Smartphone apps are challenging the way we look at urban transportation. One such app, the increasingly popular Uber, connects passengers with drivers in urban areas, acting as a ‘taxi service’ for the modern era, although Uber founders Travis Galanick and Garrett Camp are careful not to call it that.
Instead, they argue that Uber is a technology company that provides a service to drivers and riders alike. Drivers that use Uber either own the cars themselves or operate as a part of a taxi or limousine service and simply use the app for additional income during breaks in their schedules. Passengers benefit from the simplicity involved in the app’s use: to order a ride, you simply drop a pin at your location, and wait for your ride to arrive. The cost of the trip (the gratuity is worked into the cost of the ride, leaving riders with only one charge) are processed by credit card through the app itself, so passengers do not need to carry cash. Uber’s standard black car service generally runs about 1.4 to 1.5x the cost of a normal taxi, but many consumers feel that the added benefits from using Uber are worth the higher price. For those who cannot afford the high prices, Uber’s management has created UberX, a ride-sharing service; Uber Taxi, a service that connects passengers exclusively with taxis; and even Uber Moto Taxi, a Parisian service that provides rides on motorcycles, in order to offer low-cost options and widen their clientele base.
One of Uber’s most impressive features is its ability to grow. In mid-2013, Uber operated in 36 cities; by mid-2014, Uber either operates in or has definite plans to operate in 128 cities. Its website proudly touts that it operates within 38 countries. For a business that only began four years ago, that is quite the impressive figure. But in each country and each city, the system operates differently—San Francisco does not function just as London does, nor does London function just like any other city, such as Paris, Hong Kong, or Rio de Janeiro. So how is Uber faring in these differing global markets?
Uber’s success is partly determined by the particular way in which each city works. New York City, for example, with its active party scene and high number of time-strapped professionals, is home to a large number of people that might want to make use of Uber’s services. However, due to large numbers of taxis and high volumes of traffic, Uber may struggle here. It may make more sense during rush hour to hail a cab from the corner or use the Subway rather than wait for a specific Uber car to reach you through the confusion.
Washington, DC is a slightly different story. With a smaller number of taxis, less of a tradition of hailing cabs from the street, and the fact that many people that work or party in DC live beyond the reaches of the Metro, Uber can make a large difference.
Uber faces different challenges in international cities. In Beijing, Uber’s 100th city as of April 2014, payment for now can only be made with international credit cards or PayPal. With the payment system as it is, international travelers may benefit more from Uber’s operations in Beijing than Beijingers themselves.
Jakarta is on the list of cities that Uber will expand to in 2014, but Jakarta poses a new set of potential problems. First, most Jakartans prefer to use public transportation rather than spend money for a cab, and those with the necessary income generally choose the convenience of their own cars. Bad traffic is an obstacle as well, but more importantly, smartphone penetration is low, and the 3G network is notoriously inconsistent. Other services operating within Jakarta generally rely on call centers to make up the difference, but Uber does not yet have this capability. Along the same lines, only about 10 percent of the population carry credit cards, further narrowing the numbers of potential Uber users within the city.
Uber faces legal problems and taxi business opposition in each city that it enters. In Brussels and Berlin, for example, court rulings have essentially barred Uber from operating. The Department of Motor Vehicles in Virginia issued a cease and desist order to Uber and one of its rivals, Lyft, ordering them to stop operations until they comply with the existing regulations for taxi and limousine services. Neither service plans to stop, arguing that the regulations were created prior to the current ride-sharing technology, and therefore new rules need to be made that are tailored to the particular needs of apps like Uber. Ride-sharing services have found success with this strategy in California and are on the brink of success in Washington, DC, where new ride-sharing legislation is in debate.
Opposition is more intense in Europe, where taxi companies are better organized and more heavily regulated. On June 11th, a Europe-wide protest took place, with taxi drivers in at least six European cities participating. Taxi drivers as far away as Rio de Janeiro participated as well.
Still, Uber continues to operate within every city that it has entered. Despite the diverse set of challenges that Uber faces, the company’s popularity with users continues to grow. Its payment strategy and ability to connect drivers more directly with users substantially increases drivers’ incomes and facilitates transportation for passengers. Like most fundamental changes, the old establishment will fight the new approach’s progress every step of the way. If Uber’s popularity amongst users maintains at its current level or grows, it is likely that their new approach will prevail.
This article was originally published in the Diplomatic Courier's July/August 2014 print edition.