Enjoy your Ubergasm, but don't expect respect in the morning

Enjoy your Ubergasm, but don't expect respect in the morning

Summary: Uber, Lyft, Airbnb and the whole "sharing economy" are causing a rush of excitement, but don't confuse that thrill with any of them being good solutions for society's future.

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TOPICS: Start-Ups
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The so-called "sharing economy" is getting a dream run right now, but the orgy of media coverage is less about a rational consensus that the sharing economy is really even a thing, and more about the world's media having a single shared — and not very bright — group mind.

Few of the companies being discussed are particularly new, not in a daily news cycle sense anyway. So why now? I see three reasons.

One, there's plenty of conflict from which to construct a narrative. Lean, sexy newcomers rubbing up against elderly, flabby incumbents. Bold young warriors against the restraints of government regulation. And, in the specific case of short-term hire car services Uber and Lyft, there's the frisson of fierce competition. They're locking horns and spraying PR everywhere — and the media loves it when things get a bit rough.

Uber boasted that it's now operating in 100 cities, publishing a cart-load of carto-porn. Lyft countered by cutting prices and launching in 24 cities in one day, "celebrating each new market with our very own Lyftapalooza". I feel dirty just typing that, and not in a good way.

Two, the sharks can smell money in the water, and are circling. As The Economist notes in their editorial this week, "frothy values [are being] bestowed on sharing-economy companies: Airbnb is reckoned to be worth $10 billion, more than hotel chains such as Hyatt and Wyndham, and Lyft recently raised $250m from venture capitalists."

Three, Wired magazine, the original thought manual for digital utopians, gushed over the sharing economy in this month's cover story, How Airbnb and Lyft Finally Got Americans to Trust Each Other. Where Wired goes, mainstream media follows.

Wired loves grand narratives, and this is a big one. The sharing economy will return America to something like the society they imagine to have existed before the Industrial Revolution, they reckon, a time when "Americans tended to cluster in small towns and farming communities, where citizens built tight-knit relationships over the course of many years."

They quote Lyft cofounder John Zimmer as saying he likens it to time he spent on the Oglala Sioux reservation in Pine Ridge, South Dakota.

"Their sense of community, of connection to each other and to their land, made me feel more happy and alive than I've ever felt before," he's reported as saying. "I think people are craving real human interaction — it's like an instinct. We now have the opportunity to use technology to help us get there."

Wired lays it on pretty thick. "It's a digital re-creation of the neighborly interactions that defined pre-industrial society. Except that now our neighbour is anyone with a Facebook account."

Now there's something in what Wired says, and without a doubt these businesses have been successful — at least so far. But it's very easy to get caught up in the excitement and forget to, you know, think.

Let's catch our breath and come down to earth for a moment.

I'll focus on Uber and Lyft, because it's clear that the taxi industry has serious problems in many cities around the world.

In Paris, for example, there's just three taxis per 1000 inhabitants, according to Monday Note's Frédéric Filloux, compared with 13.5 in New York, 11 in London, 8 in San Francisco, 7 in Seoul. That's driven up costs, while the lack of competition means there's no incentive for drivers to provide good service.

Australian cities lack competition too. In Sydney, there's about about 5800 taxi licences plus about 630 wheelchair accessible taxi licences — a mere 1.4 taxis per 1000 inhabitants — with ownership concentrated in just a few hands.

"While there might be seven independently owned networks in Sydney, there are another six networks controlled by one just company: Cabcharge. Two other big players in New South Wales — Legion cabs and Premier cabs — have significant shareholdings in Cabcharge. Taking these factors into account, Cabcharge, Legion and Premier control 90 percent of the taxis in Sydney," reported ABC Radio National's Background Briefing last year.

"Cabcharge [also] controls 90 percent of the electronic payments systems in [Australian] taxis, and it makes over $100 million a year out of the 10 percent surcharge it charges on top of electronic payments."

Yes, this needs fixing. The Victorian government has already dealt with that outrageous 10 percent surcharge, forcing Cabcharge and other operators to drop it to 5 percent. New South Wales is set to do the same, and is giving serious attention to the new locally-grown taxi booking apps.

This is where Uber's new low-cost offering — which like Lyft means that anyone with a car could make a few bucks by touting for passengers — could run into problems.

The NSW Passenger Transport Act requires that taxi and hire car services are provided by an accredited operator, in a licensed taxi or hire car, with a driver who's authorised by Roads and Maritime Services (RMS) after passing criminal, driving history and medical checks. Those pesky government regulations help ensure that customers are safe. Much the same goes for other Australian cities.

"RMS has already requested a meeting with Uber to discuss this new 'low cost' service, and is looking forward to the company's response," an RMS spokesperson told ZDNet. Me too.

Pulling back the focus even further, in the rush to fix the problems in the taxi industry, or any other for that matter, we need to avoid making three serious errors of logic that could land us somewhere far worse.

Error one: Something must be done about this industry. This is something. Therefore it needs to be done.

Error two: The business and social models for the hyperconnected future will be radically different from industrial age models. This is a radically different business and social model. Therefore it is the model for the hyperconnected future.

Error three: Current regulation don't work perfectly. Therefore we should have no regulation.

Now I've written previously how disruption for its own sake is nothing to be admired. The disruptors are often blind to the complex, real-world needs of complex, real-world societies, and are just smashing the piñata of public services to scoop up the shiniest, most profitable parts for themselves — and damn the rest, because they're not cool.

"We just wanted to push a button and get a ride," Uber founder Travis Kalanick told the IGNITION 2013 conference. "And we wanted to get a classy ride. We wanted to be baller in San Francisco. That's all it was about."

That's not exactly a grand social vision.

Over at PolicyMic, Tom McKay had taken a closer look at Uber's maps. "Because the service tends to ferry wealthier passengers from one ritzy neighborhood to another, with a little creative thinking, Uber's maps reveal some pretty telling class lines in virtually all of the cities monitored," he writes.

"This is a no-brainer. You can reasonably expect that an expensive taxi service would be populating the same routes and thoroughfares the wealthy ride anyways every day. Uber is, of course, the app that occasionally charges surge fares (price gouging) of hundreds of dollars for relatively short trips. But it's yet another reminder that class lines aren't just social. They can also be physical, with the places where the ultra-wealthy live, work and play often inaccessible to the rest of us."

So what happens when the disruptors have disrupted the traditional taxi industry out of existence — and now drivers only work when they want to, and prices can soar unexpectedly?

What happens in the outer suburbs, where there never was any decent public transport to begin with, and now there's never any taxis either, because they're chasing cashed-up users downtown?

How does that single mother in welfare get her kid to the clinic? She doesn't. She's screwed.

"Surely the main attraction of Uber is being able to preen on social media that you take Uber," tweeted Jason Langenauer. Quite.

So congratulations to Uber for creating a fashionable status symbol. Congratulations to Lyft for allegedly returning America to pre-industrial levels of trust. But for screwing up service delivery for anyone but cashed-up frat boys in the city, not so much.

Still, cool app, eh?

Topic: Start-Ups

About

Stilgherrian is a freelance journalist, commentator and podcaster interested in big-picture internet issues, especially security, cybercrime and hoovering up bulldust.

He studied computing science and linguistics before a wide-ranging media career and a stint at running an IT business. He can write iptables firewall rules, set a rabbit trap, clear a jam in an IBM model 026 card punch and mix a mean whiskey sour.

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2 comments
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  • Chicken or Egg Situation

    They'd need to be more regulated and structured to provide truly equitable coverage. Their appeal is that they are not regulated and structured.
    luke mayson
  • Not Sensible

    If any of the things the government checks for when issuing a taxi license are truly important for safety, then they should apply to anyone getting a normal drivers license.

    Governments also usually limit the number of people allowed to have taxi licenses, driving up the cost of taxi services, making them more unaffordable to the poor. If you want to complain about inequality, that's something which should at least be mentioned.

    And I don't see the dystopian future Stilgherrian envisions coming to pass. Anyone can work for these services, so never would only the "ultra-wealthy" have access to them. If anything fares should continue to fall as more and more people become familiar with them. This is why the taxi companies are so afraid, they know they aren't low-cost producers.
    Jason (the commenter)