Uber's MoU with the Telangana government to $50 million investment

Uber's MoU with the Telangana government promises a $50 million investment and a regulatory framework for app-based operators like Ola and Uber in four weeks.This rushed timeframe of four weeks precludes a consultative process with other stakeholders - taxi drivers, existing taxi companies, auto drivers, auto owners and research bodies. By rushing regulation, Uber is trying to position itself as a tech company providing an aggregation service.

Its claim is that it is not a taxi company and therefore bears no liability for actual taxi cab operations on the street. However, Uber is not an aggregator. An aggregator simply brings several service providers and consumers into one common frame. For example, Make My Trip is an aggregator. It does not own a single aircraft, does not hire flight crews and ground staff.It merely brings Indigo, Jet, Air India and Air Costa into the same frame. Uber is in reality a taxi company just like any of the others Meru, Easy or Call Cab, except that it uses an app instead of a radio to dispatch cabs.

So what we need is a regulatory framework for what is known worldwide as For-Hire-Veh For-Hire-Vehicles (FHV) with two goals: overall health of the city and public safety (pollution, congestion, income standards) and secondly , balance within and across segments of the FHV industry . To meet the health and safety goal, we need to limit the total number of vehicles a FHV cap. In Hyderabad, currently there are 98,000 autos and between 5,000 and 6,000 taxis. To this, it appears, Uber aims to add over 12,000 new taxi drivers in the first year itself.

This means, we will mes the cur have three times the current number of taxis on the streets in a matter of one year.A pollution and congestion nightmare, not to mention collapsing of incomes for autorickshaw and taxi drivers. If we wish to avoid these problems, we need strict caps.

Further, following last week's Delhi High court decision, Hyderabad should mandate that all taxis must run on CNG, LPG or electric hybrids within five years. Autos have mostly switched out of petrol and diesel. Why shouldn't taxis? The regulation should also require that a certain percentage of vehicles should be accessible for the disabled.These, along with commercial insurance standards and state run background checks for taxis, should ensure an industry that meets global standards on passenger safety and urban public health.

To meet the second goal of balance within the industry , we must make a decision on surge pricing and floor price.If surge pricing is an option for taxis, autorickshaws also should be allowed to use it.For example, we can agree that everybody is entitled to a rush hour surcharge pricing of a maximum of 1.5 times the metered fare. Next, to keep the taxi and auto markets distinct, taxis should have a floor price say Rs 30 above the minimum auto fare and Rs 5 above the per km au torickshaw meter.

Finally, we should also ban predatory price fixing. With venture capital backing, Uber may be able to run its taxis at Rs 7km. However, smaller cab companies and autos cannot afford to do this. If we don't regulate against Uber's price fixing, we will allow a global venture capital backed MNC to create a monopoly and destroy local industry .

The Telangana government has the historic opportunity to create a progressive regulatory framework for urban transportation sector. To summarize, this framework should address the following eight dimensions: a clear and structural distinction between taxi company and aggregator, a cap on FHVs, vehiclefuel standards, accessibility, insurance, background checks, meter pricing including surge and floor, and finally anti-predatory price fixing.

http://timesofindia.indiatimes.com/india/Telangana-must-show-the-way-to-taxi-safety/articleshow/48230765.cms