Taxi fleet in Boston sues over app that hails rides
In an age when consumers can use a smartphone to buy anything from groceries to airline tickets, something as routine as hailing a cab or private car service is proving deeply controversial.
The operators of one of Boston's largest cab companies are suing the smartphone app maker Uber Technologies Inc., which lets users request a taxi or livery service. The traditional cabbies contend the start-up is running an unlicensed car service and ignoring virtually all of the government rules that have been in place for years.
"Uber has found a way to insert itself in the taxi business in Boston without living up to all the responsibility that cab companies have," said Sam Perkins, the lawyer for Boston Cab Dispatch Inc. and EJT Management, which combined have about 500 taxi licenses under the Boston Cab brand. "It's not hard to see Uber's vision. It's a fascinating vision, but it's a dangerous one."
Uber declined to comment on the lawsuit.
The legal action is the latest fallout from a wave of technological innovation that has buffeted the taxi industry after decades of stasis. Fights between cab companies on the one side and tech firms that put dispatch services in the cellphones of users on the other are playing out in many US cities. Uber is facing similar lawsuits from cab companies and drivers in Chicago and San Francisco. And Cambridge opposes the company's use of GPS to calculate fares, saying the technology is not as tested as standard taxi meters.
Uber, along with SideCar, Hailo, and similar apps, allows customers to find, fetch, and pay for a ride — from either a taxi, livery, independent car service or individual — with just a few touches on their smartphones. Particularly popular among young professionals for their convenience and whiz factor, these services have rattled the cab industry because they offer easy access to competing car services and don't have the same level of overhead and oversight as taxi fleets.
Uber does not disclose its business volume but says it provides "tens of thousands" of taxi and private car rides in Boston each week.
Daniel Sperling, director of the Institute of Transportation Studies at the University of California Davis, said the disruption these technology firms are causing was inevitable.
"What we are talking about goes way beyond the cab companies," he said. "It's taking the revolution in information and communication technologies, which has transformed many industries, and applying it to transportation."
The issue has also split governments.
The primary regulators of local taxi services are municipal governments, and many have sided with the cab fleets in opposing Uber and other services in their jurisdiction — including several cities that have brought their own lawsuits.
The regulators' main worry is that the private cars users can hire through these services are not as closely regulated for safety — and pricing accuracy — as cabs are.
Cambridge, for example, is trying to overturn a ruling by state regulators last summer that lets Uber use GPS technology stored in the patron's smartphone — and not a taxi meter — to determine fares.
Boston, meanwhile, has not taken a position on Uber, allowing it to operate in the city.
The Patrick administration has allowed Uber and others to operate in the state, after an initial ruling by regulators last year to curb the service generated a firestorm of criticism on Twitter.
"As Governor Patrick made clear last year, Uber is legal in the Commonwealth of Massachusetts, and we proudly give thousands of riders a safe, reliable ride and hundreds of drivers a new source of income for them and their families," Uber Boston general manager Michael Pao said in a statement.
In the suit in Boston, the two cab operators said the private cars available through Uber are allowed to pick and choose among their customers and destinations, unlike cabbies, who are prohibited by company rules from refusing to take fares based on their age, disability, and location.
Perkins, the companies' lawyer, said that Uber could coexist with traditional cab operators as long as it follows all the local regulations that apply to the cab industry. Uber has maintained that it does abide by applicable local standards.
Last week, the Federal Trade Commission weighed in on a dispute in Denver, where state regulators tried to block Uber from operating. The commission, which regulates business competition in the United States, said it was concerned that Denver and other cities were trying to stifle competition and limit consumer choice. The agency said the industry has "remained largely unchanged" since the 1980s.
"These apps appear to be a disruptive technology that doesn't fit neatly into the traditional regulatory framework that has characterized the industry for decades," Andrew Gavil, director for the office of policy planning for the FTC, said in an interview.
The various governments are all struggling to define what Uber and the other services are. Are they simply middlemen matching riders with licensed car services, whether a cab or private livery? Or are they, in effect, a shadow car service that simply outsources the actual ride to independents and evades the level of regulation and scrutiny that taxis such as Boston Cab undergo?
Ray Mundy, director of the Center for Transportation Studies at the University of Missouri St. Louis, said city regulators are rightfully concerned with how Uber and other electronic dispatchers do their job.
"Simply to come in and say, 'We're not going to have to abide by the regulations here because we're an app,' " Mundy said, "isn't going to fly."