This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Salt Lake City isn't a taxi town, but that won't last for long. Recent innovators of "ridesharing" (like Uber and Lyft) are offering cities worldwide the opportunity to take a good, hard look at how they regulate ground transportation as a whole. I'm afraid that we in Salt Lake City government are missing our chance to do that. This isn't just about how to regulate market disrupters. It's about the evolution of our city. Simply put: Can we offer our residents the choice of not always having to drive their own car, or even to live without one?
Salt Lake isn't a transit town, either (or yet), which increases the stakes for what we do with car services. Most cities highly control the market for hired cars. Salt Lake is no different, and grants a partial monopoly to taxi companies in return for conditions serving the public interest, like not being able to refuse rides or gouge customers during peak demand ("surge pricing"). It's important that everyone has access to a ride, regardless of where they live, what time they need to go, or whether they need an ADA-accessible vehicle. Uber and Lyft drivers can refuse any ride, and the companies have no responsibilities to cover the whole city. Taxis are different.
Despite these regulatory mandates—and the arrival of scores of Lyft and Uber drivers — taxi companies are doing fine. And the new taxi companies who won the last contract at the city are pretty OK with Lyft and Uber. If the city can ever get out of the courts to start the new contract, the taxi companies will get protected rights to hailing, taxi-stand, and airport pickups in return for the normal public-interest conditions including limits on the rates they can charge.
The biggest change in the new ordinance is that it gives peer-to-peer (rideshare), limo and shuttle companies freedom from the old 30/30 requirements. This infamous requirement stated that if you're not a taxi, you have to arrange the ride 30 minutes in advance and charge at least $30. Getting rid of this is a huge reform: protection of the "on-demand" market was previously a non-negotiable with the cab companies. It was the stupidest part of the old system, significantly hurting consumers, suppressing demand, encouraging cheating from drivers and clumsy city enforcement.
As the downtown councilman, I've heard way too many complaints from people about taxi service. "You can't hail a cab in Salt Lake" is one of our greatest urban legends (it's been legal for a least a decade). It's probably less the taxi companies' fault than the effect of a failed regulatory regime. Yet moving forward, we can we have reasonable rates, phone-hailing, street-hailing, and real taxi stands. The recent success of rideshare in Salt Lake City is a righteous testament to what is happening downtown and increasingly across the city: pent-up demand for a lifestyle where you don't have to own a car.
Moving forward, I encourage the city to do the following. First, don't kill fragile profit margins with fees, taxes, or unreasonable insurance requirements. Tender plants need the opposite. When an industry is providing a public service, part of government's job is to do no harm. Cars for hire are serving pent-up demand. Enabling residents to live without a car, or not drive their own car, is a public good.
Second, there might be something special about the peer-to-peer market. Sometimes these transactions involve the distance of the typical exchange of cash for service. But other times, there's substance to the "we're more friendly" message of peer-to-peer services. Having to sit in the front seat with your driver, or tell your host a little about yourself before they accept your room reservation, might be a different cadence of marketplace behavior that is good for public goals. It is also significantly self-regulating, with its reputation-based rating system.
Suffice it to say that peer-to-peer rideshare is booming. Its success partly hinges on the connections people make because many drivers are part-time. They have life stories to share, just as their customers do, and the web of community spreads. Salt Lake City, please resist your bureaucratic impulse to control and over-regulate. Let's show our better side, letting the market for all hired cars continue to grow.
Luke Garrott is Salt Lake City councilman for District 4.