Learning from TNCs
This is not a piece about transnational corporations, but about another kind of TNC—transportation network companies (although some of these have become TNCs of the first kind as well). Perhaps the best known is Uber, the popular—or notorious, as the case may be—ride-sharing app (techspeak for application software), which came into the limelight some time back when our transport authorities found themselves in somewhat of a quandary on how to deal with them, especially in the face of pressure from the taxi industry.
Last Feb. 23, the Land Transportation Franchising and Regulatory Board dismissed all motions filed by transport groups against the operation of TNCs in the country, with its chair Winston Ginez explaining that “…the board decided to make a disposition that would promote better mobility and to the benefit of the riding public.” That the Department of Transportation and Communications has chosen to create space for TNCs in its regulatory framework suggests that the government (finally) acknowledges the need for change.
The convenience provided by such TNCs lies in how they can quickly connect a person needing a ride to one willing to share one, for a fee. It’s a popular application of the new “sharing economy” to transportation. Carpooling is not a new concept, after all, and has long been encouraged as a means to save fuel, decongest traffic, and reduce air pollution. Put simply, the service that TNCs offer can be seen as carpooling made easier. It’s a win-win-win situation, as both driver and rider are better off, plus the environment stands to gain, too, with reduced private car usage.
It’s not without problems. Uber has faced much opposition, at times violent, from those in the traditional transport service industry. Some European markets have banned it outright. The Internet is filled with stories on the weaknesses of Uber, in particular. But the popularity of such services in the Philippines, specially among the young working population, highlights the shortcomings in our traditional transportation service system.
Rider comfort, safety, security and convenience have always been the primary reason riders have opted for the services of TNCs, or similar Internet-enabled transport services like GrabTaxi. There’s an assurance when a car is called that it will be there and that the rider will not be refused. The rider can wait in the comfort of his/her home or office while monitoring the location of their ride. Privately owned cars are often cleaner and better maintained than publicly used taxis. Payments can be made via credit card through the apps, so payments are exact. Transactions are recorded. The app always tracks the rider via the satellite-based Global Positioning System (GPS). Parents can hire a vehicle and check where their children are going without being physically with their child, all through the eyes of their smartphones. Riders can give feedback on the performance of their drivers, and vice versa. The feedback is easy to give and aggregated feedback of others is accessible, so both riders and drivers have an idea who they are dealing with. All together, riders obtain better service.
There are important lessons that the traditional taxi industry ought to pick up here.
For one, TNCs improve accessibility of rides for hire, whereas taxi drivers are known to refuse short rides, or if the route goes through heavy traffic. And, assuming the riders do get picked up, they become prone to pressure from drivers to cough up more money (“dagdag dahil ma-traffic”). We tend to address problems like this by penalizing drivers for refusing rides through programs like “Oplan Isnabero”—but do nothing to incentivize and reward positive behavior. Most TNCs provide premiums to drivers to encourage them to pick up passengers even in areas with slow-moving traffic. Systems like surge pricing and heat maps, to Grabtaxi’s institutionalized tipping, when properly regulated, can be a good incentive for drivers without having them resort to predatory pricing. Singapore’s variable taxi fares, which allow for surcharges during peak hours or holidays, puts the same principle in action within the traditional system—and yet, Singapore cab prices are considered relatively “cheap” given that country’s cost of living.
Another lesson concerns the feedback system. In this age of social media, an easy-to-use review and feedback mechanism should be easy to set up. The LTFRB does have a feedback mechanism through an online complaint form, but it only captures complaints and there is no feedback on the feedback. That is, how does the rider know that the complaints are being dealt with? How do other riders know about the complaint? And what if the feedback is a positive one? Our feedback mechanism is tailored for hunting down bad drivers, but there is no system in place for finding the good ones we would want to ride with. And that is the power that many consumers wish to have: the power to make sure that the next ride will be a good one.
Last Feb. 10, a new Uber service, UberHOP, was launched in the Philippines. It allows several riders from different points along the route to share the same Uber car. Metro Manila is reportedly only the third city in the world to have this new service. That a new product is being tested here is a clear indication that the Philippine TNC market has become a significant one. There is clearly a need that these TNCs fill that our public transport system does not. As a “disruptive technology,” the ride-sharing app shakes up the transport industry just enough for everyone to see where its holes are—and as such, is a disruption most of us probably welcome.
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