IN FOCUS
by Matthew W. Daus, Esq. President, International Association of Transportation Regulators Distinguished Lecturer, University Transportation Research Center, Region 2 Contact: mdaus@windelsmarx.com • 156 West 56th Street, New York, NY 10019 T. 212.237.1106 • F. 212.262.1215

DR. DAUS HELPS INOCULATE AUSTRALIA FROM ROGUE APP EPIDEMIC

“NO WORRIES” - THE AUSSIES ARE READY TO FEND OFF “RATBAG APPS””

G’day! On my long flight to Australia, I pulled up some internet research to brush up on my Australian slang. Over the years on my trips to Australia, I have learned it is important to speak the local lingo. Not long after landing, I transformed into Aussie mode (pronounced “Ozzy”) and adopted the local accent to engage in what Aussies are very proud of, namely, their fast talking and use of slang words that have developed over many decades. I always fit right in as I am from Brooklyn, New York!

One slang term that was introduced as a new term to our transportation audience from “Down Under” was the terminology “rogue app”. I like to use the term “ratbag app” in Australia as the local slang term for “rogue” is “ratbag”. As quickly as the terms “rogue” or “ratbag apps” enter the industry vocabulary, I am confident most industry members and regulators will quickly retire them from usage. This will occur because the industry will be very aware of the many dangers these rogue apps create and it will be prepared to tackle the expected onslaught of disruptive technology transportation companies on their businesses. My visit this year was akin to a physician making a house call to dispense some preventive “app” medicine that has been tested by our colleagues in North America. After all, my initials are “M.D.”

Overall, the Australia taxi industry and its regulators have a highly effective, well organized regulatory system with unprecedented working relationships between the regulator and the regulated in many States. Regulation takes place primarily at the State level, with the industry organized by both State trade groups and at the National level by the Australian Taxi Industry Association (ATIA) which organized the annual conference in Adelaide, South Australia where I was asked to speak.

I also attended and addressed a bi-annual meeting of the National Transportation Regulators Group comprised of all Australian taxicab regulators almost all of who are members of the International Association of Transportation Regulators (IATR). A fantastic and informative time was had by everyone at the ATIA conference which included networking and trade show functions, as well as some of the best wine in the world and great live entertainment which included some impromptu musical performances by yours truly.

Many thanks and congratulations go out to ATIA’s Chief Executive Officer (CEO) Blair Davies, conference hosts Wally and Anne Sievers, and ATIA President John Bowe. The ATIA is lucky to have Blair back as its full time CEO given his proven effectiveness and broad range of experience and extensive international working relationships including with the TLPA and IATR.

?Left to right: Blair Davies, CEO of Australian Taxi Industry Association, Matthew Daus, IATR President, Bill Rousse, TLPA President.

Australia’s taxi industry is a nation of booking or central dispatch system companies that have well established brands in each locality and state. The drivers have a bailee/bailor relationship with medallion holders (owners or lessees), which is a legal distinction that may appear to be even further removed from an employment relationship well beyond the independent contractor model.

Most central booking systems have their own “white label” apps or apps that dispatch taxicabs using the brand logo of the local booking agent. There are only three third party apps that have launched in Australia at this time which are Uber in Sydney, and two other potentially rogue companies know as GoCatch and InGoGo. These apps attempt to completely bypass the licensed booking agents by dealing directly with the drivers, similar to what is currently happening throughout Europe. In a unique twist, the New South Wales state government actually provided government subsidies and funding to InGoGo to help develop their app.

Most of the Australian states have very high and effective levels of customer service, and this is the best preventive medicine to ward off a rogue app attack. The Australian regulatory system is very unique in that many States actually mandate minimum service levels for licensed booking companies which contributes to the effectiveness of service.

For example, Queensland regulations set forth the following minimum service levels:

• conventional (peak hour service) – 85% within 18 minutes of booking and 95% within 30 minutes;
  
  
• conventional (off-peak) – 85% within 10 minutes and 95% within 20 minutes;
  
  
• wheelchair accessible service (peak) - 85% within 18 minutes and 95% within 30 minutes; and
  
  
• accessible service (off- peak) - 85% within 10 minutes and 95% within 20 minutes.
  

The regulator is provided access to dispatch data maintained by the companies, and penalties may be imposed for not meeting standards. On the wheelchair accessible service levels, there is an ongoing bone of contention between the regulators and the industry where the booking companies claim the data is being skewed as current dispatch technology only allows tracking of the taxi at the point the meter is engaged, not taking into account the time it takes for the disabled passenger to approach and be secured in the vehicle.

In some states and cities there are just a few companies. As such, they can more easily control and develop their app brands to provide those customers searching for alternative dispatch options with excellent service. Some large cities like Sydney and Melbourne may, however, present opportunities for infiltration. One could argue that the recent Victorian Taxi Inquiry and its voluminous report and recommendations, if adopted by the legislature, could weaken the Aussie immune system and lead to rogue app virus incubation.

I advised the members of ATIA that there are three basic ways to guard against a rogue app epidemic:

1. to continue full speed ahead on booking app branding and marketing efforts utilizing local grass roots public relations efforts to ensure that customers are satisfied with using white label apps;
   
   
2. work with regulators to tighten rules and eliminate gray areas to ensure that the IATR’s model rules are adopted in relevant parts, especially the provisions that would require third party apps to be licensed as booking agent companies. Conversely, the rules would prohibit such companies from operating unless they enter into a contract or obtain approval as a licensed booking agent; and
   
   
3. to implement a solution for handling peak demand issues such as late night transportation, big events, rush hour, New Year’s Eve, etc.., by working with other dispatch companies to provide for a technological overflow model. The model will ensure that passengers who are trying to book with one fleet and cannot obtain service in accordance with approved levels, will be referred to another licensed dispatch company taxi with the approval of the passenger.
   

This prescription, which is already being dispensed and followed, will lead to a quick cure.

After updating the ATIA members, along with Taxi Limousine and Paratransit Association (TLPA) President Bill Rouse, about our battle against rogue apps around the world, I was asked to participate in a panel discussion on the topic with several Australian regulators, including Rose Kent and Jeanine Girvan from Queensland, Aaron deRozario from Western Australia and Karl Mortimer and Bill Gonis from South Australia.

Karl Mortimer represents Australia on the IATR App committee, and a number of Australian regulators reported that they have already taken or are taking action to implement the IATR’s model regulations. The regulators from Adelaide, South Australia are proposing rules to render third party booking apps illegal, and Western Australia has taken one of the IATR recommended approaches of proposing new legislation to hold dispatch services accountable for any contracts with third party apps.

Likewise, consistent with IATR’s model rules, Queensland is discussing legislative solutions to require licensure of third party taxi apps as taxi dispatch services. All of the regulators present indicated their support of and the importance of maintaining centralized booking systems, and the critical data they receive and use from those systems which helps regulators maintain control of service levels.

It does not surprise me that our Australian regulatory colleagues were mostly supportive of maintaining a level playing field for central dispatch operators. I have learned that there is a strong commitment to equality in Australia and an egalitarian culture. This quality manifests itself in many ways in the transportation sector, including the custom of passengers riding in the front seat next to the driver, and the dominance of the taxi industry over luxury sedans or limousines which are considered to be for dignitaries and not the average citizen. This is part of the “down to earth” nature of Aussies which makes their country so pleasant, and the fact that regulators are calling for protecting law abiding booking agents and apps, is consistent with that philosophy.

While Aussies typically end a discussion or potential disagreement with a “No Worries” comment to say “all is okay” or “you’re welcome”– this pleasantry does not apply to rogue or ratbag apps. You should be worried if you are a ratbag app seeking to disrupt the Aussies, and you will waste your time and money if you do. Cheers mates!

Matthew Daus (left), Board Chairman of the Brooklyn Economic Development Corporation (BEDC), honors NYC Council Member Diana Reyna (center) at its annual fundraiser, joined by Joan Bartolomeo, BEDC's President (right).

DAUS, WINDELS MARX AND IATR BLOCK UBER AND OTHER ROGUE APPS IN MARYLAND

Matthew Daus, Partner and Chair of the Windels Marx Transportation Practice Group, assisted by associate Jasmine LeVeaux, successfully represented the International Association of Transportation Regulators (“IATR”) in an investigatory proceeding conducted by the Maryland Public Service Commission ("PSC") and helped score another preliminary victory against rogue apps attempting to provide transportation services without required licenses.

On March 8, 2013, the PSC served Uber Technologies, Inc. (“Uber”) with a “Staff Data Request” which raised approximately thirty-five (35) factual inquires regarding their operations. Uber’s responses were due on or about March 18, 2013.

The extensive list of questions addressed, e.g.:

• whether drivers are licensed and/or receive background checks;
  
  
• how Uber confirms that drivers and vehicles have the proper level of insurance; and
  
  
• the company’s rate structure and method for calculating fares.
  

On April 15, 2013, IATR served the PSC with a letter (the “IATR letter") informing the staff of public safety concerns and other accountability issues that are raised when unlicensed transportation technology companies are allowed to operate without oversight. Annexed to the IATR’s letter was the IATR’s Proposed Model Regulations for the PSC’s consideration.

On May 9, 2013, the PSC Staff released its Public Report which finds Uber to be a “common carrier” providing transportation services for-hire. Accordingly, the PSC directs the company to file for authorization from the PSC.

The PSC Staff also states that each new app company seeking to begin operations in Maryland will be reviewed on a case by case basis for the PSC to determine whether they require licensure.

Finally, it appears that the PSC not only relied upon the IATR’s letter, which is prominently mentioned in the Public Report, but the staff also adopted the arguments made by the IATR in the Colorado Public Utilities Commission’s Rulemaking proceeding. These arguments dealt with similar issues and proposed amendments to Colorado’s transportation rules.

DAUS TO HOST NYC MAYORAL TRANSPORTATION FORUM
AT CUNY — SAVE THE DATE - JUNE 19TH, 10AM - NOON

UNIVERSITY TRANSPORTATION RESEARCH CENTER PRESENTS

NEW YORK CITY MAYORAL TRANSPORTATION FORUM

New York City Mayoral candidates from all major parties will answer questions on a wide range of topics affecting the NYC riding public, the business community and industry stakeholders.

Event Date: Wednesday, June 19, 2013

Time: 10:00 am - 12:00 pm

Location:
Baruch College Vertical Campus Conference Center
55 Lexington Ave, New York, NY 10010

The purpose of this forum is to give all candidates for Mayor an opportunity to address a wide range of issues that affect transportation policy, community sustainability, safety and livability in New York City.

Moderator:
Matthew W. Daus
Former TLC Commissioner
Distinguished Lecturer, UTRC/CCNY

RSVP at: www.utrc2.org/events/MayoralForum

About UTRC
The Region 2 University Transportation Research Center (UTRC) is one of ten original University Transportation Centers established in 1987 by the U.S. Congress.

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