NZ Uber war shows divide between dinosaur business models and new innovation

Uber is under attack in New Zealand. The powerful Taxi Federation has engaged in an unrelenting campaign to see them shutdown and now the police are in on the act, fining drivers because a smartphone apparently doesn’t constitute a smart meter. Mainstream media are fuelling the fire as any controversial news about Uber is great click-bait. But what is really going on?

In New Zealand, Uber drivers have to jump through most of the same hoops as taxi drivers. They need a “P endorsement” — a passenger endorsement ticket from the New Zealand Transport Agency certifying the driver as “a fit and proper person” a Passenger Service Licence and a Private Hire Service Registration. A police check is done. – source

Uber is a very simple and very safe service that hooks you up with a driver via your smartphone. You enter your location and destination and can request an estimate before you commit. Your details and the driver details are exchanged including phone numbers, other details, and photos of yourself and the driver. The driver arrives and the trip is logged in real-time via GPS.

You can share that trip, live, with your partner, family, or friends, so they can see exactly where you are in real-time  – far safer than a traditional taxi. At the end of the journey you rate the driver and they rate you. Reputation is essential for both parties to use the service. The cost is automatically deducted from your credit card and no transaction in the car is required.

It beats the hell out of a normal cab, and, the majority of the time, it's a lot cheaper.

Criticisms vary, but in my opinion, are generally unsubstantiated.

There seems to be a belief that the drivers are not police vetted or certified professional drivers. We know that isn’t true and in my experience every driver I have had in Wellington is either a current or former taxi driver, or a professional driver (including some who regularly contract to government and diplomatic missions).

Safety is attacked, but as you can see above, safety is better in this model. Better, bad drivers will rate lowly and Uber has a threshold where they are cut off. Same as bad riders. If you are a bad passenger, you’ll find your account is suspended as well.

The Taxi Federation has raised the price increase issue. When demand is high, Uber increases its prices. Now, when they do that by the way, you get a big warning message before you order a cab, and you can still get an estimate. It’s not a surprise. At least Uber prices come down.

When was the last time a taxi company reduced their pricing? Oil prices have fallen by half, but as far as I am aware, not a single taxi company have reduced their fares. At least Uber is transparent in its pricing and can change it in real-time.

The Taxi Federation sites international examples of crime. Such as the rape of an Uber rider in India. This is used as a deliberate scare tactic and mainstream media love the click-bait opportunity it provides. Here’s the context.

I did some research on taxi crime in India and found that there are tens of thousands of reported crimes each year, from assault, to robbery, to rape, to murder. In fact, there are entire taxi cartels that simply survive through crime. So we have a single Uber incident versus an industry of taxi crime and tens of thousands of offences.

So why the attack on Uber internationally?

It’s simple. In my opinion, taxi federations globally largely represent a cartel situation and rake in a massive amount of money. If you aren’t part of a federation and paying your protection money, then you can expect business to be very hard. Also, using Wellington International Airport as an example, many other traditional businesses have managed to find a way to get their nose into the trough and clip the ticket on taxi rides as well. All of these business stand to lose as Uber grows.

Is the Taxi Federation just a leftover relic of yesteryear filled with old white guys who can’t work out a smartphone?

Rather than adapt their business models, like one Lower Hutt Taxi company (good on you!), they choose to try and kill the new player in the market to retain their profit. It’s an ugly approach to business and morally questionable in my opinion.

Uber is good for the passenger and the driver. The passenger gets a ride where they know what the cost is before committing, are far safer, and can see where there driver is in real-time. The driver can take jobs as they please and supplement their own work.

When Uber arrived in Wellington drivers told me that the Airport told them they weren’t welcome and if they were caught on premise they would be trespassed. Uber simply sat outside the front gate and picked up people. My understanding is that Uber and the Airport have come to an arrangement, which no doubt means that they will be paying the ridiculous flag-fall fare for being on airport property. At least the airport talked to them. Uber is still sitting outside the front gate though, customers have figured out it’s a lot cheaper to walk two hundred meters down the road to the service station and call a cab.

A couple of other points to cover off.

On the smart meter issue. Given that the traditional smart meter is a “dumb” device that could be tampered with, it does not compare to a smart phone which has a GPS accuracy of 5 meters or less and an extremely powerful computer behind it, linked to Uber central, so it can’t be tampered with.

Taxis have cameras. An interesting aside here, I asked a driver one day what they cost to install and he told me about $2000. $2000. You can buy these things, with an internet connection for $200. Someone is making a pretty penny out of those installs. You don’t need a camera in the Uber car. You are tracked in real-time and you have the driver’s photo.

I use Uber and taxis a lot for my work. I always ask drivers what they think of Uber and what they think of the Taxi Federation. In general, Uber is seen as a good thing and the Taxi Federation is roundly hated by the drivers I talk too. One driver became apoplectic with rage when I asked him, and I couldn’t repeat what he said here.

It seems to me that the Taxi Federation would be better working on new technologies for its members rather than engaging in a propaganda war with Uber, and while it may win this battle, it risks losing the war.

This is a war between the old, dinosaur business model of the twentieth century and emerging, exciting new business models of the twenty first century. Uber may be the first casualty, but the flood is coming, and unless organisations like the Taxi Federation change now, they will be made irrelevant, which in my opinion, will be a great thing for the end consumer and the driver.

IT consultant and blogger Ian Apperely posts at Strathmore Park.

READ ALSO: Cops pounce on Uber (NZ Herald)