TRANSPORTATION NETWORK COMPANIES: MASSACHUSETTS LEGISLATION IGNORES THE OFFERING OF NEW SERVICES.

• Author: Woolf, Devin

1. Introduction

   There are many transportation options for residents of the Commonwealth to get around the city; from the MBTA's trains, buses, and the commuter rail, to taxicabs and personal motor vehicles. (1) After the unprecedented snow in 2015, the train was often not in service, city dwellers who could not walk from one location to the next utilized the services of Uber and Lyft to get to their destinations. (2)

   Ride-sharing services have taken over the Massachusetts transportation market. According to Uber, the company has profited from over $1 million dollars in rides per day throughout all of the states and countries it services. (3) Over a year ago, more than eight million people used Uber, and this number has since grown exponentially. (4) These ride service technology startups arrived in Massachusetts back in 2009 and have since transformed the transportation sector by helping to meet the Commonwealth's transportation needs. (5) While the ride-sharing services have provided consumers with a more convenient option, concerns over passenger safety have steadily risen. (6) The Commonwealth's regulation of ride-sharing services faces continued challenges as a result of the constant offerings of new services. (7) Ride-sharing services are here to stay in Massachusetts and the legislation helps to maintain the market in a manner that will not deter startups, while better protecting consumers. (8)

   Part two of this paper will discuss the history of ride-sharing services, the services they offer and the prices at which they offer them, as well as the requirements for their drivers. (9) The next section will discuss the regulation of taxicabs, reviewing their emergence on the market and the case law surrounding taxicab driver's concerns. (10) The history of the proposed legislation for ride-sharing services while they were operating in a legal gray area in Massachusetts will also be presented. (11) Following the history section, the facts of the legislation regulating Uber and Lyft will be discussed. (12) Then, the benefits and downfalls of the legislation will be analyzed. (13) The conclusion of this Note will discuss areas in which the legislation could be improved to keep up with Uber's constant offering of new services. (14)

2. History

   1. Uber: Services, Fares, Pricing, and Requirements for Drivers

      Uber was founded in 2009 and currently has operations in hundreds of cities, spanning sixty different countries. (15) Uber's presence has expanded to the global market and seeks to make cities more accessible for passengers and continues to launch new services. (16) Uber claims to "seamlessly" connect passengers to drivers through their online application, "acting as an intermediary, allowing two individuals to connect." (17)

      Uber posts its itemized fare pricing for each of the cities it serves and each of the available motor vehicle options. (18) The choices for vehicles range from UberX, known as the "low-cost" Uber, the UberXL, the "low-cost" ride for large groups, UberBlack, "the original Uber," UberSUV "room for everyone," and UberTaxi "the taxi without the hassle," all of which have varying rates. (19) There are different fees associated for each of the different vehicles. (20)

      A recent article published revealed the findings of a month long study that was conducted on Uber's surge pricing. (21) Uber uses an algorithm to adjust the price of a ride when demand is high and the supply of cars on the road is low. (22) Uber explains that their intent is to increase the fare to get more drivers active on the application which increases the supply of cars on the road in a particularly busy area. (23) Uber expects this to result in the reduction of wait time for vehicles, bringing the surge price back down to normal pricing due to the increase of vehicles on the road. (24) This is Uber's claim, but the study reveals that "the pricing system is working to reduce estimated wait times, but it seems to be working better in some neighborhoods than in others." (25) In addition, surge pricing did not appear to increase the number of drivers on the road; instead it distributed the already active drivers to the busy neighborhoods. (26)

      Under Uber's page for applicants interested in driving for Uber, they refer to their Uber drivers as "independent contractors." (27) Drivers for Uber are paid weekly and get paid in fares for picking up passengers on their own schedule. (28) Uber not only delivers passengers, but it has attempted other services such as on-demand Uber ice cream, on-demand roses for Valentine's day, on-demand barbecue in Texas, DeLorean rides in San Francisco, UberCHOPPER helicopter rides to the Hamptons, and partnerships with the NFL Players Association to promote safe rides for NFL players. (29) With the above listed services, the Uber drivers deliver the products to the passengers rather than taking the passenger from point A to point B and these services have continued to expand. (30)

   2. Uber Offers New Services

      1. Contributions to the Community (31)

         In an email sent to all Uber user's titled "UberMentor: Ride and Learn from Boston's Brightest." (32) Uber provided new services to consumers offering a chance to meet one-on-one with a distinguished entrepreneur to "[g]et career advice, pitch an idea, or just glean as much wisdom as you can." (33) The entrepreneur would be in the vehicle and would meet with the mentee for fifteen minutes in the backseat of the Uber. (34) The project was intended to foster innovation in the city. (35)

      2. Additional Services for the Holidays

         Uber offered ride-pooling services for Halloween in an email dated Friday, October 30, 2015. (36) Uber attempted to incentivize passengers to share rides for Halloween by using word plays on the "spooky" holiday to promote the pooling service, such as "Sharing isn't scary. Split your fare if you're rolling with friends and take uberPOOL... for parties of two or less." (37) Uber explained to passengers that it would be in their best cost-saving interest to utilize uberPOOL since, "[d]emand goes way up for Halloween, so ride with other costumed companions this weekend. When you share the ride, you split the cost." (38)

         Uber in another email, this time sent out on New Year's Eve, offered a tip for riders planning to use Uber for their New Year's Eve transportation needs to check surge pricing before requesting their Uber. (39) Uber provided "MegaPOOL" for New Year's Eve night which was a trolley service that allowed "you and your squad [to] hop around town in a New Year's Eve MegaPOOL." (40) Instead of providing the previous Uber pool service which could only fit the number of passengers a standard vehicle could hold, Uber attempted to expand this service to accommodate much larger parties for New Year's Eve. (41) The trolleys would also accommodate passengers by " ... playing your favorite jams from 2015..." and the trolley would be "... stocked with celebratory swag." (42)

   3. Lyft: Services They Offer, Fares They Charge, and Requirements for Drivers

      Lyft began operating in 2012 in San Francisco. (43) As of three years ago, during its first year, Lyft was giving more than 30,000 rides per week. (44) Lyft encourages trust and makes their experience more personable by requiring drivers and passengers to connect through Facebook. (45)

      During regular hours, the base fare charge in Boston for a "Lyft" is $2.00, each mile driven costs $1.35, and there is a $0.25 charge for each minute. (46) Similar to Uber's "surge pricing," Lyft uses "increased Prime Time pricing during peak hours to increase prices." (47) What is unique to Lyft is that their drivers can accept tips from passengers and are able to keep 80% of the fare that is charged to the passenger. (48)

      Lyft requires that drivers are at least twenty-one years old and own an iPhone or Android phone. (49) Lyft requires background checks for employees, and runs national and county background checks. (50) Lyft drivers are disqualified from the application process if they have more than three moving violations in the past year, have a major moving violation in the past three years, have a DUI or other drug-related violations in the last seven years, or have any driving-related convictions within the last seven years. (51) Lyft also requires an in-state driver's license that is at least a year old. (52) Lyft advertises its "insurance protection" where it claims to provide additional insurance policies to cover commercial auto liability insurance for up to $1 million dollars per accident contingent upon their driver's policies. (53)

      Lyft offers "Lyft line," which is advertised by the company as, "... an affordable new way to ride." (54) The Lyft line allows you to select the Lyft predetermined route that travels near your destination. (55) The service is intended to be for pooling passengers along similar routes, allowing other passengers who are also heading in the same direction to join you on your ride, which decreases the price of the ride per passenger. (56)

   4. Sidecar: Services They Offered, Fares They Charged, and Requirements for Drivers

      Sidecar was available in eight U.S. markets: Washington, DC, Seattle, San Francisco, Los Angeles, Chicago, and Boston. (57) It was founded in 2012 and based in San Francisco, (58) and closed its doors at the end of 2015. (59) Sidecar offered three main services through a ride application that connected rides with drivers like Uber and Lyft. (60) Sidecar offered "Shared Rides," a discounted carpooling service that picked up more than one passenger along a similar route to deliver a cheaper price to the passenger. (61) Sidecar's other main service was "Sidecar Delivers." (62) According to Sidecar's website, Sidecar deliveries would "combine people and packages on the same route for the fastest, most affordable and innovative on-demand delivery solution for retailers." (63) Sidecar advertised that they had the lowest prices of their competitors. (64)

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