In a packed meeting at the Taxi and Limousine Commission headquarters this morning, commissioners voted 7-0 in favor of adopting a year-long pilot program to test out e-hailing apps that let riders flag down yellow cabs from their smartphone. The pilot won’t commence until February. After reviewing data from the test run, the TLC will assess whether to make it permanent. The more limited pilot program is an abrupt change from an earlier proposal by TLC chairman David Yassky: to vote on e-hailing rules that would have opened New York’s taxi market up to any app that met guidelines and secured a license.
The TLC pivoted from voting on rules to voting on a pilot program, “Because it wasn’t going to pass,” commissioner Nora Marino said with a laugh. Ms. Marino, who abstained from voting, said she was only notified about the possibility of a pilot program yesterday, which is when word spread of the change. “Are you kidding? Really? Can we have some time?‘ That was my response,” she told Betabeat after the meeting adjourned.
Fears that the rules wouldn’t pass were related to heavy lobbying from the livery and black car industry. They argue that if yellow cabs were allowed to venture into pre-arranged rides (as opposed to just street hails) it would gravely impact their business. Elias Arout, the only other commissioner who also abstained, said he had never received so many lobbying phone calls: “I’m amazed my wife is still talking to me.” Commissioner Frank Carone was careful to note that he would have voted against the rules because they could endanger the financial stability of black cars and liveries, but approved the pilot as a more cautious compromise.
Nonetheless, today’s decision still represents a big leap forward, bringing New York’s complicated for-hire-vehicle market closer to cities like London, which have long embraced these apps. That might be why Uber CEO Travis Kalanick has been crowing about today’s “big win,” noting that “New York City’s government overcame its own reticence.” Hailo cofounder Jay Bergman likewise congratulated the commissioners “for helping to keep New York City at the forefront of transportation technology.” The TLC, meanwhile, has issued an ecstatic press release about “appy days ahead.”
— travis kalanick (@travisk) December 13, 2012
UPDATE: Apparently actor Ed Norton is (a) a Uber fan and (b) likewise amped about the TLC’s decision.
— Edward Norton (@EdwardNorton) December 13, 2012
Under the rules of the pilot program [embedded below], apps will have to be approved by the TLC and enter into a binding “memorandum of understanding.” Riders will only be able to use apps to hail taxis “within a reasonably close distance,” said Mr. Yassky: within half a mile in Manhattan below 59th Street and a mile and a half for the rest of the city. Applicants are prohibited from offering any monetary incentive to drivers for picking up passengers through the app, as opposed to a street hail. (During its short-lived attempt to break into the yellow cab market, Uber had offered drivers cash bonuses.) In response to safety concerns, today’s rules also say apps have to enable drivers to accept trips with “a single touch.”
A number of the stipulations revolve around payment, both in terms of what apps are allowed to charge, how riders are notified of fees, and how payment is processed. Payment has to be integrated with the meter, in order to ensure that the fare is properly calculated. Payment also has to be processed by the so-called T-PEP vendors, which run the credit card swipers in the back of taxis. That may mean startups that already offer this service in other markets, like Uber, Hailo, Get Taxi, and Taxi Magic, will have to alter their offering to meet New York’s requirements. Indeed, the pilot isn’t starting until at least February 13th because that’s when the TLC’s exclusive T-PEP contracts with Verifone and CMT expire. Both companies have been wary of cooperating with apps.
There’s a bright spot for app providers, however. The rules state that “the Chair may waive this integration requirement” if T-PEP system can’t adequately support it and the app provider comes up with a viable alternative.
Before calling for the vote, Mr. Yassky acknowledged that the switch to the pilot program was made “after considerable discussion among the commissioners,” noting that the pilot will “allow us to collect data and information and feedback from all of those parties–passengers, taxi drivers, taxi owner, and importantly, car service, livery, and town car drivers and owners as well because they are affected and they have a legitimate interest in participating in our process.”
But he also emphasized that regulators shouldn’t stand in the way of a benefit to passengers. “This is not speculative. This is real today. We can look at other cities and see that passengers are using these products and benefitting from them,” he said, name-checking Uber, Hailo, and Get Taxi. The pilot will allow the city to proceed in a “measured way.”
Ms. Marino still had doubts. “We have an industry that is divided in a unique way here in the city and we’re addressing one aspect of that industry, the yellows. Well, what about the liveries and the black cars? They have apps too!” she said, comparing the pilot to a marriage because it’s easier to get into than get out of. “I think once you have hundreds of thousands of people using the apps–you have public support–[then] no one is going to care about the losers, which could be an entire industry, the black car and livery. I mean apps are hot and we don’t know where they’re going to be a year from now. There may be ways to avoid enforcement.”