Photo Credit: Randy Schafer
By the clicking with your thumbs, something Uber this way comes.
The newest transportation alternative in town—it launched locally late last month—is a cross between social networking and a chauffeur service. All anyone in need of a ride has to do is download the Uber app on a smartphone, sign up using a credit card and then request a ride. Within minutes, a car will take you wherever you need to go at a rate that Taylor Bennett, Uber spokesman, boasts is “40 percent cheaper than taxis” in most markets.
Even though it functions much like a taxi service, Uber describes itself as a “tech company.” According to its own terms of service, it “does not provide transportation services” nor is it “a transportation carrier.” The idea behind Uber is that its service is limited to providing you information—through its app—to find “third party transportation services” and to facilitating the financial transaction (all credit or debit, no cash) to pay for that ride without actually hiring any drivers. “What we do—we connect riders with drivers. And what that means is we partner with independent contractors who use their own vehicles,” Bennett says. The company takes 20 percent of the fare and also makes money by financing new cars for drivers.
The ride-sharing service made its debut in Athens on Aug. 29, the weekend of the Clemson game. However, prior to kickoff, checking the app from early morning through a little after 2 p.m. found no rides available. Eli Watkins, a student at the University of Georgia, tweeted to the Uber Athens Twitter account, “How do I get a ride? I can't find a location a car is available at and neither can the friends I've mentioned you guys to.”
@Uber_Athens How do I get a ride? I can't find a location a car is available at and neither can the friends I've mentioned you guys to— Eli Watkins (@likeyouropinion) August 30, 2014
Watkins tells Flagpole that he was unable to obtain a ride at all during or after the game. Uber declined to provide any data regarding the number of drivers or rides it had over the gameday weekend, but Bennett says the company had “an incredible response from riders throughout the Athens area."
According to Bennett, Uber now operates in 205 cities, and “55 percent of the U.S. population can now access an Uber ride in a matter of minutes.” The five-year-old company is growing rapidly—often engaging in scorched-earth tactics against competitors—and despite a seemingly slow start in Athens, Uber is poised possibly to put taxis out of business in the foreseeable future.
Is it a taxi service or a tech company? Should it be subject to the rules of the highly regulated taxi industry or be free to operate willy-nilly within a free market? These are the questions Rep. Alan Powell (R-Hartwell), chairman of the Georgia House Public Safety and Homeland Security Committee, grappled with under the Gold Dome during the legislative session last spring.
Powell took his first ride using Uber’s “black car” service—which is different from the standard “UberX” service, because drivers are registered with the Georgia Department of Public Safety as limo drivers—and was thrilled by the experience. “I was bragging about what a nice ride that was,” Powell says. He was later informed by “some of the law enforcement folks” that “technically” UberX is in violation of the law, because “drivers haven’t been screened.”
Concerned from a public-safety standpoint, Powell introduced House Bill 907 as a way of ensuring that Uber drivers obtain a government background check.
“It's always been the policy that they have background checks to make sure it’s not some violent felon or robber or sex molester out there offering their services,” he says. “If you’re going to be a referral driver, you need to have a background check. And the background check I recommend is a very simple process.” Powell says his process is similar to obtaining a motorcycle or commercial drivers' license. The bill, however, died.
Bennett says that drivers already have to pass a “rigorous” background check to access the Uber platform and give rides. “That involves local, multi-state and federal background checks that go back seven years, and it looks at a variety of things,” he says. “Anything from sexual-offense lists to violent crimes to courthouse records to driving records, and that seven-year check is more stringent than taxi companies, who often go back 3–5 years, depending on the state.”
Rep. Powell’s second concern includes problems with liability and insurance coverage. During a hearing for HB 907, Powell says, the insurance industry “came to the table real quick,” and he found out that the insurance companies will disavow coverage for any accidents that involve Uber drivers, because they deem driving for Uber as operating a commercial vehicle. This is confirmed by Nathan Stuck, an Athens Uber driver, who tells Flagpole that his insurance company would not cover him in the event of an accident while driving for Uber. But he isn’t concerned, because “Uber’s insurance is primary, anyway,” he says.
According to Bennett, Uber provides $1 million of liability coverage per incident. “While we are a tech company—we don’t hire drivers, we don’t own any vehicles—but the safety standards, the insurance polices we have in place are very most industry-leading,” he says. Bennett adds that their insurance policy acts as the driver’s primary coverage and covers damages caused by potential accidents to “all third parties” including drivers, passengers, pedestrians and even buildings.
Powell’s final concern about Uber’s operations regards paying state taxes. “Georgia had a court ruling several years ago, before there ever were cell phones or apps, that said if you’re a referral company, and you’re doing the referrals, and you’re doing the collections, they’re supposed to be paying sales tax,” said Powell. At the hearing, Powell says Uber never answered a question about whether they were in fact paying sales tax.
Despite Bennett’s claims that Uber works “with people who create policies and regulations,” Powell says that in 25 years, “I never had any such damn political hornet's nest in my damn life. Uber decided up front that they wanted to stick a finger up my fanny on this bill, quite frankly.”
Powell says that Uber took lobbying to a “whole new extreme” that he’s never seen before, which included sending out emails to its clients ”telling them that we’re putting them out of business” and putting up signs in Buckhead that had Powell’s picture on it, with the message, “Say no to Powell, say no to HB 907.”
“What we’re hoping to do is modernize regulations,” Bennett says, adding that the normal ordinances that regulate taxis “don’t make sense” for Uber. He says the company is more interested in creating a regulatory framework that "does apply” to ride-sharing services.
“More and more, we’re seeing that when we’re in a market, city officials and state officials recognize the value and they embrace it,” Bennett says. “So we want regulations that allow for ride sharing and embrace that opportunity and choice for consumers, as opposed to block it or make it more difficult for people to get safe reliable rides or more difficult to start their own careers.”
Powell says he’s “all in favor of less regulations,” and that he’s not “looking to put anyone out of business,” but is looking at it strictly from a public-safety standpoint. He says he’s an advocate for “as much deregulation of the existing taxi industry as we can,” but he wants all companies to operate on a level playing field and let the ones running the best service be the survivors.
“Their argument is: ‘We’re the company; we do our own background checks.’ Well, do you always believe in everything that corporate America does? Do you think they’re always truthful about things?” Powell says.
Gary Eddy, a driver based in Atlanta, says working for Uber has been a life-changing experience for him. “I love it. It could not be a better job,” he says. The biggest appeal for Eddy is the freedom it gives him. There are no schedules and no bosses when working for Uber.
As Eddy describes, after you sign up to be a driver and pass your background check, all you have to do is attend an orientation session, get assigned a smartphone and then you’re good to go. “I’ve never personally spoken to anyone from the company except for that one instance [at orientation],” he said. The orientation basically consisted of, “Here’s your ID, here’s your phone, it works like this. Good luck.”
Drivers can sign on and sign off whenever they want. Eddy recently took a three-week break from Uber when he started getting steady gigs from his freelance sound engineering career. Once, he says, some girls he had just driven to a bar asked him to join them, and because of the flexibility of being an Uber driver, he was able to clock out and go in.
Eddy recounts another instance when a drunken client kicked his window and scratched it. He figured that Uber’s insurance would cover it, but he was wrong—which raises doubts regarding Uber's supposedly "industry-leading" insurance. (Pro tip: Don't get drunk and vomit in an Uber car—that's a $200 surcharge.)
Even with the less-than-sane customers, the level of freedom Uber offers its drivers will likely appeal to Athens musicians. “One of the fantasies I have in my mind is being able to tour as an Uber driver and get access to being able to work in other cities,” Eddy says. “That way, I could be on tour, I could go do a show in Chicago and work for like five hours when I get there and get a bunch of money to help pay for the tour, because touring is one of the most expensive things you can do.”
Photo Credit: Randy Schafer
Stuck, who came back to Athens to get his master's degree in business administration, says that Uber’s launch was perfect timing for him, since he was in need of a job while going to school. “Everybody that works for it told me the same thing: They’re like, ‘Dude, it is awesome,’” he says.
Another Uber driver, who does not want to be named, says he has the potential to make about $300, minus gas costs, on a Saturday night, though he says reports of drivers making six figures annually are unlikely. A surge price kicks in when there are more riders requesting rides than there are vehicles on the road. The highest this Uber driver has ever seen prices surge is 2.75 times the base rate, after a Braves game, but New Yorkers found themselves paying hundreds of dollars for short rides during a December snowstorm. The surge pricing “incentivizes drivers to get out on the road and make more money” as well as meet the demand, the driver says.
When Flagpole called for comment regarding the new ride-sharing service, a woman who identified herself as a manager for United Taxi Cab in Athens asked, “What’s Uber?”
Stuck laments the Athens cab services. He recounts memories of having to “get in the 15 passenger van from 1979 and ride around downtown for 30 minutes while they fill the van up” to take as many people who are going in the same direction home at the same time.
With Uber, you only have to split a ride if you want a cheaper rate, unlike local cabs' method of charging per person. The dismal customer service of taxicabs, linked to their cornering of the market, was also a talking point among Uber drivers as well as its customers. “Why do you think [cable companies] can treat everybody like shit?” Stuck asks, “Because they have monopolies.” Which begs the question, how will Uber behave if it gains a monopoly?
Bennett concurs with the notion that taxi companies are dinosaurs and that they are “obviously threatened” with Uber’s entrance into the market. “Consumers rave about the added choice they have,” he says. “We’re creating jobs; we’re generating revenue.”
Bennett contends that Uber’s social impacts are as great as its economic impacts. “In Seattle, for instance, when we entered the market there, a year later DUI rates went down by 10 percent because people were taking Uber more often, rather than drinking and driving,” he says. “Violent crimes against taxi drivers decreased in Chicago when we entered the market.”
Athens-Clarke County requires taxi drivers to undergo police background checks and cab companies to provide service 24–7. Since Uber drivers don’t maintain any regular schedule, there’s no guarantee that you’ll have access to a driver at any time during the day or night. “We’re trying to get in touch with someone with the company to see if they meet our ordinance,” says ACC police Sgt. Laura Lusk, who's in charge of enforcing taxi ordinances.
Bill Berryman, the Athens-Clarke County Attorney, declines to comment on the legality of Uber operating in Athens, since it “potentially involve[s] privileged attorney-client communications and potential litigation and/or prosecutions” that could be handled by his office. He adds that he's not aware of any pending litigation. However, Uber faces lawsuits in at least 13 American cities; a German court recently ruled that it's unfairly competing with taxis; it has been fined in Australia for not complying with taxi regulations, and it has been banned or regulated in states like Virginia and countries like France.
Here in Athens, though, the ride-sharing service is in full swing, with an undisclosed number of drivers. (The app has indicated as many as 10 available at one time.)
“For the most part, we never really seem to have an issue not meeting a demand,” Bennett says. “When rides are needed, drivers are there.”