Transportation

Encouraging safety and innovation in ride-sharing in Austin

TwitterFacebookLinkedIn

Uber and Lyft’s decision to leave Austin in opposition to a new fingerprint background check requirement opened up space for innovation in the city’s TNC industry.

Challenge

The Austin City Council passed a resolution requiring fingerprint background checks for all TNC drivers in response to sexual assault allegations from passengers. Uber and Lyft balked at this new requirement and funded a ballot measure to overturn it. After the measure failed to pass, Uber and Lyft halted their operations in May 2016. For a year, until the state legislature denied Austin and other cities the ability to make TNC rules, the city had to find other TNC providers.

Solution

Austin decided to support the expansion of ridesharing options other than Uber and Lyft while moving forward with its fingerprint background requirement. State legislation passed in May 2017 pre-empted Austin’s efforts, but the year-long hiatus in Uber and Lyft operations offered other TNCs the chance to grow.

Timeline

2014

  • May
    Austin begins work on a pilot program for TNCs.
    Lyft launches without city approval.
  • June
    Uber launches without city approval.
  • October
    City council temporarily authorizes TNCs while it drafts new rules.

2015

  • October
    Austin City Council begins developing fingerprint background check requirement.
  • December
    Get Me launches in Austin, and agrees to fingerprinting. Fare will follow a few months later.
    Austin City Council passes fingerprint background check requirement.
    Ridesharing Works PAC funded by Uber and Lyft starts ballot measure petition.

2016

  • February
    City starts to phase in the fingerprinting background check requirement.
    Ridesharing Works’ petition is certified as Proposition 1 for May ballot.
  • February – May
    Ridesharing Works spends over $10 million campaigning for Proposition 1.
  • May
    Austin voters reject Proposition 1. The mayor convenes city leaders to find a solution to rideshare challenges. A city council resolution instructs the city manager to create “a menu of economic development resources” for TNCs interested in entering the market. A new nonprofit, RideAustin, launches with a commitment to share all anonymized data with Texas A&M, the University of Texas, and other cities that express interest.
  • June
    City council passes new ordinance on background checks and data reporting requirements.
    City council approves ATX Co-op Taxi, a new cooperatively owned taxi company.
  • July
    Austin’s rideshare startups (Fare, Fasten, Get Me, InstaRyde, Tride, Wingz, zTrip, and RideAustin) provide over 350,000 trips in July.
  • August
    All eight rideshare companies meet the requirement that at least half of drivers have passed a fingerprint background check.

2017

  • February
    All eight rideshare companies meet the final benchmark for having at least 99 percent of all driver hours/miles performed by a fingerprinted driver.
  • May
    Texas Gov. Greg Abbott signs HB 100, which establishes a statewide regulatory regime for ridesharing and prevents local governments from imposing their own standards. Fare shut operations in Austin almost immediately after HB 100 became law. RideAustin’s trip numbers fall by 50%.

Lessons learned

Effective problem solving may require a very different approach

New economic models and platform companies are creating challenges that cities may not yet know how to solve, particularly with regard to user safety and lack of trust between companies and regulators. Finding solutions to these challenges may require a shift in how cities think about the purposes of the regulatory regime. For instance, a lens of restitution/insurance (which firms seem to prefer) may prove more useful than an exclusive focus on prevention.

Sharing a values lodestar is important but not sufficient

Common ground between cities and companies can be tough to find even when all parties seem to agree on a goal. In Austin, the city, Uber, and Lyft all agreed that passenger safety was important, but they disagreed about what that meant and how best to achieve it.

Companies are not consistent in their demands across markets

Although Uber and Lyft left Austin over Prop. 1, both companies continued to operate in New York City and Uber stayed in Houston, two cities that required fingerprinting for drivers. The companies explained this disparity by saying that market conditions differ from one city to the next. This situation complicates city leaders’ efforts to learn from one another. Still, information sharing has value for cities facing regulatory dilemmas: The challenge is balancing what can be learned from other places against the particularities of each city.

You can’t escape local politics, but local politics can change

In Austin, a culture clash between the city council and those in the tech industry complicated efforts to find common ground. This friction can undermine trust, which is a crucial component of local politics. At the same time, Prop. 1 inspired many in the Austin tech community to get politically active in a way they never had before, suggesting that change is possible and trust can be cultivated.

It isn’t the end of the world if Uber and Lyft leave

Some say that the Prop. 1 battle damaged Austin’s reputation as a tech hub, but the departure of Uber and Lyft also opened up space for smaller firms to flourish. The proliferation of ridesharing companies when Uber and Lyft left Austin shows that cities can survive if major players depart.

Cities face both company pressure and state pre-emption

Austin’s up and down battle with both TNCs and the state legislature is probably not the last of its kind. Cities need a strategy to preserve their regulatory freedom of action and ability to find solutions that are best for their specific circumstances. A strong united front with other cities might shore up city bargaining power vis a vis companies and aggressive state governments.