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Beyond Uber

OPINION: If the Taxi Federation thinks Uber is bad, it aint seen nothing yet.

Mon, 26 Jan 2015

There has been a lot in the media over the past fortnight after the New Zealand Herald popped the story that Uber was being targeted by Police. I wrote a piece on the fact that Uber represents a new business model that is very disruptive to older styles of transport. That set off a flurry of responses including David Seymour's "I said it first!" press release then Uber using it's customer base to lobby the Minister, Craig Foss, for changes. But what of Uber's long term plan to get rid of all drivers, everywhere?

Bubble bubble toil and trouble... The Uber debate went in several different directions over the past fortnight. The Taxi Federation refused to back down and made more subtle allegations against the company, hoping that readers were ignorant enough to simply believe the click-bait headlines that main stream media love so much. 

Various commentators bemoaned the fact that Uber is just the 1% making more billions for themselves. This is true, that's exactly correct. It's a centralised model that sends cash back to a small number of people. It is like the taxi federation on a global scale. 

Then there is the safety issue again. This is rolled out by the opponents of Uber everywhere, it is emotive and unbalanced. The Dominion Post ran an Op Ed in the last couple of days titled "Uber review must consider safety." More click bait, it alludes to Uber being less safe than taxis, with no evidence thereof, and confuses a review of transport regulation with Uber itself. It uses the example of "the young woman riding home alone late at night." It is absolutely clear the author did not actually try the service. Personally, I prefer Uber when my wife is getting a taxi at night. She's says to the Uber driver "Isn't it great my husband can see where I am and when I'll be home!" I get a txt with a link that shows her location in real time.

Of course, there are local alternatives as well. Taap is a local app that gives you an Uber like experience, according to the website (I haven't tried it yet). You can see your taxi coming, register a Credit Card so you just hop in and out, get electronic receipts, and you can schedule taxis in advance. There are at least two other local apps, which I haven't tried, but they are more about calling a cab using your app rather than an Uber experience. It's good to see that some people are adopting and adapting to the disruption rather than sitting back and bagging it. 

But that isn't what this article is about. This article is about the fact that Uber's goal is to get rid of their drivers altogether and the epic disruption that is coming.

If Uber, and Google, have their way then taxi drivers and private drivers will become extinct. Eventually. It will be a long time coming for New Zealand, driverless cars already being trialed in the U.S. and Singapore. 

Uber will eventually replace the people who drive its cars with cars that drive themselves, CEO Travis Kalanick said today at the Code Conference. A day after Google unveiled the prototype for its own driverless vehicle, Kalanick was visibly excited at the prospect of developing a fleet of driverless vehicles, which he said would make car ownership rare. "The reason Uber could be expensive is because you're not just paying for the car — you're paying for the other dude in the car," Kalanick said. "When there's no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle. So the magic there is, you basically bring the cost below the cost of ownership for everybody, and then car ownership goes away." - Source

When he was asked about all those Uber drivers losing their jobs his response was "The world isn't always that great." I guess though, when you are sitting on a company worth $17B USD, the world probably is pretty great, every day. Uber is putting the accelerator through the floor globally and with that Google tie up, is absolutely decimating traditional models. A deal with AT&T in 2014 saw the app pre-loaded on fifty million Android phones. 

Driverless cars are already here. Singapore is trialing them in conjunction with other transport modes as is Nevada and San Francisco. 

"The government wants to explore whether autonomous vehicles could reduce congestion and remake the city into one built around walking, bicycling, and public transit," said Lam Wee Shann, the director of the futures division for Singapore's Ministry of Transport.

"Singapore welcomes industry and academia to deploy automated vehicles for testing under real traffic conditions on public roads," Lam said.

"Twice as many driverless cars could route themselves through intersections, easing congestion and reducing the greenhouse gas emissions caused by stop-and-go driving," said Paolo Santi, a senior researcher at MIT. - Source

Now let's look at the impact of a city that is serviced by public transport and autonomous, driverless, vehicles, because the disruption, and opportunities it presents, is astounding. 

First, you can reduce the number of inner city car parks substantially. The cars are in motion or can be stored in high-density car park buildings at low peak. So a massive amount of real-estate at street level is suddenly reduced. Better, when it comes to urban design, we don't need garages or off road parking any more. More land is reclaimed. 

Congestion drops significantly. Cars are shared and capacity is managed by trip. Better, because the driverless vehicles and public transport automatons all talk to each other, traffic jams are smoothed. Traffic jams, to a large extent, are due to erratic drivers, or humans. 

Following on from that, we wouldn't need traffic lights. Sure, we'll have to mix the pedestrians into the overall flow of automated cars and public transport, but all those signs, traffic signals, and the host of other interventions we put into roading can be vastly reduced. 

The experience will be better for commuters and travel times will reduce. This means that we can push the edges of our cities out further. It won't be a chore to travel from the Kapiti Coast into Wellington City for example. You will be able to work in the car, watch NetFlix, sleep, and so on. 

Far far less traffic accidents. The cost savings on this alone could fund driverless car programmes I suspect. 

Then there are the other affects that the government may not be so keen to see.

Less tax. The overhead with transport today generates billions in tax for the government. Consider how much tax you pay on your car registration, petrol, road charges, tollways, bus & train charges, parking buildings, taxi overheads, and the like. Driverless cars break that collection model and it will have to be rebuilt. 

No drivers. Like the Uber boss said, drivers will disappear. There is an entire industry that will need to find other work. 

Less revenue for cities and the police. Cities gather tens of millions of dollars in parking fines and charges each year and the police (I haven't looked up the figure) must be in the hundreds of millions. Driverless cars don't break the law. 

Impact on the oil industry. The oil industry loves the fact that we hop into cars all day everyday. It's how it's shareholders make their cash. The driverless cars are not likely to be gas-guzzling giants, if they use gas at all. 

Private public transport companies will struggle to remain afloat. Right now, public transport companies (in New Zealand at least) making a pretty penny out of their services, and we know that in Wellington, studies have shown that it is cheaper to buy a small car and rent a carpark than it is to get on the bus. With very cheap driverless rides, public transport companies will find a large drop in patronage. 

The implications of new business models such as Uber and their deep relationship with Google will significantly disrupt transport in the next two decades. The issue that Craig Foss and the Government policy makers need to consider is much longer term than the current scope of review, it is multi-agency and while it represents a huge opportunity, the question is, is government going to be smart enough to leverage that opportunity and plan for it now, or are they going to seek ways to cripple it before it flies?

End note: Flying cars. Not happening in our lifetime. Sadly. 

IT consultant and blogger Ian Apperely posts at Strathmore Park.

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Beyond Uber