The Real Time Ridesharing Revolution: Half Time Break

David Seymour evaluates his earlier prediction that ubiquitous smart phones will transform the taxi industry by analyzing the current market and regulatory environment.
Published on October 4, 2012

Nearly two years ago I wrote several opinion pieces predicting that ubiquitous smart phones would revolutionise the way in which people use their cars, and shatter the taxi market as we know it.  The future predicting business produces many who turn out to be starry-eyed, a few stars, and even fewer who are prepared to revisit their predictions later on.  Here goes.

Real-time ride sharing, I wrote, would mean that anybody with a car would become a potential taxi.  The coming ubiquity of smart phones that have touch screens, are internet connected, and GPS enabled would mean that anybody could find, safety check, and pay a driver going their way with only a few minutes notice.

In turn this would dramatically improve the efficiency of our road networks and vehicles.  Valid concerns around energy, emissions, congestion, and infrastructure costs could be mitigated without governments forcing anybody to do anything.  The market would guide people to save money by filling some of the three quarters of moving car seats that are empty at any given time, but only when it made sense on their own terms.

Meanwhile the case for taxi regulation would disappear as the line between a taxi driver and a motorist blurred, and the smart phone marketplace made transparency and price competition possible in a market that is notoriously light on consumer information.

The revolution has not yet succeeded or failed, but half time is a good time to survey the state of play.

For one thing, smart phone ubiquity is still on its way. Surveys this year have found that around half of North American adults have smart phones, up from a third last year.  It’s difficult to identify the critical mass for the envisaged market, but it may well be a way off.

There has been a flurry of start-up businesses in the smart phone taxi dispatch business.  Hailo operates in London, England, and plans to move into several large North American markets including Toronto.  Taxinow in Vancouver and Fastcab in Calgary are aiming to give drivers and passengers in Western Canada a new way to find each other.

In Washington, D.C. taxi industry incumbents have already started to feel the pinch.  The municipal government has been involved in what the Wall Street Journal called a dust-up with taxi dispatch provider Uber.  Uber started taking market share and, in a move corrupt even by Washington standards, the City proposed setting their minimum fare at five times the standard rate. The city was forced to back off in what may be a tidal moment for the taxi lobby and its hitherto formidable grip on city halls.

In the ordering of conventional taxis, the revolution appears well underway.  The sharing of everyday private vehicles by regular motorists is a more difficult grail, which has been pursued in various forms since Universities started carpooling schemes in the 1960s.  It is difficult to identify breakthroughs to critical mass where the system works reliably enough that shared rides can be depended upon by a wide range of people.

Nevertheless, there are committed players in this business, most notably the global transport technology company Avego who have pilot programs in California and Europe.  They are far from the only operator however.  Earlier this year the American operator Zimride claimed to have facilitated over 26,000 rides and to be active on 125 university campuses.  TEXXI (transport exchange for the twenty first century) of England has taken a somewhat academic approach to solving the underlying economic problems of forming a deep and liquid ride market, and have run a practical trial with some success.

As with the taxi dispatch side, ride share operators are swarming to create a young market reminiscent of the one for search engines fifteen years ago.  It is not yet clear who will be the Google in this story but so many are entering the market because they sense the technological possibility.

It is only half time in what may be a revolution in urban transport.  Municipalities will play a role one way or another.  I argued last year that they can either stop the pointless controls on taxi numbers or become irrelevant.  I’m easy to ignore but the D.C. dust-up is not, the end of municipal taxi regulation is nearer.  

With respect to ride sharing, the revolution has the potential to improve the efficiency of investments in roads.  It is another reason for councillors to curb their planning departments’ enthusiasm for waging war on the automobile and give technology a chance.

The revolution is not finished, but is in good heart.  Long may it continue for the sake of everybody’s mobility.

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