SEATTLE — In a fight pitting upstart technology and traditional business, app-based ridesharing firms and taxi companies are dueling for supremacy in the Seattle market.
But the next round will be shaped in part by the City Council, which is set to vote on ridesharing regulations Monday, and neither side is happy with the pending decision.
At the heart of the debate are politicians attempting to regulate fast-evolving companies such as Uber, Lyft and Sidecar, which use apps to connect passengers with rides from drivers using their personal cars instead of traditional taxis. With the touch of a few buttons, people can have a ride within minutes, a system many users say is more reliable than hailing a cab on the street or calling taxi company operators. Payment is done through the app.
But because these companies are so new, regulations haven’t caught up with the business model. In Seattle, the startups are outright illegal because they are not licensed. Taxi companies see that as an unfair advantage.
It’s a story that’s repeating throughout the country as state lawmakers and city government officials consider how to regulate emerging Web-based businesses that provide a service similar to that offered by traditional cab and limo companies but under a distinctly different model.
It’s difficult to determine the exact scope of efforts to regulate ridesharing companies, said Douglas Shinkle, of the National Council of State Legislatures, a Washington, D.C.-based nonpartisan nonprofit that monitors and researches state governments. Some proposals have come from state lawmakers, some from city councils and others from state agencies, such as in California, he said.
Arizona, Colorado, Georgia and Maryland all have had legislation pending this year, Shinkle said. No proposal has passed.
After months of lobbying and rallies, the Seattle City Council settled on a proposal to cap the number of cars on the road from ridesharing companies. The proposal, which was approved by a subcommittee and now goes to a full council vote scheduled for Monday, calls for a cap of 150 cars per “transportation network” company, meaning there would be about 450 such vehicles on Seattle roads at any given time. Under the proposal, the companies would be licensed and not the drivers, and insurance would be mandatory.
There are nearly 700 taxis that operate in Seattle and the surrounding county, according to city estimates. The City Council proposal would bump up the number of taxi licenses for the city by 200 over the next two years.
In Seattle city politics, a proposal approved by a subcommittee is unlikely to be changed before the full City Council vote.
The pending regulation has not been welcome news for taxi drivers.
“These unlicensed taxi businesses can only profit by risking public safety and price gouging,” said Yohannes Sium, an attorney representing Seattle-King County Taxicab Owner Alliance.
Sium and others in the taxi industry say the plan has a glaring loophole. They argue the cap on cars per company doesn’t stop other companies or offshoots from setting up shop in the city. They say the plan also doesn’t level the playing field on regulation and fees, including requirements to pay commercial insurance.
Drivers pay between $4,000 and $9,000 a year to be insured, said Dawn Gearhart of Teamsters Local 117.
Ridesharing company Uber said it carries a $1 million liability insurance policy per incident for its drivers that acts as primary insurance if the driver’s personal policy is not available for any reason.
The City Council, city attorney and Mayor Ed Murray “have each shrunk from their responsibility to protect the public because the unlicensed taxi businesses are popular with the public,” Sium said.
Sium said taxi companies are already experiencing consumer shortages as rideshares expand and take people off the street.
City leaders have been grappling with the issue for months. Murray said ridesharing companies will have to accept some sort of regulation. There were varying opinions in the council. Some members were irked that Uber initially wouldn’t disclose the number of drivers and other key information.
Eventually, Uber released some of its statistics for its UberX subsidiary. The company said it has about 300 drivers at any given time operating in the city. The company said those drivers are at risk of losing their livelihood if the legislation is approved. Lyft echoed their sentiments.
“It remains our position that caps on drivers have nothing to do with safety. We are only now releasing these driver numbers to illustrate to the Council that this legislation will kill ridesharing as we know it,” said Brooke Steger, Uber’s Seattle general manager in statement this past week. “In the face of steady or increasing taxi revenues, the Council is still choosing to protect the taxi industry over the tens of thousands of their constituents who have called on them to remove the caps.”
Uber and its supporters went on an aggressive public campaign to sway the City Council. Celebrities like Seattle pop star Macklemore and some Seattle Seahawks players tweeted their support for Uber. The company also robo-called its users.
Lyft has said the regulations would put them out of business in Seattle because many of their drivers use their cars for supplemental income. Their drivers may make their car available for rides while running errands or other routine tasks, the company argues.
“By passing an ordinance that does not prioritize public safety or support consumer choice, members of Seattle’s City Council have shown that their sole intent is to eliminate competition and protect existing industries in Seattle,” a company statement said.
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