Never again get the ‘foreigner tax’ while traveling, and other benefits of the sharing economy
Have you ever arrived in Mexico or Malaysia, fresh out of the airport, mobbed by dozens of local taxi drivers? You don’t even know the exchange rate yet, or if you’re getting massively ripped off, and wait… does the meter even work? You swear it’s going up ridiculously fast, but you can’t even read the rate guidelines… if there are any.
Let’s zoom out first. The word ‘taxi’ is inherently linked to measurement, coming from the Latin and Greek words ‘taxo’ and ‘tasso’ meaning ‘to put in an order, to measure’. It shares the same word with ‘taxes’, kind of makes sense right?
The concept of carrying someone to a location of their choice at a particular fare dates back to 17th century when people were still using wagons as a transportation method. The name ‘taxi’ was introduced later, in 1834 in London, after the installation of the taximeter.
Just as with taxes, there have historically been issues inherent with anything where human incentive meets measurement. Taxi services were usually an extremely local affair, learning which taxi companies to trust, and how to tell if the driver is giving you the runaround to jack up the fare. Not just for riders, being a taxi driver is also difficult, and sometimes risky.
The taxi service evolved from wagons, to gasoline cars, to electric motorbikes, and spread around the world, using different colors as identification, but nonetheless, always offering a transportation method at a measured rate. Eventually this service met distributed networks and information technology… and evolved into transportation network companies (TNCs) like Uber, Lyft, Gett, Juno, Cabify, goCatch, Via, Ola Cabs, GoCar, GO-JEK, Careem, Wingz, Taxify, GrabTaxi, Didi Kuaidi, Easy Taxi, and Fasten.
Previously unchallenged, and using bureaucratic regulations, such as high licensing fees, limitation on the number of taxis providing service, and equipment mandates, to create a monopoly, traditional taxi services now exist in competition with TNCs.
As consumers become more comfortable in the ‘sharing economy’, ride sourcing outside of the traditional yellow cabs threatens business, worldwide. TNCs all use a distributed and networked platform of mobile phones to connect passenger and driver offering a convenient, safer and often cheaper methods of transportation. Most TNCs disclose the price before you even accept the ride, and give ratings and profiles of drivers for enhanced safety. How can traditional taxi services compete?
In fact, since its inception, TNC have put a special pressure on traditional taxi services, even being one of the reasons for ‘two major’ taxi operators to seek bankruptcy throughout United States. Even though, supporters of TNC say that they are not direct entering the taxi market, they are satisfying an unmet demand for a more convenient and quicker transportation.
Critics say that TNCs are identical to taxis, and for that reason they are entering their market without going through the same regulations faced by the taxi drivers; insurance regulations is one example.
However, the San Francisco Municipal Transportation Agency argues that taxi drivers still have a market and demand to attend to. With technology available for both sharing economy’s services and traditional services, taxi operators and transportation agencies, are thinking how to improve a service so well known to all of us. Especially when it comes to information on the price and street hailing safety.
Keeping Taximeters and Drivers Honest and Safe
Throughout Latin America we hear the problem about safety when we catch a taxi, especially in the streets. Cases of kidnap, theft and rape are not unusual, in addition to not knowing how much you are paying, or if the price presented is the real and correct one. Often, taximeters are changed, to show a higher fare.
Safety is not just an issue in Latin America, where I grew up, but Egypt, Morocco, and Jamaica are listed as unsafe places for women to travel, and it is recommended to “consider an Uber in favor of a taxi.”
To combat the safety and meter issues, companies are moving to smart meter technologies. In Colombia, for example, after two decades, taximeters are coming to an end, starting in August. Taxi drivers will have until December to implement the new service that will be provided by an app, where people will be able to see their fare before entering the taxi.
According to the new program, by changing taximeters to a mobile phone app, they are trying to avoid possible changes in fare offered by taxi drivers.
Following the same trend, Washington, D.C.’s Department of For-Hire Vehicles, decided to remove taximeters, in August as well, and replace them with tablets or smartphones, as an alternative to compete with Uber and other ride sourcing apps. From the rider perspective, you can use the DC Taxi app, to call your taxi, get a fare estimate, as well as GPS route tracking.
Curious to see this change, I took a taxi in D.C. I didn’t use the app, I decided to get a taxi from the streets. After saying hello to the driver, and observing everything, a tablet on the back of the front seat, informed me the number of my ride, and gave me all the driver information, including his license number.
Unfortunately, the taximeter was still there, and the driver explained they will be replacing it by the end of this month. Immediately after that he said, “it is time for us to change, and adapt to the new way of doing business.” According to him, the taxi drivers need to update their service to something more appealing to the consumer. My driver also pointed that things started to change after Ernest Chrappah was named director of the Department For-Hire Vehicles on June, 2016. He described Mr. Chrappah as a vibrant, young and a technology oriented leader. My taxi ride was very nice, and I hope this innovation mindset continues to grow in the taxi service.
More than just a mobility solution
Companies like Uber and others are not only offering an urban mobility solution, but also addressing high pressures placed on urban infrastructure, environmental resource scarcity, rising crime and unemployment.
TNCs are not just connecting people and offering convenient transportation, they are reducing carbon emissions and time spent in traffic by calculating the best route through GPS and reducing the number of cars on the road through ride sharing services like Lyft Line or Uber Pool. Moreover, they can also ease the pressure on public transport during peak commute hours.
In terms of employment, companies like Uber and Lyft are seen as a great way for an extra and flexible income generation. When it comes to safety, they use social network to build their passenger and driver database, making the service safer for both rider and driver. Moreover, using GPS tracking can help both the passenger and driver to check the route avoiding delays and increasing the feeling of safety.
These are things that taxis could easily implement. In some places they are already improving passenger safety in taxis, and they should consider solutions to increase security for drivers themselves.
Back in October 2016, Guatemala started to prepare when they saw Uber coming, and nothing like the fear of competition to start something new. After some protests at the historic center of Guatemala City, taxi drivers decided that the best way to fight was to offer a better perceived service. That’s when they launched Ciklo, with the slogan in Spanish, “Tú controlas tu viaje en todo momento”, meaning you control your travel at all times. The company is currently rated at 3.7 stars and is considered one of the best ways to move in Guatemala.
Examples like Ciklo, prove that taxis still have market, and it is a matter of exploring their strengthens. Offering a new measuring fare method is definitely a good way to explore innovation in the taxi market. Nonetheless, there is so much more that the disruptive economy can offer. Taxi drivers could, for example, explore their passion to drive and their street knowledge. In cities like New York, taxi drivers are valued because they do not rely on GPS to circulate, and know all the short-cuts.
Besides that, Ciklo shows that it is possible to operate with less bureaucracy and regulations, and most important, co-exist with your competitor; that’s the greatest part about the sharing economy, there is space for everyone. However, investing in technology, and in the perceived service by the customer will be critical. It is the moment for taxis to also play a role in this disruptive innovation and digital economy.
Big Questions for Technologists
Technology is evolving much faster than the policies in place, so how can we update regulations in order to address the sharing economy solutions? If we are using apps and smartphones to request, pay or even just check the price for a transportation service, how can people without a smartphone be able to access this type of service?
