Nov 02, 2015

A look into the concept of "ride hailing" in general, and what it means in the context of electronic booking apps as used by both taxis and hire cars (including Uber):

Firstly, some comments on the popular catchphrase "disruptive technology".  There is a trend to refer to Uber, AirBnB and similar organisations as "disruptors".  But Uber was already operating in the United States at the time the Victorian Taxi Industry Inquiry was announced on 28 March 2011, and it had launched in Australia long before the Government adopted most of the reforms proposed as a result of the Inquiry.  The amendments became operational on 14 May 2014, after Uber was well established in Melbourne.

Whether the regulations were designed to encompass and consider the Uber model, or Uber's operations were not considered significant enough to regulate separately, we do not know.  From a legal perspective, however, there remains a single regulatory framework that exists and it applies to all commercial passenger vehicles under the Transport (Miscellaneous and Compliance) Act 1983 (Act). 

The issue is that the current legislation and regulations are not being enforced. 

The obvious example is UberX, the topic of our previous Legal Rider article.  Simply, the UberX model of unlicensed drivers in unlicensed vehicles driving passengers for reward offends our current legislative regime. 

A less obvious example is the concept of "e-hail", and the way it has blurred the lines between a true hail and a pre-booking.

Section 86 of the Act defines a taxi-cab as a commercial passenger vehicle to be used by the public on demand and which operates by being hailed or from a rank or previously booked or ordered but does not include a vehicle that operates solely by being previously booked or ordered.

A key distinction between a taxi-cab and a hire car is the right to accept rank and hail work.

Unfortunately however, there is no definition of the term "hail" in the Victorian legislation.

If an e-hail is considered to be a hail, then an e-hail through an app should be for the exclusive use of taxis.  If it can be classed as a pre-booking, then hire cars and PBO's are entitled to use the electronic hailing system through an app.  (Of course, as UberX is unlicensed, it should not be entitled to use the app in any circumstance.)

As "hail" is not defined in the Act, we looked to the Australian Concise Oxford Dictionary for guidance.  Here the definition of "hail" is "to signal or attract the attention of (hailed a taxi)".  Conversely, to "book" is to "engage in advance, make a reservation of".

It is quite clear that there is a distinction between the immediacy of a hail, and the prior engagement, for delivery at some time in the future, of a booking.

The operation of the Uber app was described by the Honourable Allan B Weiss, a judge of the Supreme Court of Queens County New York, as:

displaying a map showing the locations of available vehicles and informing the passenger of the approximate travel time of the closest available vehicle to the passenger's location, and which after a passenger requests transportation, the … app transmits the request to the nearest available driver who is signed in to the … app. If the driver declines the request or does not accept the request within fifteen seconds, the request is sent to the next closest driver.

(Weiss, Melrose Credit Union Montauk Credit Union v City of New York(Supreme Court of Queens County, New York), 6443/15, 8 September 2015, Slip Op 31702(U).)

That certainly sounds like a hail rather than a pre-booking – and we assume that Uber operates the same way here.  Of great interest is the immediacy, with drivers only having 15 seconds within which to accept a booking request.  This cannot be said to be anything other than an immediate call.  Uber's app does not even allow passengers to pre-book a car at some time in the future – in 20 minutes, or tomorrow.  Passengers must be ready to ride immediately.

New York's taxi regulator, the Taxi Licencing Commission (TLC), has responded to this issue by introducing "e-hail rules" initially on 29 January 2015, and subsequently in April 2015.  These rules defined the terms "Hail", "E-hail" and "E-hail application".  Most relevantly, "Hail" was defined as:

a request, either through a verbal (audio) action such as calling out, yelling or whistling and/or a visible physical action such as raising one’s hand or arm, or through an electronic method such as an e-hail.

These rules confirm that booking a vehicle through an E-hail Application is, for the purposes of the New York City municipal ordinance, a Hail.  There is no sensible basis to believe that a different interpretation would apply in Victoria.

In April 2015 the New York TLC promulgated further regulations that entitled non-medallion (non-licensed) vehicles (known as For-Hire Vehicles or FHV's) to be dispatched via electronic despatch through an app.  Each entity that dispatched to FHV vehicles, including by way of smartphone applications, was required to obtain a licence and conform to uniform protection and safety standards.  In other words, Uber needed to be licensed to use its e-hail app.  We make no comment on the how or the why of such regulations.  We simply note that, given the definition of "e-hail", Uber was required in NYC to be registered to use its app.

While existing industry stakeholders brought claims challenging these regulations, each case was dismissed because the TLC had power to make the regulations, and had done so within its authority.

We do not have such regulations.  We have had no change to the legislation introduced following the Taxi Industry Inquiry.    

The conclusion we can draw, however, is that the e-hail through a smartphone app is the exclusive right of a taxi-cab.  This is the reason the TLC had to regulate to allow the FHV's (eg. Uber) to use e-hail.  Because it was a hail, they had to regulate it to be a pre-booking to enable Uber to use it.

The same argument is occurring in London and is being echoed around the world, as taxis feel a lack of support from regulators globally.  While they suffer fare regulation, licence fees, knowledge tests, security requirements and more, Uber continues to operate unregulated.  Indeed, the ACCC has recently knocked back an app designed to take on Uber directly.

In the 8 months in which New York has regulated twice, and effectively licensed Uber, we have had nothing happen.  While the TSC is running a test case against Uber driver Nathan Brenner, it has been 15 months since the offence occurred and the matter has not been concluded.

The ACT Government have announced they will bring Uber within the law, at the same time reducing costs for the existing taxi industry to allow them to remain competitive.  The challenge for the Victorian regulator is clear.  Either enforce the law as it stands, or introduce regulations to ensure Uber is required to compete on a level playing field.  It is NOT sufficient to stand by while other avenues are available, and the industry is hurting so badly.

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