25 October 2016
The Uber experience tells us that technological advances must be welcomed, but that doesn't mean companies must be allowed to do as they please. Photo: Bloomberg
The Uber experience tells us that technological advances must be welcomed, but that doesn't mean companies must be allowed to do as they please. Photo: Bloomberg

Taxi-hailing apps: To ban or to regulate?

Uber’s meteoric rise in the past few years has sparked a string of controversies and lawsuits. Regulatory regimes and laws often lag behind technological advances.

How to strike a balance between regulation and innovation deserves in-depth discussion by the government and society.

Alex Stephany, founder of parking app JustPark, defines the sharing economy as “the value in taking underutilized assets and making them accessible online to a community, leading to a reduced need for ownership of those assets”.

Uber is a poster child for the sharing economy. Drivers provide point-to-point transportation service with their idle private cars. Uber matches drivers and passengers according to their locations, reportedly taking 20 percent of the fare for each ride as revenue.

Supporters say Uber provides more convenient and polite services. It is not short of problems, though.

First, Uber does not compete with taxis on a level playing field. Taxis are usually subject to government regulation via licensing.

In Hong Kong, due to rampant speculation, the price of a taxi license was once jacked up to HK$7 million. In addition, taxi fares are strictly regulated by the Hong Kong government. This is in contrast to Uber, which, for instance, charge four times the usual rate as when crowds were evacuated during the 2014 hostage crisis in Sydney.

Second, it is doubtful if Uber offers sufficient protection for passengers. In Hong Kong, to apply for the taxi written test, one must hold a valid full driving license for a private car for at least three years and must not have been convicted of drink-driving, drug driving or causing death by dangerous driving within the past five years. A license to drive a taxi will be awarded only after the written test is passed.

Uber claims to be conducting background checks on drivers, but investigations by Crime Watch Daily, an American TV program, revealed that there is no need for applicants to disclose their criminal history, and criminals could apply to become drivers easily.

Although Uber boasts global insurance, the Consumer Council reminds consumers that the terms and conditions of the insurance policy are complicated and should not be taken for granted.

Some insurance experts also point out that Uber’s insurance does not cover illegal activities, and there is a possibility that passengers might be sued for damages for riding on an unlicensed vehicle in case of an accident.

Currently, Uber is banned in a number of regions. Last March, a court in Germany banned Uber since it did not fully insure drivers and passengers.

In Taiwan, authorities said Uber cannot guarantee the “professional experience of drivers” and this could undermine road safety. Last September, a court in Taiwan issued a cease-and-desist order against the company. Uber has also hit a wall in Toronto, Brussels, Barcelona and several other cities.

Colorado and Singapore are among the few places that have passed legislation to regulate Uber.

In 2014, Colorado became the first state in the United States to legalize Uber, regarding it as a transportation network company (TNC) that uses “a digital network to connect riders to drivers for the purpose of providing transportation”.

The law requires TNCs to conduct strict background checks on drivers to ward off anyone who has been convicted of drink-driving, drug driving, sexual offences or other felonies. Also, TNCs must carry out safety inspections of vehicles at least once a year, and insure each ride for at least US$1 million.

In Singapore, taxi-hailing apps are governed by the Third-Party Taxi Booking Service Providers Act of 2015. Registered and issued with certificates by authorities with a validity period of three years, service providers can only dispatch licensed taxis and drivers holding valid taxi driver’s vocational licences.

Besides, service providers need to comply with numerous requirements. For instance, booking fees cannot exceed those charged by taxi companies, and service providers must not require commuters to disclose their destination beforehand such that drivers cannot pick and choose their passengers. Moreover, basic customer services, including complaint channels and lost-and-found services, must be in place.

Whether, and how, Hong Kong should regulate Uber is open to discussion by society.

In any case, the examples of Colorado and Singapore show that technological advances must be welcomed and celebrated, but that’s not the same thing as giving companies the right to do as they please. 

The government always has a responsibility to safeguard public safety and interest.

Ben Lee is the writer of this article.

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