Photo by jhembach on Flickr.

This morning, DC Council Mary Cheh is holding a hearing on “innovation in the public vehicle-for-hire industry,” or in other words, Uber, Taxi Magic, and other new technologies that are changing taxis in DC.

I’m testifying, likely in the second panel. The head of London’s taxi office, Uber’s CEO and the head of less disruptive Hailo, will go first. There are also owners of a number of black car associations and taxi drivers.

You can watch the hearing online here; it’s scheduled for 11:00, though hearings often don’t actually start quite on time. I’ll livetweet interesting tidbits @ggwash as well.

I will emphasize how over-regulation, possibly well-meaning, can often stifle innovative new services. In the taxi market, dispatched trips are fundamentally different from street hails. We need rate regulation for street hails because people cannot effectively comparison shop and negotiate for these trips.

We do not need the same regulation for dispatch cab trips. These cabs do need regulation to ensure they are safe, and that they serve all parts of the city and people with disabilities. A café needs regular health inspections to ensure that it does not poison its customers, but not regulation to specify the color of the counters, or the format of the receipts, or approval for every new dish on the menu.

Yet the Taxicab Commission’s proposed regulations do just that, requiring, among other things, that any reservation service have an office in DC with a sign, a receptionist during business hours, and even specifically “office furniture.” They micro-manage the technology in the cars, how customers get receipts, and elements of the pricing system.

Taxi Commission Chairman Ron Linton says he needs these rules to ensure that riders don’t get overcharged, for instance. That’s a laudable goal, but do we need the Taxicab Commission to ensure that? Restaurants don’t have the same level of price oversight, and they don’t overcharge people for a very simple reason: if they do, diners will complain. If the error doesn’t get fixed, they won’t go back, and will spread the word, harming the restaurant’s reputation.

With the traditional taxicab model, riders are not repeat customers of individual cabs, so drivers have little disincentive to cheating a rider except the threat of enforcement action from the Commission. A reservation service, by contrast, relies on repeat customers and on its reputation, so it will take action on its own against misbehaving drivers, to persuade them to act properly and drop drivers from its service when needed.

This puts more power into the hands of individuals. They can pick a dispatch service or taxi fleet that provides quality service. If they aren’t happy with the ride, they can pick a different company in the future. This power makes it less necessary for the Commission to specify detailed operating procedures or monitor performance.

Uber has not always made itself easy to support. They have chosen, now three times this year, to rile up supporters through statements which were at times misinformed or misleading. Some of their statements misstate the specifics of proposed laws or regulations, while others conceal the ways they were working with lawmakers and regulators.

However, creating an innovative marketplace is not about supporting Uber or not supporting them. It’s about creating an environment for many independent dispatch services. If Uber simply supplants traditional taxis, riders will not necessarily be better off. They might have higher quality rides, but at a higher price, and without much more choice.

If, on the other hand, DC ultimately has 5 or 10 separate, competing dispatch services, there will be every incentive to improve service and keep prices low. That is the end toward which our public policy must aim. If the Taxicab Commission is not willing to create regulations in this spirit, the council should step in.

My (somewhat whimsically-formatted) testimony is here.

David Alpert created Greater Greater Washington in 2008 and was its executive director until 2020. He formerly worked in tech and has lived in the Boston, San Francisco Bay, and New York metro areas in addition to Washington, DC. He lives with his wife and two children in Dupont Circle.