Uber vs. PUC

This past Saturday’s Wall Street JournalWeekend Interview was with Uber founder Travis Kalanick (“Travis Kalanick: The Transportation Trustbuster“).  Uber allows a customer to summon an otherwise idle limo or SUV, on demand, through a smartphone app.  The prices are competitive with town car service, and don’t require pre-arrangement.  The article details, in part, Kalanick’s battles with various municipal regulatory authorities, who, often acting on behalf of established taxi interests, seek to keep his company from operating:

When I suggest to Mr. Kalanick that Uber, in the fine startup tradition, was using the “don’t ask for permission, beg for forgiveness” approach, he interrupts the question halfway through. “We don’t have to beg for forgiveness because we are legal,” he says. “But there’s been so much corruption and so much cronyism in the taxi industry and so much regulatory capture that if you ask for permission upfront for something that’s already legal, you’ll never get it. There’s no upside to them.”

Then, last year, came the clash with regulators in the city where they order red tape by the truckload: Washington, D.C. A month after Uber launched there, the D.C. taxi commissioner asserted in a public forum that Uber was violating the law.

This time Uber was ready with what it called Operation Rolling Thunder. The company put out a news release, alerted Uber customers by email and created a Twitter hashtag #UberDCLove. The result: Supporters sent 50,000 emails and 37,000 tweets. Mr. Kalanick says that Washington “has the most liberal, innovation-friendly laws in the country” regarding transportation, but “that doesn’t mean the regulators are the most innovative.” The taxi commission complained that the company was charging based on time and distance, Mr. Kalanick says. “It’s like saying a hotel can’t charge by the night. But there is a law on the books, black and white, that a sedan, a six-passenger-or-under, for-hire vehicle can charge based on time and distance.”

In July, the city tried to change the law—with what were actually called Uber Amendments—to set a floor on the company’s rates at five times those charged by taxis. “The rationale, in the frickin’ amendment, you can look it up, said ‘We need to keep the town-car business from competing with the taxi industry,’ ” Mr. Kalanick says. “It’s anticompetitive behavior. If a CEO did that kind of stuff—you’d be in jail.”

A determined PR campaign by Uber was able to derail DC’s efforts.  By coincidence, this week, Uber posted on its Denver blog that the Colorado PUC is up to the same tricks:

Unfortunately, the Colorado Public Utilities Commission proposed rule changes this month which, if enacted, would shut UberDenver down. We need your help to prevent these regulations from taking effect!  Sign the petition!!

Here’s a sampling of what’s being proposed (Proposed Rules Changes):

  • Uber’s pricing model will be made illegal: Sedan companies will no longer be able to charge by distance (section 6301)
    • This is akin to telling a hotel it is illegal to charge by the night.
  • Uber’s partner-drivers will effectively be banned from Downtown — by making it illegal for an Uber car to be within 200 feet of a restaurant, bar, or hotel.   (section 6309)
    • This is TAXI protectionism at its finest. The intent is to make sure that only a TAXI can provide a quick pickup in Denver’s city center.
  • Uber’s partner-drivers will be forced OUT OF BUSINESS — partnering with local sedan companies will be prohibited. (section 6001 (ff))

The PUC has run interference for the taxicab cartel here before, last year shutting down a popular airport ride sharing program.  In 2011, they denied additional permits to Yellow and a proposed start-up, Liberty Taxi.  And the Union Taxi Cooperative’s battle to begin service (eventually successful) was the stuff of legend.   Their actions to the detriment of electricity ratepayers have been well-documented by Amy Oliver and Michael Sandoval over at the Independence Institute.  But at least in those cases, they had the fig leaf of enforcing existing law.  Here, as in DC, they’re actually proposing to change the rules in order to run the company out of town.

As a living, breathing example of regulatory capture, Colorado’s PUC is in a league of its own.  Let’s hope that Uber’s supporters are able to persuade them to cease and desist their harassment of the company.


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