If you live in an urban area, you may have started seeing cars on the road with a striking accessory – a hot pink fuzzy mustache attached to the front grille. Maybe you’ve seen cars with bright orange “mirror socks.” Or perhaps you’ve noticed an increase in large black SUVs and town cars circling around hotels and tourist attractions. These cars are part of the growing number of online-enabled transportation providers. After downloading the company app to their smartphone, customers can use the app to “e-hail” the vehicles, pay for the trip and even rate the driver. Some services, such as Uber, use town cars and SUVs, among other vehicles. Others such as Lyft (of pink mustache fame), Sidecar and UberX connect individual private drivers with people who are looking for a ride.
Last month, the California Public Utilities Commission (CPUC) adopted rules to regulate online-enabled transportation services such as UberX, Lyft and Sidecar, creating a new category of “transportation network companies” (TNCs). Companies providing these services claim that they use personal vehicles to provide their services. The CPUC tentatively concluded that Uber, which does not involve use of personal vehicles, fell within the existing category of for-hire passenger carriers (limousines, airport shuttles, charter and scheduled bus operators), but deferred a definitive ruling on Uber’s status.
The CPUC’s ruling made California the first state in the US to legalize these new services, which have faced legal and regulatory obstacles across the country. During the California proceeding, and in other proceedings across the country, proponents of TNCs touted their “green” credentials by claiming that the services reduce the negative environmental impacts of driving by matching people with common interests and common destinations.
If TNCs truly reduce traffic, it might be possible that we could see a drop in the amount of automobile emissions. The CPUC’s September 19, 2013 decision, however, casts doubt on this scenario. The CPUC concluded, “In our review of the filings and supporting documents, there is no evidence that TNC drivers have a common work-related or incidental purpose with their passengers. Instead, drivers transport passengers entirely at the convenience of the passenger.” That means drivers can, for instance, cruise metropolitan areas to pick up passengers as soon as the passengers hail them online.
Critics of app-based transportation services argue that what we are actually seeing is a de facto deregulation of the taxi industry. While California regulators may consider Uber’s SUVs and town cars to be like limousines, customers are using them like taxis. Similarly, there appears to be little evidence to support TNCs’ ride sharing claims, making them operate much more like taxis than a casual carpool.