The Reign of the Yellow Cabs is Surely OVER...but What Will the Riding Public Do When Uber is the Only Game in town?

The reign of the yellow cab in NYC is surely over. While the yellow cab itself may be a symbol of the city itself, the actual number of yellow taxis on the road is dwindling. The yellow cab may be as synonymous with New York as pizza, Broadway and the Empire State Building, but for more and more people, it is no longer the ride of choice. The yellow cab was once the main alternative to subways and buses, hailed by rich and poor alike. Cabdrivers were a kind of ambassadors of the streets. But the Yellow cab owners did not see what havoc that was going to be caused a few years back by a new form of technology. Now, fleets of cars are summoned by an army of "ride-hailing apps" like Uber and Lyft.

The yellow cab numbers are comparatively bleak: today, there are 13,587 yellow cabs on New York City streets. The total number of black cars: 60,000, more than 46,000 of which are connected with Uber, though they may be hooked up to other car services as well. Back in the pre-Uber days (the good ole days) around 2010, yellow cabs made 463,701 daily trips and brought in $5.17 million in fares during the month of November alone. Six years later, the numbers have not just dropped, but yellow cabs are on a fast downward trajector.

Uber and Lyft have flooded neighborhoods where taxis once flourished. And they appeal to a new generation of tech-skilled riders who live on their phones, ordering everything from groceries to books and movies. Uber and Lyft  (the so called “Ride-hailing apps) have gained a huge market share in a short period of time. They have expanded the market tremendously, but have also stolen market share from taxicabs and all other for-hire vehicle services alike. Yes, I said stole because they entered the market and operated illegally for so long that by the time the NYC Taxi and Limousine Commission got around to regulating them, it was too late to do anything. The means by which the public can obtain for-hire transportation has changed along with the expectations of the riding public. The new generation of tech-skilled riders want pretty much what everyone else wants, transportation on demand. 

Black cars have long served Wall Street banks and law firms, but they were not for casual or last-minute users because they had to be prearranged. Traditional livery services primarily provide transportation to those in the people who live in the outer boroughs of NYC. Both the liveries and the black cars have been hit hard  by the rise of Uber. Many of the long standing car services, like Carmel Car and Limousine Service, have been able to overcome the "Uber challenge" and adapt by having an app of its own that provides pre-arranged transportation and what also amounts to transportation on demand.  

While the yellow taxis have ben hit hard, the livery and the black car bases have been harmed as well and such harm to the car services has caused harm to the public in ways that most people are not aware. Since traditional livery services primarily provide transportation to those in the people who live in the outer boroughs of NYC, the rise of Uber has caused many drivers to deflect from the traditional car services in order to drive for Uber. This has caused those people who live in Queens, Brooklyn and the Bronx to have less means available for transportation. Unlike in Manhattan, not everyone who lives in Queens, Brooklyn and the Bronx (and Staten Island too) have quick access to the subway or other public transportation. These residents have always relied upon livery bases to provide reliable transportation. Contrary to popular opinion, Uber is not so readily available in Queens, Brooklyn and the Bronx. So what are those residents supposed to do to get to work, to the doctor and to the food store. 

Fortunately, some car services, like Carmel, have been able to adapt to the changing needs of the public and continue to provide the arrangement of safe and reliable transportation for the riding public. But this is not true of all livery bases. Many have either died or are dying a slow death. They don't have the money or technology to compete with Uber. Just like the taxi's, some car services have been rendered irrelevant. 

While most people will take a hands off approach and say that if Uber is winning the transportation game by having a better product and service, then so be it. But the problem is that it is not that Uber's service is better than anyone else, but that Uber has gotten to where it is by competing on a unfair playing field. Uber has engaged in many underhanded tactics in order to lure drivers away from other car services and to get people to use their service rather than the service of the long standing car services. The Federal anti-trust laws were set in place in the late 1800's in order to prevent illegal monopolies and unfair competition. The problem is that the NYC government and the NYC Taxi and Limousine Commission let Uber operate in an unregulated manner for so long, that it expanded in ways that those who are properly regulated, were not permitted to do so. This is tantamount to improper favoritism by a municipal entity. This is not competition on the merits, but an un level playing field that the City of New York was instrumental in causing.  

 In the old days, taxis were the only ones allowed to pick up people on the street. But now, with smartphone apps that can dispatch cars in minutes, there is little practical distinction between taxis and Uber. This is the whole point....while there is little practical difference between the means by which Uber and other for-hire vehicles operate, the New York State government, and particularly the governor, is trying to push legislation forward that will allow Uber to essentially operate throughout the state with very little if any regulations. It is important to keep in mind that compliance with regulations is a large cost of doing business for the for-hire transportation industry. If Uber does not have to be regulated or regulated in the same manner as other for-hire transportation providers, then the State Government is also seeking to become complicit in creating an unloved playing field between Uber and all other for-hire transportation providers. 

In the end, this un level playing field is going to be detrimental to the riding public. Most people do not see it just yet, but consider this: what will the riding public do when Uber is the only game in town? and what will the riding public do when Uber decides to no longer subsidize the cost of trips for the public. When Uber becomes a true monopoly and there is no other service available, do you think Uber will still charge competitive prices. Of course not. They will squeeze every last nickel from the riding public and there will be nothing anyone can do about it. Then the public will have no choice but to pay the high prices Uber will demand. This is true because the public has become so heavily reliant on obtaining transportation on demand that they will pay the high costs, but what about those who previously relied on the car services in the outer boroughs for transportation. Livery services that used to be the low cost means by which those in the outer boroughs relied upon, will not get transportation because the car services they used will be gone and this sector of the public will not be able to afford to use Uber. 

So service expands in Manhattan but severely contracts in the outer boroughs. Isn't this what happened with the yellow cabs? They became a government backed monopoly that provided service primarily only in Manhattan and had no incentive to innovate and provide better service. So what will Uber do when it is the only game in town. They will not only charge high prices for transportation, but will have less incentive to make their app more user friendly to the public....and once again the cycle continues.... with the public having little choice in service providers and being forced to pay high prices. The difference here is that the City and State Government have taken away the government backed monopoly of the yellow cabs and made Uber a defacto government backed monopoly.  

Lets face it, the yellow cab industry is in sharp decline and long standing car services being forced from the market because Uber pays politicians to write laws that are favorable to them....and the politicians are all too happy to take campaign contributions from Uber. That’s it. End of the game. Politicians who make the laws are favoring one company over another and are seeking to change the laws to allow Uber to operate essentially how Uber sees fit. The best thing that the riding public can do is to contact their local City Council member and the elected officials in the Assembly and Senate in order to express frustration and outrage over what the state is proposing. Write a letter to your elected official, make a call or do anything to bring awareness to the public of the ills that Uber is causing. 

Remember, it is you, the riding public, that elects the officials that are allowing Uber to wreak havoc on the for-hire transportation industry. You have the right to call them up and tell them your opinions. You have the right to vote for someone else who does not so obviously favor Uber. You can do many thing, but the option to do nothing is not a good option because doing nothing now will only cause problems later on. Remember the old saying...you can ignore your problems, but ignoring them will not cause your problems to go away. 

Take a look into the future and think for a moment what will happen when Uber is the only game in town. In the 1800's, Standard Oil was essentially the only game in town and look how they caused harm to the public. This is why the US Supreme Court ordered Standard Oil to be broken up into many smaller entities. Because consolidation of power in the hands of one is a danger to the public that is anathema in our democratic society. 

How risky is your Uber ride? Much More than you think

An Uber ride is different from hopping into a taxi or a traditional car or limousine service. When you download Uber's app and get into a car summoned with the mobile reservation system, you agree to a host of terms and conditions by default. Uber claims it puts potential drivers through a background check so that they can become an impromptu taxi driver using their own car and Uber's tech platform. The incidents, injuries, assaults and accidents involving Uber drivers and the riding public are too numerous to detail. But the real issue is that the public should understand Uber's responsibility to passengers (or lack thereof).

What exactly do passengers agree to when they use Uber? That depends on whom you ask. Most people don't know what they're getting into when they get into one of these Uber cars and they surely don't know what they're getting into when they download the app. The public is essentially giving Uber a free pass -- up to and including possible death.

Uber's terms and conditions are a way for the company to absolve itself of any liability in cases of injury or accident and to avoid responsibility for a driver's actions. It is a way for Uber to attempt to cover their ass and claim they are not responsible for anything that happens to you. Uber's public statements on safety contradict its terms and conditions. It is akin to an outright deception on people. They surely do not in any way seek to warrant that their product/service is safe.

The fine print of Uber's  terms and conditions clearly says that passengers accept a risk by using the service. "You understand, therefore, that by using the application and the service, you may be exposed to transportation that is potentially dangerous, offensive, harmful to minors, unsafe or otherwise objectionable," Uber's terms and conditions read, "and that you use the application and the service at your own risk." Lyft essentially operates the same way as Uber.

In essence, Uber and Lyft are basically trying to show through their terms of use that they are ride-matching services, rather than transportation companies. No one is really buying that they are merely tech platforms, but people continue to use these services without knowing the true potential dangers

While there are some Uber and Lyft drivers that are safe, courteous and competent, several incidents have occurred during the past few years that have called into question the safety of the services. The most severe incident was the death of 6-year-old Sophia Liu, who was  struck and killed by an Uber driver on New Year's Eve in San Francisco. There have also been more than a dozen allegations of sexual assault and groping; kidnapping; and physical assault, according to several media stories.

Uber claims its drivers are independent contractors rather than employees, which if true, it protect Uber from liability. But the company's terms and conditions can be trumped in court if it's shown that Uber exercises a certain amount of direction and control over its drivers and they more are akin to employees. Such factors of control include the ability to hire and fire drivers, decide where their services are performed, or provide them with specialized equipment, along with other considerations -- many of which, some would argue, including myself, Uber has.

Soon enough, the time will come when the issue of whether Uber's drivers are independent contractors or employees will hit the appellate courts and if it goes bad for Uber, then their entire business model may be placed in grave danger...the same type of grave danger that Uber often places its customers.....the danger of death.

Uber investors expect big results, but can Uber produce? Not so far.

Uber’s business strategy has involved trampling government regulations and daring the relevant regulators to do something about it. That strategy has been worked so far, but regulators and the public have begun to show more spine in the face of Uber’s arrogance. Meanwhile, financial analysts have been turning a more critical eye on Uber’s growth and profit potential, and not always liking what they see. Whether the company can sustain its putative $65 billion valuation — derived not from actual financial results, but on the expectations of private investors — is in question.

Uber’s current strategy of dominating local taxi markets depends heavily on the cooperation of regulators (or on intimidating them) and maintaining a positive image with the public. As far as their image, Uber seems to follow the old adage that there is no such thing as bad public relations. To them, all news on Uber is good news. But in public view there are so many horror stories of customers getting assaulted that it astounds me that anyone would ever use them.

On the regulatory front, just two weeks ago Uber agreed to pay $20,000,000.00 ($20 million dollars) that it had systematically deceived drivers about their potential earnings and the terms of a lease deal it offered to help them acquire cars. Uber got away without admitting or denying the charges, but a picture has been painted as a result showing a company that engaged in wholesale deception in order to recruit drivers. In 2014 and 2015, the FTC said, Uber asserted on its website that its UberX drivers earned median incomes of more than $90,000 a year in New York. The truth, according to figures from 2013 to 2014, was that the median driver’s income was only $61,000 in New York. Fewer than 10% of all drivers in New York made as much as Uber had claimed.

Meanwhile, in 17 markets including Los Angeles and Orange County, Uber placed help-wanted ads on Craigslist offering the enticing prospect of making as much as $25 an hour, even driving part-time. In truth, the FTC said, only a fraction of drivers could clear that much. For example, in L.A. and Orange County, where Uber quoted fares of $20 an hour, fewer than 20% of the drivers reached that mark.

Uber’s representations about its auto sales and leasing program were also deceitful, the FTC said. From 2013 through mid-2015, some 7,000 drivers signed up with three subprime auto financing companies with which Uber made deals for a four-year “lease to own” arrangement or installment credit exclusively for its drivers. Uber claimed the drivers would get preferential interest rates, the FTC said; instead, many were saddled with higher rates than other buyers with similar credit scores — in some cases more than double. The bottom line is that Uber has ahabit of doing what it wants regardless of law

Uber is also running up against labor regulators calling foul on its claim that its drivers are independent contractors not entitled to the benefits of employment. The New York State Department of Labor has ruled that two former drivers are entitled to unemployment compensation. The ruling follows a similar one in 2015  by the California labor commissioner for a San Francisco driver. And in Seattle, Uber has just filed suit to invalidate a 2015 city law that gave its drivers, and those for other such services, the right to unionize. 

These battles strike at the heart of Uber’s business model, which depends on flooding markets with platoons of drivers, sticking them with such expenses as gas, insurance and maintenance, and skimming 25% of the fare off the top. Drivers get the benefit of being linked with passengers via Uber’s ride-hailing app, but they’re powerless to control their fares, which Uber sometimes discounts to attract passengers, or the level of competition. Uber’s interest lies in hiring as many drivers as it can for a given market; the drivers, however, end up cannibalizing each others’ opportunities.

This looks like a win for Uber and its investors, but the scanty financial information that has dribbled out about the firm’s revenue and earnings suggests that it’s nothing like a profit-making machine. Bloomberg, reporting from unofficial sources, calculated that Uber lost more than 2.2 billion in the first nine months of 2016, including $800 million in the third quarter alone. Is that really a path to profitability?

Financial analysts are beginning to question whether Uber’s profit potential is all it’s cracked up to be. Transportation industry experts have interpreted Uber’s losses as implicit subsidies to attract riders, meaning that riders were paying only 41% of the cost of their trips. The question is how Uber would keep their business if fares had to more than double to allow the company to break even.

Additionally, Uber’s growth seems entirely explained by its willingness to engage in predatory competition funded by Silicon Valley billionaires pursuing industry dominance. Uber’s business model is focused on the pursuit of monopoly power. But that’s an expensive global quest, and there’s no telling how long Silicon Valley venture investors will bankroll it. Uber already lost the battle in China, potentially a transportation goldmine. Uber gave up the battle in China last year, selling its subsidiary there to domestic company Didi Chuxing — which has hinted that it might wish to expand to new national markets. 

Perhaps in recognition of the limitations of the ride-hailing market, Uber is investing heavily in self-driving cars. But launching its own fleet of vehicles would mean a drastic transformation of its business model. Whether its investors will keep their money in a hardware company rather than a purveyor of software isn’t clear.

Vision Zero- the Mayor has no Vision

New York City’s Mayor Bill de Blasio said in an interview Monday that he would categorize drunk driving “that doesn’t lead to any other negative outcome” a minor offense. This is absolutely absurd. Is Mayor de Blasio serious about this. Drunk driving a minor offense so long as no one gets hurt!!!! I guess all that really matters to Mayor Bill de Blasio is that traffic accident statistics go down. The means to achieve such are irrelevant to him. In other words, driver fatigue rules look good on paper, but in reality all they will do is add window dressing for Vision Zero. To say that drunk driving a minor offense so long as no one gets hurt is kin to dying that armed robbery is a minor offense so long as no one gets hurt. Driving drunk or walking into a bank with a gun, both have potential to cause massive harm and are akin to a scourge on society, but according to this Mayor, no big deal.

How about the big deal of limiting the ability of for-hire vehicle drivers to make a living. Limiting the number of hours they can work without any proof, statistics, studies or data (data and/or studies that apply to New York City) is an absolute outrage. For-hire vehicle drivers are doing the best they can to make a living in this day in age. considering the state of the market right now, that i a hard feat to do. the market is flooded with part-time Uber drivers, thus limiting the amount of jobs a regular full time professional driver can perform. Less money for drivers means they are going to seek a job elsewhere. NYC will be left with nothing but part time in experienced drivers. Would you rather be driven by an experienced driver who knows how to manage their time and fatigue or a part time inexperienced driver who knows how to manage neither.

How many NYC taxi medallions need to be foreclosed upon until the Mayor understands that limiting the number of hours a for-hire vehicle driver can operate is not going to be good for local small businesses in the outer boroughs of NYC, is not going to be good for persons who drive people for a living, is not going to be good for the ability of drivers to continue to service those persons most in need of transportation, is not going to enable the driver to make his/her car payments, etc, etc. In other words, limiting the ability of drivers' ability to operate is not going to be good for the consumer or the the economy.

If the Mayor or the NYC Taxi and Limousine Commission had some empirical data or studies to support their arbitrary time limit, then there may be nothing to complain about, as we are all in agreement that limiting accidents in NYC is a laudable goal. But limiting drivers ability to work and make a living based upon no proof of a problem and no proof that the means sought to be imposed by the NYC Taxi and Limousine Commission are the best means to prevent accidents wholly unreasonable.

It is clear that the Mayor and the NYC Taxi and Limousine Commission are more concerned with what looks good to the public rather than what is good to the public. Accidents in NYC will never reach zero. It is a fact of life, just like crime in NYC. It will always be there. We can try to limit it, but both will be there. Police don't go after criminals and solve crimes without proof, evidence an/or data. They don't operate based upon a hunch. The NYC Taxi and Limousine Commission should not be allowed to make rules based upon a hunch either.

The Mayor's comments about drunk driving not being a big deal so long as no one gets hurt is proof that the Mayor is not really concerned with limiting accidents, but simply with the appearance that he is doing something to limit accidents. That is fine, but before you take away the ability of a for-hire vehicle driver to make a living, perhaps the Mayor should consider having some proof or evidence that the NYC Taxi and Limousine Commission proposed rules on driver fatigue be based upon some proof or evidence. Otherwise, the for-hire vehicle driver is being hurt and punished more than the drunk driver who does not cause any accidents or harm to others. Think about it. It is not just the end result that matters. The means used to achieve those results are often the difference between a well executed plan that leads to good results and a poorly executed decision that causes harm to many without any justifiable basis.

Time to Consider Deregulation of the FHV industry

Deregulation in the for-hire vehicle industry is something that should be seriously considered these days. It is obvious that the New York State government, in its various versions of the TNC (Transportation Network Company) bills it has recently created, proves that while there is virtually no difference in the service provided by a TNC like Uber, from that of the traditional car and limousine service, the various services are being treated differently, all without any real reason or rationale. Can someone really tell me with a straight face that providing transportation via a TNC is not transportation for hire? Is the State Legislature and the Governor going to serious claim that the provision of transportation via a TNC is not a commercial transaction. Ride Sharing is simply a misnomer. While the ride can technically be shared by more than one person, we are no talking about legalized hitchhiking. It is a commercial transaction for which a service is being provided to one person and that person is paying for the service. At least create rules that are the same for all services. Otherwise, the playing field is hardly level and will only lead to destruction of all for-hire transportation providers other than Uber and Lyft.

While new competition from all sides of the car service industry are forcing operators to improve their business, it is impossible to adapting through improved driver retention and customer service when Uber and Lyft are able to operate the same type of business as a traditional car service but can play by rules which are either non-existent or so lenient as to make it unfair competition. If there is going to be regulations, then there should be regulation for all that provide the same service. Otherwise, the government should de-regulate the entire industry.

Transportation deregulation in the airline, railroad and shipping industries have produced enormous benefits for consumers. Airfares are down sharply; trucking rates have fallen; the nation’s railroads are offering new services. A few years ago, passenger and freight transportation were among the most heavily regulated industries in the United States. Now much of the red tape regulation has been totally eliminated.

This wave of deregulation stems from a growing recognition that government controls of transportation have not fostered the public interest. Regulatory agencies tend to protect the interests of the industries they regulate. Studies by experts representing the whole spectrum of political persuasion have confirmed that regulatory agencies reduce competition at the expense of the public. Typically, industry-oriented individuals are appointed to commissions, often from industry itself. Once in office, regulators perceive their duty as protecting the financial health of the companies they regulate. The easiest way to accomplish this is to reduce competition, thereby increasing rates and creating monopolies. This seems to be the exact case in New York City and soon to be throughout New York State. 

Uber and its Destructive Revolution is Bad for the Consumer

Creative destruction is a process through which something new brings about the demise of whatever existed before it.  The process of creative destruction stems from competition and innovation, which drive changes in the market. The success of Netflix is an excellent example of “creative destruction. Netflix has driven the video tape/disc rental business, along with companies like Blockbuster, into extinction. Federal Express created the overnight delivery industry and all but decimated the U.S. Postal Service. Kodak was an iconic American company synonymous with photography. But long entrenched in film manufacture, it did not see the shift to digital photography, one that required no film. But the iconic exemplar of creative destruction was Apple. Its story needs no re telling as it is the stuff of culture and legend. Apple unified the worlds of computers, internet, phone, photography and music by bringing them all together in a single device.  Last, but not last, there probably has not been a better example of creative destruction than the ascendance of Uber.

In New York City, the taxi industry continues to collapse under the forces of Uber’s disruption. Traditional taxi drivers and medallion owners, after being protected from competition by government regulations for many generations, are the obvious losers from the “Uber effect”. Some people believe that consumers are the winners from Uber’s creative destruction in the transportation industry, as we now have more choice, better and faster service, friendlier drivers, cleaner cars, and most importantly — lower prices. Competition is said to breed competition as it forces business to rethink their methods of doing business and to devise methods of doing business in a better and more efficient fashion. At the very least, competition often causes businesses to maximize their responsiveness to consumers. But for competition to be beneficial to the consumer, competition must be fair. In New York City, Uber can hardly be said to have been competing fairly. They burst into the market claiming they were not a transportation company subject to regulation by the New York City Taxi and Limousine Commission (“TLC”), but were a technology company. Their business model was the same as the traditional car services, yet they refused to abide by the rules of the TLC, which all other car services that provide identical services must play by. Compliance with government regulation is very costly, but by the time the TLC got around to regulating Uber, it was too late. The damage had already been done. Uber’s methodology was to break the law, and obtain absolution from the TLC by eventually agreeing to submit to the rules that all other car services in NYC had to play by. Misclassifying its drivers as independent contractors is just another example of how Uber not only continues to take advantage of their drivers, who in my opinion are employees and not independent contractors, but also avoids having to pay the massive costs associated with paying employees (e.g. health insurance, payroll tax, time and a half for overtime, compliance with labor laws). Of course, there are the stories of Uber engaging in a concerted effort of calling other car services for transportation and then eventually cancelling the trip at the last minute, thus upsetting the driver who lost a fare. All this causing the driver to reconsider working with Uber rather than staying with the traditional law abiding traditional car service. And we should not forget about Uber’s massive subsidies of each trip for its drivers and Uber’s obscene subsidization of “sign on bonuses” given to for-hire vehicle drivers to lure them away from the local community car service. With a $65 Billion dollar valuation, Uber can afford to provide subsidies to drivers to lure them away and even to prospective customers to get them to become customers. The list of unfair business practices can go on and on. All of this may seem like legitimate business operations, but in my opinion, it is not only not legitimate but it is destructive to the for-hire vehicle industry in an extremely negative fashion.

Uber did do one good thing in its creative destruction. It caused the for-hire transportation industry to modernize. The yellow taxis had a government backed monopoly for years with no end in sight. As such, there was no incentive for them to modernize or pay more attention to customer service. Car services were forced to modernize by obtaining smartphone applications to allow its customers to book a trip or summons a car, just like one may do with Uber. If a company is forced out of business because it refuses to modernize and adapt to the times, just like Blockbuster and Kodak, then that is the forces of the market that caused their demise. But by engaging in unfair business practices, Uber is forcing the competition out of business for reasons other than market forces. This is patently unfair and should not be condoned.

The City of New York turned its backs on the yellow taxis and is also turning its backs on community car services. Many of these small car services are mom and pop shops, mostly minority owned and operate a legitimate business that have served the transportation needs of the local communities in the outer boroughs of NYC for decades. They provided a service to the City in the 80’s and 90’s in areas of the city that most people did not want to travel to. These small businesses are being forced out of business not just because of Uber’s unfair competition, but also due to the onslaught of new, burdensome and irrational government regulations. The cost to comply with most of the irrational government regulations are so high that small car services cannot afford it. When government regulations serve a genuine purpose, and are rationally related to a legitimate goal, then compliance is required, regardless of the cost. But for the past 6 years, the TLC has been engaging in a pattern of creating new regulations that serve no legitimate goal. Most importantly, government regulation, while sometimes mandatory, is not a market force, but is a governmental requirement.

Most of the governmental leaders of the City of New York have allowed Uber to grow and grow at an unchecked rate. This has caused many unfortunate circumstances. First, it has caused the demise of the yellow taxi industry. Medallions that were worth 1 million dollars a few years ago are worth about half of that now. Even with the plummeting values, medallion owners are still unable to meet their loan obligations because the unchecked rise of Uber has shifted the actions of consumer base from hailing a cab to summonsing a car on demand from Uber. Taxi and car service drivers were once able to make a legitimate and decent living. Now, most can hardly afford to make their car payments. Full time professional drivers are a thing of the past. Uber and the actions and inactions of the TLC have created a market filled with part time unskilled drivers. So what happens to the full time drivers….they become unemployed, unable to pay their bills, unable to feed their families and eventually bankrupt.

I believe in the free market. So if all of this destruction was caused by market forces, then I would have no problem. But when the government turns its back on long standing, law abiding businesses and allows a super-rich and super powerful entity like Uber to operate outside of the law, then the end result will be another government backed monopoly…..all in the form of Uber. So back to the consumer, because that is really what matters here. Right now, the consumer is happy. No more stinky yellow cabs. No need to wait for a car service to pick you up. No need to be concerned about costs because the cost of an Uber trip is the same as a trip with a yellow cab or a traditional car service. But the public usually does not realize the inherent problem until it is too late….and that problem is that non-market forces in the form of unfair completion from Uber along with irrational and needless regulations from the TLC are all combining to cause all other car services to go out of business and make the yellow taxi extinct. So the typical question from the consumer is this….what is wrong with that ultimate scenario since Uber will be left standing the consumer can always use Uber’s app to get transportation? The problem is that the end game of Uber’s creative revolution is a destructive revolution where only one company is left standing….and when Uber is left to be the only company in town, they will be free to jack up their prices because there will be no competition to keep their prices in check. It also reduces their willingness to serve the public interest or provide top customer service. All of this surely make us all worse off. This is why the government is supposed to prevent monopolies from being created or from continuing to operate. Since the late 1800’s monopolies have been largely outlawed. But in the meantime, Uber continues to make massive “donations” to politicians’ campaigns, all to get them the lawmaker to see it the “Uber way”.    

If the history of transportation in NYC has taught us anything it has taught that we need to move away from the ubiquitous crony capitalism that protects well-organized, well-funded, concentrated companies like Uber. In the long run, it will only lead us down the same vicious cycle of high prices and poor service. Think about what I am saying here. Look at the dynamics of the industry. Take a thoughtful view of the future and decide if creating another government created and government backed monopoly is in the best interest of the public. I think you know that my opinion is a resounding “NO”.

The Uber Monopoly- Don't Let It Happen

It is obvious (or should be) that Uber's long term objective is to create a monopoly and to undermine all traditional legal/regulatory obstacles to exploiting anti-competitive market power. Again, please realize that Uber's game plan is to hold out until they have a strong enough market dominance, so that many of the risks go away, and the IPO price is inflated by all the monopoly power it can readily exploit....and if Uber gets to monopoly power, then like any other robust monopoly, it will be able to make big profits by raising prices — especially surge prices — and ultimately charging customers more than they were paying before Uber came along.

It is true that Uber really has figured out ways to make the for-hire transportation market more efficient, but that is not the point. You have to look at the bigger picture. In economics jargon, there is something known as a network effect. It’s the reason that eBay has a stranglehold over the collectibles market and Craigslist dominates online classified ads. Sellers list their goods on these markets because they have the most buyers; buyers go to them because they offer the largest selection. Once a dominant company is established in a two-sided market like this, it’s hard for anyone else to create a viable competitor. This is why Uber is offering lavish subsidies to both drivers and passengers to try to become the dominant operator in as many markets as possible.

Competition has almost always driven p[rices down. Competition is healthy and good for the consumer. But an Uber-dominated market will prevent a competitive market, leaving much room and the amity to raise for fares, further decrease competition and create massive profits for Uber shareholders.

As a consumer, you should consider these things because it is you...the consumer...that is the one who will be crying when Uber is the only game in town and they jack prices up so high that you are once again, forced to take the subway.....and the driver, it is you what is making Uber a monopoly. They can't exist right now without you. But you can exist without them. You can go back to the traditional car service, livery base or black car company you came from and help prevent Uber dominance. By continuing to driver for Uber, all Uber drivers are creating their own demise. Once the self-driving vehicle comes out, you will all be unemployed. All of your traditional companies (taxis and car services alike) will be gone and you will have to find a new profession. You will be kicked to the curb in a few years. Why do you think Uber is investing so heavily in the self-driving vehicle market. Because they are planning on replacing you. Don't let them do this. Get out now.

So here it is in a nutshell.......

1. Consumers- stop using Uber because your continued use will lead to an Uber monopoly which will surely driver prices up sky high, which you will ultimately pay and be unhappy about it

2. Drivers- stop driving for Uber as you are allowing Uber to render you useless to them. There will be no Uber drivers in a few years because they will not need you anymore. Your old car service affiliations will be done because you enabled Uber to get rid of the competition

3. For-Hire Vehicle Industry Stakeholders- get involved, call your politicians, call your trade organizations, take a stand, yell out loud, help others get involved, do whatever you can to stay alive and fight the good fight. To do anything less will surely lead to your demise.

Uber and the Demise of the Taxi industry and the Dawn of the Tyranny

New York state took over a small credit union in September of this year because of the “unsafe and unsound conditions” at the institution. The real reason for this is Uber. One third of Montauk Credit Union’s portfolio of $170 million in outstanding loans were to taxicab operators, all of which have been struggling to pay their loans to their lenders.

Since the dawn of the Hass Act, a taxi medallion was likely the best investment in the world. Enter Uber and the technological revolution they brought to the for-hire vehicle industry in New York City. Taxicab operators typically take out loans for medallions, the city-issued licenses that they need to operate. Yellow taxi medallions were always a hot commodity in New York City because the city always severely limited how many licenses it issues, thus driving up the demand for them and their value. Just two years ago or so, a single license could sell for as much as $1.3 million.

When Uber entered the marketplace, they exploited loopholes in the system by skirting existing rules and regulations or by simply ignoring them. By the time the TLC got around to bringing them under their regulatory umbrella, Uber was already entrenched in the market. The loopholes exploited by Uber let the company’s fleet of drivers grow over the past five years to about 60,000 drivers in New York City. Keep in mind that there are only 13,237 licensed yellow cabs in the city. 

As Uber’s estimated value has skyrocketed to an estimated $65 billion in the past few years, the value of the city's taxi medallions has shrunk from $1.3 million to less than $700,000. The plummeting value of taxi medallions doesn't just hurt taxi owners. Much like how the housing bust in 2008 shook the home loan industry, banks across the country that specialize in medallion loans are now taking a massive hit. With the crash in prices, many loans are now underwater, many borrowers are in default and lenders are reluctant to continue to refinance as the borrowers struggle to make payments.

A group of Credit Unions have sued New York City and the Taxi and Limousine Commission for allowing Uber to operate, saying the company is destroying their businesses and threatening their livelihoods. The situation will get worse before it gets better for taxi owners and their lenders. Financial institutions with large exposures to the taxi medallion industry have had to take appropriate steps to measure and mitigate this increasing credit risk. As Uber and the other so called “ride-sharing companies” have overtaken the on demand transportation market in New York City, medallion prices will to continue to decline. The end result is still unknown. No one, except a few people, would have predicted the housing market crash in 2008 and look what long term ripple effects that caused. While the Taxi industry is not quite as large as the housing industry, the fact remains that the “Uber effect” has not only decimated the taxi industry in New York City, but is harming, and sometimes destroying, the credit unions that loaned taxi owners money to purchase the medallions in the first place.

I don’t blame Uber for this. I blame the City of New York. The allowed Uber to operate outside of the law, allowed them to proliferate over time and caused the value of the hottest commodity in town (the taxi medallion) to plummet…and that decline will only continue and the ripple effects will be harmful not to just the taxi owners and their lenders, but to the public. If things continue as they are, there will likely come a time when Uber is the only game in town….and when they are, they will do as all monopolies do, they will exert their power and influence in a manner that is detrimental to the interest of the riding public. The only difference between Uber and Standard Oil is that once the medallion industry is decimated and the car services are no longer in business, there is no going back to the “old days”. A theoretical break up of Uber, if it were to become an illegal monopoly, would not make the price of the yellow medallions rise, will not prompt people to go out and purchase medallion and will not prompt lender to loan money to those who may seek to purchase a medallion. Hence, any theoretical break of the Uber Monopoly that is set to occur in the future will not increase competition because there will be no competition.

And remember, Uber is not the Salvation Army. They are not here to save the world. They are here to gather your information and data for their own purposes. Uber is not just a ride sharing company. Look further into the future, remember George Orwell’s 1984 and consider what happens when an almighty entity controls all the data on the comings and goings of the citizens of New York City. The consolidation of power has been a danger since the dawn of time. Our country was founded upon the principle that the consolidation of power is bad and leads to tyranny. Where do you believe Uber is headed? Think about It and Draw your own conclusions. 

Uber Drivers- Get Ready to Be Unemployed

Uber is preparing to dump its drivers as the self-driving vehicle is not so far away. A few years ago, when I told people that self-driving cars was the new technology, the wave of the future and likely the next biggest thing since the advent of the internet, I was looked at like I had 4 heads. Now, Telsa, who is at the forefront of developing the self-driving vehicle, has announced that all Tesla cars being produced now have full self-driving hardware

Self-driving vehicles will play a crucial role in not only improving transportation safety, but in revolutionizing how people seek and utilize transportation. Full autonomy will enable a Tesla to be substantially safer than a human driver, lower the financial cost of transportation for those who own a car and provide low-cost on-demand mobility for those who do not.

Tesla’s already doing its own early testing which shows vehicles with fully autonomous capabilities navigating city and freeway streets with apparent ease. Tesla has been criticized for rolling out autonomous features before the technology is fully proven, but then again, when was the last time a disruptor to any industry was not criticized. Just like Uber, Tesla learns a great deal of information from its computers and full fleet of vehicles. Every Telsa car, even those in customers’ hands, collects data and sends it back to the company’s headquarters, where engineers analyze and refine the system. The same applies for Uber and the millions of people that use its app.

The CEO of Uber says self-driving cars won’t replace human drivers in the near term. This is surely a bluff to keep Uber drivers from leaving its flock before the next big shift in transportation takes place. We all know that the next big shift is the self-driving vehicle. Once this is fully tested, accepted and approved, Uber will kick its drivers to the curb and by then. Of course, Kalanick, the CEO of Uber, has been less vocal about how Uber’s self-driving ambitions will affect its fleet of urban drivers. Of course Uber has been less than vocal. Do you tell your staff of workers that they are about to be fired and replaced with robots before the robots actually arrive? Never. You wait till the robots arrive and then you fire everyone. Whether Uber makes deals in the future with automakers, rents self-driving vehicles or creates some other new business model in the transportation industry, the fact remains that Uber’s drivers do not have long term security with Uber.

So the question remains…why don’t Uber drivers open their eyes and realize their days are numbered. Why stay with a company that is planning, in the short term, to replace you? Why stay with a company that treat you like a commodity, rather than a person who provides a valuable service? Uber helped decimate much of the for-hire vehicle industry in New York City and the Uber drivers that stay with Uber are only furthering the demise of long-standing car service and dispatch companies. Many may say, well those long standing companies should have invested in technology like Uber and should have catered more to the needs and desires of their customers and should not complain now. Be that as it may, the reality is that once the self-driving vehicle arrives, Uber drivers will be knocked off in drives and will be seeking affiliations once again with their old dispatch bases.

Many of the smaller dispatch bases in the outer boroughs of NYC are already being decimated or are closing down. The bigger ones are holding their own, but why would a Uber driver who, eventually, is going to go back to affiliate with once of their old dispatch bases help to contribute to their downfall. Why not leave Uber now and go to a dispatch base that values your service as a provider of transportation. Yes, Uber is a means for drivers to make extra money and to have an alternative to the way business has been done in the for-hire vehicle industry in NYC for the past 30 years. But, take a look down the road, read the news and open your eyes. Uber is not the salvation army and is not going to keep one driver for one second longer than they have to. Uber drivers should not just think about today, but think about the future of transportation in NYC and their own future with a company that is actively plotting to get rid of you.

Deregulation off the FHV Industry in NYC?????

It has now come to pass that one company is capable of dominating a whole industry. You know the name of the company. But let u go back to the Haas Act of 1937 which instituted the “medallion system” to regulate the number of taxi operators. The yellow taxi system became a government backed monopoly that for decades reaped millions and millions of dollars upon the City of New York and the medallion holders in general. The Taxi industry successfully lobbied to limit the number of medallions for their own benefit.  The taxi companies used their influence to sway politicians in favor of their monopoly. For so many years, an investment in the medallion was a better investment that almost anything in the world.  Ironically, this monopoly left the taxi companies with no incentive to innovate or improve their services, rendering them vulnerable to something they never saw coming……..market forces.  Coddled by this lack of competition, taxi operators have made insufficient effort to be more responsive to customers, who were often frustrated by the difficulty of getting a taxicab, among other issues. So while the taxi medallion owners counted their money and laughed at those on the outside who could not get in, the City of New York became complicit in the demise of the industry. They did nothing to innovate either. No incentive to innovate or think outside the box. This caused an effect that no one could imagine.  A monopoly is essentially concentrated economic power in the hands of a few. Any concentrated power in the hands of a few is antithetical to a free market and democratic society.

The community based car services were born out of the rule mandating that the radios be taken out of the taxis and the general rule that taxis are prohibited from accepting pre-arranged transportation. So for decades, the taxis accepted street hails and the car services (and black car radio groups) provided transportation by pre arrangement. The lines were very clear and all had prospered. Then came the insurgents (the “disruptors”). All of a sudden, the lines between street hail and pre-arrangement became blurred. The Mayor of New York City is quite tech savvy and he was all in favor of the disruptors and their new “toy”. Allowing them to operate outside of the law was a governmental abuse of power and abdication of its responsibility to its citizens. All of a sudden, the disruptors were allowed to accept street hails and prearrangement, which took a significant chunk of business away from both the taxis and the car services. While the taxis and car services played by the rules and were smacked by the regulators when they violated the rules, the disruptors were permitted to operate unlawfully and with impunity.

The City of New York used the taxi monopoly for its own benefit for decades and now has essentially abandoned the transitional for hire vehicle industry. When the “disruptors” came to town, some were not daunted and did not see the need to innovate. Also, they did not see nor could they comprehend that an evil empire had come to town. This was a huge mistake. The black car industry enabled the disruptors and the TLC allowed them to operate outside of the law for so long that by the time everyone woke up, it was too late.

We are now at the point where most in the for hire vehicle industry have begun to lose faith that anyone or anything can help them. By its very nature, monopolies tend to arrest progress. In the beginning, when the taxis reigned supreme, the City of New York standardized the prices and the products, but in the process, in order to retain that standard, the City arrested efficiency and progress…and that itself stagnated the industry and prevented it from growing and innovating.

Very often, a business grows in efficiency as it grows from a small business to a large business; but there is a unit of greatest efficiency in every business that may be too large to be efficient. The profits of a monopoly are not due in the main to efficiency, but are due to the control of the market. The ratio of profit ordinarily is in direct relation to the ratio of control. Where a company has a high degree of control, the profits are great; where they had a small degree of control, the profits are small.

When is the City of New York going to learn the fact that the effect of a monopoly is the arresting of progress and the arresting of advance in industry. It should have learned this with the taxi industry, but now it is doing the same thing with the “disruptors”. The City of New York is perpetuating another monopoly. The City and its regulatory regime is on the wrong path right now and unless they change course, a great for hire transportation infrastructure for the future is unattainable.

A practice is unreasonable if it tends to destroy competition. And we know now what the main practices are which have been pursued by the “disruptors” to secure the monopoly-control of our industry. They are cut-throat competition, espionage, doing business as fake independents, the making of exclusive contracts, as well as many other methods and practices of unfair trade which have been pursued not for the purpose of conducting a business in competition with others, but for the purpose of killing competitors. Again, we have found grave defects in our regulatory machinery.

Personally, I would like to restore competition and do away with the conditions that make for monopoly. But the regulators of the City’s taxi and limousine industry are blinded. The “disruptors” have a lack of respect not only for the law, our City and our institutions, but also our citizens themselves. And yet, with this great demand for on demand transportation staring us in the face, we need to be calling upon everyone we can to do everything we can to bring the “disruptors” back to a respect for law and to convince the regulators to deregulate the industry. This is to prevent another monopoly and for the benefit of all. We are seeing that if we follow the current path, a few rich and powerful people can defy the law; that their power is so great that there will be private monopoly and we cannot prevent it; and that, therefore, if such is the case, we must content ourselves with seeking to mitigate the evil. Respect for the law must be supreme, but the great question involves question more fundamental. For generations immigrants came to this City seeking and obtaining the job of a taxi driver. This used to act as a gateway to the American Dream and the ownership of a medallion was the gateway to riches. Now, it’s the gateway to hell and destruction.

If this opportunity is no longer available and this is no longer the land of opportunity, then what does America stands for. Our whole regulatory system of the industry is for naught. What does democracy involve? Not merely political and religious liberty, but industrial liberty also. Is not business today one of the greatest part of life? What America needs is not the combination of power in the hands of a few, but to keep open the path of opportunity to enable the industry to do for themselves. The current regulatory regime is not merely a capitalistic control of the industry. It is the worst form of capitalistic control. It is absentee capitalistic control. The responsibility and sensibility of regulation is lacking. If there had been responsibility of regulation in the industry, then we would all not be witnessing destruction of the minority based community car services in all 5 boroughs of NYC.