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A tale of two cities: Why Uber must stay

For any young person living in San Francisco planning to do anything within the city, there are four available transportation options: driving, public transportation, taxis or a rideshare service like Uber.

Parking in the city ranges from physically impossible to economically unfeasible, so driving is out of the equation. Public transportation is convenient to get to certain areas, but requires a little advance scheduling and does not provide easy access to certain areas of the city.

When time is of the essence or there is no direct access to the destination via public transport, there are two options: taxis and Uber. In San Francisco, Uber demolishes the taxi service.

About 630 miles north of San Francisco lies Portland, where relatively very few people use public transport, taxis rule the alternative transportation scene. Why?  For the simple reason that Uber is banned. Uber is also prohibited from operating in many cities including Miami, Orlando and Austin, and is fighting to stay in Boston and Anchorage. Some insurance-related regulations on Uber have recently been imposed in Virginia, California and Colorado in lieu of bans. Time will tell if these affect Uber availability.

The primary argument heard by both lobbyists and legislators opposed to Uber is that because Uber drivers do not undergo the same regulations as taxi drivers, Uber is not as safe for users as taxis are. In fact, some advocates of these bans claim that users assume Uber is as well-regulated as taxis, so they are ensured as safe of a ride.

Another justification is that Uber and other ridesharing companies will keep prices low until they send taxis completely out of business, and then price gouge their customers once ridesharing is the only option left.

However, this argument is wrong. Nowhere does Uber, Lyft or Sidecar suggest that they are taxis or subscribe to the same regulations as taxis. In fact, Uber very explicitly advertises itself as a ridesharing service and promotes itself as a company one can work for with little barrier to entry.

While Uber drivers are not ordinarily held to the same level of inspection as cabbies, Uber has many innovative features that are in everyone’s best interest. Customers rate their drivers and drivers rate their customers, so users can see both how much experience their driver has and how well he or she was liked by passengers.

Given these ratings on a five-star scale, users can be assured of the quality of their driver and make a decision whether or not to opt for a new one. Although it varies depending on the city, Uber drivers must maintain at least a 4.5 rating or they risk being fired. About 98.9 percent of Uber rides end with a five-star rating from the customer, indicating that the unsafe ride is a negligibly rare exception.

It is true that Uber, for the most part, offers cheaper prices than taxis because they must adhere to fewer regulations. However, given the success of the company that many customers safely depend on, taxi services should fight the regulations, not the competitors.

In the event of the actual destruction of the taxi industry, price gouging is not likely. Uber would not have a monopoly on quickly accessible transportation, because it is a member of an entire ridesharing industry. This industry includes other popular services like Lyft and Sidecar, and other more obscure ones.

The success of these ridesharing services has naturally evolved many similar companies, each with its own little tweak to differentiate itself. Sidecar offers free credits every few weeks. Lyft offers “Happy Hour pricing,” which is effectively the opposite of surge pricing. Even in a taxi-less world, a cheap ride will always be available.

Regardless of the legal ruckus taxi companies make, why don’t taxi drivers switch to Uber, given that their business is taking such a hit in most places? Well, many have. However, in many cities, taxi drivers must obtain medallions, which effectively serve as licenses, to drive their taxis. These medallions are expensive, often ranging between $500,000 to over $1 million. Usually drivers will lease them. Even with a lease, a medallion is a substantial investment, so it is in their best interest to achieve as high a return on investment as they can.

Do we have a fundamental right to get wherever we want at any time of the day? Of course not. Nevertheless, it is a modern privilege many people have and an accessibility that we should strive to expand.

Accessibility depends on two variables: availability and affordability. For something to be accessible, it first must be attainable to the potential customer. Affordability is often the greater obstacle. However, Uber and ridesharing companies have done a good job of being both very available and very affordable. They should be kept.

Contact Pepito Escarce at pescarce ‘at’ Stanford.edu.

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