Technology trumps tradition: Uber versus old taxi system

In the news in the recent past, controversy has erupted over the extension of franchises to new applicants for Uber and Grab, called Transport Network Vehicle Services (TNVS) by the regulatory agencies. Possibly fueling this controversy is a backlash expected from among the traditional franchised taxi operators, which used to lord it over the transport system for rides better than the buses and jeepneys.

In just over two years or so, the TNVS system has expanded so much and taken away significant market share from traditional taxi rides that the taxi fleets have complained to the Land Transportation Franchising and Regulatory Board (LTFRB) that there was a need to regulate and control the growing threat to their traditional stranglehold of the “taxi” service business. In my estimate, the fleet of TNVs available in the Metro Manila area alone must exceed 5,000 units and is growing fast.

A new and better idea, aided by computer and internet technology has changed forever the way the private car ferry business or taxi service is carried on WORLDWIDE. Traditional taxi services from Paris to Beijing are reeling from the quick adoption of the taxi riding public of the Uber idea. This also explains why Uber, from being a technology start-up a little more than five years ago, is now a publicly listed company valued at the stock market at more than $55 billion.

Why has the idea caught on so fast? One major reason is that it appeals strongly to riders and the service providers. The old paradigm was for taxis to be moving around or crowded around major traffic centers such as malls, LRT stations and the like. This expended fuel and was an inefficient way of conducting business as the old taxi had to look for passengers.

In the new business model, there is in effect a central dispatching center which directs the vehicles to a waiting passenger and saves time for both the driver and the passenger who knows who and what are coming his way. This business model also pre-computes the fare so that the customer is aware of the cost before the service is rendered and can arrive at a personal economic decision on whether the cost is worth the service. This model makes a service decision a mutually arrived decision by both rider and driver.

In the old model, a usual question asked by the taxi driver is the rider’s destination? Then, the driver, quite illegally, determines whether this is worth his time and effort, a source of frustration for both rider and driver.

Then another aspect is the quality of service. This factor makes the Uber/Grab service head and shoulders above the traditional taxi service.

In the first place, many, perhaps about half of the traditional taxi fleets are old and dilapidated, having an average age of at least five years. Under the terms of agreement, an Uber/Grab vehicle should be no more than five years old and riders can give immediate