Photo by Framing the Street

It’s been stated before but the popularity of peer-to-peer mobility services such as Lyft, Uber, and Sidecar isn’t surprising anyone who’s been unable to hail a cab or has been stuck waiting endlessly for the bus. Perhaps not so shockingly, the popularity of these services has caught the traditional transportation industry by surprise. What Wired Magazine recently labeled as a renewed belief in trust, the International Transportation Regulators Association calls “rogue.”

The latest controversy is the classification of these transportation services, because this would determine the level of their regulation. The taxi folks don’t want them, and the rideshare folks don’t want them either. The conflict over the definition, while well-intended, tends to overlook the purpose of regulation. Originally for the sake of consumers, today’s regulation of these services rarely yields customer experience improvements nor has it removed friction from the marketplace. It’s still hard to hail a cab in the edge neighborhoods of a city. Regulation has only made the conventional transportation companies’ monopoly more secure for their own benefit, without regard to the consumer.

The industry’s claim that consumers will be taken advantage if start-up mobility companies aren’t given enough scrutiny overlooks a fundamental aspect of peer-to-peer mobility: both parties agree to the set of risks in order to reap the rewards.

When both parties share risks, there’s a bigger opportunity for improved service and benefits. The level of customer satisfaction on peer-to-peer mobility systems has been very high given the user rating systems and customer service. Drivers make an effort to make their vehicles clean and appealing. When something goes awry, peer-to-peer transportation operators will call you to find out what has happened and how to improve the service.

By contrast, the taxi industry commonly fights nearly every innovation that would improve the rider’s situation. They opposed the inclusion of GPS in their cars, preferring to rely on the outdated driver’s test of a mental map of the city. They stalled on credit card machines. In reality, very few municipal leaders have mandated such consumer improvements, falling back instead on buttressing their political blocs, the taxi regulators.

As to the new companies’ role in this mayhem, I take a page out of Elizabeth Warren’s book: they should also contribute their fair share as components of a major public good, a city’s transportation system. How that could happen is still to be determined. The beneficiaries of existing infrastructure should help with maintenance, whether that means roads or telecommunications. They should contribute to local taxes at an appropriate rate relative to the service they provide. They should partner with insurance companies to construct coverage that protects everyone in the peer-to-peer configuration. But in order for them to do that, cities should find a place for them in the ecosystem of transportation service providers, not ban them. These changes will only give the individual rider more options to get around.

So lest anyone thinks that there’s no role for government, in fact there is. But the public should have more agency in choosing how they’d like to travel than is currently is permitted. As a society that prides itself on being market-oriented, competition is good for the consumer. And government shouldn’t protect cartels – they should protect and promote ways for the public to get around town conveniently, safely, and comfortably, and at a reasonable cost. We will be discussing many of these issues at the Innovation in Mobility Policy Summit in Washington, DC on June 10-11, 2014. Register now, early bird ends today, May 8.