Should authorities go after disruptive models or should they let competition level up?


New transport minister Khaw Boon Wan said in a blog post last week that the transport ministry will be looking into car hire service UberX to see if they have an unfair advantage over the cab drivers. The question begs, should authorities step in to prop up a failing national system or should they allow competition to level up the whole industry?

Why unfair?

The national taxi system is regulated to some extent. Only Singaporeans can become taxi drivers. They have to first apply for a taxi driver’s vocational license, paying $40 for that. Next they have to take a medical examination. Lastly, they will have to undergo training at the Singapore Taxi Academy, paying $335 for 5 modules. It takes about 95 hours to complete (10 full days; 20 half days). The course includes three practical tests, which have to be passed before one is issued a taxi license.

Uber, on the other hand, does not have any of these qualifying requirements. Firstly, it is open to any nationality, so long as you have a car. Next, you don’t have to take any tests; you just register, provide all the documents to drive, and you are ready to go. You don’t even need a smartphone as it will be provided for you.

So you can see both systems do have an element of unfairness. You cannot be a cabby if you are not Singaporean, so that is the first unfair advantage that the cab companies have over Uber. But you don’t have to pay anything, and set aside time, for taxi vocational training to drive for Uber. You therefore don’t have to comply with industry standards that national cabbies do. This means that Uber has a much larger pool of people to choose from to drive for them, and they don’t have to spend so much in infrastructure, and fleet management services. A huge PLUS point for Uber.

But before we forget, Uber has not left cabbies in the lurch. Uber has a service called UberTaxi, wherein they offer their app to taxi drivers to get on board as an Uber driver, albeit driving a taxi. So while cabbies are benefiting from UberTaxi, they conveniently ignore that fact and complain about UberX! Talk about wanting to have your cake and eat it! That in itself, is also unfair.

Change never happens by accepting the status quo

Even Minister Khaw did recognize that Uber has helped the industry, and he said, “Our instincts must be to flow with the times, keep an open mind to innovations.” These are wise words from a wise man. But he did try to strike a balance by adding, “But we must always be fair to players.” This suggests that the Uber story is not without challenges. Uber has the potential to unravel years of infrastructure, and millions of dollars of investment. However, what has that brought the taxi service? Instead of rising sterling service, we have rude cabbies who choose to pick up passengers when they wish, and give you attitude if you are not going far enough for them (try hailing a taxi after midnight from the airport to go to Tampines, and you will know exactly what I mean!).

Uber coming into Singapore has improved the service standards of the industry, forcing cabbies to become nicer drivers. But Uber goes many steps further by using social proofing. So while the passenger can rate the driver, the driver can also rate the passenger. Hence, they form an ecosystem where VIP customers can vie for VIP drivers. This ensures that drivers get picked for more jobs, and customers get picked up faster with better service. An altogether superior system to the national taxi service.

Uber is not perfect

Of course, Uber is not a perfect solution. Safety of passengers is an issue. Having a modicum of regulation helps keep drivers in check. For the relative ease that Uber drivers get to pick up passengers, there will be a greater risk of criminal activity. For example, a female passenger accused an Uber driver of rape in New Delhi last year, and a male driver was arrested in Calcutta recently for allegedly masturbating in front of a female passenger. However, one can argue that this can also happen with taxi drivers.

Let the industry sort itself out

We have entered the crowd-era. Instead of governmental regulations, we should leave the industry to be self-regulated. If we can have crowdfunding, and crowdsourcing, we should also embrace crowd-driving or crowd-commuting. In this sense, Uber has come in and set it up for us. By creating a platform where suppliers and commuters come together to seek each other out, not unlike any other matchmaking service, Uber is developing the crowdsourced way to solving the taxi problem. It is best to let the industry find its own water level, and in so doing, to raise the bar on all players. That is how a new disruptive model should work, and not put shackled by protectionism.

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