Will Virginia Embrace the Coming Transportation Revolution or Thwart It?

A Lyft car. Idiosyncratic but revolutionary.
A Lyft car. Idiosyncratic but revolutionary.

by James A. Bacon

Has Virginia has given up any pretext of being a market- or innovation-friendly state? The Department of Motor Vehicles has issued cease-and-desist orders to the Uber and Lyft ride-sharing service and slapped the companies with a total of $35,000 in fines. Their offense? Operating order-a-ride-with-a-smart-phone services and giving traditional taxicab companies a good scare.

According to the Washington Post, DMV claims the two companies are operating in violation of state law (although it’s not clear from the article what provision of the law they are breaking). Here’s what a DMV spokesperson had to say:

Virginia DMV supports innovation. … DMV has been charged by the General Assembly to conduct a study of these transportation network companies. We are confident that the solution to transportation network companies operations will come out of the study and we hope that Uber and Lyft will actively participate in the study and be a part of creating the solution. In the meantime, Virginia DMV must fulfill its obligation to highway safety and enforce the law as it is currently written.

Uber and Lyft maintain that they are operating legally, and they will not obey the cease-and-desist order.

Bacon’s bottom line: This dispute is far more important than Virginians realize. It’s way more significant than a dust-up between local taxicab companies and the Silicon Valley up-starts who would compete with them. We are in the early phases of a transportation revolution. Right now, companies like Uber and Lyft are targeting the premium end of the market because that’s where the money is and where they can most rapidly recoup the cost of developing their software apps, administrative systems and algorithms for positioning their vehicles. Once those concepts are refined and proven in the marketplace, we will see them migrate downstream to other market segments. I recently highlighted Bridj, which is providing premium bus service in the Boston area fore highly competitive fares as an example of the next wave of innovation.

The logical culmination of this technology revolution will be the emergence of a wide array of transportation services with different mixes of convenience, price and amenities targeted to different population segments. People will enjoy a far broader array of transportation services than they do now, and it is entirely reasonable to expect new enterprises to begin serving low-income populations in neighborhoods that municipal bus lines do not now serve. This change will be driven by the profit motive — by entrepreneurs filling niches in the marketplace that are now ill-served by taxicabs and municipal bus lines — and will not require government subsidies.

While it may be appropriate to maintain basic minimum regulations — companies and drivers need to carry insurance, for instance — all government has to do is step out of the way. While cities from Chicago to Seattle are throwing up barriers to transportation innovation, Virginia should embrace the trend. DMV should back off while the General Assembly studies the issue. And the McAuliffe administration should make it a core plank of Virginia transportation policy to become the most hospitable state in the country for the likes of Uber, Lyft, Bridj and other heralds of the New Transportation.

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9 responses to “Will Virginia Embrace the Coming Transportation Revolution or Thwart It?”

  1. And we tend to get upset when someone gets a special deal. Look at the rules; eliminate ones that are not necessary to protect the public interest; but don’t create two sets of rules for the same service.

  2. Breckinridge Avatar

    Jim, Jim, Jim — clearly you have ignored one basic purpose of regulation, which is to protect those already in a market from fresh competition. Protecting the status quo is the goal! I read somewhere that Virginia has more barriers to market entry than most states, requires various licenses for more “professions”, and of course has a local tax scheme that is yet another problem for start ups. Yes the entrenched taxi services will fight these guys to the bitter end.

  3. HausofSanta Avatar

    I hope that Uber and Lyft make it out of this ok. Especially with the danger of greedy cab drivers in and around the District of Columbia who have shady business practices- Uber and Lyft provide a consumer friendly alternative.

  4. billsblots Avatar

    The primary aim of government is protection and growth of its authorized manpower levels, and to secure and elevate management positions to higher pay grades. Government positions and policies are determined by first evaluating them against this undeniable fundamental. I have seen this numerous times first hand inside both federal and state governments.

  5. larryg Avatar

    I see lyft and Uber the same way I see school vouchers.

    let me explain.

    I’m fine with school vouchers to privatized schools as long as:

    1. – they have to accept all demographics… including the harder to teach

    2. – they have to meet the same academic performance standards as public schools do

    so it’s the same with these non-traditional transportation services –

    1. – the vehicles should be inspected so we won’t end up with someone dying in a car that lacked brakes … like we see right now with those Dollar buses

    2. – the driver should be certified – with respect to driving record and criminal record.

    3. anyone who provides taxi service needs to have an acceptable level of insurance.

    4. someone needs to be the arbiter of companies that call themselves insurance so we don’t get “insurance” companies in name only that supposedly insure these services then disappear when there is a big claim – like we are seeing happening – again with some of these dollar bus services.

    Perhaps – we are entering a new era where these standards are outmoded.

    If so – then we should take the nutrition label approach for foods and adapt it to transportation services – so the consumer is fully informed as to the level of services and protections and then they can make a truly informed decision.

    I’m not opposed to that – but the first time a 17-year old daughter gets savaged by an irresponsible person masquerading as a cab driver – be prepared for a public outcry that “something” be done about it.

    that’s kind of how we got to where we are right now.. we start with no regs and every time something bad happens – we have an outcry – and voila – new legislation and regulations follow.

  6. Ghost of Ted Dalton Avatar
    Ghost of Ted Dalton

    Uber and Lyft I can see…..I’m not as big a fan of the Bridj concept. It reminds me very much of a recent piece about amusement parks. We no longer even share the experience of standing in line. Now there are express passes for people to jump to the front of lines in certain amusement parks.

    Bridj seems very similar. Creating a hip, more expensive bus service and leave all those “other people” to use the city bus service.

    For all the absurdity of screaming about the 1%, there is a point to be made about our civic values. When we share no common experiences, it gets more and more difficult for a society to hold together.

  7. larryg Avatar

    I think current transit service pretty much sucks.. if that makes anyone opposed to govt-provided subsidized transit service happier.

    but there is a fundamental problem with any kind of transit service, public or private when trying to balance the idea of a predictable service with predictable travel times – with one that can pick up people anytime and anywhere. An exclusive taxi-service for you only for your needs vs something much less expensive but with tradeoffs.

    The core premise with transit is that it provides mobility for the lower income workers…. and that’s a benefit to the rest of us because they are doing service work that would be far more expensive if workers could not afford to live nearby or would need to be higher paid to provide their own transportation.

    this core premise my have been overcome by events and basic public transit is really a zombie do do bird.. that does not know it’s become obsolete but still keeps getting funding so it can turn the same old crank… to support that core mission.

    is this true? Is public transit – obsolete?

    if that’s true – then we need to embrace uber and lfyt and even jitneys and other services that are dispatchable with a smartphone.

    so the next question is (and maybe it should have been the first) – is how many low income workers have cell phones?

    my understanding is that virtually everyone has a cell phone these days – however how many of them are smartphones and able to use a transit type “app” is maybe a more relevant question.

    are we ready for a paradigm shift?

    perhaps this is the time to do it – given the fact that the transportation trust fund is basically getting only 1/2 of it’s funding from fuel taxes and the other half is coming from the Federal general revenue budget.

    should this be turned over to the states and localities to fund (or not) and/or let uber, lyft and others step in to innovate?

    I’m in favor of it.

    I wonder about the standards… and if people who depend on traditional transit – are ready.

  8. virginiagal2 Avatar

    Being the contrarian here – to me the company is coming off like a bullying jerk. Below is what I understand happened, from press accounts.

    The company talked to DMV about their business model, DMV indicated that regs and laws needed to be rewritten to make it legal, and indicated a willingness to work with them to get that done.

    DMV then told them that until the GA could get the regs rewritten, that they would have to wait to operate in Virginia. Basically, they were told they weren’t legal but that the agency was willing to change the rules specifically to adjust to this new business model. Not really a stereotype of bureaucratic inertia.

    The companies then announced they weren’t waiting on no stinking regulations, and that they’d happily break the law because, you know, disruption.

    As I understand it, only after that did DMV issue a cease and desist order – which they really kind of had to do at that point, as the agency knew these companies were breaking current law, and DMV would be on the hook if a driver decided to take the term “Death Cab for Cutie” literally.

    Deliberately defying an agency that has indicated it’s willing to work with you to change the rules – and change them solely to meet your new business model – doesn’t strike me as a brave blow against over-regulation. That strikes me as being arrogant jerks who think rules don’t apply to them.

    Sorry to be judgey, and I hate cabs too, but this is a serious case of special little snowflakes.

  9. […] has these feelings, too. Then we read stuff like this and feel much […]

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