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Innovative ride-sharing firm bucks Austin regulators

By   /   March 14, 2013  /   No Comments

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SXSW: Festival attendees crowd the Austin Convention Center on Saturday in Austin, Texas. Thousands of festival goers booked rides with SideCar, which works via smartphone app. (AP Photo/Jack Plunkett)

By Mark Lisheron | Watchdog.org

AUSTIN – A few weeks before the international hordes descended on Austin for this week’s South by Southwest music, film and media festival, a company called SideCar blitzed blogs and social media with an irresistible pitch.

SideCar was looking for licensed and insured drivers who wanted to make $20 an hour to, as one of their blasts said, “swing by Austin Music Hall to pick up and meet the next Music Hall of Famer (hey, maybe you never know…) and drop them off on the east side where they’re looking to get some serious taco action.”

The would-be Hall of Famer would arrange the ride with a SideCar smartphone app, and negotiate a price determined by the market – the time of day, the traffic, the time crunch, the utter exclusivity and fabulousness of the gig.

For veteran SXSW festival goers burdened with the result of Austin’s failure to develop transportation alternatives to match its so-called Smart Growth urban development, SideCar was a revelation.

For the Austin City Council, caretakers of the policies that have made construction cranes and traffic congestion permanent downtown, SideCar was, and is, a threat.

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AN APP FOR THAT: The makers of SideCar have sued the city of Austin, Texas.

On Feb. 28 the City Council passed an ordinance amending its transportation code for taxi services allowing police to impound the cars of drivers for unlicensed services like SideCar.

City officials told a local reporter they were willing to back the ordinance with a sting operation against SideCar and its drivers.

Near the end of the first week of South by Southwest, SideCar announced it would offer its ride sharing service for free. One hundred SideCar drivers filled 1,000 ride requests on Friday, and by the end of the weekend, 10,000 requests, Dave Phillips, head of policy for SideCar, told Watchdog.org.

By the end of Friday, SideCar filed a lawsuit charging the city, in particular its Department of Transportation, with misinterpreting its own city codes.

Calls placed to the city’s Department of Transportation soliciting comment on the lawsuit were not returned.

The lawsuit and SideCar are part of a national urban transportation revolution, entrepreneurs harnessing relatively simple phone technology that allows customers greater control over the timeliness, cost and comfort of their rides.

SideCar’s ride sharing concept and the luxury limousine service Uber, to name just two, have been successful in every city where they have expanded. Both ideas were, not surprisingly, incubated in San Francisco, another city that prides itself on smart urban policies and regulation that result in transportation misery.

They have also been fought by city administrations that see a threat to their sclerotic regulatory structure and the taxi and limousine services in those cities protected by those regulations.

“In every one of these places they know that car sharing is coming to their city, and they are prepared,” Phillips said. “It’s a well organized effort from a real entrenched industry that benefits from regulatory capture.”

In late February, after Philadelphia police impounded three SideCars in a planned sting, SideCar announced that it would not shut down its service, but for a weekend give free rides like those at South by Southwest.

The lawsuit in Austin, however, was SideCar’s first legal effort to establish that its ride sharing concept is a technology platform rather than a transportation service.

Austin’s city code does not apply to SideCar because it owns no vehicles like a taxi or limousine service, and its transactions are not based on a fee but an agreement between passenger and driver, according to the lawsuit.

“This lawsuit is bigger than Austin, Texas,” company CEO Sunil Paul said in a statement he issued after the lawsuit was filed. “ What happens here matters for the entire sharing economy. Sharing resources is not a crime – it’s a solution for a better and more sustainable way of life. Rideshare is good for Austin and we’re going to defend this position in Austin City Court.”

Phillips said the company chose Austin to take its stand because the city’s transportation code and the City Council’s hostility to a new idea are at odds with its progressive reputation.

Smart Growth, after all, was founded on the idea of high-density downtown living where innovation made moving about easier with less congestion. South by Southwest is a symbol of Austin’s commitment to creativity and innovation, Phillips said. Austin has proven itself an early adopter, he said

“I think our idea would be good for this city in the way it wants to portray itself,” Phillips said.

On the night before the lawsuit was filed, the City Council asked by resolution for more information about ride sharing regulation in other cities. The report, however, is not expected before June 1.

Phillips said that while the ordinance passed in advance of their arrival was not warranted, he has been encouraged by private discussions with city council members and senior transportation officials.

In the meantime, SideCar expects to field more than 20,000 free ride requests by the time South by Southwest finishes its run on Sunday. Phillips said SideCar will by that time have left an impression with Austin residents and visitors.

“I believe we have an agreement in principle with the city, but we believe that for right now a judge is in the best position to decide on that agreement,” Phillips said. “We know they’re not going to just roll over, but I think now we’ve provided an opportunity for the silent majority who wants this service to speak up.”

Contact Mark Lisheron at mark@texaswatchdog.org.

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Mark Lisheron