UBER-PAIN?

Electronic musician Deadmau5 is the proud owner of a million-dollar car. In a video going around the Internet, the Toronto-based DJ is seen picking up and dropping off passengers in his 727 horsepower McLaren P1 hybrid hypercar after signing up as a driver for UberX – a ridesharing service offered by application developer Uber Technologies, Inc. [www.uber.com].

While being picked up by a celebrity in a McLaren is a bit extreme, legions of people around the world have embraced Uber as an alternative to traditional modes of transportation such as taxis, limousines and shuttles – even buses. Uber services are available in 45 countries and more than 200 cities, and rolled out operations in South Carolina in July: Columbia, Greenville, Charleston and Myrtle Beach.

If Uber Technologies thought rolling out operations in Dirty Myrtle was going to be smooth sailing, somebody in corporate must have bumped his head. The blowback started almost immediately. The city of Myrtle Beach released an e-mail to local media via public information officer Mark Kruea, stating that Uber had no business license and that no other certifications had been issued for local Uber drivers, and therefore was not legally authorized to conduct business in Myrtle Beach.

Considering the fact that Myrtle Beach is the same town that has threatened to lock up musicians trying to eke out an existence in bars here if they don’t have a business license, does this come as a surprise?

UberX, which is the company’s most economical service and the only one available in South Carolina, connects folks who have signed on as Uber drivers with passengers via the Uber application on their smartphones. Passengers simply register on the application, punch in their payment information, which can be traditional credit cards, PayPal or Google Wallet. They next set their pickup location. From that point the user can see how many available vehicles are around and how long it will take the closest one to get there. They punch in their drop-off location, and at this point are able to grab a fare estimate, and if everything looks good, tap “Request UberX” and a driver is on the way. Cash never changes hands and there is no need to tip.

A quick ascent

Uber, headquartered in San Francisco, is a juggernaut with a dizzying current market value of $18.2 billion, according to a recent CNN story. Not too shabby, considering that the company did its first test run with three cars in New York City in 2010.

Since its official launch in San Francisco in May 2010, Uber has been adopted early and widely by tech-savvy folks the world over while being assailed by municipalities and traditional transportation providers who feel that Uber has no right to operate without proper commercial insurance, business licenses and taxi medallions. Uber itself has stated many times that it is an app developer and not a transportation company and that the service merely connects riders with drivers.

Such flaps in other cities keep coming in over the news transom: From a group of limousine drivers in Orlando, Fla. launching a billboard attack on Uber and a similar company called Lyft, a brouhaha in Tuscaloosa, Ala. over licensing, and a cabbie protest in London in June that brought traffic to a snarl. Sunday, Dutch police arrested four Uber drivers for using the Uber app in Amsterdam (in a city where weed and prostitution are legal, no less).

The City of Myrtle Beach is also trying to get a handle on Uber: On one hand it is part of an emerging technological revolution focused on convenience and sharing apps. On the other, it is seen by some as a sort of pariah – doing business here without being properly vetted by the powers that be. Cab and limo companies are up-in-arms.

In July, Myrtle Beach Police issued citations to three Uber drivers for operating without a business license and for operating without a valid chauffeur license. Those are the only such citations issued, according to Captain David Knipes of the Myrtle Beach Police Department. “We have had no other calls, issues and or problems that I am aware of since the initial arrests,” he said.

What happened? Did Uber drivers take it upon themselves to procure business licenses here? The answer is no, according Myrtle Beach public information officer Kruea: “Business license [office] reports that no one has applied for a license as an Uber operator,” he said.

Uber representatives, who did not respond to Surge’s various inquiries by press time, have famously stated in many news outlets that the company will cover any costs incurred by its drivers as a result of citations or fines. Deep pockets, for sure.

In a [Charleston] Post & Courier story, Uber Spokesperson Taylor Bennett staunchly defended Uber drivers: "Any effort by law enforcement to discourage drivers from partnering with Uber is the equivalent of discouraging people from pursuing entrepreneurship, making a living, and contributing to the economy," he said.

In July, Myrtle Beach City Council invited representatives from local taxi companies to participate in a workshop focused on Uber and how to deal with it.

Myrtle Beach City Councilman Randal Wallace was on hand at that workshop.

“I understand their complaint and I have some concerns about Uber,” he said, adding that he remembers a time when the taxi industry in Myrtle Beach was very chaotic. “At one point the city attorney sat down and they came up with all kinds of stuff trying to get it in line, because it was a crazy business where you would have one guy would own the car – another guy would own the insurance – and another guy would be driving the car.”

As the city grew, this Wild West approach had to be tightened up. And now the implication is that the same thing needs to be done with Uber. “We are at a point now where I wonder whether or not we already have too many medallions on the road to be competitive for the people that are already in that industry,” he said.

But Wallace recognizes the importance of emerging technologies and new business models.

“I realize that technology is changing the world, so you have got to be able to adjust to it at some point. But I still would like for them to come in and have to do what the other cab companies do –following through with all of the steps to make sure there is some kind of ability to ensure the safety of people when they are riding. I know a lot of people argue the free enterprise thing, but [Uber] is very vague about who they have got picking you up. You don’t know who is picking you up, and I think that can be dangerous on a whole other level. We want to be cautious on the side of safety.”

He feels that industry is preparing government for the kind of new technology that is coming and already here. “It’s going to revolutionize everything. Slowly but surely that is what’s happening. We are all going to have to get used to it and prepare for how to deal with it. If you don’t, you are going to get left behind.”

What’s in a name?

Semantics notwithstanding, shouldn’t any newcomers to the transportation game be required to jump through the same legal hoops regardless of what they call themselves? Can’t we also call bullshit on Uber’s claim that it is not a transportation provider?

Last month, POLITICO reported that Maryland became the first state to rule the Silicon Valley start-up a transportation company, not a tech company.

Robbie Singh, owner of Diamond Cab in Myrtle Beach [www.myrtlebeachdiamondcab.com] was also at the council workshop here. “We carry commercial insurance and have to go by state regulations,” he said. “We have to have a business license and get inspections. All of our drivers carry a chauffeur permit issued by the city. These people want to come in with their private cars and want to provide transportation for people.”

Another issue is the medallion, a constant in the taxicab business since the 1920s, and another mechanism of municipal regulation. “You have to have a medallion if you want to pick up in the city,” Singh said. A medallion is an emblem indicating that a taxicab is registered in the municipality where it operates.

All things being equal, would Singh welcome competitors like Uber on the Grand Strand?

“I mean, I don’t welcome them to do it,” he said. “I just feel if somebody wants to do the transportation business, they should do the same things that the city requires us to do. You just can’t have a minivan and start picking people up. We go by the book.”

Diamond Cab has been operating in Myrtle Beach since 1997.

Limo operators Surge spoke to feel the same way about adherence to regulations.

Limos of Myrtle Beach [www.limosofmyrtlebeach.com] transportation director Lee Webb said that Uber may or may not impact legal transportation providers because that is yet to be seen, but the consumer should be aware of a few salient points:

“The consumer who is [using Uber] never has any idea who is going to pick them up and what type of experience they are going to have,” he said. “When you contact an unlicensed provider, they may be cheaper but the consumer is then subject to the mercy of the provider. If the provider charged them more or leaves them somewhere, they have absolutely no recourse. However – being that my company is a state licensed charter limousine service that provides not only limousines but group vans – we have to operate under the guidelines and the laws of the state.”

The big concern for Webb is commercial insurance. “Commercial insurance is generally more expensive than private insurance. What Uber is asking its drivers to do is to use their own insurance. If there should be an accident – once they find out that they are running a commercial operation, more than likely their company is not going to pay. That’s the main danger.”

Singh said he pays $320 every month for commercial insurance on each of his 35 taxis.

“I don’t want to go to a medical provider that is not licensed by the state. Why would I want to ride with someone in a vehicle that has no license through the proper authority?” said Webb.

But in response to concerns like this, Uber Technologies, which previously offered blanket supplemental insurance liability to drivers when they were transporting riders, introduced a new commercial insurance plan in March.

The following is from Uber’s Web site:

“From the time a driver accepts a trip request through our app until the completion of the ride, our partners have $1 million of coverage for driver liability. We were also the first ridesharing request service to include $1 million of coverage for uninsured/underinsured motorists, meaning that passengers and drivers are also covered for injuries when another party is at fault and lacks sufficient insurance. This $1 million coverage from trip acceptance to drop-off is consistent across cities. This coverage kicks in regardless of whether the driver’s personal insurance applies to the trip. We have also added contingent comprehensive and collision insurance during trips, up to $50,000/incident with a $1,000 deductible.”

And assuaging consumer worries about the caliber of Uber drivers and the experience, the Uber Web site says:

“Since Uber started offering a ridesharing option in the U.S. more than a year ago, our commitment has been to provide riders with the best possible user experience – one they weren’t getting from a taxi. In that time, we have revolutionized how people move around their cities with access to the lowest cost, most reliable, safest ground transportation out there.”

Gonna hitch a ride?

Weekly Surge rode Uber from Broadway at the Beach to Walgreens on Kings Highway at 38th Avenue North, our fare was $9.06. When we checked taxi fares to and from the same location on a Web site called TaxiFareFinder [www.taxifarefinder.com], our estimate depending on traffic was between $7.42 and $11.35 before factoring in a tip.

Our driver was a pleasant lady, a retiree who wished to remain anonymous. She said she enjoyed being an Uber driver and has had no unpleasant experiences with passengers – but was once shouted at by a taxi driver. She used to keep her phone on her dash with the app-in-progress, but now keeps it out of sight.

But what if your Uber driver looks and acts like Super Creepy Rob Lowe from the DirecTV commercials? While Uber isn’t in the pageant business, the company claims it has high standards in regard to a driver’s background.

“Every ridesharing and livery driver is thoroughly screened through a rigorous process we’ve developed using industry-leading standards,” Uber said on its Web site. “This includes a three-step criminal background screening for the U.S. — with county, federal and multi-state checks that go back as far as the law allows — and ongoing reviews of drivers’ motor vehicle records throughout their time on Uber.”

We also posted a few public shout-outs on Facebook for anybody who has used Uber in Myrtle Beach. Strangely, only one Facebooker named Tha Guy responded: “Way better than cabs!!! Cheaper!!! Quicker!!! Better people! Lyft rocks too!!!”

Why, other than Tha Guy’s exuberance, was there virtual silence regarding Uber in Myrtle Beach?

“Honestly, this is Myrtle Beach, most folks don't know an Uber from a Twitter,” said Rocky Dohmen, managing partner at TheDigitel Myrtle Beach [www.thedigitel.com]. Dohmen has also been a go-to source for Weekly Surge in regard to technology and social media. We asked him for his take on Uber.

"I think services like Uber are the future,” he said. “People want a way to connect with others who provide sought-after services -from car services to dog walkers to booking a private jet to selling unwanted concert tickets. Today those under 40 don't see a problem with disrupting the status quo and see a lot of laws (like local and state transportation laws) as arcane and counterproductive to business, and the customer/client experience."

“It's a great option for those who mostly want to hang on the beach but then need to go to the store, mall or tourist attractions,” said local social media consultant and entrepreneur Dorien Morin-van Dam [www.moreinmedia.com]. “I see a lot of start-ups using technology and this is just one of many.”

Government regulation and the free market

Matt Moore, Chairman of the South Carolina Republican Party, recently wrote an Op-Ed embracing Uber. “The Republican Party has traditionally embraced entrepreneurship and innovation. That’s why I recently announced my support for Uber, which is revolutionizing transportation and giving consumers more choices when considering how to get from one place to the next,” he wrote.

We followed up with Moore, who said he has used Uber in multiple cities across the country, including Columbia. “It’s always a positive experience I think mainly due to the transparency of the Uber system,” he said. “Bad drivers and riders get weeded out.”

In his Op-Ed, Moore also wrote: “Once innovators can break down the artificial barriers holding back new ideas, they force their antiquated competitors to compete or die. That’s the beauty of our free market system; advancements made by just a few can spread far and wide. A rising tide really does lift all boats – and cars.”

But what “artificial barriers” need to be broken down?

For one thing, Moore cites what he calls a ridiculously complex taxi permitting system.

“It’s a nine page application with dozens of questions; potential cab drivers must submit things like their cash balances, mortgages and other assets,” he said. “In what other small business is that required? On top of that, look at what happened recently in Charleston. The taxi cab companies went to the police for help with fear mongering. The police basically said Uber is unsafe, despite no proof.”

So are services like Uber the shape of things to come in regard to ride-sharing and other convenience apps?

“Uber is only the beginning of the sharing economy,” he said. “Innovators are poised to disrupt other industries as well. Imagine a personal delivery service through Uber, or having your neighbor pick up your groceries via a shared application. The possibilities are endless. I’m sure horse and buggy operators had the same complaints towards the automobile. There’s nothing new under the sun. Technological progress creates winners and losers. In a truly free market system, we have to be OK with that. Government shouldn’t protect those who refuse to innovate and improve.”

This story was originally published October 15, 2014 at 3:09 PM with the headline "UBER-PAIN?."