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

 

PROFESSOR DAUS DELIVERS KEYNOTE SPEECH IN PERTH, AUSTRALIA ON WORLDWIDE PROLIFERATION OF TRANSPORTATION SMARTPHONE APPS

I was pleased and honored to deliver the Keynote Address at the annual convention of the Australian Taxi Industry Association (ATIA) in Perth, Western Australia this April 2014. I also held a meeting with the International Association of Transportation Regulators’ (IATR) Australian delegation of regulators representing every state.

Once again, I must commend ATIA President John Bowe and CEO Blair Davies for an informative and fun conference. As always, my good Aussie friends were brimming with hospitality, great regulatory ideas and information.

Many thanks also go to IATR Board Member Bill Gonis of Southern Australia and to Aaron de Rozario of Western Australia, the Chair of the National Transportation Regulators Group, for hosting the IATR Australian regulators meeting in Perth. As a conference participant, I provided an update on the IATR’s activities and engaged in discussions about issues facing our members.

In the last month or so, Perth has been in the news internationally more so than I ever remember, primarily due to its designation as the official search headquarters for
missing Malaysian airline Flight 370. While the topic of my speech covered smartphone app proliferation around the world, transportation technology and economic market trends, the looming tragedy of Flight 370 was on everyone’s mind at the conference.

In this day and age, with taxicabs being tracked through GPS and other related technologies all around the world, it is truly unbelievable that a large jet carrying precious human cargo could disappear without a trace.

While we may never know what happened, this disappearance is unacceptable and should never happen again given how basic technology could have helped to quickly locate the airliner. I believe the larger point here is that as a result of this loss there will most likely be new updated technology in use in the airline industry. This consequence inches us one step closer to more widespread public acceptance of tracking by the government for public transportation safety reasons.

One of the highlights for me was spending some time with the Right Honorable Lord Mayor of Perth, Lisa Scaffidi, who delivered the opening remarks for the conference. Although I debated the issue of disruptive apps with her, she seems to love them. I am hopeful we can convince her of the problems associated with unaccountable and unregulated transportation technology. The Lord Mayor understands the industry well, as she continues to be a dedicated member of the Perth Taxi Council, and I believe she will ultimately do the right thing.

Professor Matthew Daus (right), and The Right Honorable Lord Mayor of Perth, Western Australia, Lisa Scaffidi (left), listen intently to opening remarks at the 2014 Australian Taxi Industry Association conference.

Once again, all eyes on the continent appear to be focused on the State of Victoria, and, in particular, the taxi reforms being implemented as a result of the competition inquiry of Professor Alan Fels. A new agency, the Taxicab Services Commission (TSC), has been created and led by its Chair Graeme Samuel and CEO Marnie Williams.

I visited and toured the TSC, and met extensively with Ms. Williams when I visited Melbourne. I was very impressed with the new agency’s operations, and discussed the implementation of the 139 reform recommendations from the Victorian Taxi Inquiry that were approved by the State legislature.

This incredible city, with a Grand Prix track, major sports arenas and incredible shopping, entertainment and dining options, is aggressively implementing reforms too numerous to mention. The primary changes include a “Knowledge” exam for taxi drivers, prebooked only services and the reduction of the 10% credit card fee charge to no more than 5% of each noncash trip.

To read more about Victoria’s reforms, see www.taxi.vic.gov.au/taxi-reform. CEO Williams did announce at the ATIA conference that, while the TSC does require accreditation or approval of Transportation Network Providers, such as booking or dispatch systems, accreditation would not be required should a customer contact a driver directly using any smartphone app to book the ride. Predictably, this has already allowed rogue apps to run free in Victoria.

The same is happening in Sydney, New South Wales, where the government has not taken action to prevent rogue apps from operating. In fact, the government of New South Wales has gone so far as to provide a government grant to a company known as “GoCatch” to develop an app similar to “Uber” and “InGoGo,” all of which are currently of concern to dispatch and taxi companies across Australia. Further, Canberra, the Australian Capital Territory, has seen its first appearance of the GoCatch app. It has neither deeply penetrated the market as of yet nor been challenged by regulators.

Since I last visited Australia and warned of rogue (or “ratbag”) app infestation in Europe, the US and elsewhere, my report this year focused on the massive infiltration of both legal and rogue apps in practically every country around the world. Every continent except Antarctica has apps, and some common themes were revealed by my research.

For example, most rogue apps are using the sedan or limousine market, or simply unlicensed cars to provide on-demand taxi type service. Italy, France, Germany, Greece, Japan, Russia, the Middle East, India, the US, Canada and Australia might have some slightly different variations and players, but for the most part, the “times they are a changing” as Bob Dylan would say. Our industries will never be the same, and, as a result, a new normal is developing and, in some cases, is already in place.

Contrary to what has been bragged by one rogue app company we all know well - “Resistance is not futile!” For example, in Paris, “La Resistance” is alive and well, as it is in Japan and many other jurisdictions that are insisting on requiring that rogue apps, like every other transportation company, be licensed. These countries and municipalities recognize the common theme of rogue activity that is surfacing due to the proliferation of all of these disruptive apps, as they either:

  1. operate sedans or limousines while mirroring taxi service by utilizing time and distance rate for fares, at times even at exact taxi fare rates; and/or

  2. bypass dispatch companies by giving smartphones directly to taxicab drivers to take calls emanating from sources other than the licensed dispatch or booking company.


For instance, Uber continues to use limousines or sedans to provide taxi type service in: Bangalore, India; Dubai and Abu Dhabi, United Arab Emirates; Tokyo, Japan; Milan, Italy; and Paris, France.

Paris taxi drivers are striking and revolting, Milan taxi drivers are engaged in uprisings and the Japanese government just forced Uber to become licensed as the Tokyo Taxi Association has launched its own legal and competing app.

However, rogue apps such as “MyTaxi” continue to bypass the booking companies in Germany and other parts of Europe by allowing communication directly with the drivers just as InGoGo and GoCatch are doing in parts of Australia.

No continent is safe or free from apps – they are everywhere. Examples abound, including:

  • Greece, which is facing the launch of an app known as Taxibeat as deregulation becomes closer to reality;

  • China, where, while there are many apps, a showdown is looming between “Didi Dache” and “Kualdi”, each backed by a rival tech giant investor, Alibaba Group for Kualdi and Tencent Holdings for Didi;

  • Russia, where both “GetTaxi” and “Wheely” are prevalent in the market; and

  • South America, as apps such as “Taxija” and “Easy taxi”
    compete in Brazil as the World Cup and Olympic Games approach in Rio.


The latter app, "Easy Taxi", has also exploded in 15 markets throughout Latin America as well as Africa and the Middle East. In fact, practically every other South American country is getting into the app craze which includes such players as:

  • “Taxibeat” (Sao Paulo and Rio, Brazil),

  • “SaferTaxi” (Chile, Argentina, and Brazil),

  • “Tappsi” (Colombia),

  • “DineroTaxi” (Argentina and Peru) and

  • "Cabify" (Chile and Peru).


In Mexico, “Taxibeat,” “Yaxi” and “Taxi Seguro” are duking it out with some of the other apps mentioned above. The list goes on and on.

There is also a proxy war among major private equity firms that are investing in apps worldwide. Where there are apps there are technology hedge fund investors behind the scenes struggling for both quick and long term returns. Practically everyone is getting in on the action, including Google, Amazon’s founder Jeff Bezos, Sir Richard Branson, Alibabi, Tencent Holdings and many more.

The list of well known Silicon Valley investors and the rapid app expansion craze will ultimately lead to one thing: a race to IPOs (Initial Public Offerings) so that many who are already rich can enhance their fortunes. Although IPOs are common and accepted in a thriving market economy, unfortunately, the resulting reckless disregard for public safety and sound transportation policy is the concern.

The history of IPOs, whether Twitter, Facebook, Zynga, LinkedIn or Google, is that hundreds of millions of dollars of investments and losses are irrelevant when stock price increases result in 150-750% returns on investment.

The Silicon Valley cartel and global elite financial institutions have taken over leaving the means of transportation production hanging in the balance. Regulators and the public must unite, or we will certainly see a “New World Order” that makes profit the foremost concern for investors while quality of service and safety are relegated to secondary after thoughts.

What are regulators and the industry to do as they face a reverse 1984 scenario where private companies, with no accountability to the public, will be amassing tremendous data on everyone who uses a transportation smartphone app, allowing them to know our thoughts, desires and whereabouts at all times? Certainly the Flight 370 tragedy highlights how such information could be proven useful in terms of tracking one’s whereabouts. However, even if the governments involved in the search for the plane are possibly withholding information, what are the chances that private companies will ultimately come forward with your private information that they will purport is “proprietary” to them?

I believe, ultimately, that the inevitability is the public, in most free countries, will cede and accept the government obtaining such information because, in some way, it will help to protect them from the “evils” of technology. I also anticipate that tragedies such as Flight 370, as well as the recent spate of traffic fatalities such as the one involving 6 year old Sofia Liu in San Francisco last New Year’s Eve caused by an UberX driver, will lead to regulators obtaining and utilizing data from smartphone app providers. By so doing they will be able to monitor and prevent abuses by tech companies that have run amok.

During the ATIA conference, one such regulator, during a panel discussion, called for turning over dispatch and other data collected by the app companies to the government as booking companies must do in most Australian states. There was a surprising round of applause – “yes” – from the industry! It has taken an app revolution to cause the industry to realize that regulators must obtain data and some control in order to keep everyone honest. This is the direction I believe many jurisdictions will be going in the future. Only time will tell.

 


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