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Uber says it will leave Houston if it does not change its fingerprinting requirement

I called it.

Uber

Uber announced Wednesday that the company plans to cease operations in Houston if the city council does not repeal its existing regulations relating to vehicle-for-hire companies.

Houston is one of two cities in the country where Uber continues to operate despite a local requirement that its drivers undergo fingerprint-based background checks. Uber has recently left three cities in Texas for approving similar regulations and has threatened to do the same in Austin.

The company’s main competitor, Lyft, pulled out of Houston over a year ago in response to the new rules requiring its drivers to undergo fingerprint-based background checks. Uber had continued to operate in the city while publicly criticizing the regulation as burdensome.

“We have worked hard and taken extraordinary steps to help guide drivers through the current process in Houston,” said Uber General Manager Sarfraz Maredia in a letter to Houston City Council on Wednesday. “However, a year and a half later, it is clear the regulations are simply not working for the people of this city.”

Uber also released a report Wednesday detailing, “The Cost of Houston’s Ridesharing Regulations.” The report claims Houston’s regulations have led to a decrease in Uber drivers and in turn, “fewer safe rides.”

Here’s Uber’s press release, their letter to Council, and the report mentioned in the story. Before I get into any details, here are some further news bits. First, from the initial Chron story.

No departure date has been set, Uber spokeswoman Debbee Hancock said.

“We have not set a specific deadline,” she said. “We want to work with the city to develop regulations that work for riders, drivers and the entire community. We understand this process may take a few months.

[…]

Meanwhile use of Uber in Houston surges, something both sides have said bolsters their case. The city argues use means Uber is profitable even with the regulations, though the company says they stifle supply of drivers.

From the Statesman:

The company does not disclose to the media or public how many drivers it has working in Houston, and it obtained a court order preventing city of Houston officials from releasing that information. (Lyft does not operate in Houston.)

The report released Wednesday by Uber includes a chart purporting to show drivers-per-million residents in Houston, Austin and Los Angeles, and the chart is presented in such a way as to imply that Austin (with no fingerprinting required until Feb. 28) has many more drivers per million residents.

But the chart has no numbers listed on its vertical scale of drivers per million residents, rendering it qualitative in nature, not quantitative. Given that and the company’s refusal to release driver figures, it is impossible to confirm the company’s claims about driver supply there.

The letter and report do not mention that Houston has a process under which a driver can get a 30-day “provisional” license without first going through fingerprinting. But according to Uber, a Houston driver, even to get that provisional license, must complete a physical, take a drug test, appear at Houston municipal court to get a check of outstanding criminal warrants, buy a fire extinguisher for the car, get his or her car inspected by a city inspector and get an Uber identifying marker for the car.

From the Houston Business Journal:

According to the letter and a corresponding report on Uber’s Houston operations, 59 percent of its Houston fleet drives less than 10 hours a week. That’s compared to 79 percent of drivers in Austin, and 77 percent in Houston’s outer limits. Uber argues that for these part-time drivers, the regulations are too oppressive and prevents new drivers from signing up.

Mayor Turner held a press conference yesterday at 4 to give his reaction. The Chron story that contained it was updated too late for me to see it last night, so I’ll do another piece tomorrow to discuss that. Click2Houston reports him saying he was “surprised” and that when he had last spoken to Uber reps a few months ago they gave no indication they were dissatisfied; I received another statement from Uber later in the day that takes issue with that, but I’ll get to all that tomorrow. The one thing that surprises me about this is that Uber announced it before the results of the Austin referendum are known. I had assumed they’d wait and pounce if they were successful in repealing Austin’s ordinance; if they failed, I figured they’d still make some move in Houston, but they might be more circumspect about it. Winning the referendum in Austin gives them leverage, which I strongly suspect is part of the point. Maybe this is a show of confidence on their part, maybe it’s just bravado, or maybe this was the plan all along. Who knows?

There are three logical ways Houston can go with this:

1. Do what Uber wants, which would surely have the effect of bringing Lyft back as well. That would not be my first choice, but if Prop 1 passes in Austin, there may be a lot of sentiment here for that.

2. Stand pat and let Uber do what it’s going to do. Get Me is operating in town, so it’s not like there’s no vehicle for hire alternative. One could argue that Uber’s abandonment of many Texas cities, potentially including Austin, would pave the way for another competitor to arise. The demand clearly exists for this service, and opportunities like this don’t come along every day. This is a better strategy if Prop 1 fails, and the bigger the margin the better. It also assumes a commitment to ensuring that no legislation that pre-empts local rideshare ordinances gets passed in the 2017 Legislature.

3. Try to negotiate a compromise. I still kind of like Austin Mayor Adler’s proposal for voluntary fingerprinting, which then becomes part of a driver’s profile and which customers can request. Let’s see what the free market has to say about that, shall we? There are certainly other possibilities, and again, this is likely to be more feasible if Prop 1 goes down.

Anyway. I don’t know as I write this what Mayor Turner had to say beyond his surprise, nor do I know what the prevailing opinion on Council is. Whatever the case, I’m sure this will be a big part of the discussion over the next few months, which I’m sure is exactly what the Mayor wanted given the forthcoming budget battle, the ongoing flood cleanup, the continuing search for an HPD chief, and everything else on his agenda. Well timed, Uber.

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18 Comments

  1. voter_worker says:

    Personally, I see this as a case of California tech bros doing a shakedown on our elected city representatives. My first reaction is “good riddance”, but it might be a twisted sort of spor to watch the spectacle of the demographic that wants to take down Wall Street fighting for a rapacious corporation from Silicon Valley. Aren’t stereotypes fun!

  2. voter_worker says:

    *sport* grrrr phone keypads

  3. M1EK says:

    Adler’s compromise was never fully formed, but I was highly dubious as he could never make up his mind whether to call it an incentive or not. For weeks, they claimed they’d give better access to fingerprinted drivers (allowing them in the front of special events, etc), but then when people balked they said they’d have equal access (separate but equal?). Never fully resolved as the Council rejected the attempts to continue to compromise, and here we are.

    I still think you’re very off on this, by the way. Cab companies are horrible; and if UL had obeyed the law they never would have been able to initiate service in the first place.

  4. J says:

    I don’t understand. This blog usual position is “all the other largest cities do ____, therefore we should do the same.” For example, HERO and trash collection fees. But when Houston is doing something completely out of line with other large cities that we are supposed to emulate in all other ways, suddenly we need to be different. Where’s the position “no other cities put this burden on Uber, let’s not do it either and drive away a service that tens of thousands of people love.”

    Oh, and it just happens to be more government regulation, what lockstep, let’s not think for ourselves Democrats always want more of, regardless of whether it makes any sense, or if almost anyone else in the country thinks it makes any sense. And it hurts a corporation, which is also a Democrat imperative because all corporations are bad, bad and evil — must hurt them, must regulate them more…

  5. C. L. says:

    Rarely have I taken a cab in this town, and have never hired an Uber driver, but the issue/conflict is over fingerprinting ? Where is the data that would indicate a taxi driver’s that been subject to fingerprinting is less likely to harm a passenger in some fashion vs. one who hasn’t been ? Has someone overseeing the taxi industry been running driver’s fingerprints across a local/state/federal database of existing, crime scene prints in an effort to deny a taxi license to applicants, or is running the existing database daily in an effort to catch a crook ? This is just nonsense. I’d take a ride with a millennial Uber driver in a Prius over some taxi driver in a 20-yr old Crown Vic who speaks English as a second language any day.

  6. Joshua ben bullard says:

    The hotel shuttle driver-does not go the this city check-day care drivers – no check- school bus drivers do not go threw this “give your body to science ,DNA and blood same check by the city of Houston”, so if the daycare drivers ,shuttle drivers and school.bus drivers are not required to submit to this specific kind of background check by Houston government, why would a uber driver have to give his or her body to science to be fingerprinted by the FBI???

  7. Joshua ben bullard says:

    PS,Sylvester turner is going to mess him self up and get recalled,they’ll recall him.he needs to make right decision now,millions and millions of uber trips in just 18 months.

  8. Paul Kubosh says:

    You can’t recall. If that was possible Parker would have been recalled.

  9. Tory says:

    They’ve got maximum leverage with no Lyft and the Super Bowl coming. It will be a huge national embarrassment if we hold a Super Bowl without Uber. They’re timing it perfectly, giving the city several months to come up with an acceptable compromise. I vote 1 or 3.

  10. Ross says:

    If Uber doesn’t like the rules, they can leave, and we haven’t lost anything. I don’ tbuy any of their arguments in favor of looser checks.

  11. […] here for the background. I didn’t expect Uber’s announcement to be greeted warmly, but I am […]

  12. Steve Houston says:

    PK, given Turner’s track record for the last few months, anyone suggesting he will be recalled over such a non-issue like this is clearly delusional (again). It’s sad that Uber is casting stones while simultaneously trying to prevent the city from defending its actions, a mark of desperation.

    As far as the fingerprints not being used for some minor number of other transportation positions, aren’t some of those mentioned covered in other ways? Anything tied to day care centers sure seemed to be covered for extensive background checks the last time something went wrong and as extensive an operation as Uber is, you’d think they would have found the federal violation given how easy it is for anyone else to find such (without any personnel in place or special access to databases).

    But in answer to the question regarding does anyone actually check backgrounds or run the fingerprints, perhaps if they don’t already, they should be doing so, in my experience cabbies are run. It gives the impression that Uber is trying to recruit very marginal drivers to cash in on them, knowing the chances are so high a criminal background problem arises that they want the requirement dropped. That makes sense given their compensation model is so lacking.

    Last thing, a variety of companies are planning on using their own shuttles during upcoming sporting events, preparing to bolster coverage at great expense (hotels and other venues) plus there is ample time for Metro to enhance services as a means of selling the population as to why we should keep them around or expand in the future. I actually like the idea of loosening up some regulations but just as some commentators have been mistaken regarding how old cabs can be (6 years maximum) versus Uber (10 years), loosening should work both ways.

  13. Joshua ben bullard says:

    @steve “Houston”, we agree that uber drivers have unlimited access to the public and cab drivers should as well,on the background checks -ubers nationalized check is in par with the fingerprinted FBI check,the sole purpose or difference is making sure someone isn’t using false creditials,not related to the past crimes and convictions, that’s covered,fingerprint match is not -per the 1000% identification.

  14. Steve Houston says:

    The amount of interpretation needed to decipher Josh’s latest rant just proves my point. Charles did a fine job stating what amounts to my similar position in the newer thread, letting huge companies like Uber bully the city or write their own regulations is crazy, even if I too think a more comprehensive revamp of such regulations is a good idea (one of those stances coming from councilman Mike Kubosh that Joe could never find in all his searching).

  15. manny says:

    I have never been a supporter of Uber for various reasons, one being that they have a company structure that is geared to avoid paying U.S. Federal Taxes, in a tax haven.

    Uber is not consistent, their drivers are fingerprinted in New York City.

    But for more information on Uber and finger prints and the dirty wars they fight;

    http://ww2.kqed.org/news/2016/02/26/california-to-reconsider-fingerprint-checks-for-uber-lyft-drivers

  16. Michael Kubosh leaves much to be desired.
    Outright won the election, but no ideas…

    Ban the box ordinance
    NDO without public accomadation
    Public bank
    Paid FMLA for city employees
    Reforming TIRZ
    Repeal TABOR
    Paid sick leave ordinance

    I understand there are many moving parts and maybe they won’t pass, but Kubosh and city council aren’t even talking about ideas.

    Why waste time with 4 lawyers, 2 of which are harvard graduates a doctor and exec’s on council if they won’t even talk about these things?

    Bye felicia

  17. On a side note.

    All one has to do is look at city council staff’s background and realize they are either tea party zealots or over-paid paper weights.