Uber uber alles?

 
Uber app

Imagine a transport business that's under five years old, but is already worth more than airlines like Easyjet or British Airways, or delivery services like TNT or Britain's Royal Mail.

You might think this was a new budget airline, or perhaps a service offering the promise of rocket trips into space - but instead it's a good old fashioned minicab firm.

But of course Uber, the San Francisco firm that has rapidly spread to more than 100 cities around the world, is not at all old-fashioned and isn't seen by its investors as being in the cab trade. Instead, it's part of the deeply hip "sharing economy", with unique technology that connects customers wanting a ride with drivers looking to minimise the time they spend with their cars empty. It describes its mission as being "to turn ground transportation into a seamless service and to enable a transportation alternative in cities that makes car ownership a thing of the past".

I'm not quite clear why this counts as "sharing" - except perhaps for the fact that the drivers share 20% of the fare with Uber - but the idea is proving hugely popular, and revenues are growing rapidly. On Friday the firm revealed that its latest funding round had raised another $1.2bn (£700m) at a valuation of $17bn (£10bn), and its backers now range from Google to Fidelity Investments.

I took a couple of Uber rides in London last week - both substantially cheaper than a black cab. I opened the smartphone app, saw there were plenty of cars nearby, and within a few minutes I was climbing in. Both drivers told me it was their very first day with the service. They had each been through a short induction session with dozens of others and then been handed a phone with the Uber app. It was up to them to supply the car, which in most cases seems to be a Toyota Prius, fuel efficiency being vital if the drivers are to make the numbers add up.

One explained that he had been a minicab driver in the West End for five years, but in recent months the work had dried up: "Even on a Saturday we were just sitting around waiting, with just a couple of fares the whole evening." The customers, he explained, had switched to Uber, so he'd decided if he couldn't beat them, he'd better join them.

Taxi driver

And it's not just the minicab business that is being disrupted. In cities around the world, the incumbents have found Uber's arrival deeply threatening. This week London black cab drivers are to stage a protest which they say will bring the city to a halt. They accuse the regulator, Transport for London (TfL), of allowing Uber to break its rules by installing meters in cars. That's how they describe the smartphone app which uses GPS to measure the distance travelled and calculate the fare, and you can see their point.

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Will this company be any more keen to pay corporation tax here than other hi-tech firms from the US west coast?”

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TfL is now taking the issue to the high court to get the law clarified, but it is difficult to see the cabbies winning in the long run, any more than the textile craftsmen who smashed power looms in the 19th Century were able to stop the industrial revolution. Nevertheless, there are questions to be asked about Uber.

Will transport in London really be revolutionised in the way it claims if the streets are flooded with ever more Uber drivers battling for customers? Will this company be any more keen to pay corporation tax here than other hi-tech firms from the US west coast? And most important of all, why couldn't a British firm have come up with the same idea?

Of course, one did - it is called Hailo and was founded by a group which included three London cab drivers to put the taxi trade in touch with customers via a smartphone app. Hailo has also done pretty well and is expanding overseas. There was even talk of a stock market flotation which would have taken it straight into the FTSE 100.

Russell Hall, founder of Hailo Russell Hall, former black cab driver and founder of the Hailo app

But with London taxi fares substantially undercut by Uber, Hailo is beginning to feel the heat in its own backyard, and the way it is responding to that threat has angered many cabbies. Hailo has applied for a private hire licence, with the intention of offering minicab services alongside black cabs. "They've looked around the world and seen that's the way things are going - they need to offer something different," a person close to the company tells me.

Furious taxi drivers have seen this as a betrayal. There have been demonstrations at Hailo's offices, and the company admits that it has lost quite a few drivers in recent weeks. Many of the cabbies I've met have never been that enthusiastic about the app, seeing it as a necessary evil rather than a real improvement in their trade. Now Twitter accounts such as @failogrp and @Tfl&hailo-useless are calling on fellow cabbies to unite against the app.

But Hailo itself says in a blog post, "There is no point burying our heads in the sand… A taxi-only app will get isolated and customers will take their money to services without any cabs on offer. It is already happening. Let's win back that work." A clear acknowledgement then that Uber is hurting the business.

The London taxi drivers may not like the way the world is changing, and they may have a point about an imbalance in the way their new rival is regulated. But do they really think they can prosper in competition with a $17bn US company like Uber, while refusing to embrace a home-grown innovation?

 
Rory Cellan-Jones, Technology correspondent Article written by Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

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  • rate this
    +2

    Comment number 44.

    I can't understand how they get around the requirement to be licensed or indeed to charge a fare. This is not sharing it is unlicensed scamming. Maybe once some perv signs up and starts getting fresh with a lady then the authorities will act. Are their insurance companies aware they are carrying passengers? The list of traffic laws they are breaking seems endless!!

  • rate this
    +13

    Comment number 43.

    41. Taxi drivers think it's illegal. That's a laugh, they don't usually show such concern for the law whilst driving.

  • rate this
    +4

    Comment number 42.

    That's progress.
    This is what happens when ideas are embraced.
    And like it or not it can never be uninvented!

  • rate this
    +1

    Comment number 41.

    I'd like to see what the doctors, lawyers and let's even say the police would say, if I set up in opposition to them, without any form of licencing, qualifications etc and operating on a technical loophole!

    I bet they'd shut me down in seconds and send me to prison.

    Think about that, they are opposed to Uber because they believe it's operating ILLEGALLY- yes, OUTSIDE the law!

  • rate this
    +3

    Comment number 40.

    Taxi driving isn't a career, it's a low skilled job for the grossly uneducated. Taxi drivers don't need a reason to get upset, they are constantly upset. A taxi driver is someone you wouldn't trust a half empty bus with.

  • rate this
    +1

    Comment number 39.

    If the problem is a mismatch in regulation then the simplest solution would be to remove whatever rules apply to black cab drivers that don't apply to Uber drivers.
    Otherwise it is not fair competition.

  • rate this
    -2

    Comment number 38.

    Black cabs are a rip off,I refuse to use them.they think that their licence is a licence to rip us all off.get rid of black cabs and let the taxi ranks take over .why should the black cabs have a monopoly,hey call the ombudsman .
    Hackney cabs are rip off's get rid of them ,they rob everyone

  • rate this
    +4

    Comment number 37.

    If black cabs have regulations and costs that Uber do not have, this is not a level playing field. Either Uber play by the black cab rules, or black cabs get to ditch the ones that bind them.

    Either way it levels the market and should stop the conflict.

  • rate this
    0

    Comment number 36.

    I OPPOSE any USA company that sets up in UK & destroys UK jobs, via lower costs mainly due to their taxation avoidance set ups, all legal of course

    Maybe Tesco, Sainsburys, Argos London Cabs & all the rest should write to Cameron/Osbourne & State if they do NOT level the taxation playing field, then they will have NO option but to join Amazon & Uber in moving abroad for tax purposes.

    Simples

  • rate this
    +4

    Comment number 35.

    SmallBusinessOwner: Because all taxi drivers are angels and never ever ever break the law do they

  • rate this
    +12

    Comment number 34.

    Hackney carriages, more specifically their drivers, are living fossils who have inflated egos and like to lord it over London. Not had a good experience in the last 20 years in the handful of times I've used one either on business or been forced to try to hail one for other reasons. I've had much better from the local mini-cabs and the quicker we get competition in place the better.

  • rate this
    +10

    Comment number 33.

    Other industries (i.e. radio, where I am) have had to cope with hugely disruptive new technologies that are changing the way we work, and also the behaviour of our users. I have every sympathy for cabbies, but GPS and Uber are ready replacements for 'The Knowledge' and a lonely wait in the rain for a black cab. They will shoot themselves in the foot with this protest, and lose sympathy fast.

  • rate this
    +2

    Comment number 32.

    13.


    I think one of the most worrying things about this Uber company is it allows anyone to drive anyone anywhere. What about personal safety? CRB and police checks? All of these are required by Black Cab Drivers, optimizing safety and well being of the general public

    ---------------------

    Clearly you have complete little to no research on the service before passing such a comment. Classic HYS.

  • rate this
    +15

    Comment number 31.

    The black cabs are one of the last dinosaurs of the closed shop. It's high time they were fully deregulated.

  • rate this
    +3

    Comment number 30.

    All these arguments will be largely irrelevant in a few years when driver-less taxies start to appear...

  • rate this
    +10

    Comment number 29.

    Would I like to use a locally based driver paying into the local economy and fully paid up with his taxes?

    YES!

    But then I also don't want to pay £7+ for a 5 min drive!

    Black cabs start charging reasonable amounts, rather than being part of "Rip Off Britain" and they won't have a problem will they?

  • rate this
    +11

    Comment number 28.

    I heard a Black Cabbie taking to an Uber user on LBC last week.

    The Uber user trumped him on every argument raised and saved the best for last. He proposed they do a comparison of fairs, to which the Black Cabbie said "It's not about price, I don't to get into an argument about fairs"

    Yeah mate, good job, because you'd get absolutely slaughtered!!

  • rate this
    +3

    Comment number 27.

    The few times I've used a minicab app, they cancel the appointment as soon as they realise I want to transport a baby in a pushchair. At least black cabs (and their attendant apps) have never given me any trouble with that.

  • rate this
    +2

    Comment number 26.

    I got a black cab from Heathrow and he couldn't even find the way to the A40 without a sat-nav which took him the wrong way. Black Cabs are dinosaurs.

  • rate this
    +1

    Comment number 25.

    20.kevthebrit states: “The times they are a changing! Then we HAVE to change with it or sink! We ALL have 'The Knowledge' these days at the tip of our smart phones.”

    No, not quite ALL. And some of us manage to stay afloat without this technological clobber.

 

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