CARL MACMURDO'S SPEECH TO THE CALIFORNIA PUBLIC UTILITIES COMMISSION ON MAY
On the TNC (Transportation Network Company) issue, many taxi advocates
focus upon the "level playing field" argument. For example, Uber X and Lyft
drivers provide commercial transportation for-hire under a regular auto
insurance policy. They defraud their insurance providers by lying about how
the vehicle is being used. Licensed taxi drivers follow the law and pay a
higher commercial rate. This fraud results in an unfair business practice
allowing TNCs to undercut the rates charged for rides to the public by
My concern is a separate topic; namely, the dynamic of supply and demand.
Over time, many cities have experimented with deregulating taxi supply by
allowing open entry. Typically, the result has been a hostile and unsafe
work environment, replete with high accident rates and poor public service.
Taxi drivers and owners cannot make an adequate living under a system with
gross over-supply of vehicles. Historically, these cities have quickly
returned to a business model which controls the number of authorized taxis.
San Francisco's system is typical. Regulators hold periodic Public
Convenience and Necessity (PC&N) hearings to ascertain whether additional
taxi medallions are needed. It is a balancing act, weighing the public's
need for adequate service against the essentiality that taxi drivers and
owners will earn a reasonable profit. Presently, San Francisco has
approximately 2,100 taxi medallions.
CPUC allows for unlimited vehicles in transportation categories under its
jurisdiction. Your September 2013 decision to establish a new TNC category
jurisdiction has resulted in de facto deregulation of supply. The economic
to taxi interests are not merely disruptive, but destructive as well.
President Picker recently acknowledged that cpuc lacks the resources to
enforce your own TNC rules and has mused about assigning jurisdiction to a
different state agency. But when, and to whom? A different state agency
as CHP, e.g., would also be an interloper without adequate tools to enforce
regulations and otherwise micromanage a city's taxi industry. Plus, this
approach fails to address the economic and safety consequences of excess
If cities --- rather than the cpuc --- have TNC jurisdiction, we can
create innovative solutions to ensure public safety, economic prosperity,
and efficient on-demand transportation options. One flaw in the
aforementioned PC&N process is the lack of flexibility to add extra
during periods of peak demand. A city such as San Francisco can craft a
hybrid model --- regulation-light in many policy aspects --- allowing for a
combination of TNCs and authorized limousines (TCPs = Transportation
Party vehicles) to augment on-demand transportation needs subject to
specified rules and limitations.
Inefficient taxi dispatch methods created the niche whereby TNCs
developed efficient apps to ensure rapid response to customer service
requests. With reference to playwright Samuel Beckett, telephone requests
for taxi service historically put the customer in a "Waiting for Godot"
mode --- wondering if a taxi actually would arrive. For app users, those
times are gone. In both San Francisco and Los Angeles, taxi regulators
require an app in every authorized taxi. Flywheel is the predominant taxi
app here in San Francisco.
In the ruling by Administrative Law Judge, Robert Mason --- adopted by
Michael Peevy in
2013 --- there is a glaring factual mistake, the consequence of which is to
afford TNC jurisdiction to the cpuc, rather than to cities. Judge Mason
incorrectly ruled that the nature of an e-hail is pre-arrangement, rather
than on-demand. Even the TNC websites acknowledge and advertise that their
services are strictly on-demand.
In analyzing his jurisdictional determination, Judge Mason noted that
customers have to file an application in advance to be in the TNC system
also need to tap an app to summon a vehicle. Yet, the clear TNC model
dynamic is to provide very rapid, nearly instantaneous service to app
requests. We are fortunate street hails are not similarly defined as
pre-arrangements, given that customers make a conscious, advance decision
carry means of payment and must signal for a vehicle as well. When the taxi
industry attorneys appealed the jurisdictional argument last year, both the
California Appellate and Supreme Courts exercised judicial indifference by
refusing to hear the appeal. As such, TPAC (Taxicab Paratransit Association
of California) never had its proverbial day in court.
Hopefully, there will be no need for further litigation requesting a jury
to hear the jurisdiction argument. Just as all major professional sports
have instant replay as a tool to overturn egregiously incorrect rulings by
president Picker should request a review of the incorrect ruling
that e-hails are not of an on-demand nature. TNC jurisdiction belongs with
individual cities, whose regulators can establish and enforce optimal