PA: Ride-Sharing Drama in Pittsburgh is Closely Watched in Philadelphia

June 26--When the ride-sharing evangelists of Uber and Lyft square off Thursday in Pittsburgh against staff from the Pennsylvania Public Utility Commission, will it be the latest act in that timeworn drama, New Technology vs. the Old Regulatory State? Or are officials raising timely alarms about real risks?

So far, I'm not convinced either way. Both services have operated for months in Pittsburgh in defiance of state regulators. Since this drama's next act could play out here, it's a good time to see how it's unfolding.

Uber and Lyft, you may recall, are two San Francisco start-ups using technology to challenge the reigning business models -- taxis and limo services -- that enable one of those mundane bits of modern commerce: hiring a car and driver for a ride.

From your house to the airport, from your office to a client's in King of Prussia, or from a night on the town back home -- all were once the exclusive province of taxis and car services. If you aren't willing to use public transit or ride a bike, who else are you going to call?

Enter companies such as Uber and Lyft. Thanks to smartphone apps and GPS satellites, you don't have to hail a cab anymore or call a costly limo service.

Just click a button, and the app knows where you are. Confirm your interest, and a car is on its way.

Both companies also go a step further, into the "sharing economy" -- the idea that your unused resources, such as the spare bedroom you might list for rent on Airbnb.com, can be turned into money.

"A lot of our drivers are artists or photographers or stay-at-home parents who use Lyft as a way to make ends meet," spokeswoman Paige Thelen told me Wednesday.

Uber has been operating in Philadelphia for the last two years as an app-based intermediary for traditional livery services, but it also now offers a more budget-friendly option -- UberX -- that, like Lyft, uses ordinary drivers in their own cars.

Silicon Valley investors love these companies. Lyft was valued at $700 million by its latest capital infusion. Uber, a few steps ahead, was valued at about $18 billion, according to news reports.

Is Pennsylvania simply behind the curve? Last year, the Philadelphia Parking Authority shut down a similar ride-sharing business, Sidecar, as an illegal taxi service. Now, the PUC has issued cease-and-desist orders against Uber and Lyft.

PUC spokeswoman Jennifer Kocher says the companies, at the very least, jumped the gun. Each had sought an "experimental license" to operate a ride-sharing service in Allegheny County and elsewhere in the state. But they didn't wait for approval.

Uber didn't respond to a request for comment.

Thelen says Lyft moved forward because of backing from Mayor William Peduto and confidence that its service can benefit Pittsburgh residents.

"We were impressed by Mayor Peduto and his support of sustainable technologies as a way of solving city problems," Thelen says. To get around objections, it frames payments as donations -- a strategy Sidecar tried for a while here, too.

Thelen says Lyft's business -- including cars decorated with grill mustaches and invitations to passengers to sit up front and fist-bump the driver -- aims to stress its informality.

"We want it to feel like you're getting a ride from a friend, similar to how you'd get a ride to work from a friend and help pay for gas," she says. "It's designed to reinforce the community experience."

That's not how regulators and other skeptics see ride-sharing businesses.

"It's portrayed sometimes as new technology, and current law not being adequate to meet it," says Sam Marshall, who heads a trade group representing insurers. "But really it's that you have two companies that want to create a lot of part-time cabdrivers using their own cars."

Marshall is especially critical of the companies' offer of $1 million in "excess coverage" to supplement a driver's own insurance, which he says could pose difficulties for passengers or drivers involved in a crash. "Every other cabdriver has to have primary insurance for what he's doing," he says.

Both Marshall and Thelen see promise in a decision last year by California regulators, who created a new category of "transportation network companies" for businesses such as Lyft and UberX. That model, which requires criminal checks and driver training as well as limo-level insurance, could serve as model here.

Still, Marshall suggests that some semiprofessional drivers may ultimately not be happy sharing their cars.

"It all sounds great until somebody throws up in the backseat," he says.

jgelles@phillynews.com

215-854-2776 @jeffgelles

www.inquirer.com/consumer

Copyright 2014 - The Philadelphia Inquirer

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