Jon Shapley / Houston Chronicle

The taxi wars: Uber takes Houston

Ride-hailing app enters the city unlawfully, then persuades officials to clear the roads for business

Editor’s note: This four-part series, reported and published with the Houston Chronicle, examines the impact of Uber, the app-based ride-hailing service, on America’s fourth-largest city. Read parts two and three and four.

HOUSTON — On June 23, the app-based car service Uber sent a media blast aimed at area customers: “Get your paws on a puppy!” Animal lovers could choose a temporary “puppies” option in their Uber app and pay a small fee (donated to charity) to have “15 minutes of puppy cuteness” delivered to their offices. It was a masterful move for a company that has been lauded as innovative and disruptive.

The pups made for a novel public relations stunt, but Uber wasn’t lacking in supporters before its canine deliveries. The company’s business model of taxi by smartphone anytime, anywhere had already won it passionate advocates around the country who helped advertise the service by word of mouth in the early days and signed petitions demanding that city governments not shut the app down later on.

And the online system does in fact make for quick, convenient transactions. The app, which claims to coordinate supply and demand, makes Uber a hugely popular way to navigate Houston’s labyrinthine streets. A rider opens the application, confirms his location and destination, accepts the going rate and with a magical tap summons a car.

Fitting this service into a taxi-based model, with rules dating to the Great Depression, however, hasn’t been so easy. In Houston and beyond, officials struggle to ensure customer safety and fair competition while a global company worth billions battles entrenched cab firms and insists that it is merely a technology company, not a transportation provider or employer.

Less than a year after Houston began regulating “transportation network companies,” questions about safety and accessibility hang over Uber, the city’s only transportation network company, or TNC. Uber has tested the patience of local officials by criticizing the rules it agreed to follow and lobbying for the state to supplant them. And in certain instances Uber has failed to abide by rules that Houston changed to accommodate the company.

[Uber wants] to own Houston, and they will. But those of us out here, doing the work … we won’t see a dime they don’t want us to have.

Uber driver who did not want to be identified

Some of the company’s drivers, meanwhile, say Uber is squeezing them, saturating the market to the point that it’s impossible for most of them to make a living wage. “They want to own Houston, and they will,” said one driver, who asked not to be identified because she feared the company would disable her account. “But those of us out here, doing the work … we won’t see a dime they don’t want us to have.”

Yet none of the company’s problems — not even the highly publicized case of a driver accused of sexually assaulting a passenger — seems to have dented its popularity. “I use it everywhere,” said Sami Tamska, 30, who moved to Houston last year. “Here, Dallas, whenever I go anywhere. It’s all the same.”

The enthusiasm of customers like Tamska suggests that Uber is here to stay. What remains to be seen is how the rules of the road will evolve for the company and what that will mean for riders.

Sparring with regulators

Last year, the city went through a rigorous process to make rules for TNCs, trying to ensure customer safety without stifling innovation. Uber wanted to use its own background checks, which do not involve fingerprinting, but the city demanded that all drivers play by the rules set for cabbies.

Less than six months after the launch of the new system, Uber acknowledged that hundreds of its drivers were not licensed to drive in Houston. The corporation removed them from the app only after an unlicensed driver recently released from federal prison was accused of sexually assaulting a passenger. Meanwhile, in Seattle and New York, regulators pressed for limiting the number of Uber drivers — only to lose out to Uber’s lobbying muscle.

“Innovation has gotten out ahead of the public policy environment,” said Susan Shaheen, co-director of the Transportation Sustainability Research Center at the University of California, Berkeley. “Things haven’t changed in 100 years in this industry and suddenly it’s changing rapidly and I think everyone is still figuring out what that means.”

Uber spokeswoman Debbee Hancock said in a statement that Uber could serve its customers better if Houston’s rules were less strict. “This is one of the reasons we cautioned against implementing requirements that very few other cities have put in place, such as drug testing, physicals, warrant checks and fire extinguishers in people’s personal cars,” Hancock said. “It is not only difficult for our driver-partners … it is a large administrative challenge for the city and for Uber.”

“My taxi license is worthless now. Anyone could do what I do,” said Clark Darrell, stomping on his certification after an August 2014 vote by the Houston City Council to allow Uber to do business.
Mayra Beltran / Houston Chronicle

The city’s background checks don’t seem to have deterred drivers unduly. Uber drivers report a steady increase in competition though no one — not the public nor regulators — knows precisely how many Uber drivers are on Houston’s streets. The company, via court filings, has refused to disclose how many trips have been provided through the app and has prevented the city from releasing figures on licensed drivers, calling the data a trade secret.

“It’s safe to assume there are thousands (of drivers),” said Duane Kamins, owner of Lone Star Cab Company, part of a legacy industry that lobbied hard to prevent Uber’s entry into Houston. Kamins and the working-class drivers who lease cars and permits from him are losing money and market share to Uber. Part of this is due to the difference in fares: A typical ride from Bush Intercontinental Airport to downtown in a taxi could top $60, compared to around $40 in UberX, the company’s least-expensive option. Taxi fares, however, are standard and predictable, while Uber often increases its rates when demand is highest.

Nearly every week, Uber seems to have a new public-relations campaign or item to discuss with the city council. On August 25, it brought a caravan of drivers to city hall, to voice support for Uber at a hearing on mobility issues. Disability advocates have railed against the company for refusing to mandate at least some wheelchair-friendly vehicles. This gap in service helped defeat a bill in Austin, backed by 30 industry lobbyists and an estimated $1.2 million, which would have let Uber do business statewide, rather than city-by-city. For now, Houston remains in charge of its own vehicles-for-hire, but loose ends remain in its regulatory process.

Driving everyone?

Within the central Loop 610, Uber rides are easy to come by — especially in prosperous areas where the bar scene creates demand. In some neighborhoods that taxi drivers claim to service regularly, however, Uber vehicles are scarce.

Matthew Perez, 30, said he’s one of the few UberX drivers who will accept fares pretty much anywhere. He routinely swings into the low-income Third Ward as well as spots between downtown and the University of Houston. “I feel pretty safe,” Perez said, “but that’s what you hear from other drivers. They won’t do it.”

Yet according to an August Uber blog post, “[T]he number of rides beginning in underserved neighborhoods increased significantly in the first half of 2015.” In 18 months of business in Houston, the corporation says it has “connected” a half-million users on more than 3.5 million rides. (The data behind those statements, however, remain secret and thus not independently verifiable.)

These are extraordinary figures for an upstart company, one that says it is all swipes and clicks. Uber has enticed Houstonians with puppies and other perks, and, in its newest venture, plans to recruit African-American drivers with the local NAACP. What’s next?

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