Here’s the first challenge for the new Council.

City officials, armed with a new study showing weaknesses in the local system, are inching toward regulatory changes that would open Houston’s cab industry to new players, such as Uber, which enables customers to schedule trips with a smartphone application, bypassing much of a traditional taxi company’s bureaucracy. Such companies can’t operate now under city codes, which are focused on making sure limos and private cars do not directly compete with cabs. “We need a pretty comprehensive restructuring of our taxicab regulations to get in line with what’s the city’s role in making sure passengers have the safest and best choice available to them,” said Chris Newport, spokesman for the Houston Administration & Regulatory Affairs Department. The city-commissioned study, by the Tennessee Transportation and Logistics Foundation’s director, Ray Mundy, suggests Houston serves certain ride-seekers well. Getting a ride to and from the city’s airports, for example, is easy. What’s unclear is the city’s ability to handle more intercity routes because many cabs rely solely on taxi stands and major trips. Further, the study found some Houstonians have a negative impression of cab rides because of poor service by drivers. Many riders also find the litany of cab colors and company names confusing. […] City staff, based on the report, recommended elimination of a $70 base fare on all private trips and a requirement that trips must be arranged 30 minutes prior to departure. To pave the way for companies like Uber while ensuring safe trips, Houston officials would also establish insurance liability requirements for dispatch companies that cover the drivers. Drivers in the company’s Uber Black service would be independent contractors, not employed by Uber, but part of a partnership with the company that connects them with interested riders. Under the city staff recommendations, the insurance would apply whether the car was carrying a customer or en route to pick one up. The insurance coverage could potentially be extended to all times the vehicle is in use, according to a city memo issued Friday.

Here’s the memo to the Mayor’s office from Tina Paez, the Director of Administration & Regulatory Affairs, with a review of the study and the recommendations for Council. A brief glimpse, from the Conclusions section:

The City of Houston has an interest in strictly regulating the taxi industry because it serves a vital public interest and ordinary market forces have proven themselves incapable of delivering reliable service at reasonable prices in the absence of regulation. This framework is supported by theory, empirical fact, and both local and State law. We recommend moving forward with a phased approach to amending the vehicle-for-hire ordinance to address new entrants and technologies in the market, as well as address the taxicab issues identified in the taxicab study. Addressing the taxicab issues will involve major changes to the existing regulatory structure; thus, we recommend the taxicab changes to the ordinance occur in the second phase of the Chapter 46 amendments, after substantial stakeholder input is solicited and incorporated. In the interest of public safety, the new entrants and emerging technologies can and should be addressed in the shorter term, in Phase I of the Chapter 46 amendments. In this phase we can expand the existing mobile dispatch provisions in our ordinance to ensure public safety standards are explicitly outlined, and we can update those provisions in the ordinance that may have become outdated due to the emerging technologies – such as the 30-minute reservation requirement for a limousine trip. With the advent of smartphone applications that can dispatch vehicles-for-hire at the press of a button, a 30-minute waiting period is no longer reasonable. Several regulatory authorities around the country have reconsidered this requirement and have replaced it with a definition for “prearranged” that instead speaks to the intent of the passenger, i.e. in order for the passenger to request a ride he/she must download the application and agree to the service agreement with the transportation provider, including providing a credit card. This shows clear intent by the passenger to prearrange a trip. Further, these trips cannot be hailed. All passenger information must be provided in advance.

Emphasis in the original. The memo goes on to identify Uber and Lyft as the main firms poised to enter the Houston market and the changes they say they need to be made. I’ve done a bit of blogging about Uber before, and I continue to believe there’s room in the market for companies like them and the existing cab industry. I think they’re coming whether we or the cab companies like it or not, and I’d rather the city took the approach of adjusting its existing regulatory structure in a way that everyone can at least live with rather than do nothing and wait for someone to file a lawsuit or for the newcomers to enter the market as rogues. As it happens, a couple of weeks ago I was having lunch in the tunnels downtown and I ran into Joshua Sanders having a meeting with representatives from Lyft, who were preparing to make their initial pitch to Council. Like I said, it’s coming.

I believe that if done well, the potential is there for the car-for-hire industry in Houston to expand and serve a larger audience with better service and a broader array of options. Frankly, if this happens it will be a boon for those who advocate for more density and a less car-centric culture in at least the inner-urban parts of Houston. It’s a lot easier to go carless or be a one-car household if you know there’s a convenient and affordable ride readily available when you need it. Having said all this, while there’s a lot of justified focus on the customer experience here, we need to keep in mind the needs of the drivers, especially those that will be serving as “independent operators” and thus will have less clout than full-time employees of a company would have. The Roosevelt Institute has some well-timed thoughts on this subject, which I would encourage Council members to read. Let’s make sure everybody’s interests are being represented and considered as we go forward with this.

Related Posts: