Uber’s SA strife: while taxis threaten and government waits, everyone loses

I’m sitting in the back of an UberX car, on the way back to the office from a press function. Everything seems normal, like the dozens of other Uber rides I’ve taken over the past two years, until we pass a metered taxi. Suddenly my driver removes the iPhone running the Uber app from its dashboard mount, placing it somewhere more discreet. Things aren’t easy for Uber drivers right now.

The worried look in my driver’s eyes is very real. It’s understandable too. Just a day earlier metered taxis were physically threatening their Uber counterparts in Sandton, Johannesburg. Cape Town drivers have reportedly faced similar threats.

Metered taxi drivers aren’t the only threat either. Authorities in Cape Town have impounded more than 200 cars belonging to Uber partner drivers so far in 2015. They do so on the basis that the drivers are working without operating permits, ignoring the fact that many of those drivers have been waiting months for a piece of paper that should take two weeks to process.

Drivers are caught between an old industry angry at a new player on its turf and regulations written by people who couldn’t even have imagined something like Uber. And while they struggle, everyone loses.

Read more: Disrupt and dismay: why Cape Town’s metered taxi operators are so upset with Uber

Metered taxi tantrums

That list of potential losers includes the metered taxi drivers mentioned above. They accuse Uber drivers of having an unfair competitive advantage, largely due to the fact that the app charges significantly less than traditional fleets do.

While many now use Uber as a channel, others have been shut out because their cars do not fit the strict standards the service sets for its partner driver vehicles.

This week, their frustrations boiled over, with some Gauteng operators physically threatening and intimidating both Uber drivers and members of the public.

Their Cape Town colleagues are no strangers to these kinds of threats either. In 2014, the Western Cape Taxi Council sent letters to Uber drivers, saying that they were found using the service, they would have their permits taken away.

In February meanwhile, its members marched through the Cape Town CBD, calling for the service to be shut down.

Read more: Uber petitions City of Cape Town to stop hassling its drivers [Update]

The frustration is understandable: Uber is a disruptive company. It’s changing long-established models and some friction is inevitable.

And to be fair, the violence in South Africa has yet to reach the levels seen in other countries. In France for instance, protests turned so violent that Uber was forced to suspend its UberPOP service (which allows anyone to become a driver without a special license). Cars were flipped over and burned and drivers were attacked.

Still, the intimidatory tactics by local taxi operators are unlikely to win them many friends. Those who wouldn’t have used them before still won’t. And those who did have seen that it’s possible to have a cleaner, safer experience than that offered by many metered cabs, at a much cheaper price. They’re not exactly going to rush back either.

And so you get situations like the one I mentioned in the introduction to this article: Uber drivers carrying on as best they can and trying to blend in with ordinary road users whenever there are taxis nearby.

Read more: City of Cape Town: we fully support Uber operators

If local metered taxi operators truly want to level the playing fields, then it’s up to them to step up, innovate and find ways of differentiating themselves.

Bound by the law

Objections from metered taxi operators aren’t the only reason Uber’s been in the news recently. Last week it emerged that the City of Cape Town had impounded 200 cars belong to Uber partner operators in the first half of 2015.

Ostensibly, the cars were seized because the drivers were unable to produce valid operating licenses. Uber disputes this, saying that a number of drivers with valid operating licenses had their cars impounded too.

The real kicker though is that a large number of those drivers were waiting on operating licenses they had applied for months ago.

On a recent trip, one driver told me that when he’d applied in January, the provincial regulatory authority said it would take a couple of weeks to process his application. He was still waiting for the license in early July. His story is mirrored by hundreds of other partner drivers in the province (one owner partner said he’d been waiting on his license since December 2014). With such a lengthy wait, he had little choice but to flout the law. Uber is a good, solid source of income for him, as it is for many of its partner drivers.

Read more: Helen Zille explains why government has such a hard time with Uber

Spurred by the impoundments, Uber launched a petition urging authorities to speed up the issue of operating licenses to its partner drivers. The petition attracted massive support and has so far been signed by more than 20 000 people.

The city then responded, with Mayoral Committee Member for Transport Brett Heron saying that “the City has gone out of its way to assist Uber and their partners to become lawful operators,” he says. “Ultimately it is their responsibility to conduct their business lawfully and to have fully understood the regulations that govern the industry they planned to enter”.

He also placed responsibility for the unissued permits with the Provincial Regulatory Entity, which “has not made any decision on these applications as yet”.

Read more: The Western Cape Taxi Council is not loving Uber and its tech savvy ways

Provincial premier Helen Zille then weighed in. She largely echoed Heron’s sentiments, but also pointed out that local government had been caught off-guard by Uber’s entry into the market.

Helen Zille admitted that government had been caught on the back foot by Uber

“Uber’s e-hailing service ‘does not fall into any of the categories of the National Land Transport Act’, as an official explained to me this week,” Zille wrote in an official blog post published earlier this week. “It is also not provided for in the Integrated Transport Plan. And any process to regularise the e-hailing service must follow the requirements of the Promotion of Administrative Justice Act”.

“In other words, Uber is a market disrupter,” she adds. “It was unheard and unthought of when South Africa’s legal framework for public transport was put in place”.

Zille also says that it’s important for Uber drivers to have the operating licenses because if they don’t “passengers cannot claim from the Road Accident Fund in the event of a crash”.

Both Zille and and Heron are technically correct, but neither offer any explanation as to why the applications have been sitting with the PRE for more than six months. Again, this is a process which is meant to take no longer than a few weeks.

It’s also evident that no government-wide cognizance has been taken of Uber’s efforts to stay within the law as well as its own operating requirements, which appear to surpass those needed for an operating license.

In that light, some might argue that the authorities impounding the cars are acting according the letter of the law, but not within the spirit with which it was written.

Zille did at least promise some answers by 9 July, when “there will be a meeting of the Provincial Regulating Entity, where all the verified Uber licence applications supported by the City will be considered”.

Read more: 12 Uber cars impounded during J&B Met; UberYACHT launched

The business of doing business

One possible reason the PRE give if it decides to turn down the Uber driver partner applications is that they’ve failed to make a convincing business case. That is, after all, a part of the application process. If the regulatory authority does decide to take that routes, it would be problematic for a number of reasons.

First off, there is very clearly demand for the service Uber provides, especially in Cape Town. Uber claims it’s facilitated more than 2-million rides in 2015 so far and the company’s own data shows that growth in Cape Town has outpaced that of many big international cities.

But even if you don’t buy those numbers, is the fact that so many Uber partner drivers are willing to risk impoundment not evidence that there is a viable business case?

What will be particularly worrying is if the PRE denies the licenses based on the notion that Uber compares unfairly with metered taxis. In that case, it would be missing Uber’s real business models.

Yes, some business may have been taken away from metered cabs (or at least those who have been unable to use the platform) but Uber’s real market is people who would otherwise have driven in their own cars.

Read more: Uber wants to create 1 million new jobs for women drivers by 2020

In fact, that’s exactly how Uber is now trying to market its cheaper UberX service, as a cheaper alternative to car ownership. Here’s a slide from a recent presentation it recently gave to Cape Town media:

That number assumes that you’re diving 16km a day and that you’re paying off a car. But in any city which suffers from major traffic issues (as Cape Town does) should be doing everything it can to encourage anything that incentivises people to get off the road.

Future-proofing the law

And if the authorities get the laws right, there’s an Uber product which could see even fewer cars on the road. UberPOOL was launched around a year ago and allows users to share a ride—and split the cost—with another person who just happens to be requesting a ride along a similar route.

Read more: Is Uber the best travel app ever?

It’s been rolled out in a number of cities in the US and, if Uber is to believed, there have been “millions of uberPOOL trips” and “thousands of users” are taking POOL trips during commute hours more than five times in a week.

Now imagine if someone in possession of a vehicle and license which fits within Uber’s guidelines were allowed to to turn the service on and off on their own commute to work. They would be able to make their commute profitable as, while their passengers could make the trip productive. That’s to say nothing of the fact that as many as three fewer cars could be taken off the road.

And that’s not even to say that Uber will be the first to bring this kind of service to local markets (if tests underway in Israel are anything to go by then it could be Google). As the number of low-cost smartphones grows, similar technologies could even disrupt the way the minibus taxi industry currently works.

And if authorities at municipal, provincial, and national levels get caught napping when that happens then the current brouhaha around Uber will seem like a Summer picnic by comparison.