The unregulated cabs

Pub date September 11, 2012

EDITORIAL Yeah, the shared economy. Yeah, high tech. Yeah, there’s an app for that. Yeah, the San Francisco cab industry is screwed up and you can never get a cab when you need one.

But that’s not an excuse for the city to stand by and allow a whole cottage industry of unregulated, unlicensed cabs hit the streets, using a business model that everyone knows is fake and undermining decades of painstakingly crafted rules that govern this critical part of the city’s transportation infrastructure.

Over the past year, at least five new companies have opened that offer what the taxi industry offers — rides around the city for money. They do it in a cool new way — you send a message from your phone requesting a ride, you follow where the driver is with a GPS app, and when you get to the destination, you make a “voluntary” payment through a Pal-Pal-style system.

It sounds great: Fast service that the existing industry can’t always offer, an easier way to pay (a lot of drivers still demand cash only, in part because the cab companies charge drivers an extraordinary fee for credit-card transactions) and — more important to a lot of us — a way to know exactly when your ride will arrive. (Ever call a major cab dispatcher to ask when the car will be there? “As soon as he gets there,” is the usual gruff response. Sorry we asked.)

But there’s a reason that the city regulates taxis. Drivers are in constant contact with the public — with vulnerable people who may be tourists with limited English, seniors or others who could easily be exploited, or in the worst case scenario, harmed — so a background check is required for anyone who gets behind the wheel of a cab. Cabs have to carry extra insurance to cover passengers. There’s a city office where you can file complaints against unethical drivers. Companies won’t hire anyone with a serious infraction on his or her license.

There’s nothing, not a single rule or regulation, to protect customers of the new startups.

The city also controls the number of cabs on the streets — in part because too many cabs chasing too few fares leads to problems. You can’t legally drive a cab in the city — that is, pick up and discharge passengers for hire — without a city medallion.

The new companies, like Lyft and Sidecar, get around that rule by claiming the fare is just a “suggested donation” — which everyone knows is bogus. The companies would have no business model without charging money for rides.

The emergence of these new companies demonstrates how far behind the city and the taxi industry is — easier payment and more reliable service is such a mandate that customers are willing to go elsewhere when they don’t get it. But the idea that the free market and tech-savvy entrepreneurs will solve every problem clashes with the longtime, demonstrated need for regulations in the taxi industry.

City officials need to make it clear that they won’t allow these rogue cabs to keep operating. If the new outfits want to offer their services, they need to do what every other cab company does — line up medallions, follow the rules, get the proper insurance and operate within the law.