How mobile-app services are changing Philly's taxi business

In part 2 of a series on city cab drivers, Randy LoBasso considers the impact of smartphone-summoned car rides.

By Randy LoBasso
Add Comment Add Comment | Comments: 1 | Posted Mar. 12, 2014

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It was about a year ago when a sting operation took down a new car company that had begun operating in Philadelphia: Sidecar, a Silicon Valley-based startup that let ride-seekers use its mobile app to connect with a non-professional driver to come pick them up.

While the company was partially owned by Google, it wasn’t hackers or a computer virus that had targeted its service, but a combined effort by the Philadelphia Parking Authority, Philadelphia Police Department and a local tow company.

Sidecar was already operating in Los Angeles, Austin, Seattle and San Francisco, but what mattered to the PPA was that, under local law, it’s illegal for nonprofessional drivers to provide car services for pay. So undercover parking officers used Sidecar’s app to book rides with several of its drivers—and led them to prearranged locations where police and tow trucks were waiting. The drivers were fined $1,000, their cars were impounded, and Sidecar was soon a distant memory for consumers psyched about the future of peer-to-peer rides across Philadelphia’s urban landscape.

The PPA’s public safety concerns with peer-to-peer ride-hiring notwithstanding, the Sidecar app’s basic premise, that of summoning a car quickly with your smartphone, held clear appeal for locals. And not just for riders. Many cab drivers in Philadelphia see app-based car services—like Uber, which operates in town now—as the future of the business. These new business models stand to offer them some distinct advantages over the existing cab system, which is a public-private venture between a state agency and million-dollar companies whose drivers earn low wages and are vulnerable to being overcharged in weekly fees.

Back in the ’90s, says Ronald Blount, head of the Philadelphia Taxi Drivers Alliance, no driver ever thought the price of a medallion—the small, metal plate that goes on the front of a cab to signify that it’s run by a legitimately licensed taxicab owner—would ever surpass the $10,000 range where it then hovered. But then in the 2000s, medallions started going for $50,000. Then $75,000. Then $100,000. Today that price is over $500,000 with no end in sight, and the low-wage drivers who once believed they could get a leg up and own their own company one day, if they’d just work hard as drivers and play by the rules, too often find that goal forever out of reach.

It’s no wonder that some of them see the next-generation car companies moving into town not as fierce competitors for their business, but as better options for their own futures.

“Cab drivers, they want to see the medallion system fall, at whatever cost,” says Blount, who holds weekly meetings at his West Philadelphia office with drivers from all over the city. “Because it’s going to be those same drivers—say if it’s

Sidecar or Uber that’s successful—drivers could easily just turn in their keys to the medallion cab and go drive for [a new company].”

As explained in the
first installment of this series, cab drivers in Philadelphia, as in many cities, are required to rent their medallions for an upfront cost each week and work to gain that money back plus a profit. This system is regulated by the Philadelphia Parking Authority, and takes place within a marketplace that grows less competitive every year as Philly cab companies conglomerate.

The system for these new private ventures is totally different. When Sidecar operated here, both drivers and customers used their respective phone apps to schedule pick-ups and drop-offs. The cost was paid via the app connected to your bank account, and Sidecar kept 20 percent of the total trip.

Uber, which came to Philadelphia in June 2012, is a bit different from Sidecar—not so much on the user’s end, but in a key way that makes it legal to exist here. Unlike Sidecar’s peer-to-peer rideshare approach, Uber is technically a limousine service. Limo drivers, like cab companies, need to be licensed by the PPA, but don’t fall under the medallion system because limos aren’t allowed to pick up rides on the street—their services have to be scheduled in advance.

That means drivers for Uber have to pass a background check with the company and the PPA, then be tested on their knowledge of Philly streets, customer service and other requirements for all limousine drivers in the city. Once they pass, they set up their own driver account on the Uber app, connect their profile page to their bank account, and get a company phone from Uber.

Several former cab drivers tell PW that, with Uber, they like the hours better and their customers tend to be more respectful. There are also fewer upfront costs: Instead of paying cab companies $420 a week to rent a car—and usually more than that, as detailed in PW’s Feb. 26 story—drivers for Uber start from zero, and the revenue they earn is split between themselves and the company with each ride. That means the company has an interest in seeing each driver succeed. Under the medallion system, it makes no difference: Medallion owners get the driver’s upfront rental fee whether he makes $100 or $1,000 in a shift.

One driver who identifies himself as “Mr. Williams” has been driving professionally in various capacities since moving to the U.S. from Jamaica in 1996. Last year, after working in the cab industry for a combined 12 years—he also worked as a truck driver for stints in between—a friend told him about Uber. To him, it sounded a hell of a lot better than cruising Center City, hoping for a wave-down from customers who might or might not actually have money in their pockets.

“I don’t have to be driving around looking for fares,” he says, “and I don’t have to worry about getting paid—with Uber, it’s pre-paid.”

Not having to pay a lump sum up front for his cab is nice, he says—as is the fact that he doesn’t have to own the car, and that he can work in a suit and jacket. It sure beats his days of paying $500 per week for a medallion, he says. That’s $80 more than medallion owners are legally allowed to charge. Asked if the reason he was willing to overpay for his medallion was that he feared if he complained the owner would just give his medallion to someone else, he pauses for a moment before saying, simply: “Yes.”

Mohamad Klouj, for his part, has been working for Uber for one week. He’s new to the car-service business; he’s just switched careers after several years at an environmental contracting firm. When I speak to him over the phone, the faint sound of piano-bar music trickles in from the background; I can hear him get out of the car, open the door for his customers—he refers to them as “clients”—and close it after they leave.

Klouj says he likes Uber for the same reason some riders might not use it: It draws higher-end customers. “Uber clients are different from the cab industry,” he says. “I have a couple friends driving cabs; I didn’t see myself picking people up off the street.” He likes the fact that the customers are choosing him, specifically, as their driver—and that there’s no cash transaction to worry about. Lots of younger people living in 2014 don’t carry cash on their person at all, so a direct electronic transfer system between driver and client is pretty much a no-brainer. And while he acknowledges that “you expect people are drunk” when they want a ride home at night, “it’s still—the class of people are very respectful. Even with college kids and young professionals.”

All that said,
Uber has come under scrutiny as of late. In New York City, the company responded to at least one East Coast winter storm by upping its prices by as much as eight times the going rates. Customers in L.A. have registered similar complaints.

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1. Steve Chervenka said... on Mar 12, 2014 at 06:53PM

“This is the best article on the taxi industry in Philly so far. Blount has said it best, describing the frustration by career drivers whom care about serving people that the revenue is a one way street bypassing the drivers and the nonsense that goes on starts with the owners. In Toronto, a few are unhappy that their medallions are being replaced with a true independent contractor driver, and the only costs being that the cab must be disabled suitable, which is a win for any customer to actually get in a large cab and feel comfortable, and a win for drivers to feel comfortable and alleviate back and leg problems! Taxi customers, voice your opinion on supporting ways to award the good drivers!”


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