installed in licensed taxis. And to drive a licensed cab in London, you have among other things to pass "The Knowledge," a grueling test that requires 2-4 years of study, committing to memory: 320 basic routes through the city, 25,000 streets and 20,000 landmarks. No satnav allowed, which is quaint, but a bit silly since most black cabs now have satnav anyhow.
Uber's position, and that of TfL looks silly, too. Of course Uber is a taxi company and of course its app should be subject to the U.K. laws that regulate taxi meters. Which is why those laws should be changed, they are archaic.
Another argument the cabbies make against Uber (there is a sane and plaintive statement of their case from cab driver/commenter "nick" here), is that the regulations they face as licensed taxi operators are onerous and very expensive. Encouraging free competition from drivers who don't face those artificially imposed costs, but can now replicate exactly what licensed cab drivers do, is therefore unfair. This is surely true.
Uber drivers and other private hire taxi drivers don't have to spend several years of their lives learning "The Knowledge" -- they can just use the satnav on their dashboards. Nor do their cars have to have the 25ft turning circle needed make it around the tiny driveway of London's Savoy Hotel; or take a passenger in a wheelchair to name just a few of the regulations that force most cabbies to buy the traditional black cab design from the (now Chinese-owned) London Taxi Company -- starting price 33,000 pounds ($55,000), or the same as a Mercedes E Class sedan.
Unlike in many other European cities, there is no protectionist quota on the number of licensed taxi drivers operating in the city. So the cabbies have a legitimate gripe, even if they do sound like superannuated union leaders protecting a closed shop. The answer lies not in blocking Uber, but changing the laws so they apply to everyone who wants to make money from running a taxi service.
That should be a decision for London's voters and their political representatives to make. If Londoners want to be driven home to their obscure Mews alley by people who don't need Satnav to get there (but could look at it if they wanted); and if they want to be able to hail iconic black cabs that can turn on a sixpence and are built like tanks but cost a fortune; make Uber drivers follow the same expensive rules. It isn't fair to say the licensed cabbies should just get on Uber too and compete.
Otherwise, if Londoners aren't ready to pay for that level of nostalgia, change the law and say goodbye to The Knowledge, the London Hackney Carriage, 1066 and all that.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
Editors: Marc Champion, Lisa Beyer
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Marc Champion at firstname.lastname@example.org