Ride-share field has new player

NEED A LYFT? Cecilia Navarro is a Lyft driver working in Newport. The company is the latest ride-sharing service to launch in Providence in the past year with a mobile app linking passengers with drivers for hire. / PBN PHOTO/MICHAEL SALERNO
NEED A LYFT? Cecilia Navarro is a Lyft driver working in Newport. The company is the latest ride-sharing service to launch in Providence in the past year with a mobile app linking passengers with drivers for hire. / PBN PHOTO/MICHAEL SALERNO

The Rhode Island taxi and car service markets were already in upheaval when pink mustaches began appearing on the grills of sedans weaving through Providence, signaling another new competitor for local transportation dollars.
The mustachioed cars were utilizing Lyft, the latest ride-sharing service to launch in Providence in the past year with a mobile app linking passengers with drivers for hire.
Lyft’s arrival comes as state regulators, like many governments across the country, wrestle with how taxis, livery companies and Internet vehicle services should be regulated in an evolving marketplace.
At the end of this month, the R.I. Division of Public Utilities and Motor Carriers is scheduled to re-examine its most controversial recent car-service rule, a $40 minimum charge for all hired rides in commercial vehicles other than registered taxis.
Authorized by state lawmakers in 2012, the $40 minimum was designed to protect taxis – which are required to use meters, accept cash and operate around the clock and follow numerous other rules – from lightly regulated car services and “gypsy cabs” stealing fares.
As it happens, the $40 minimum would also undercut the Providence operation of ride-sharing service Uber, which launched in the city last summer unaware, according to the company, that per-ride charge was in the works.
After regulators approved the $40 rule last summer, four traditional (non-Internet) car-service companies challenged the new minimum in court, prompting the Division of Public Utilities to postpone enforcing it and now reconsider it.
Although it wasn’t a party in the original lawsuit, Uber is listed as a petitioner in the Division of Public Utilities hearing on the rule, which the company said would force it to leave the state if enforced.
The central question behind the $40 minimum ride is whether traditional taxi service is a public utility that needs to be closely regulated and protected from unregulated competitors.
It’s a question puzzling governments locally and globally that gets more complicated with each new startup bringing its own software platform and business model into the mix.
Lyft, for example, claims that even if the $40 minimum charge in Rhode Island is upheld, it won’t apply to the rides it facilitates, because the drivers involved are not professionals and the transaction informal, almost like car-pooling. The informal nature of the transactions are emphasized by Lyft passengers often riding in the front seat and, of course, the pink mustaches. Where Uber uses only drivers who have their “blue card” license to operate a commercial service, Lyft drivers almost all are part-timers using their personal transportation to make a little extra money on the side. (Lyft does do background checks on drivers and provides supplemental insurance for them.)
“This is a different model,” Paige Thelen, spokeswoman for Lyft, said about why the minimum would apply to Uber and not her company.
Perhaps to keep the service in a regulatory gray area, in some cities including Providence, Lyft allows passengers to make “donations” for their rides instead of payments, even though there is a set per mile or per minute fee schedule.
Despite the differing business models, the prices for Lyft and Uber rides on their respective websites earlier this month were nearly identical in Providence, with both companies quoting $2.30 per mile or 25 cents per minute plus a $3 base and $5 minimum.
While Uber has drawn attention for its “surge pricing” that raises rates to meet demand, Lyft does something similar called Prime Time, although it does not take a percentage of the increased rate during those periods.
Touting a recent agreement with California regulators, Thelen said Lyft works with city and state leaders across the country to reach agreements to allow the service to work within their regulatory frameworks.
In some places however, such as San Antonio, police have issued cease-and-desist orders against Lyft, although it is unclear whether drivers are observing those orders.
In Rhode Island, motor vehicle regulation is typically done at the state level, and so far state regulators have not given any indication whether they accept Lyft’s suggestion it is not subject to a minimum price per ride.
Rick Szilagyi, executive director of the New England Livery Association, which represents taxi and car-service companies, isn’t buying Lyft’s argument that it shouldn’t be regulated. “Our stance is it should be regulated just as taxi and livery is and has been,” Szilagyi said. “It is an issue of public safety and consumer protection.”
Szilagyi said part of what makes Internet ride-sharing services successful is their ability to “cherry pick” more lucrative rides from tech-savvy young professionals.
“Everyone is enamored by apps today, but there are longstanding companies who have operated following regulation in Rhode Island,” he said.
There is little indication of where the Division of Public Utilities will go with the $40 minimum after the April 30 reconsideration hearing.
But either way, the issue is likely to wind up before lawmakers again sooner or later.
Rep. Teresa Tanzi, D-South Kingstown, who sponsored the 2012 bill authorizing a per-ride minimum, has a bill this session that would exempt Internet services like Uber and Lyft from the $40 minimum ride.
Tanzi said she had been approached by Uber’s lobbyist about repealing the price floor completely, but decided to file something that would only exempt Internet platforms as a way to start a new conversation about taxi regulation.
“I think we need a fresh start,” Tanzi said. “It seems like more regulation gets piled on top of more regulation.”
Tanzi said a study committee may be the way to go on the car-service issue and sees local taxi companies possibly open to forming their own cooperative, mobile platform.
For new Lyft drivers dabbling with the service in their spare time to make a few extra dollars and meet new people, the layers of state taxi regulations seem a long way off.
Originally from San Diego, Cecilia Navarro is on active duty with the Navy at Naval Station Newport and drives for Lyft on the weekends.
She is still learning the Providence area and, perhaps unlike many veteran taxi drivers, describes the work as more fun than moneymaker. In the first two weeks after Lyft launched and she started driving, she picked up 52 rides.
“For me more than an income supplement, it is a fun thing to do,” Navarro said. “I get to know the city, and I get to know all the hot spots up in Providence.”

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