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Can An App Fix a Broken Industry?

David Alpert has a good overview of three taxi hailing apps that you can now use in DC. I've only used one (Uber) but did recently create an account for MyTaxi. Since I almost never hire rides, I haven't used the latter yet. For the purpose of this post, everything I say about Uber refers only to its taxi service, not its Towncar/SUV service.

In my opinion, the DC taxi industry isn't just bad, it's downright terrible. The economist in me sees the obvious problems: cabbies don't have any incentive to provide good service because people don't really get a choice in which cab they hail, nor can they usually hire the same drivers more than once.

Adding to that, the taxi regulator (DCTC) is extremely weak and cab drivers know they can get away with a lot of abusive behavior (refusing destinations, inefficient routes, discrimination, etc.). And traffic enforcement is weak, so cab drivers also know they can drive like dangerous maniacs and pick up more fares as a result.

(from thisisbossi on Flickr)

David's post is about how these apps change the user experience. I think there's even more to it than that.

Uber, for example, is a new de facto regulator of the taxi drivers that use the service. If I have a bad taxi experience, I can file a complaint with DCTC (and it probably won't go anywhere) and I can file a complaint with Uber (and it's much more likely I'll have the situation resolved or at least get an apology).

If a taxi driver working for Uber provides poor service to enough customers, he could get kicked out. If Uber is generating a decent amount of business for him, this could be incentive enough to provide good service to the passengers who hire him through the app.

The other issue that the technology addresses is anonymity. For a driver that finds passengers via street hails, providing bad service to one customer isn't going to stop another customer from hailing him a few blocks down the street. With Uber, customers get to rate their drivers after each ride, so the driver has the same incentive to earn a good rating on Uber as any business has to earn a good rating on Yelp.

In order for Uber to have enough muscle, they need to generate enough business for cabbies so that the drivers have no choice but to use the service if they want to make any money. If Uber isn't pushing enough business to them, drivers might not care if they get kicked out, because they can always go back to using street hails for business, or sign up with a competing app.

It's too early to tell if any of these apps will make a dent in the DC taxi industry, let alone fix any of the problems. That said, I'm at least optimistic for the time being.

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