Las Vegas Sun

August 27, 2015

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Transportation:

Vegas cab alternative runs into regulations stifling competition

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Steve Marcus

A Bell Trans limousine heads to a passenger area at McCarran International Airport.

A San Francisco company that’s given the limo business a digital-age makeover wants to do business in Las Vegas but has run headlong into regulations that shield cab companies from competition.

Uber Technologies Inc., which already offers its service in nine cities, runs dispatch centers that customers access via a smartphone. To provide the rides, the company partners with licensed companies that use sedans, SUVs or limousines, using those vehicles during the companies' down time. No cash changes hands — the transaction, including tip, is paid for using the phone.

Uber is technically a livery business and as a result would not be regulated as a traditional taxicab company. But because it would be new competition, its efforts to enter the Las Vegas market has ignited a political war of sorts with cab companies.

Uber executives told the Sun they look forward to doing business in Las Vegas. But sources said the company is having “an interesting time” dealing with an old state statute requiring livery services charge a high minimum hourly rate.

Most livery services in Southern Nevada are required to charge a minimum rate of about $40 to $45 an hour. It means that even if a ride is five minutes long, the cost is at least $40.

Whether it was the intent of the law or not, it ensures that limos pose less of a threat to the Las Vegas taxicab business, which, using meters, can provide short rides at lower costs.

Uber executives said they haven’t encountered high minimum charges anywhere else. And no city where Uber operates has a minimum hourly rate. Uber started in San Francisco, where its base fare is $8.

The Nevada Transportation Authority approves rates for each company. Companies can request that regulators set lower minimum hourly rates. But even if a livery company figures it can make a profit with a minimum hourly rate of, say, $15, sources said opposition from the powerful cab companies would make it difficult, if not impossible, to get regulators to go along.

The Nevada Taxicab Authority, which regulates the taxi industry, is looking closely at Uber. Charles Harvey, Taxicab Authority administrator, said an “unregulated, unlicensed quasi-taxi operator is a concern.” He said the agency is doing research on the company and talking to the Transportation Authority, which regulates limousines.

The state’s Office of Economic Development is also interested in the company, but for different reasons.

While it offers transportation, Uber is a tech firm, founded by a man who developed a smartphone application after he was unable to hail a cab. It’s the kind of company that Gov. Brian Sandoval has said he wants to lure to the state to diversify the economy.

Dave Berns, the Office of Economic Development’s communications director, said state officials have spoken with Uber representatives and reached out to the state Department of Business and Industry and Transportation Authority about its interest in moving here.

Uber’s use of technology is a big part of the company’s allure. With Uber, money and credit cards are never exchanged — everything is done through a smartphone application, which already has logged a customer’s payment information. When a customer punches their Uber smartphone application, they can “watch” the vehicle on a map and see how how long it will take for the vehicle to arrive.

How Uber will fare in its effort to do business in Las Vegas is uncertain. But the company has a track record of facing adversity and winning.

In January, the head of the Taxicab Commission in Washington, D.C., Ron Linton, did a “sting” on Uber, towing away an Uber sedan and levying a fine because Linton said the company was doing the same thing as taxi companies but isn’t regulated like a cab company. National Public Radio reported Linton is moving quickly to get credit card machines into taxis to “make them … more Uber-like.” Uber is still operating in Washington, D.C.

San Francisco cab companies fought the company because its former name, UberCab, sounded too much like a taxi company. The company shortened the name to Uber.

Jim Gillespie, general manager for San Francisco’s largest cab company, Yellow Cab Cooperative Inc., said Uber has not hurt his business because the city has too few taxicabs. His company gets 6,000 to 7,000 calls a day but can only serve about 20 percent of those calls.

The city is expected to approve about 500 more cabs within the next year. Gillespie believes Uber will be hurt more by the increased competition because its service is more expensive than traditional cabs.

Sources told the Sun that Uber will know within a week or two whether it wants to try to do business here or go to other cities where regulations aren’t as daunting.

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