Tough Rideshare Regulations in NYC and British Columbia leave Lyft Complaining - Will Uber Follow Suit?

Lyft is retaliating in NY after the TLC (Taxi Limousine Commission) extended the cap on rideshare drivers and instituted a minimum wage rule. And after five years of operation in Canada, British Columbia has yet to allow the global giants of the rideshare industry to roll in. However, that may be changing as of September of 2019. BC Passenger Transportation Safety Board (an independent tribunal) will start processing company applications by September 3, 2019.

Lyft is taking the pink gloves off in NYC!

Last year the New York TLC (Taxi Limousine Commission) passed minimum wage laws in order for rideshare drivers to earn a living wage as well as passing regulations capping the number of FHV (For Hire Vehicles) in the city. In August of 2019 they extended the cap for another year. Lyft is retaliating by not allowing their drivers to turn their app on and drive when and where they want. I do understand Lyft’s point of view. Why would they want to pay drivers sitting on their couch with their app on and collect $17.38 per hour? Why would they pay their drivers while they are circling Manhattan without a passenger? 

It all comes down to utilization rates. The utilization rate for Lyft and the Driver are very different. Lyft’s utilization rates depend solely on passenger demand and driver supply in a certain city at a certain time. Lyft has all the data regarding supply and demand. However, the most important metric for Lyft is passenger wait times after they order a ride, not how much money their drivers make! For the driver, utilization rates mean something very different, it means having a passenger in the car and maximizing their income. As per TLC studies, rideshare drivers in New York drive around empty 41% of the time. That means they are just driving around waiting for ride requests. In a busy city like New York low driver utilization rates create traffic congestion problems that even Uber and Lyft cannot ignore. The NY TLC is requiring driver utilization rates to be much higher by lowering the empty cruising time to 36% by the end of 2019 and 31% by the end of 2020. 

However, is it fair to drivers who now cannot make a living? Is it fair for Lyft to have total control? The initial PR campaign for Uber and Lyft boasted of logging into the platform and making money. That has proven to be a very valuable tool for both of them to replace the massive numbers of drivers quitting every six months. As a driver, I know that working when and where demand is high guarantees a higher profit. Unfortunately, Uber and Lyft have been in a tight race to the bottom, which has hurt drivers even further. The cuts in rates came fast and furious but both Uber and Lyft also decided to dump as many cars as possible in cities like New York, Los Angeles and San Francisco resulting in a collapse in drivers earnings. Passenger wait times got cut in half over the past few years since these days there are so many drivers on the road. How did that help utilization rates for the drivers? It didn't, now they are competing for a share of the pie with a lot more drivers on the road. No one told Uber and Lyft to dump unlimited amount of cars on the road hurting driver utilization rates and incomes. But now Lyft is in retaliation and forcing drivers offline or not allowing them to log onto the platform when demand is low, shameful rally! 

The following is what NY Lyft drivers saw in their app! Remember, we are all Independent Contractors, so much for Independence I guess!

B.C. Taxi Shortage - Can Uber & Lyft Fix it?

On the other hand, the British Columbia has a taxi problem, there simply aren't enough cabs to service the demand. One would think Uber & Lyft would be all over this conundrum but, the Province has strict regulations in place for all ride for hire companies. Instead of buckling under lobbying pressure and allowing Uber & Lyft to rush in to disrupt the existing taxi industry, the government plans to increase the number of cabs in B.C. by 15% (300 in the Lower Mainland and 200 in the rest of the province), allowing taxi companies to discount rides booked using an app, and providing more data to the provincial regulator, as part of a plan to modernize taxi services. 

Minister of Transportation and Infrastructure Claire Trevena expects ride-hailing companies will have their applications filed with the Passenger Transportation Board (PTB) by September of 2019. “I know that people are looking at expanded transportation options to be available very soon, and I want to reassure them that a lot of work is happening to get this accomplished, but it is important that we get this right,” Trevena said.

Disappointment and frustration about the lack of action on ride-hailing, and confusion about the timeline, came from all sides. The Ridesharing Now for B.C. Coalition (supported by Uber & Lyft) was initially happy with the government’s announcement, until it realized that only the legislation would be dealt with in 2018. In a statement issued, it said it was extremely disappointed and the time to allow ride-hailing has long passed. “It is unacceptable that ride-sharing is going to take at least 18 months,” the coalition said.

I guess Uber & Lyft are used to having their cake and eating it too, they did so in the United States but when they get some pushback and the shoe is on the other foot, they didn't enjoy it. I think it is well known that the “Win at all Cost” attitude of Travis Kalanick brought Uber from a fledgeling startup to a $70 billion public entity. Well, kudos to B.C., no one is denying the fact that Uber & Lyft offer a great service but the bull in the China closet must be tamed before being let out of the pen.

So you want to drive for Lyft or Uber in B.C.?

Ride-hailing companies could begin operating on B.C. roads as early as September 16, 2019, under new provincial regulations on licensing and insurance that come into effect on that date. That doesn’t necessarily mean services such as Uber and Lyft will actually be available by then as they will still have to apply to the Passenger Transportation Board for permission to operate, with applications being accepted starting September 3, 2019.

All drivers must carry a Class 4 commercial license as opposed to a Class 5. The first step is getting a learner’s commercial licence before you can even apply for a Class 4 licence or driver training. You need to be at least 19, according to ICBC’s website (The Insurance Corporation of British Columbia), already have a full-privilege driver’s licence (out-of-province is acceptable) and two years of non-learner driving experience, have no driving-related criminal convictions within the past three years, and have no outstanding fines to ICBC. There are some medical conditions that could prevent you from getting a Class 4, including certain types of epilepsy, psychiatric or neurological conditions, heart problems, diabetes and sleep disorders. But, according to ICBC’s website, these are not automatic disqualifications. All cab company drivers must have a Class 4 driver’s license and be subject to the same rules of the PTSB (Passenger Transportation Safety Board) which is independent and also will set the guidelines for fares, boundaries and supply of vehicles.

Lyft is Pushing Back, Uber is on the Fence

The province is getting pushback from ride-hailing advocates who say the new rules and regulations announced by the B.C. government make it difficult for prospective drivers to become licensed. Under the province's new rules, people interested in becoming rideshare drivers will have to acquire a Class 4 commercial licence, the same as taxi and limo drivers and undergo strict criminal and driving record checks and fingerprinted.

"It's excessive red tape and bureaucracy," said Ian Tostenson, a spokesperson with Ridesharing Now For B.C. He's concerned the additional licensing which comes with fees, road tests and driving record checks will prove too much for some people. "I get that they want a level playing field, but they're going to level the playing field in favour of slowing down the process of people being able to be become a rideshare driver," Tostenson said. "But frankly, it's playing into the hands of the taxi industry." Lyft agrees with Tostenson that, without any data to back up the safety claims, the restrictive regulations can only favour the taxi industry. That's a false claim, as per ICBC, Class 4 drivers are roughly 20% safer drivers than Class 5!

"By putting in a Class 4 regulatory regime, you get a population of drivers that are only full-time commercial drivers, we're not going to have the number of drivers or the type of drivers that are critical to making these marketplaces work, the amount of time and money they would need to expend to become a driver, it just becomes not worth it for them anymore," said Aaron Zifkin, managing director for Lyft Canada. 

My Rebuttal on Mr. Zifkin’s Comments:

Mr. Zifkin said that having to work under Class 4 regulations would result only having commercial drivers that work full time. 

Then from the driver’s perspective, it might not be such a bad thing, providing they can earn a basic living in return for their labor, their ability to pass the testing requirements, physical exams and their willingness to abide by the rules and regulations. 

He says all the extra licensing fees, background checks, road tests etc. would make it just not worthwhile for people to become Lyft drivers. 

I have to ask if that’s meant to be a valid critique of the “regulatory regime”, or an unintentional disclosure that drivers won't be able to recoup the expenses incurred by these requirements before they quit driving for Lyft. I’d say that's not much of an endorsement for the Lyft rideshare model. 

He then goes on to say that having to abide by such regulations would result in Lyft not having the number or type of drivers that are critical for making the Lyft platform work. What does he mean by type? Those who couldn't pass the stricter background checks than the existing plain vanilla, watered down U.S. background checks, medical exams, licensing requirements and road tests? Does he mean desperate people looking to put food on their table? Does he mean the type of drivers Lyft would take advantage of? What does he mean by numbers? Does that mean that Lyft won't be able to oversaturate the market to make up for high attrition rates? As per their own numbers, around 70-80% of the drivers quit in less than a year. Does he mean that there won't be an endless pool of replaceable drivers?  

Mr. Zifkin, why not let the drivers speak for themselves? Any time Mr. Zifkin presumes to speak on behalf of the drivers, I feel he is out of line. If he or Lyft really had even the tiniest bit of the driver’s interest at heart, it would have become obvious by now. Everything he says is entirely self serving and from Travis Kalanick’s playbook. Wait doesn't Mr. Zifkin work for Lyft, the kindler gentler rideshare company? The only time he speaks the truth is when it's unintentional. 

Uber issued a written statement: "We will review the information and evaluate how they may impact our ability to provide British Columbians with the same ride-sharing experience they already enjoy in cities across North America," said Michael van Hemmen, business manager, western region, with Uber Canada.

Give the regulators in B.C. some credit, they saw rideshare for what it is, a slow moving train wreck and they took strong action. Personally, my hat is off to B.C.!

What do you think about stricter background checks with fingerprinting for the U.S. drivers of Uber & Lyft? Should they be outright regulated? Why isn't Lyft jumping in this lucrative market?