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NYC regulators approve limited pilot program for taxi hailing apps like Uber

NYC regulators approve limited pilot program for taxi hailing apps like Uber


Proof that government prefers to move slowly

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Drivers and passengers in New York City can now use smartphone apps to hail nearby street cabs, thanks to a one-year pilot program that was just approved by the Taxi and Limousine Commission. The vote represents a partial victory for startups like Uber, Hailo, and Get Taxi, which had been lobbying New York City regulators to change the rules for months.

The pilot program allows for passengers to use apps to hail street cabs that are within a half-mile radius in Manhattan below 59th Street, and a 1.5 mile radius elsewhere in the city. The apps will have to conform with the TLC's requirements for payments system in cabs. That means at least Uber and Hailo, which store customers' credit card information and charge them seamlessly at the end of the ride, will have to retool in order to meet the criteria.

The TLC's chairman David Yassky has said e-hailing apps are "inevitable" and Mayor Michael Bloomberg has publicly voiced firm support. However, the TLC has been inconsistent in its effort to get the rules changed. The agency was expected to take a straight-up vote on a set of proposed rules that would have set the requirements for e-hailing apps and simply opened the market.

57 percent of New Yorkers are in favor of apps to hail cabs

The TLC found that 70 percent of riders in New York own smartphones, 57 percent of them would like to be able to hail a cab with their smartphone, and 55 percent would like to be able to pay with a smartphone. Still, five of the commissioners got cold feet at the last minute, most likely because of heavy protests by the traditional black car and livery services.

In New York, yellow cabs may only pick up street hails and black cars may only pick up pre-arranged hails. Electronic hailing blurs that distinction, which has some in the industry worried. When Uber first launched street cab hails in New York in September, the agency told drivers they'd be in danger of losing their licenses if they participated. The startup had to shut down the service after just over a month of operation.

Instead of voting on a permanent rule change, the chairman opted instead to vote on whether to put the proposed rules in place for a year. The rules require apps to interface with the existing meter system and prohibit the payment of incentives to get drivers to pick up e-hails, among other specifications intended to protect consumers and preserve competition.

Apps won't hit the street right away. Companies will have to apply for an e-hail license, and the exact procedure is still forthcoming. All payments systems in cabs will be required to integrate with e-hailing services after the Verifone and CMT contracts expire on February 15. Update: the TLC announced that the pilot program will begin after February 15. The program will be evaluated quarterly, and "if successful as anticipated, it could then be extended or replaced by permanent rules."

Hailo CEO Jay Bregman acknowledged that there are still some hoops to jump through before his company can operate in New York, but he was still excited about the pilot program. "It's absolutely a step in the right direction," he said. "We are thrilled to be bringing Hailo and e-hailing to drivers and passengers in New York." Uber called the decision "another big win."

The vote was 7-0, with two commissioners abstaining. The ruling follows a decisive win in Washington, D.C. for Uber, which has been the most aggressive in its efforts to introduce e-hailing, after city officials there voted to sanction "digital dispatch" companies.

Correction: An earlier version of this post said that apps will have to integrate with Verifone and CMT, which have contracts to administer payments until February 15. In fact, the pilot program will not begin until after February 15, which means the apps may not necessarily have to work with Verifone or CMT.