Will there be no taxis left in a few years’ time or is the market going to grow in size and diversity with apps? Are apps the new radio-circuits? How do they fit into taxi regulation? The app-age is moving at a rapid pace. Not even a wellinformed professor has all the answers.
‘In five to ten years there’ll be no taxis left’ is a favourite saying by trendwatchers, IT-experts, taxi app-suppliers and those who keep their eye on emerging and disappearing professions. With existing technology and certainly with the onslaught of apps, taxi dispatcher is surely a profession of the past (a bit like switchboard operator). But taxicabs? And taxidrivers?
“That all depends on how you define a taxi”, says Cooper . “There may be a different taxi industry, based on the way people access the market. Depending on your definition of taxi market, it could very well be a much larger taxi market, or should I perhaps say, individual mobility market.
But it could also be that this new market is made up of different vehicles in addition to the age-old hackney carriage. Or that ‘the taxi’ has a more limited purpose focused on serving minority markets, like carrying people with disability handicaps.” The taxi-professor quickly continues by saying that “the large hail-markets in places like New York and London will certainly still be there, but they’ll be shrunk considerably. The mobility market will be more diverse, with new groups –like Car2Go for instance- entering the same mobility market. However, I’m not saying that the taxi market is going to die.”
You find taxi a particularly unhelpful definition?
James Cooper: “Yes, to a point. There will be different players entering the taxi and mobility market, for instance private hire or vehicles like black car, sedan services and limousines will be more prevalent. And there may be parts of these markets that disappear.”
Why do you see such a sea-change?
“Because of the way we access services. Apps, depending on the type, are now 3-5 years old. Given the dynamics in the different markets, you might expect more stability and a situation of equilibrium and ‘harmony’ in about 5 years.”
‘Blurring the lines’
Cooper reminds that this is not the first technological revolution the taxi industry has had to endure: “The rise of the Internet, 10-15 years ago and especially the change in the use of the telephone 30-40 years ago caused major changes in the industry. Take the motorised taxi: if we had not embraced that change we would now be using faster horses. Again: it was the market that moved.” He admits that the rise of the Internet was a bit of a, as he calls it, ‘damp squib’ for the taxi trade: “It just didn’t catch on in the taxi industry.
Apps provide a significant change. But we shouldn’t forget that the apps were rather late coming into the taxi market. Other forms of transport – like public transport, for instance – were using apps well before they made their way into the taxi trade. Each new generation offered new benefits, but also helped blur the lines between transport modes – something Uber plays with intentionally and with much effect.” The professor thinks initially the ‘back room development in the taxi trade’ was not as successful as those in other industries and caused no decisive effect on the taxi market.
“Most of these early apps were tied to a particular fleet or recruited within the taxi industry, like the early developers Taxi Magic or Hailo. Taxi Magic piggybacked on the large fleets in the US. It was a quick way in and nobody thought this was a negative development. They had no intention of killing the market – far from it. They came from the trade! There was also a large white label market, to provide every fleet with its own app. Uber saw different opportunities, and went for the mobility market in a far more radical way.”
What caused that change? Was it the San Francisco/Silicon Valley IT-mentality? Doing things differently? Better?
“It was as if Uber, with its economic laissez- faire mentality didn’t care for the traditional market. Or perhaps the likes of Taxi Magic and Hailo cared too much. Uber has the effect of disrupting the market, fundamentally changing its structure, sometimes growing demand where that growth is focused on a new product, altering the market to a point that it will take time to achieve a new market equilibrium.”
But is that market actually getting bigger or are parts falling away?
Perhaps it’s too early to give a definite answer, says Cooper, and uses the example of Seattle, where he has researched the taxi market, to explain: “Lyft, a sharedride app like UberX, suggest the market there hasn’t settled yet. That side of the market had been expanding, the taxi market had not.
Since 2012 the numbers of limousines –including Uber- had been expanding, taking 40 % of the taxi trips. Taxis were only busy at the usual key points like taxi ranks downtown. How the new market will balance out? It is too early to say. The question is also how you gain market share. Everyone has a smartphone and lots of apps.”
Let’s look at the perspective of the regulator. Why regulate? Why not leave the market to its own devices?
Cooper chuckles: “Take for instance London. The Knowledge is a high barrier to entry – although nobody says so. But is also sets a high standard. Do we need this Knowledge or do we fit all cabs with a navigation system? If we decide that the taxi and its driver have to be fit for purpose, we need a test, we need a reliable, certified driver. Then the strength of the Knowledge is necessary. But what point is the right level? Remove or sidestep the Knowledge and you have a different industry”
It seems as if both the industry and the regulators are in a state of confusion. What’s the next step?
Here Cooper surprisingly quotes the classic stages in Kübler-Ross’ book ‘On dying’: “They all follow the same pattern, wherever you go”, he says. “Denial-Anger- Bargain-Depression-Acceptance-Death. At what stage a city is depends on to what extent apps have made inroads. Take the United Kingdom: full of denial. You could be screaming ‘there’s a fast train coming and you’ll be hit’, but nobody listens or is doing anything.
Germany is mainly angry, I gather. The US is adopting model regulations to hem the apps in. The next thing will be bargaining. Because in many markets the different apps – and particularly Uber and Lyft -are strong enough to have forced themselves into a bargaining position vis-à-vis the industry and the regulators.”
US AND Europa
Surely there are differences when it comes to the US and for instance the European markets?
“Yes, although Uber has recently embarked on a large international campaign, Europe is still lagging behind the US. That opens a window of opportunity for national or regional apps like E-cab, Taxi. eu and Cabonline to take hold in parts of Europe. But that window is closing awfully fast.” Cooper makes the comparison between Starbucks and Costa, a British coffee chain.
In his opinion Costa probably has more outlets than Starbucks and sells more cups of coffee, “but ultimately Starbucks is present in all the relevant keyareas and is happy with its turnover – a new equilibrium. Just like there is a demographic background to Uber’s expansion: it use may be popular amongst specific groups– like in Houston for instance. Just one example: you need a credit card to use Uber.
Not everyone has a credit card. That’s what makes white label apps so popular: you don’t need a card. Uber’s not going to work well in every market with each of its products. Not in minority markets, like that of people with mobility handicaps. Not unless you legislate and enforce accessibility for apps.”
You have repeatedly pointed out that regulators need to have a rethink about why and what they regulate.
“Yes, there has been 400 years of regulation in the transport sector. Do we need regulation? If you say ‘yes’ how much, for what and how? Perhaps you don’t need regulation for every little thing. But perhaps you feel you need it for accessibility, to make every cab or a certain number of cabs wheelchair-accessible.
But then you’ll find a strong lobby of the taxi industry on your path. That’s why I have been suggesting that there should be a rethink about the level of regulation.”
He adds that where the regulator hasn’t worked out how to handle apps, ‘regulator ambiguity’ in the words of Uber, effective responses are limited. “But additionally, the apps also thrive where the quality of the taxi industry is not good enough. And it is not that the taxis got worse, it often is the expectation people have. If there are new and improved taxi services, suddenly people’s expectations change dramatically.
Perception and reality often are two different things. Preempt that, reduce the impact of apps and deal with market decline. It is difficult to deal with apps once they get the upper hand. My advice: the first line of defence is a quality service. But in the US, with the independent contractor status, that quality is difficult to enforce.
The trip should be absolutely perfect from start to finish. Uber has control over quality from the moment you push the button. You have to be better than Uber or you’ll lose the market.” “And Uber has also made some regulations ineffective, especially if they are not enforced. You need to protect the market from being governed purely by commercial reasons.
Like you need to make a provision for having every outlying area served. Have an agreement about serving everyone and make it work. The taxi market should not be regulated as a sort of Utopia, but for economic sustainability – not just for today but also for tomorrow.”
In California the Public Utilities Commission (PUC) more or less gave the apps a free reign, whether they provided taxis, black cars or ridesharing. Is that the way forward?
“You mustn’t forget that there is a difference between California and a well-regulated city like San Francisco. But I keep coming back to the same point. Every regulator should go back to the same fundamental question: why regulate? There have been centuries of regulation, often without frequent updates.
And if there have been changes, it was always retro-actively. That won’t work this time. There’s no timescale for that. Some regulation has to be there. Price? Numbers? Safety? That’s the fundamental question!”
Back to the taxi industry. We already noted that the profession of taxi dispatcher may disappear. But will that be the only casualty?
Cooper doesn’t think so: “It is more likely that the radio-circuits will face significant change. Sometimes these companies are major investors in medallions, that gives them a different role. But purely as communication- tool they face distinct change, as a large number of phone bookings will cease in a few years’ time.
That role will be taken over by the apps. Uber insists that it is purely a technical company, not a transport company. Like the ubiquitous Yellow Cabs in certain cities is a dispatch company, not a transport company. The function of this company is to continually assess and re-assess what’s happening to its brand. But in effect, Hailo, Taxi Magic, Uber and Lyft will see themselves as the taxi companies of the future.”