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IN FOCUS |
by Matthew W. Daus, Esq. |
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PROFESSOR DAUS DELIVERS “GAME CHANGER” TECHNOLOGY DISRUPTION SPEECH IN WASHINGTON, DC AT U.S. DEPARTMENT OF TRANSPORTATION HEADQUARTERS
I was honored and pleased to deliver a “Game Changer” speech at the request of the Assistant Secretary of the United States Department of Transportation (US DOT) in Washington, D.C. on February 6th, 2014.
The two day conference hosted by the U.S. DOT’s Research and Innovative Technology Administration (RITA) was entitled the Clean Transportation Sector Initiative Workshop – Reducing Greenhouse Gas Emissions Beyond 80% by Mid-Century. A select group of distinguished members from the private, public and academic sectors specializing in transportation and technology, as well as automotive and climate change experts, attended and worked closely together for two straight days.
Workshop moderator Kevin Womack, the U.S. DOT’s Associate Administrator for Research and Technology, coordinated excellent sessions that highlighted the crossroads between technology and environmental sustainability. Day 1’s program included keynote remarks by the U.S. DOT’s Deputy Assistant Secretary for Policy, and sessions included the topics of Fuel Pathways, Greenhouse Gas Reductions, Roadway Electrification and Zero Emissions Strategies. Speakers included representatives from the National Aeronautics and Space Administration (NASA) and the National Renewable Laboratory.
Day 2 of the workshop focused on “Disruptive Technologies – Clean Sector Strategy.” U.S. DOT Assistant Secretary Gregory Winfre delivered the keynote speech and discussed the activities and mission of RITA and how the ideas expressed would be collected, analyzed and relied on to make future policy decisions.
I was delighted to serve on a very lively panel that day which was moderated by Marcia Pincus, who runs the AERIS program at RITA. AERIS stands for “Applications for the Environment: Real Time Information Synthesis.” Other panelists portrayed diverse viewpoints, and included media, solar energy and electric vehicle entrepreneurs.
The discussion centered on philosophical, political and social issues facing the climate change challenge, and what impediments stand in the way of meeting the 80% goal set by the Obama Administration. New vehicle types and fuel infrastructure,
as well as the role of technology market disruption were robustly debated. Some panelists pointed the finger at government bureaucracy, while others argued that automobile industry lethargy and politicians are barriers to dynamic “game changing” environmental policies, decisions and GHG reduction.
My lecture was entitled Disruptive Transportation Technology – Sustainable Solutions or Emissions Multiplier? This “game changer” speech, as US DOT described it, focused on market disruption, technology, transportation and the environment.
As soon as I was asked to deliver such a speech, I needed to properly research the nature of a “game change” lecture. Initially, the movie “Game Change” about Presidential Candidate John McCain’s nomination of Sarah Palin as Vice President crossed my mind; especially due to the relationship between former Governor Palin’s book entitled “Going Rogue” and the term “rogue smartphone apps.”
The term “rogue app,” which I coined a few years ago in a report I authored, operates within the penumbras of the law, or totally outside of existing transportation regulations. However, when I came to my senses, I looked up the term “game changer” in the Mirriam Webster’s dictionary, and the term is defined as “a newly introduced element or factor that changes an existing situation or activity in a significant way.”
Former TLC Commissioner/Chair and Coalition of Transportation Associations (COTA) President/Board Chair Matthew W. Daus, congratulates
his friend the newly appointed Chair of the NYC Council Transportation Committee, Ydanis Rodriguez (second from left), at his first
Transportation Committee meeting on January 29, 2014. Joining them are COTA's VP for Governmental Affairs, Barry Lefkowitz (third from left)
and Windels Marx Special Counsel and former TLC Chief Judge, Pasqualino Russo (far right).
Well, that definition generally does fit the disruption upheaval taking place with smartphone apps deployed by transportation companies. The RITA program described “game changers” as “under developed technologies or strategies that could
dramatically alter opportunities to reach clean transportation goals.” So, there is the context of what games may be changed and how.
The gist of my “game changer” speech presentation and subsequent discussion ran deep into transportation policy, governance models and political philosophy, as well as the nuts and bolts of the automobile industry, environmental issues and the concept of regulation versus deregulation.
The sharing economy has led to many new products and services, in the hotel/apartment rental space, automobile rental and for-hire ground transportation industry to name a few.
The concept of disruption should be classified in two categories:
(1) legal technology or other innovations; and
(2) the illegal equivalent.
There are plenty of examples of market disruption that involved innovations where businesses upended entire markets, but followed the laws, or sought to have the laws changed to accommodate new technology. Examples include Ford’s introduction of the Model T and mass production, the migration from mainframe to PCs/personal computers, from landlines to cellular phones – all done in a way that involved complying with the laws of the United States.
Examples of illegal disruption would include, not just rogue smartphone apps and ridesharing services, but Napster’s early attempts to up-end the recording industry via alleged copyright violations, and Airbnb’s apartment rentals being classified as the unlicensed operation of hotels.
In a democratic society that protects and balances life, liberty and property rights - public safety, equal protection of the law and due process must be at the top of the list. Otherwise, our entire system of government falls apart. In short, policy makers need to act quickly to address technology changes which we tried to do at the International Association of Transportation Regulators (IATR).
The IATR, a non-profit peer group of government transportation regulators, helped develop model regulations to allow smartphone transportation technology to legally flourish with accountability and safety safeguards. IATR regulators are already actively using these best practice recommendations to change local rules around the country in a proactive way.
The smartphone transportation app as a concept itself may not be truly disruptive, in that the idea is simply using software on a phone to do for customers more conveniently and efficiently what technology dispatch systems have been doing in the limousine and taxicab industry for years. Such apps have been around for a while now, and it is truly a service improvement unto itself. However, these apps do not appear to be true “game changers” in terms of how the US DOT program describes the term.
It is not the absence of effective technology that has caused service problems in the taxi industry, but the failure of some taxicab companies to use their dispatch services along multiple competitive fleet businesses to share customers and provide more prompt service. Passengers often view taxicab service as a public utility, and expect uniform standards and fares which runs afoul of the impulse of taxi dispatch companies or fleets looking to shield and protect their customers from their own taxi business competitors.
If this passenger sharing mechanism was in place, like the company-to-company business affiliation model in the limousine industry (where business referrals are shared nationally and locally with competitors), these new app companies may have never obtained their foothold and market entry.
Smartphone app disruption in the ground transportation arena has less to do with technology improvement than it does with simply not following the law and engaging in predatory actions, aggressive social media marketing and extensive lobbying. Rogue transportation app companies basically entered the market the easy and illegal way, by cherry picking the best limousine drivers or simply using unlicensed drivers, charging premium fares based on time and distance like a taximeter, and providing “so-called” improved taxi service as limousines in disguise.
Is it truly innovative or such a disruptive game changing event worthy of the brilliance of Henry Ford’s Model T, to aggrandize these companies when they simply violate the law and risk loss of life? This has already happened several times, as exemplified by the horrible tragedy that could have been prevented this past New Year’s Eve, when 6 year-old Sofia Liu was struck and killed by an Uber driver in San Francisco. The driver was previously convicted of reckless driving in Florida and not properly vetted in the app frenzy to provide service everywhere, immediately and at all times – and at all costs!
The other fallacy is that these apps are needed to reform poor taxi industry service. An app company coming to a city to deploy black car and limo drivers to provide more expensive and better service to taxi customers is like putting a band aid on a deep wound. The answer may be for the local regulators and elected officials to reform taxi service with:
- service standards monitoring vehicle dispatch response time to passengers, enforced by law as is done in several states in Australia;
- enact regulations improving the condition and age of the vehicles; and
- raise the quality and standards for driver licensure and behavior.
More than apps, that is what is sorely needed, and technology companies are simply distracting the public by using poor taxi service as an excuse for them to enter a market and dominate it.
Smartphone apps to help passengers find the nearest vehicle, book the vehicle instantaneously, watch its approach on the phone screen, to see the name and contact information for the driver, and have the ability to pre-load credit card information to make service seamless, has the ability to increase efficiency and help reduce emissions. It is definitely a sustainable solution to reduce the number of empty vehicles driving endlessly in circles looking for fares or waiting for service calls, by keeping them filled to the brim with passengers at all times.
Also, in today’s new sharing economy, the Millennial generation shuns car ownership and usage by moving to urban environments to use mass transit, car share rental services or the new ridesharing applications. Such rideshare apps use drivers –
“in theory” – to pick up multiple passengers going in the same direction.
In practice, all of these services are illusions of sustainable solutions, as they are either adding more vehicles to the road, harming the environment, or using existing vehicles and drivers already on the road deployed by other existing taxi or limousine companies. They are providing more prompt service for passengers, but are doing so by merely tapping into a growing or larger existing pool of vehicles, and are not presenting any overall scalable environmental efficiency.
The marketing campaigns for ridesharing companies falsely represent a “car pooling” type of voluntary service with multiple passengers. Instead, this so-called “ride-sharing” is most often between just one driver and one passenger, and could involve an unlicensed or under insured vehicle, and an unlicensed or inexperienced driver.
These drivers are not volunteers, but are working for a company, and are using the smokescreen of helping the environment and voluntary tips to offset gas and other expenses when in fact they are compensated workers whose companies are not likely to serve repeat customers who did not tip well, or at all.
The tip is a fare, and it is for-hire service, nothing more, nothing less. True ridesharing could involve using the GPS navigation capabilities on smartphone apps to pick up multiple passengers in larger shared ride shuttle vans during peak or off peak times when taxicabs are unavailable to hail the nearest passenger en route to common destinations. That is the direction we should be going instead of the sham ridesharing that exists.
Let’s look at the big picture here on what is really going on behind the scenes. At this point it appears that the rogue app and ridesharing movement may ultimately have less to do with transportation than meets the eye. As many tech start-ups do, I suspect these companies are gearing up to be publicly traded through an Initial Public Offering (IPO). Ultimately, why do companies such as Google or moguls like Sir Richard Branson, pump hundreds of millions of dollars into a ground transportation company?
Yes, I am sure they want to transform the transportation world, but the true economic value behind these investments are the consumer or passenger data that will be mined for advertising and other purposes. Also, I do not believe it is just a marketing gimmick when Uber sends out emails asking transportation customers to order Christmas trees, adopt kittens, rent a helicopter to the Hamptons, or skywrite to your sweetheart via airplane on Valentines Day.
I believe another stream of commerce is being opened up using the massive global network or “digital mesh.” This mesh is being developed with an infrastructure or army of vehicles around the world with an immense database of consumers in markets everywhere.
Could Amazon now send their products through Uber to the masses in a seamless non-transportation related transaction? In any event, local based transport data is available showing these companies all the details about where we dine,
get entertained, go to work and otherwise monitor our whereabouts, tipping and spending patterns.
Why do consumers have such a visceral reaction to government knowing such details or having such data, as opposed to private companies who are not transparent or accountable, is beyond my comprehension.
The ridesharing companies, based on the reluctance of private equity investors to compete with Uber, sat around a table and thought of an idea or gimmick that would simply steal Uber’s customers, and be the new and most happening service in the tech world. A few pink mustaches and fist bumps later, their goal is to loosen standards, deregulate the industry to add unlicensed drivers, and to try to compete with Uber at the retail level.
What is evident to me is that this rogue app war has more to do with Apple versus Google than transportation efficiency and better service. With web based advertising revenue forecasts not reaching the same levels as handheld smartphone devices or tablets, the reality is that the next decade will see a dramatic shift globally with practically everyone having a smartphone, and of course, everyone in the world needs transportation.
Assistant Secretary to the United States Department of Transportation, for Research and Innovative Technology,
Gregory Winfre (left) alongside Professor Matthew W. Daus.
On February 6th, Professor Daus delivered a major policy speech on ground transportation technology disruption and climate change
at the request of Secretary Winfre at U.S. DOT Headquarters in Washington, D.C.
The vessel or vehicle to mine data and sell products is the smartphone and the ground transportation industry. It reminds me of the science fiction movies “Alien” and “Invasion of the Body Snatchers” where the Silicon Valley alien company enters the human host (the taxi or limousine company), saps it of life, and either replicates the host (as in the Body Snatchers) or discards its lifeless body (as in the movie Alien), giving birth to a scary new form of alien life. In both scenarios, the host transportation company, vehicles and drivers, are used for a different purpose, and passenger lives and businesses are lost in the process.
That is what is happening now, and the deregulation movement started by these companies involves simply a market dominance strategy to steamroll, demolish and co-opt the existing infrastructure and industry. With little or no accountability, responsibility or risk, rogue apps simply take the drivers, the cars and the businesses of others that were built for decades, and make them their own - overnight. How dare the government or anyone on this planet stand in the way of technology, the ultimate deity, or question the motivations of Silicon Valley?
So “Who’s Next?” and “What’s Next?” To answer those questions, I am reminded of the last line of The Who song entitled “Won’t Get Fooled Again” – where vocalist Roger Daltry exclaims “Meet the New Boss! Same as the Old Boss!”
Once the ground transportation industry is dominated and taken over through deregulation, these same companies, as new bosses, will come to the regulators and ask for tougher standards and closed market systems once they own the means of production. As Woody Allen (who is now in the news once again) said in the famous courtroom scene of the 1971 movie “Bananas” – “It’s a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham!” Well, that’s how I basically feel about “rogue apps,” and sham “rideshare services.” It's completely “Bananas”!!!