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April 24, 2014

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Transportation:

Vegas cab alternative runs into regulations stifling competition

Image

Steve Marcus

A Bell Trans limousine heads to a passenger area at McCarran International Airport.

A San Francisco company that’s given the limo business a digital-age makeover wants to do business in Las Vegas but has run headlong into regulations that shield cab companies from competition.

Uber Technologies Inc., which already offers its service in nine cities, runs dispatch centers that customers access via a smartphone. To provide the rides, the company partners with licensed companies that use sedans, SUVs or limousines, using those vehicles during the companies' down time. No cash changes hands — the transaction, including tip, is paid for using the phone.

Uber is technically a livery business and as a result would not be regulated as a traditional taxicab company. But because it would be new competition, its efforts to enter the Las Vegas market has ignited a political war of sorts with cab companies.

Uber executives told the Sun they look forward to doing business in Las Vegas. But sources said the company is having “an interesting time” dealing with an old state statute requiring livery services charge a high minimum hourly rate.

Most livery services in Southern Nevada are required to charge a minimum rate of about $40 to $45 an hour. It means that even if a ride is five minutes long, the cost is at least $40.

Whether it was the intent of the law or not, it ensures that limos pose less of a threat to the Las Vegas taxicab business, which, using meters, can provide short rides at lower costs.

Uber executives said they haven’t encountered high minimum charges anywhere else. And no city where Uber operates has a minimum hourly rate. Uber started in San Francisco, where its base fare is $8.

The Nevada Transportation Authority approves rates for each company. Companies can request that regulators set lower minimum hourly rates. But even if a livery company figures it can make a profit with a minimum hourly rate of, say, $15, sources said opposition from the powerful cab companies would make it difficult, if not impossible, to get regulators to go along.

The Nevada Taxicab Authority, which regulates the taxi industry, is looking closely at Uber. Charles Harvey, Taxicab Authority administrator, said an “unregulated, unlicensed quasi-taxi operator is a concern.” He said the agency is doing research on the company and talking to the Transportation Authority, which regulates limousines.

The state’s Office of Economic Development is also interested in the company, but for different reasons.

While it offers transportation, Uber is a tech firm, founded by a man who developed a smartphone application after he was unable to hail a cab. It’s the kind of company that Gov. Brian Sandoval has said he wants to lure to the state to diversify the economy.

Dave Berns, the Office of Economic Development’s communications director, said state officials have spoken with Uber representatives and reached out to the state Department of Business and Industry and Transportation Authority about its interest in moving here.

Uber’s use of technology is a big part of the company’s allure. With Uber, money and credit cards are never exchanged — everything is done through a smartphone application, which already has logged a customer’s payment information. When a customer punches their Uber smartphone application, they can “watch” the vehicle on a map and see how how long it will take for the vehicle to arrive.

How Uber will fare in its effort to do business in Las Vegas is uncertain. But the company has a track record of facing adversity and winning.

In January, the head of the Taxicab Commission in Washington, D.C., Ron Linton, did a “sting” on Uber, towing away an Uber sedan and levying a fine because Linton said the company was doing the same thing as taxi companies but isn’t regulated like a cab company. National Public Radio reported Linton is moving quickly to get credit card machines into taxis to “make them … more Uber-like.” Uber is still operating in Washington, D.C.

San Francisco cab companies fought the company because its former name, UberCab, sounded too much like a taxi company. The company shortened the name to Uber.

Jim Gillespie, general manager for San Francisco’s largest cab company, Yellow Cab Cooperative Inc., said Uber has not hurt his business because the city has too few taxicabs. His company gets 6,000 to 7,000 calls a day but can only serve about 20 percent of those calls.

The city is expected to approve about 500 more cabs within the next year. Gillespie believes Uber will be hurt more by the increased competition because its service is more expensive than traditional cabs.

Sources told the Sun that Uber will know within a week or two whether it wants to try to do business here or go to other cities where regulations aren’t as daunting.

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  1. It would be nice to have some competition for McCarran. Any potential savings on Budget Airlines is quickly lots by High Taxi Fares from a dysfunctional Public Transit System or Parking Price Gouging at the Airport. There is no reason why a Public Transit System should not reach the Airport every couple of minutes unless you are looking at a Corrupt Political System. Please Bring The Mob Back they seemed to be far less incompetent than our current politicians.

  2. Appointment to the Nevada Transportation Authority or the Nevada Taxicab Authority have for years been highly sought positions for persons who want to gain favors from the industries they're supposed to regulate; i.e., free meals, vacations, cash. This in exchange for keeping out competition. Until both agencies are erradicated, there will be no livery services in Southern Nevada.

    Steve Miller, former Clark County Regional Transportation Commissioner

  3. If it walks like a duck and quacks like a duck, it's a duck. This isn't an alternative to a taxi cab, it is a taxi cab. Even the article claims that until a law suit in San Fransisco they kept the word "cab" in their name. An alternative to a taxi cab is simply not riding in one, it's not simply avoiding calling the vehicle a cab.

    I've got no reason to defend any taxi companies, and I nor any of my friends or family are associated with any taxi company. But it is quite obvious that they are indeed in the right on this. Wheather or not you like them doesn't factor into the equation. The point is that this guy wants to start a new taxi service and should indeed be subject to the same regulations.

    The bigger question of course is what protections are there for Drivers and Passengers with these "uber" cabs? If they're not subject to regulations by the Taxi Cab Authority how is a passenger protected from outrageous fees? How are they protected from stolen luggage? Hey, how is a driver protected from being robbed and murdered if cameras aren't installed in the vehicles? In any of these cases and others, who are you going to file a complaint with. Unless it's regulated, you might as well just be hitchhiking.

    But most of all, why is this guy so bound and determined to start his own cab company? He's got a great invention, and I'm sure that many taxi cab companies would love to implement it in their fleets. He could just license the stuff and sit back and watch the royalties flow in. He wouldn't have to worry about liabilities and profit loss from these lawsuits, just make money.

    That of course is not to say that this uber concept is actually going to function in Las Vegas. Vegas ain't other cities. You can't pick passengers up off the streets in the resort corridors where this stuff would be used the most. You're going to end up with lots of people complaining they can't get cabs on the Strip, and other hacks will be angry that their fares are being poached while they're forced to sit for hours in queue lines at hotels because they do things the proper way.

  4. This is crony capitalism on parade here. This is exactly what the occupy people should be protesting. Where the hell are they?

  5. This doesn't surprise me at all. You have ground transportation companies in Vegas that have fingers in multiple pies (cabs, shuttle buses, limos) and that in itself stifles competition.

  6. The "Authority" is ran by the big two cab companies. And like the Strip, there are only really two or three cab companies in town, using 10 different names for the same operation.

    They are making enough money the old fashioned way (cab top signs and cab wraps) while screwing over the drivers who than screw over the customer... Why would they ever want to license something that would be benefit to the customer and not enrich themselves??

  7. Someone tries this every ten years or so.

    They can park those limos right next to the privately owned cabs, shuttle buses, jitney's, tiny two person cars, rickshaws, and carriages the other guys wanted to use on the strip instead of cabs.

    The cab companies have a lock here....the limo guys can throw more money away but the end will be the same.

    I think the scooters are still being rented on the strip. If so they must have a lock too.

  8. Sounds like we need to eliminate outdated statutes. We have a legislative session coming up. Maybe they can skip a show and tell or two and get something relevant done.