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Uber Is Close to Launching a Taxi App to Hail and Pay for Yellow Cabs in New York City

Imagine the possibilities!
 Uber Is Close to Launching a Taxi App to Hail and Pay for Yellow Cabs in New York City

(Photo: Facebook/Uber)

A source has informed Betabeat that Uber–the pricey, San Francisco-based request-a-ride app for black cars–plans on an imminent launch for a similar service for yellow cabs in New York City. Uber already lets riders in New York City order and pay for private sedans and SUVs from their smartphone, but this new launch would offer the service for regular taxi cabs.

The launch was scheduled for today, but appears to be held up as the New York City Taxi and Limousine Commission (TLC) explores “whether it complies with the TLC’s rules,” said Allan Fromberg, the agency’s deputy commissioner for public affairs.

Earlier today, Mr. Fromberg told Betabeat by email, “We just met with the Uber folks this afternoon and I don’t have a response for you at this moment.” We have reached out to Uber and will update the post when we hear back.

UPDATE 11.15 p.m.: The New York Times reports in tomorrow’s paper that Uber initially planned on launching this new service Wednesday with 105 cabs. However, the TLC said Uber’s yellow cab service may not be legal for a few reasons: (1) city rules prohibit prearranged rides in yellow taxis, (2) cabbies are forbidden from using electronic devices while driving, and (3) cabbies can’t refuse a fare without justification. (The latter is a concern because Uber’s policy says once a driver accepts a ride through the app, he can’t pick up another passenger.)

The Times also confirmed what we had previously heard: that today’s meeting concerned regulatory issues surrounding Uber’s ability to process credit cards to pay for yellow cab rides. The good news? In response, CEO Travis Kalanick agreed to make the yellow cab app available for free for New Yorkers for the next week.

UPDATE 6.30 p.m.: Taxi and Limousine Commissioner David Yassky offered Betabeat the following statement by email:

“Time and again, New York City’s Taxi and Limousine Commission has led the country in terms of putting new technology to work for riders – from credit card payments to our innovative use of GPS data to find lost belongings. If fact, we are currently requesting proposals for a smartphone payment system that will integrate with our existing technology. We are eager to see products, including apps, that allow taxi passengers to take advantage of the latest innovations, provided they are consistent with the TLC’s rules, and we will continue to work with the technology community to make sure we stay at the forefront of new developments.”

Each town car or SUV ordered through the Uber app starts at a $7 base fee and $3.90 a mile after that. In July, Uber began rolling out a “cheaper” option by adding hybrid vehicles to their fleet. But even the incrementally more affordable option still comes at a 10 to 25 percent premium on a standard taxi, as opposed to a 40 to 100 premium for its black town cars, the New York Times reported.

picture 2 Uber Is Close to Launching a Taxi App to Hail and Pay for Yellow Cabs in New York City

Uber CEO Travis Kalanick (Photo: Tech Cocktail)

Uber has run into some problems with the legality of its car-booking app this year. In July, the company won a victory regarding price-fixing in Washington D.C. when the City Council passed an amendment legalizing the service. As the Verge noted, the Council has been debating legislation that “these sedans charge no less than five times the minimum cost of a taxi.” At the close of the year, the Council will reconsider the bill. Massachusetts initially asked Uber to stop operating in Boston until officials could establish guidelines for the app, but quickly reversed the decision.

Perhaps prompting Uber’s rush to offer yellow cab service in New York City? We also heard that Hailo, a London-based company that operates a similar service, is planning on launching here in a couple of weeks. However, Hailo does not have explicit approval from the TLC either.

Hailo, which already works for licensed taxis in London, seems to have a strong foothold in the European market. Uber, on the other hand, is popular in San Francisco where early adopter techies are willing to pay extra for a convenience of hailing a hard-to-find car. That leaves the big whale, New York City, still up for grabs.

Both Uber and Hailo applied to an RFP in March from the New York City Taxi and Limousine Commission for a smartphone app to let riders pay for a cab with their smartphone, although the soon-to-be released offerings are independent of the RFP. The TLC would not disclose the full list of all the companies that applied, but Get Taxi and Taxi Magic also submitted proposals.

There are some drawbacks to trying to beat a competitor to market, however. According to our source, Uber has 10 to 15 yellow cab drivers pre-registered to use its app, whereas Hailo has 2,500 pre-registered to use its app. A representative from Uber scoffed at that number. [Update: The Times later reported that Uber planned to launch with 105 cabs, or less than 1 percent of the 13,000 yellow cabs in New York City, with ambitious plans to recruit 100 new drivers a week.] Reached by phone, Hailo confirmed both its planned launch and the number of registered drivers in New York City, adding that it also had 400 drivers pre-registered in Toronto, where Uber launched last week.

Both Uber and Hailo have plenty of cash in the bank to help extend their reach. In March, Hailo raised a $17 million Series A round led by Silicon Valley’s Accel Partners to take on Uber in the U.S. However, that figure is dwarfed by the $32 million Series B Uber raised last December from Menlo Ventures, Amazon’s Jeff Bezos, and Goldman Sachs.

Over breakfast recently, an entrepreneur from London told Betabeat, “Hailo is for the 99 percent whilst Uber is for the 1 percent,” explaining that while Uber can cost twice or more the cost of a yellow cab, Hailo charges users what’s on the meter. The entrepreneur, who uses Uber’s black car app in New York City, recounted a recent dinner in London’s Camden Town neighborhood. Afterward, the diners walked to the curb and three of the four immediately whipped out the Hailo app to order a car.

Uber, however, has a head start with New Yorkers. The company courted influencers with a deal on a ride to the Hamptons this summer. Then they tried winning over locals via door-to-door ice cream delivery, with Justin Bieber blasting, of course. We’re willing to entertain the notion of higher costs, if it’ll save us from buying $5 Duane Reade umbrellas every time we’re caught in the rain.

This is a breaking news post and we will update the story as we learn more. 

Follow Nitasha Tiku on Twitter or via RSS. ntiku@observer.com