Uber/Lyft Regulation Debate Leaves Much to be Desired

Nick Zaiac Mar 27, 2015

This week the ongoing saga of the regulation of so-called Transportation Network Companies (TNCs) like Uber and Lyft once again dominated Annapolis’s legislative agenda.

Tuesday the State Senate Finance Committee held a hearing about what regulations such companies should follow. Largely, the hearings went just as one would expect, with the TNCs arguing that they are successfully self-regulating, while representatives from the taxi industry called for TNC drivers to be regulated the same way as taxicabs.

At issue is a bill by Sen. Bill Ferguson, D-Baltimore, that would allow TNCs to handle background checks and vehicle safety inspections, notes Katelyn Newman of the Capital News Service.

Opponents have argued that TNC drivers should have to maintain a state-issued passenger-for-hire license. Uber and Lyft responded that such a requirement would discourage part-time drivers from joining the service, making it harder for Maryland residents to get rides, and could also force the companies to raise prices in the state. The Public Service Commission (PSC) has proposed rules requiring the passenger-for-hire license.

The Ferguson bill would be a far better framework for the general public than the one proposed by the PSC. As I’ve noted in this space before, the PSC’s actions are unprecedented nationwide, and caused uproar  in the past when the commission tried to force TNC drivers to get licenses.

Allowing the industry to self-regulate is a smart idea. The companies have generally worked out the complicated insurance issues and questions about safety that regulators often raise, and have a great incentive to ensure only well-qualified drivers get to use their valuable brand.

Taxi companies are quick to ask that new competitors face the same burdensome regulation that they do, yet they should be demanding the opposite—that cabs should be deregulated. Indeed, traditional taxi drivers could benefit from a lower overall regulatory burden. By entering the digital age, drivers could spend less time cruising for street-hail passengers and more time actually earning fares.

Ferguson’s bill would be a step in this direction by setting the lower regulatory burden in law, taking the discretion for TNC regulation away from the Public Service Commission. While it’s by no means perfect, the bill would be far better for the for-hire vehicle using public than the overly burdensome regulations proposed by the PSC.