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New York City's taxi industry insiders made an app to compete with Uber

A way to hail yellow cabs without the extra fee or surge pricing

Andrew Burton/Getty Images

The introduction of Uber to New York City has destabilized the taxi industry. The value of medallions has been cut nearly in half, pushing medallion owners into financial distress. Meanwhile swathes of yellow cabs are now sitting idle, as drivers flock to Uber. In an attempt to fight back, a team of taxi industry veterans are rolling out their own app, Arro, as reported this morning in Crain's. It works just like Uber, but allows users to hail a cab without the $2 fee charged by the Uber-T service. Cabs also allow users to avoid surge pricing, which can double or triple fares during peak hours in Manhattan.

Arro's founders argue that their system will be more appealing because it's directly integrated with the payment terminal in the taxi, as opposed to working through the driver's smartphone. But that seems like a weak line of reasoning, since both apps provide a seamless way to hail and pay once a credit card has been entered. Arro will launch with 7,000 taxis, compared to Uber's more than 20,000 cars. And for now Arro works only in New York City, although it has ambitions to expand to other cities.

There is a sizable market for Arro to improve on. "There are half a million trips in yellows and greens every day," Mike Epley, director of product management at Arro, told Crain's. "Some of those trips go smoothly, and some of those don't." But it will be tough going against Uber, a company with $5 billion in funding and the political muscle to overmatch even New York City's mayor.