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Uber says it's threatened by Md. regulators

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The popular ride-share company Uber began urging Baltimore users this month to help "save" it, declaring that "Uber's future in Maryland is in jeopardy."

Uber launched the public relations campaign as state regulators waded into the same dispute that embroiled the company in other cities as it and other technology-based ride-sharing operations disrupt the local taxi market.

The success of Uber, which launched in San Francisco in 2009 and now operates in more than 35 U.S. cities, shows consumers are smitten with summoning a ride with the tap of a screen and paying by smartphone. But regulators from coast to coast have grappled with how to make sure those rides are safe without laying down so many rules that Uber and its competitors simply leave town.

State lawmakers in Annapolis are considering how — and whether — to craft new regulations to oversee drivers who pick up riders through smartphone apps.

"They're not cabs, but they have some similarities. They're not limos, but they have some similarities," said Del. Ben Barnes, a Prince George's County Democrat who sponsored a bill to regulate the businesses differently. "We don't really have a way to regulate them."

Taxi companies, which filed a cease-and-desist request with the state's Public Service Commission before Uber even began operating in Maryland, have hired veteran lobbyists to try to stop the legislation from creating different rules.

A similar fight has played out in California, Chicago, New York, Seattle, Washington and other areas where these smartphone-driven alternatives collide with the century-old cab services that have been regulated for decades. While cab companies in Maryland are required by law to submit rates in advance, carry expensive insurance policies and hire drivers that undergo state background checks, the new ride-sharing companies are not.

For more than a year, the state's Public Service Commission has weighed whether Uber and Lyft, another ride-sharing application, should be regulated like just like cabs. An advisory panel to the commission is expected to make a recommendation by the end of the month, a PSC spokeswoman said.

So far, more than 10,000 people have signed Uber's online petition to sway state legislators to back bills by Barnes and Sen. Bill Ferguson of Baltimore that would establish a new class of transportation services, with regulations modeled after those of California and Washington, D.C. Both Uber and Lyft have testified in support at House and Senate hearings, as well as lobbied lawmakers on the need to create new rules instead of lumping them in with cab companies. The bills have yet to get a committee vote.

Ferguson, a Democrat, predicted that Uber would leave the state altogether if Maryland chooses to regulate it like a cab service.

"It's a big statement: Do you accept innovation? Are we willing to be nimble and create new tools?" he said. "It would be a travesty to Maryland's image as a 'tech state' if we reject these innovative companies."

Uber and Lyft representatives said they want to be considered a "transportation network service" that connects willing drivers with riders, not a "common carrier" like a limo or taxi.

Cab companies contend the businesses amount to illegal taxi-cab services that skirt costly safety and insurance regulations, creating an uneven playing field that makes it difficult for traditional cabs to compete.

"They're doing the same thing we're doing. They're hiring drivers. They're just another method of booking a trip," said Dwight R. Kines, a vice president with Veolia Transportation, which owns Yellow Cab.

"We can compete with them on a level playing field," Kines said, but without regulation that calls for high insurance policies, background and safety checks for drivers, and pre-approved rates "it's going to be very difficult."

Uber and Lyft, however, say they're not cab companies. Uber contracts with limo and sedan drivers. Lyft and Uber say many of their drivers use their privately owned cars to help give people rides. Each company performs their own driver background checks. On Friday, both separately announced expanded insurance plans that cover any driver who's logged into the app.

Both companies balk at having to set fares in advance. An Uber representative at a work session Thursday said that would upend Uber's surge-pricing model that resets rates instantly based on demand.

Some customers have complained about Uber charging unreasonably high surge rates, for example, during this winter's snowstorms.

A Lyft lobbyist told lawmakers setting fares in advance would muddle its model that relies on suggested donations for each ride.

Nairi Hourdajian, an Uber spokeswoman, declined to say whether the company would leave Baltimore if it was forced to operate like a cab company. But she said the service's future was "under threat" unless state lawmakers create a new regulatory structure.

She declined to specify how many Uber drivers and riders use the app in Baltimore, only to say that "today, in Baltimore, Uber has hundreds of driver-partners and tens of thousands of users who rely on the Uber platform."

The number of trips booked through the app had nearly doubled over the past three months, she said.

Sen. Delores G. Kelley, a Baltimore County Democrat, said she thought it was "unconscionable" to not regulate rates. At a recent work session on the issue, Kelley rejected the contention from Lyft and Uber that it's a matter of consumer choice about whether to use the application to book a ride and they won't do it if the price is too high.

"We regulate all sorts of things because the general public is not smart enough to know when they're about to be fleeced," Kelley said.

Chadwick Frazier, a 33-year-old from Essex, said he's used Lyft about 15 times since it launched in Baltimore in October.

"My wife and I, we can drive into the city, park at a friend's house, and then call for a Lyft and go pretty much anywhere," he said.

Frazier applied for — and was awarded — status as a Lyft driver. He has another job and has no plans to ever become a full-time cabdriver. If Lyft were turned into a cab company, he said, it would eliminate consumer choice.

"I've never been picked up by a cab," Frazier said. "I've been picked up by different people by their own cars. It's like being picked up by a friend."

Sen. Thomas M. Middleton, a Democrat and chair of the Finance Committee, said it may be too soon to pass laws on such businesses, but regulations are coming sooner or later as lawmakers try to strike a balance between consumer demand and public safety.

"People love Uber, but there are some legitimate concerns," he said. "There's got to be some regulation, hopefully not over-regulation."

ecox@baltsun.com

Copyright © 2014, The Baltimore Sun
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