Ride-hailing businesses won by breaking the rules.
September 18, 2019 | In The Press
Let’s face it. New ridehailing businesses won by bending — some might even say breaking — the rules. They launched their services and delighted consumers with more efficiency and comfort than traditional taxies, and cities were caught off guard. The services have prevailed and become a new normal mode of transit.
Now, cities like Denver and Boston are starting to put public transport in the hands of these same businesses as ridehailing companies seek to become mobility as a service (MaaS) platforms — one-stop shops for door-to-door trip planning from a mobile app. Travelers can open their ridehailing apps to see public transport schedules alongside their ridehailing options and book their trips. The stated goal of these partnerships is to increase public transit utilization.
Cities should be wary. In fact, a better model might be for cities to provide the apps and allow private mobility service providers, like Uber and Lyft, to participate, with a set of guidelines in place. This is what LA Department of Transportation general manager Seleta Reynolds told the audience at 2018’s LA CoMotion event.
Reynolds said that cities have tried to enforce regulations, rather than thinking about how they can position themselves “in the correct seat around the business model.” She compared it to the way Google and Apple have app stores with terms and services that allow them to remove any apps behaving badly.
Whoever controls the “app store” controls the options people see and the data that people provide. That’s why the San Francisco Bay Area Planning and Urban Research Association (SPUR) wrote that “we can’t leave public transportation apps to the private sector.”
“There’s nothing precluding commercial MaaS operators from favoring their own solutions,” SPUR officials wrote, and “public transportation could very well be sidelined in a commercial MaaS platform.” There is also no reason why the MaaS platforms couldn’t charge public entities for access to their subscribers, or ignore the needs of low-income neighborhoods. Public transportation has a mandate (that private businesses don’t) to serve everyone, regardless of age, income, ability or access to digital tools.
Transportation agencies should be enabling private operators to integrate into public platforms, not the other way around. Ride-hailing businesses have little incentive to encourage public transportation. Though later amended, Uber’s initial prospectus for its IPO positioned public transportation agencies as competitors. Including public transportation options on ride-hailing apps may well be a trojan horse that gives these businesses access public markets, appearing to support public transport in order to gain control of how and when passengers can view and purchase public options.
The Massachusetts Metropolitan Area Planning Council released a study in June that quantifies the financial impact of TNCs on cities. This study found that between 2017 and 2018, ridehailing use grew 25% and cost public transit $20 million in lost revenue.
Then there is the issue of data. Some ride-hailing companies are blatantly opaque when it comes to sharing ride data with public entities (hence mandated in Massachusetts and other states), or with disclosing what data is sold to third parties. Ridehailers would be collecting the information about the locations, travel patterns and personal data of every user. Cities should be protecting citizens’ data, not giving it away to private businesses.
Cities could, as Reynolds suggested, provide the platform that defines the rules of engagement between public and private transport operators, ultimately ensuring “that MaaS delivers benefits for all rather than just a few.”
Can government organizations become tech pioneers? It is happening in Europe in the form of the MaaS Alliance, a public-private partnership formed by several organizations to “facilitate a single, open market and full deployment of MaaS services.” Alliance member MaaS Global created the Whim app, which enables travelers to view and book door-to-door rides from a wide range of options, with choices organized by convenience and price. It creates a level playing field for all participants. Whim was first released in Helsinki in 2016 and has enjoyed widespread adoption while increasing public transit utilization. Uber has a seat on the board of the MaaS Alliance, which suggests that the company can indeed work with public transportation and other providers on a level playing field.
Uber aspires to be the “ Amazon of transportation.” Do cities want to turn over access to their transportation systems to a ravenous private business? Reynolds encouraged establishing productive partnerships. Private transportation operators have a role to play in urban transport, but cities should be in the driver’s seat. Ride-hailing companies need to prove that they can and will work with cities, not compete against them.