Let Them Take Taxis…or Uber or Lyft
City may lift cap on cabs and embrace upstart ride sharing services. There will be rides for everyone!
Milwaukee alderman Bob Bauman and the Common Council have just discovered they can’t keep up with technology. And the race wasn’t even close.
“Sometimes what seems obvious six months ago doesn’t seem obvious any more,” Bauman admits. “Technology is funny that way.”
Actually, it was just a month ago, on March 17, that the city took what seemed the obvious step: holding a lottery to award the 100 new cab licenses Common Council members voted to issue. This was — finally — the solution to a controversy that dragged on for two-and-a-half years, ever since the libertarian Institute for Justice filed suit and demanded the city eliminate the cap on the number of cabs.
But just three weeks after the lottery was held, Bauman declared that this entire approach should be scrapped. The problem was the technological innovation of companies like Uber and Lyft, who bypass traditional cabs with sophisticated software systems that match those needing a ride to any driver who requests one from these online services.
“The technology of these companies have made the idea of a cap on taxicabs irrelevant,” Bauman says. “They will simply go into business anyway and dare you to track them down. And I don’t know if we have the resources to do that.”
A couple weeks before this, Lyft had begun advertising for drivers, as Don Walker reported for Milwaukee Journal Sentinel, and we soon learned the “pink mustache” (the company’s rather vaudevillian logo) had arrived in Milwaukee. Lyft, too, flashed some Brewers-oriented symbolism, picturing a pink-mustached car in front of Miller Park.
In short, by the time the city lottery for new licenses was held, it was abundantly clear that any attempt to cap the number of taxis or limousines or ride sharing services was futile. The genie was out of the bottle.
So Bauman quickly hatched a new plan, with the help of the city’s Public Transportation Review Board, which includes nine members of the community appointed by the mayor and common council president.
The plan is relatively simple. First, there will be no cap whatsoever on cabs. Second, there will be minimal requirements on operators of any kind: all drivers must have a drivers license, their car must have a public passenger vehicle permit and they must meet the city’s insurance requirement. Third, any violators will pay a fine, beginning at $2,500 and rising significantly with each added offense.
The fines will not be imposed on the companies themselves, Bauman notes. “I have no illusions about that. Uber and Lyft may laugh at these fines. They may not even have a physical presence in Milwaukee.”
Rather, the drivers themselves will be fined. “If they start getting $2,500 fines, that will have an impact,” the alderman predicts.
As for enforcement, Bauman and the committee envision having the city clerk’s office rather than the police do this. “The city clerk will have more time and interest in regulating these operators,” Bauman says. “The police have better things to do.”
So meet City Clerk Jim Owczarski, the new sheriff in town. How exactly will he track down the scoflaws? “Anybody with a smart phone can call for a cab,” Bauman believes. “When they get there you ask ‘where is your license?’”
I’m guessing this part of the plan might get some discussion as it comes before the Public Works Committee (in May) and ultimately before the full Common Council (in July, Bauman predicts). Perhaps they’ll add a requirement that Owczarski take a body building course. Or pack a gun. Maybe Sheriff David Clarke can consult.
Meantime there is a good deal of excitement in town about the arrival of Uber and Lyft. As I’ve previously reported, Milwaukee has for decades been a terrible town for taxis, with one taxi for every 1,850 residents, compared to one for every 319 residents in Phoenix, one for 424 Chicago residents and one for every 551 San Franciscans.
The city is terribly underserved, says Beth Weirick, CEO of the downtown business improvement district (BID 21) and a member of the city’s Public Transportation Review Board. “I’ve heard from tourists and locals and my own children it’s really hard to get a cab in this town. I could talk about some pretty bad experiences I’ve had with cabs, they can be dirty and not safe, though I’ve had good experiences.”
Weirich says she used the Uber service both in Milwaukee and other cities. “I liked it a lot. Every time it’s been a positive experience. The cars are clean, the drivers are polite and follow the traffic signals.”
“This is really an opportunity for individual cab operators to be entrepreneurial, “ Weirich says. “This is progress. This is innovation. This is everything we tell the world Milwaukee wants to be.”
Milwaukee, in short, is about to become a capitalistic battleground between traditional taxis, Uber and Lyft. I’ve already written about Uber, which launched in 2009 and serves some 65 cities world-wide. It has been touted as one one of the world’s fastest growing companies and has attracted billions in investment.
Like Uber, Lyft is based in San Francisco. It launched in the summer of 2012, but has already attracted $333 million from investors and now serves 32 cities, including Milwaukee.
Lyft held a launch event in Milwaukee on April 11 at Anodyne Coffee Roasters in Walker’s Point. “We love that Milwaukee has a tight-knit, small-town feel,” a company blog rhapsodized. “Lyft is all about community, too.” Its service will allow Milwaukeeans to “enjoy friendly rides from drivers who are community organizers, stay-at-home-moms, law school students, police officers, PhD candidates and more.”
Yet this open-door policy for all drivers was qualified by Lyft co-founder Logan Green in an interview with BusinessInsider.com, where he emphasized the safety advantage Lyft has over Uber and even other taxi companies. “With Lyft we run criminal background checks on every driver. We do a DMV check on every driver. We have a million-dollar insurance policy on every ride.” Logan says the company only accepts 6 percent of its driver applicants and any driver averaging less than a 4.5 star rating by users is dropped from the service.
To gain customers from Uber, Lyft currently takes a 0 percent commission on rides versus the 20 percent taken by Uber, Forbes magazine has reported, adding that “Lyft is literally losing money on each transaction.”
Then there’s SideCar, yet another startup based in San Francisco (it must be really easy to get a ride in that town) offering an online ride-sharing service company. SideCar actually launched before Lyft, in January 2012, but trails behind, with a mere $20 million in seed funding, and services in 12 cities. But chances are it will be in Milwaukee soon, and Ald. Bauman will be there to greet the company with a list of regulations. He has seen the future and it works technologically — and a lot quicker than just a month ago.
Anthony B. Sanders, Attorney for the Institute for Justice, Minnesota Chapter, offered this reaction to Bauman’s plan: “The Institute for Justice welcomes Alderman Bauman’s realization that there should be no lottery on the American Dream and that the city’s cap on the number of cabs should be lifted once and for all. We also welcome the news that the city is interested in accepting ridesharing as a safe and affordable method of transportation. Any regulation of ridesharing, however, just as with the regulation of taxicabs, should only be made for true reasons of health and safety, and not in aid of economic protectionism.”
Any gloating perceived in this statement is purely in the minds of readers.