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Ridesharing technology provides a crucial opportunity for Arizona

Steve Zylstra (Submitted photo)

Steve Zylstra (Submitted photo)

If innovation is the beating heart of business, then disruptive innovation is the defibrillator.

It triggers wholesale change. Topples industries. And can even revolutionize the way we live and work.

Disruptive innovation often isn’t pretty. Perhaps you’re reading this column online. As we all know, the Internet turned the newspaper industry upside down. Unable to adapt quickly enough, many newspapers folded. But those that survived are providing information across multiple formats, and readers in general are benefitting from a world of new, online content, including blogs, e-publications and social media.

This same story has played out countless times across every industry. But when the Internet threatened the newspaper business model, did these publications lobby legislators for protection? Did Blockbuster video run to government regulators in order to keep Netflix at bay?

Of course, the answer in both cases is “no.” Likewise, now that app-based ridesharing technology in the hands of companies like uberX and Lyft is helping change the way people get around, state policymakers should take a measured regulatory approach. Let’s not kill this new industry – and the jobs that go with it – before it even gets established.

Ridesharing technology is the essence of disruptive innovation. It works like this: Users of uberX or Lyft install an online app on their smartphone, allowing them to request a ride from a background-checked, authorized driver. Before stepping foot into the vehicle, passengers can request a cost estimate for the trip, and are told the identity of their driver, as well as the make/model and license plate number of the vehicle.

The service is convenient, cashless and cardless. And it is proving wildly popular for the hundreds of drivers and thousands of passengers who’ve used the service across metro Phoenix and Tucson. With the right steps by legislators and state government, this new industry will continue to thrive and spread to communities statewide.

That’s why this is such a critical moment. State Rep. Tom Forese, R-Chandler, has proposed common sense legislation that would bring Transportation Network Companies (TNCs) such as uberX and Lyft under state oversight. This measure would update antiquated statutes that were enacted long before the advent of this new technology, and would codify reasonable safeguards such as company-backed insurance to protect the driver, passengers and public; comprehensive background checks for drivers; and vehicle inspections.

Failure of this legislation would leave our state’s ridesharing industry in limbo, deal a setback to Arizona’s tech reputation and threaten a growing number of uberX and Lyft drivers who’ve been empowered by this technology to launch their own businesses.

Passage, on the other hand, would demonstrate that Arizona remains a place where innovation, entrepreneurship and public safety are not mutually exclusive. Imagine the powerful signal that would send to the inventors of future technologies that will improve our lives in ways we can’t yet imagine.

Uber and Lyft alone are operating worldwide and in more than 40 domestic markets. By passing this legislation Arizona can be a leader in this movement, enacting reasonable regulation that protects the public while making way for technology changing the face of transportation.

On behalf of the Arizona Technology Council and its 750 member companies across Arizona, I urge legislators and state officials not to let this opportunity pass us by.

– Steven G. Zylstra is the President and CEO of the Arizona Technology Council, the state’s largest science and technology organization, representing 750 private-sector, government, academic and non-profit entities.

5 comments

  1. The term “Rideshare” should stop being used to describe the services provided by Sidecar and Lyft. The service they provide is clearly more similar to a taxi service and has no relation to traditional ridesharing like carpools or vanpools.

  2. What utter nonsense. This technology is already available for hailing taxis in Arizona. All these companies are looking for is an excuse to avoid being required to carry as much insurance as a regular taxi does. Arizona in fact has one of the most deregulated taxi industries in the US — not much more is required than that the vehicles carry commercial insurance and submit to inspections. Very basic, yet Uber and Lyft are resisting even these minimal consumer protections.

  3. These services will bring better pay for drivers and lower costs to consumers.

    As there is currently no regulatory framework or licensing for a taxi dispatch company in Arizona individual drivers are unable to book fares without giving up a HUGE chunk of their income in “leasing and dispatch fees.” This is the case as without a huge fleet of cars they simply cannot afford to pay for the massive advertising necessary to generate fares.

    These TNC’s are simply advertising agencies that directly route customers to service providers for a fee. Taxi companies force drivers to pay $80-$120/day to rent their car PLUS $1-3 per dispatch PLUS gas simply to have the chance at getting enough fares to feed their families vs TNC’s that take a modest fee.

    Cut out the middlemen who have been gouging Arizona customers and forcing drivers to barely make enough to survive – let the TNC’s be licensed and bring the higher pay and lower prices Arizona deserves.

  4. I travel between Phoenix and Chicago frequently and have used similar technology to order cabs in both cities for 5+ years. I have tried the rideshares with sucess and have been following the news and asking the drivers how it is working for them. There is mixed response from the drivers as many feel the company is taking too much of the ride and calling it “un-fareshare”, I’ve had some of the drivers hand me cards and ask to be contacted directly for service and after following all the discussions about insurance I find that very disturbing.

    My conclusion is that big business through advertising, lobbyists and social media is spinning a business model that is clever but not new, a prettier taxi but with serious gaps when it comes to public safety. Knowing the driver is safe, drug free and insured are basic common sense items… Why are they working so hard to avoid these simple requirements… maybe it’s the money their making without these protections.

  5. Dave – in some markets there may be money to be made by “avoid(ing) these simple requirements” however in Arizona this is not the case. Virtually anyone with a valid drivers license and a car can get a cab license as the industry is highly deregulated. Additionally the few requirements that do exist are on a statewide basis which makes it so Arizona municipalities are not allowed to impose rules on or regulate/license cabs.

    This unique regulatory environment allows almost anyone with as the Department and Weights and Measures puts it a “device license fee of $24.00 per year” and a car that will pass an inspection barely more stringent than normal requirements for all cars on Arizona roads to operate an owner/operator taxi.

    Additionally when it comes to consumer protections there are no min/max rates – only that taxis have a meter that registers whatever their posted rate is accurately. This is fine if you know ahead of time what the cost will be – such as with TNCs – however in most owner/operated cabs you won’t know until they pull up – even then it’s hard to keep track of various fees such as “$100 cleaning fees” or a sneakily high initial/minimum charge. Most TNCs have $1,000,000 of liability insurance for each of their drivers (something that would also be mandated by the proposed TNC regulations in Arizona) – your owner/operator cab driver in Arizona is currently only required to have $300,000 of liability insurance. Furthermore I will let you come to your own conclusions as to the glaring loopholes that exist for owner/operators in regard to background checks and drug testing directly from the law that requires them for taxi drivers (relevant parts in ALL CAPS as I can’t figure out how to make words bold on here):

    A.R.S. § 41-2097(A)) An OWNER of a livery vehicle, taxi or limousine licensed through the department shall have available for inspection at all times by the department written evidence of a criminal background check and drug testing records OF ANY DRIVER operating a livery vehicle, taxi or limousine FOR THE OWNER, WHETHER AS AN EMPLOYEE OR LESSEE.

    You can see the distinction between owner and employee/lessee is clear and I see no wording requiring criminal checks/drug tests for owner/operators. This may be something that is in practice required at licensing but let’s be honest if you are an owner/operator there’s no such thing as a “random” employer mandated drug test.

    The end result of all this is Arizona has created an environment where anyone can become a taxi driver in their own vehicle with little to no barriers – wait isn’t that what TNCs do! HOWEVER there is no regulatory framework to pull a dispatch/advertising/fare routing service that does not own or operate vehicles out of the grey areas of the law (such as TNCs).

    Without a reliable source of fares drivers are beholden to larger taxi companies who have enough cabs to financially justify the advertising expenditure necessary to make the phone ring. Arizona is full of urban sprawl – street hails won’t make anyone enough money to feed their family here. This puts taxi companies in a position to price gouge their drivers who end up at times working for less than minimum wage due to unreasonably high leasing and dispatch fees charged by some taxi companies. From everything I’ve read TNCs can consistently deliver between $25-$32/hr for drivers – the tired old system takes a far bigger bite out of drivers than a 20% referral fee.

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