Transportation in the Digital Era: Is our regulatory system keeping up?

Wed, 20/11/2019 - 16:33

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The Motor Vehicles Amendment Act 2019 has added cab aggregators (such as Uber and Ola) under its purview. Section 93 of the Motor Vehicles Act 1988 states:

Agent or canvasser to obtain licence - (1) no person shall engage himself - (i) as an agent or a canvasser, in the sale of tickets for travel by public service vehicles or in otherwise soliciting custom for such vehicles, or (ii) as an agent in the business of collecting, forwarding or distributing goods carried by goods carriages, unless he has obtained a licence from such authority and subject to such conditions as may be prescribed by the State Government.

To this, the Amendment Act adds aggregators as a third category after agents and canvassers and adds that such aggregators shall comply with the Information Technology Act 2000. This would cover the emerging space of bike taxis as well, which have also had some run-ins with state governments.

Nearly a decade after cab aggregators, or ride hailing services as Uber and Ola are called, began operations in India, it looks like they will be regulated. In the past few years there has been growing calls for their regulation from various quarters due to concerns over labour rights, monopolies, pricing, etc.

This pattern has been seen worldwide and is not limited to Uber or Ola. While these two companies are the most well known and dominant in India, there are several other such companies functioning in India and elsewhere. Over the years, governments have flirted with bans of varying time periods on cab aggregators. New Delhi, for example, suspended Uber after an Uber driver allegedly raped a passenger in 2015.

To regulate, or not to regulate?

Other states too have been toying with codifying rules and regulations for cab aggregators. Recently some states (including Tamil Nadu) banned bike taxis. Media reports indicate it is because two-wheelers as commercial vehicles is not a category under the Motor Vehicles Act 1988.

In 2016, Karnataka introduced the Karnataka On-Demand Transportation Technology Aggregators Rules. The Rules require aggregators to obtain a licence from the state for which the aggregator may be an individual or registered company; the aggregator must have a fleet of 100 taxis (own or have an agreement with individual taxis); have GPS/GPRS technology installed to track the taxis; and the taxi should have yellow board clearly stating it to be a taxi. A driver for such a service should of course have a driving licence to drive a light motor vehicle; have a taxi driver badge; minimum 2 years driving experience; have lived in Karnataka for at least 2 years; have a working knowledge of Kannada and another language; no criminal record; and a KYC compliant bank account. The Rules give the government the power to fix taxi charges; doesn’t allow the aggregator to charge for dead mileage (hire charges only from pick up to drop point); requires the aggregator to have relevant documents of vehicles and drivers and share with the government; have a consumer grievance redressal mechanism; and have panic buttons in the taxis.

Some of the requirements are also strange. Why do app-based systems need to have a printed bill, display board giving route, cost, time and driver details; an illuminated board on the vehicle declaring it to be a taxi? Why does the driver need to have 2 years of driving experience or lived in Karnataka for 2 years and how exactly will this driving experience be determined? The impact of these Rules is not clear; media reports continue to provide view points. There seem to be no reports/studies on how the Rules have changed things for each of the stakeholders involved.

Internationally as well, cities have been trying to regulate cab aggregators. This year, New York City started to implement some new rules on minimum wages and other issues as well. However the aggregators are not giving up and are gearing up for some serious pushback.

The cab aggregators (irrespective of which country this fight is being reported from) counter that all these regulations are being brought to target them unfairly; that the traditional taxi lobby is trying to protect its turf. For customers, the cab aggregators are convenient, easy to book, often cheaper than regular taxis (and especially since it removes the need to haggle with autos in India), and comes with a bill (useful when one needs to submit the bill to the office), and allows one to track the vehicle. None of these features are available with traditional taxis. No wonder there is a move towards the aggregators. Have you noticed that we don’t say, “Shall I book a cab?” It’s always, “Shall I call an Uber/Ola?”

Surge pricing

Surge pricing makes customers froth at the mouth. No one likes to pay more for a ride that cost much less an hour earlier. How does this surge pricing work? Essentially, Uber/Ola have an algorithm which tracks supply and demand. The algorithm determines the surge in pricing depending on this; more the demand and less the supply, greater the surge. The idea is that drivers will be tempted by the price hike to move towards these areas and so supply will go up and demand will reduce and the price will come back down.

Traditional taxis, of course, do not have such a system. The rate is fixed before one boards the cab. In the 2016 Rules, Karnataka placed a cap on surge pricing. Uber claims the cap on surge pricing has meant it is not worthwhile for a driver to battle Bangalore traffic to accept a ride in peak hour in congested areas. The drivers earn less; Uber says it found that drivers in Bangalore earn upto 15% less than counterparts in Hyderabad (where there is no cap). On the other hand prices have been known to surge 10 times which seems quite excessive. Of course, as a customer, one has the choice not to book a cab at such rates. It is not as if the company is sneakily hiking the price.

Labour issues

Drivers contend that they just cannot earn an adequate living by driving for these companies. Uber, which has been in the eye of the storm (though in the US, for example, another big company involved in the standoff has been Lyft), has insisted that their model allows drivers the flexibility to choose their hours of work and the rides they wish to accept. However, in many countries/cities where such technology-based cab aggregators function, drivers on the platforms say that it is rarely a part-time job for them. The people who take up this job do not usually hold other jobs as well and instead of working just convenient hours, end up chasing the elusive bonus.

In India too, a similar situation exists. Cab aggregator drivers (car and auto) I spoke to say that a couple of years ago, perhaps it was reasonable money but now the incentives have changed, they are much harder to achieve and so drivers keep driving hoping to reach the cut off to earn the bonus; even though it means 10-12 hour (or more) days. Cab aggregators typically offer a monetary incentive if a driver completes X number of rides in Y time. These may change as per the whim of the company and may get harder to achieve given traffic conditions and other local variables.

The obvious fallout is fatigue. Drivers get little sleep, endangering themselves, their passengers, and other road users in the process. Their personal life too is affected as quality time with the family is non-existent. In the long term, such prolonged fatigue will likely impact their health and require unaffordable expenditure on medicines and treatment.

Studies in the US (by the government) back the claims of the drivers that most cab aggregator drivers do not hold other jobs and that their take-home pay is below the minimum wage in the US, making this an unviable occupation.

What’s in a name?

Quite a lot actually. Cab aggregators insist that their drivers are independent contractors and not employees. Their logic is that the company is just a digital platform that helps drivers and customers link up; the drivers have the choice to decide their work hours and if they wish to accept a particular ride or not. Hence, unlike employees, the company does not set any requirements on the drivers. This has been defended to the hilt by the companies because if they accept drivers as employees, the company will be legally required to provide certain benefits such as minimum wage, insurance, sick leave, right to unionisation, and paid vacation. This will obviously increase the costs of the company and eat into its profits.

Drivers across platforms have been protesting this worldwide and in some countries have taken the companies to court. In early September 2019, California passed a law that requires gig economy enterprises to pass the ‘ABC test’. To classify a worker as an independent contractor, the company would need to prove the following: A) the worker is free from the control and direction of the company; B) the worker performs work that is not fundamental to the company’s business; and C) the worker has his/her own business/trade which is of the same nature as the work performed for the company.

This will also affect a slew of other gig economy workers (hairdressers, delivery services, etc) but with Uber and Lyft pushing back strongly against this and their drivers vociferously campaigning for the Bill, all the talk has been around the impact on these companies.

One finger on the panic button

Just a couple of days ago, I took an auto and as always got chatting with the driver. He turned out to be one of the few drivers who seems to be happy with the cab aggregators. He was registered with both Ola and Uber and while he expressed a marked preference for one of them, he felt his income was quite reasonable. He noted that if he was smart about when he took rides (his ‘shift’ starts post lunch till late night) he makes a good amount. Peak hours and late night when people want to go home, the demand goes up, he said. So essentially he is surfing the price surge.

I asked if cab aggregator companies required a background check and any documents. He said recruitment was very simple; you stopped at one of the company outlets (located near major transit hubs) and signed up. They would install the app on your smartphone, and you had to give them copies of your driver’s licence, vehicle registration, PAN card, and bank account details. And voila you were a driver partner! And no they don’t offer any courses on road safety or soft skills. I asked this because I had just returned from a road safety conference in Adelaide, Australia, where Uber had a stall and I heard from them about how they are introducing various courses for their drivers and also looking to roll out a programme wherein drivers had to log in and log out of the app using biometrics and this would help them track the hours of driving.

No doubt such measures will take some years to reach us here in India.

Can I get a human on the line, please?

Every now and again, there is a flutter about passenger safety in these cabs. There are reports of rape or a kidnapping attempt and there is an outpouring of angst over background checks, safety measures, etc., till the next big news arrives.

Passenger safety, however, is an issue. Cab aggregators do not have a proper helpline/customer care with a human being at the other end. As customers we are expected to bear that risk; especially women. There is also the issue of driver safety as my auto driver pointed out. He spoke of a fellow auto driver who got mugged by a couple of drunk passengers, losing not just his money and phones but also his vehicle.

The future we want

Part of the problem is, of course, that our regulations have not kept up with the technology. No wonder our authorities don’t know how to regulate bike taxis and cab aggregators. No such idea existed in 1988. Certainly issues of drivers’ rights, passenger (and driver) safety need to be addressed. But these are universal issues, not restricted to cab aggregators.

While governments struggle to get a handle on this sector, the underlying question is not whether cab aggregators should be regulated or if licensed cabs are playing a protectionist game, but what kind of transportation future do we want as a society?

Do we want citizens to have a range of transport options, especially sustainable, equitable, safe ones or do we want to continue on the current consumption pattern of more people having easy access to motor vehicles and abandoning sustainable modes of transport?

While cabs (licensed or aggregator) have their place in the transportation sector, the government should see how they can be regulated so that they are a cog in the bigger plan to make our urban areas more sustainable. How can regulations ensure car sharing systems are promoted over individual rides; cleaner fuels are encouraged in cabs; drivers are assured of a secure livelihood with reasonable pay, dignity, and safety; how can cabs be linked with public transport systems; and how can passenger safety be enhanced?