Thursday, October 31, 2013

New state-imposed charge will drive us out of RI

630WPRO.COM | The Voice of Rhode Island - NEWS: Uber: New state-imposed charge will drive us out of RI

Image and logo courtesy Uber.

By Kim Kalunian, WPRO News
The new car service Uber says they’ll be forced to pull out of Providence if a new charge is placed on their services next month.
According to a new regulation drafted by the Rhode Island Division of Public Utilities and Motor Carriers (RIPUC), a $40 minimum charge will be placed on all trips made by public motor vehicles that aren’t taxis. The $40 minimum would be charged for all trips regardless of time or distance. 
The charge is set to take effect Nov. 11.
“It would make our business untenable in Providence and the state of Rhode Island,” Meghan Verena Joyce, the general manager of Uber Boston and Providence, told WPRO Wednesday. Uber officially launched in Providence just last month.
The legislation for the law that mandated RIPUC implement the new charge was drafted and passed in 2012. Rep. Teresa Tanzi (D-Narragansett) sponsored the bill in the House and Sen. Bill Walaska (D-Warwick) sponsored the bill in the Senate. Both bills were signed by the Governor. 
Tanzi, as a member of House Committee on Corporations, said she was approached by RIPUC to sponsor the bill. At initial hearings about it, she said there weren't many who voiced oppositions.
"I was not really ever envisioning anything like Uber down the line," she said. "I certainly have been a customer of Uber and I think it's a great model."
Tanzi said she believes Uber is "pro-consumer" and said she would be willing to revisit the issue.
According an order filed by RIPUC on Oct. 15, Terrence Mercer, RIPUC’s Associate Administrator for the Motor Carriers, said the minimum charge would “’eliminate the rogue, gray-area sedan services that are really acting like taxicabs and, truth be told, stealing the work of taxicabs.’”
He went on to say that the fee would act as a way to distinguish between taxi cabs and cars used for services like Uber.
“’It allows [public motor vehicles] to provide the premium service envisioned without leaving them the ability to steal taxi work,’” he said.
When reached by phone, Mercer said the new rule wasn’t an attack poised to Uber from the state.
“These are not aimed at any particular business endeavor,” said Mercer of the new minimum charge. “These are probably two years in the making.”
Mercer explained that in 2002 the General Assembly created a special category for specialty “black car” services that were considered to be a step above traditional taxis. Because these “public motor vehicles,” or PMVs, weren’t as heavily regulated as taxis, they could get away with charging less for similar services.
Now Mercer said the PMV industry is “decimating” traditional taxicabs. Ten years ago, he said, there were 230 registered cabs. Now there are fewer than 200; there are roughly 100 registered PMVs.
Mercer said the goal of the new charge is to eliminate some of the PMV operators (the ones that are operating as taxis but loosely regulated like PMVs) but said Uber wasn’t even on their radar. He said it’s about leveling the playing field.
“If you were a taxi cab company and you were looking at someone who is taking your fares…what would you do?” he asked. “Become a PMV.”
The problem with that is mass deregulation, something he likens to rogue pharmacists taking to the streets to oxycontin – they’re still selling drugs, just without the oversight.
But over at Uber, Joyce said the move is aimed at protecting special interests.
“We worry that this puts special interests ahead of consumers,” she said. “There’s no reason going across town should cost $40.”
Mercer disputes that, calling their claims a “fallacy.”
“It’s designed to protect both industries so that the services they provide are maintained,” he said. “It’s really as simple as that.”
While Mercer calls black car services like the one Uber provides “premium,” Joyce said Uber’s goal is to provide the best value to consumers. The California start up now offers their service in 50 cities around the world.
Their base rate for a trip is $12 in Providence; much like a taxi, fare depends on time and distance.
Mercer said he doesn’t see how the $40 minimum will harm Uber, which he calls a “broker” since they are not PMVs themselves. Uber is a mobile app that connects drivers with riders.
“It’s just they don’t like that there is a minimum price floor,” he said, “They already have their own self-imposed minimum.”
Joyce said it’s about more than just Uber and the money; it’s about the principle of the issue.
“It’s more than a $40,” she said. “It’s really about the kind of state that Rhode Island wants to be.”
Rhode Island is not the first state to give Uber pushback. The company has also encountered problems in places likeWashington, D.C. and Dallas, Texas.
On Wednesday, Joyce and the Uber Providence team sent out a plea for signatures for a petition that aimed to halt the implementation of the $40 charge. As of 3 p.m. Wednesday, the petition had nearly 1,300 signatures.
“Rhode Islanders deserve access to affordable transportation,” Joyce said.  “All we’re asking is for Governor Chafee and elected officials to take a hard look at what this would do.”
Mercer said he hadn’t seen the petition before speaking with WPRO, but didn’t believe it could do much to stop the $40 charge from going into effect next month. 
This story has been edited to reflect that Sen. Walaska sponsored senate bill S 2603 sub A.