Thursday, January 5, 2017

City Council, January 9th - Ride-Booking Companies and Monoculture

Last night the Mayor and new Councilors were sworn in. They meet formally on Monday for their first set of actions. Already the Mayor, himself a lobbyist it is perhaps relevant to note, is jumping up to lobby for ride-booking companies. It is a strange priority. Is this really the first, and most important thing to jump on?

Back in 2014, the City tried to apply rules consistently
From Mayor Bennett:
I move that Council direct staff to prepare amendments to the Salem Revised Code to better allow transportation network companies, such as Lyft and Uber, to operate in Salem.

Last year, the City Council considered amendments to the Salem Revised Code (“SRC”) to address transportation network companies (“TNCs”) and app-based technology related to passenger transportation services. Council adopted an ordinance amending the SRC to remove unnecessary regulation, and address the use of a digital, application based, passenger transportation systems. However, the changes were insufficient to accommodate the business model of TNC’s, and as a result that service is not available in Salem.

In order to provide Salem residents with more transportation options, it is necessary for the City to be willing to accommodate different passenger transportation business models. Therefore, I move that Council direct staff to prepare, for Council’s consideration, amendments to the SRC that accommodate the current business model of major TNCs such as Lyft and Uber.
Over at Human Transit, Cherriots' current consultant Jarrett Walker had written "Sounding the Alarm about Uber's Impacts on Transit, and on Cities." He says
cars’ inefficient use of urban space is rarely reflected in the cost of urban driving, and Uber skates through on the same invisible subsidy that all urban motorists enjoy. Transit, which doesn’t enjoy any such subsidy, is unable to properly reflect its efficient use of space in its pricing....

Uber’s behavior often looks like an intentional effort to undermine competitors and thus reduce customer choice — in which case you’d call it predatory pricing — but it doesn’t matter what the intention is. Underpricing is a blunt weapon with zero targeting ability. It mows down everything in its path....

But it’s time to quit discussing Uber and similar companies as though they were improving the world in a permanent way, and as though they will necessarily make cities better for everyone. We already know that’s not true.
The scope of underpricing is breathtaking:
A new analysis of Uber's financial data suggests the ride-hailing company is losing as much as $2 billion a year, with passengers on average only paying 41 percent of the actual cost of a trip.

Parsing a set of three private financial statements that were published on three separate occasions, Yves Smith of Naked Capitalism writes that its clear that for the year ending in September 2015, Uber posted $2 billion in losses on revenue of $1.4 billion....
It seems clear that the overall goal is not "more transportation options" overall, and not here in Salem in particular. The overall goal is monopoly as far as possible: To use underpricing to drive out other "transportation options" and to create a transportation monoculture.

Later, once the investors in ride-booking companies force them to maintain actual market pricing - you know, to make a profit - users of the ride-booking services will find much higher fares. And in the mean time, we may have lost the other compensating transportation choices.

It may be that we have a choice in Salem, and we can choose one of these:
  1. Develop a plan to fund evening, weekend, and more frequent transit in Salem; or
  2. Make it easy for ride-booking companies to underprice the market and to further erode transit or other choices
There are other issues, too:
  • The employee/independent contractor question
  • Fair wages for drivers
  • Adequate background checks for drivers
  • Commercial insurance requirements and coverage gaps for drivers who hit people walking and biking
  • Equity and discrimination in avoiding parts of town or certain classes of names (more here)
  • Fairness and consistency for taxi companies and for ride-booking companies
It is far from obvious that ride-booking companies as they currently operate offer a clear set of advantages for a city like Salem. Mostly they appear to be asking for a regulatory environment that gives them special advantages and unlevels the playing field.

Note that Mayor Bennett asks for "amendments to the SRC that accommodate the current business model of major TNCs." That does not look like much of a negotiation.

Choose wisely, Mayor Bennett and Councilors.

(Previous notes on ride-booking companies are here.)

Other items
  • Details on $750,000 in partial funding for affordable housing and the rehab of Yaquina Hall at the State Hospital.
  • $100,000 for the "code clean up" project in West Salem, associated with the West Salem Business District Action Plan, which will promote better walking, storefronts, and housing and business in the close-in flats of West Salem. (Strangely, it's identified as in Ward 8, but I think it's Ward 1 instead.)
  • At the north end of the Deaf School, folks associated with Capitol Auto Group have got a parcel reclassified from “Community Service - Education” with PE (Public/Private Education) zoning to “Industrial Commercial” with IC (Industrial Commercial) zoning. Out-buildings have already been demolished. This is on a supposed route for a family-friendly bike boulevard to the Kroc Center, and it is slightly worrisome to see more car dealership or other car-oriented business here. One condition of the approval is to construct bike facilities on Cherry, Maple, and Auto Row Streets, but it's not clear how "family-friendly" these actually will be. The conditions also include some intersection widening and new turn lanes for cars, so the area will get worse, not better in some ways for bike travel.


Anonymous said...


The current business model of Uber is:
(a) Do whatever you want, even if it's against the law
(b) Take as much as possible from drivers
(c) Rely on people's inability to calculate the costs of driving and time costs, and end up earning $2-3/hour sometimes
(d) Claim whatever avoids a lawsuit. For example, Uber has claimed their drivers are independent contractors, or not, depending on what serves them. But if so, they're price-fixing illegally.

I'm all for more choices. But the phrasing is problematic.

Anonymous said...

Today Bloomberg has a piece on the struggle over data and transparency:

"Uber Technologies Inc. is starting off the year preparing for a new political fight. As New York City seeks more information about ride-hailing drivers’ activities, it’s shaping up to be Uber’s second major conflict with the administration of Mayor Bill de Blasio.

The impending battle, which will play out in the open Thursday at the first public hearing on the issue, points to a broader struggle pitting Uber and Lyft Inc. against local governments hungry for more data about the movement of their citizens. The companies have had similar fights across the U.S., invariably reaching the same conclusion each time: They should share less data than local governments want."

NWA88 said...

Just want to say that I was told by two different Uber employees in early November that Uber was headed back to Salem at the beginning of the year.

Not sure if that's because they knew the mayor's agenda and his chances of being elected or if it's because it was already a done deal prior to the election, but it is interesting.

I do welcome it overall, from a purely selfish perspective. The cab companies do a pretty poor job in this city and Uber can at the very least put pressure on them to be a more reliable option, that would be a win.

Susann Kaltwasser said...

Saw on the CATC agenda that they are going to be talking about 'crosswalks." Anyone know what is up?
Pedestrian safety has been an issue discussed here more than once.

Sarah Owens said...

Wonder if ride-sharing companies will provide free transportation in inclement weather for warming center volunteers the way Willamette Valley Cab Co. has done this year?

Anonymous said...

It's good that Councilor Andersen asked that the taxi companies be involved in the policy proposals. Mayor Bennett sounded like he was too interested in blindly accepting the TNC party line.

NACTO it turns out has published some guidelines on these and related things:

There's a role for ride-hailing companies in the total transportation mix, but not as they currently want to conduct themselves!