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



DAUS VISITS AUSTRALIA – ADDRESSES REGULATORY REFORM & SMARTPHONE APP TRENDS


This past Spring, I was invited to deliver two speeches at the annual Australian Taxi Industry Association’s conference on the Gold Coast in beautiful Surfer’s Paradise. The surfing took place mostly off the beach and involved the worldwide web. The buzz about regulator response to the use of smartphone Apps dominated the interest of attendees both industry and regulators alike. It appears that the controversial and innovative use of smart phone technology to aid in the dispatch and/or hailing of taxicabs has spread widely among the international community, well beyond the United States to Canada, Australia, the Middle East and Europe.

One of my lectures provided an overview on regulatory issues observed through my world travels and work, some of which was described in a radio show interview I held with ABC Gold Coast Radio during the conference. To access an audio link of this interview visit:

www.windelsmarx.com/public_document.cfm?id=140&key=28A0

Also, I led a panel of regulators from practically every State on the Australian continent to speak of their various approaches to the thorny issues involving smart phones. This presentation was entitled: “There’s An App for That!” To view the presentation please visit:

www.iatr.org/documents/Final%20ATIA%20SmartPhone%20PP%20(10758639).PPT

All Apps seek to use GPS location technology in varied formats to basically help find and deliver the nearest taxicab, sedan or limousine. There are at least three types of App models that have been presented and developed around the United States and abroad:

(1) electronic hail model: allowing for the direct hailing and engagement of taxicab drivers directly through the smart phone as a virtual dispatcher sometimes cutting out the taxi dispatch business from the equation to share the fee with drivers;

(2) dispatch model: allowing for direct access to phone numbers of the taxicab companies whose cabs are most proximate to the consumer prompting an easy telephone communication or text with the dispatch company; and

(3) company brand model: those developed by taxi and limousine companies to prearrange service for their existing and prospective customers for use only with their vehicles and/or affiliated transportation partner companies as part of their national and international affiliation networks.

There are several issues that are presented by the use of smart phones, including:

(1) customer service and protection;

(2) public safety; and

(3) business accountability.

The problem is that most existing regulations governing metered rates of fare, license classification distinctions and hail and dispatch requirements were developed before the advent of smart phone Apps, and regulators are finding themselves attempting to interpret rules that did not contemplate these new technologies.

While many regulators have indicated an interest in exploring such technologies there are issues and challenges. On the consumer protection front, some Apps contain fare calculators based upon time and distance which can be viewed as a de facto taximeter. Of course, this presents issues of consumers being potentially confused and overcharged as normal taximeters usually withstand significant testing, review and approval from State weights and measures agencies.

Also, another big issue is the lack of identity of the drivers, vehicles and/or businesses that dispatch vehicles via smart phone Apps which has the potential to allow unlicensed drivers and vehicles to show up once service is arranged.

Finally, there are issues of potential legal and regulatory liability, and a lack of accountability for the companies that run the Apps. They are third party providers of services without obtaining licensure, maintaining rates and information required of other licensed taxi companies or limousines bases.

It is only a matter of time before these Apps are perfected, tested and receive industry, regulatory and consumer acceptance and use. Right now, a race to the top is progressing rapidly between various companies that are backed by private equity investors, internet start-ups and larger technology companies. The merger of these dispatch App technologies with credit and debit card payment processing solutions is inevitable given their potential marketplace compatibilities and synergies to address regulators’ policy needs. To proactively address these issues I released a white paper entitled:

“Rogue” Smartphone Applications for Taxicabs and Limousines: Innovation or Unfair Competition?, which can be accessed in the following link,

www.windelsmarx.com/resources/documents/Rogue%20Applications%20Memo%20(updated%208.6.12)%20(10777883).pdf.

Following release of this report, as IATR President, I formed a Smartphone App committee of government regulators that will help develop model regulations to not only allow for this new technology to benefit passengers and the industry, but to incorporate safeguards to eliminate the concerns noted above as well. To date, I have appointed the following regulators to the IATR App committee which I will Chair:

The committee expects to discuss its work and release its model regulation at the November 2012 IATR conference for public input and comment.

Another major concern on the minds of the Australian taxi industry at the conference was the pending government “Inquiry” being conducted into the Victorian taxi industry by Inquiry Chair, Professor Allan Fels. Following the conference, in May 2012, the Inquiry released its long awaited report which contained 145 draft recommendations for comment from the public. The full report can be obtained at:

www.taxiindustryinquiry.vic.gov.au/draft-report/recommendations.

Probably the most significant and controversial recommendation is to convert to an open market permitting system making taxi and for-hire car licenses available at any time to approved applicants for a set price. The new taxi licenses will be renewable every five years with annual payments (e.g., $20,000 per year in Melbourne), and the prices that existing taxi license holders can charge for license assignment will be capped. There will not be complete deregulation, but there will be more flexible vehicle standards and appropriate safety regulations.

Of the many other recommendations other significant reforms include:

• allowing for a more diverse vehicle fleet such as the introduction of London style black cabs;
  
  
  
• improvements to the training process including a “Knowledge” exam for Greater Melbourne;
  
  
  
• an increase in the drivers’ share of fares from 50% to 60%;
  
  
  
• the creation of a central dispatch system to ensure wheelchair accessible taxis are more available and efficient;
  
  
  
• the introduction of GPS monitoring, in car smartphone App compatible technology, and child safety restraints are among many other recommended improvements.
  

The efforts of the Victorian Inquiry highlight a recent movement among regulators internationally to conduct broad based reforms of for-hire transportation industry regulation to address longstanding economic, service and safety issues.

There are obvious intangible benefits to a city’s reputation as a taxi driver is often the first and last face seen by both business travelers and tourists. The cost, effectiveness and safety of the ground transportation system is increasingly being recognized by cities around the world in their desire to enhance quality of life for their residents, attract businesses, big events and tourism.

Both issues of regulatory reform and smartphone Apps are of such importance and interest that we will be spending
considerable time on both topics at various sessions to be held in Australia at our 25th Anniversary Annual Conference of the International Association of Transportation Regulators (IATR) in November 2012. The conference will be held at IATR’s corporate birthplace, Washington, D.C., from November 15th through the 17th, and we will be allocating an entire day’s sessions to innovative payment processing solutions and Smart Phone Apps with engagement by and between
regulators, technology companies and industry stakeholders.

Also, in addition to the first ever award being given for “Regulator of the Year,” the IATR will hold panel discussions among regulators who have engaged in significant reform efforts during the last year, including: Victoria, Australia; Washington, DC; Philadelphia; Toronto; Chicago; New Orleans; and San Francisco. The conference is now open for early bird registration and membership renewal, and you can do so now to reserve your spot by visiting the home page of our website, www.iatr.org.

IATR President Matthew Daus (far left) led a panel discussion on Smartphone Apps with regulators from around the Australian continent including, left to right: Karl Mortimer and Bill Gonis (South Australia); Marnie Williams (Victoria); Bernie Ingram (Northern Territory); Aaron de Rozario (Western Australia); and Anthony Wing (New South Wales). Rose Kent (Queensland), not seated at table, also participated in the panel discussion.

 

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