{"id":3656,"date":"2015-02-11T11:44:11","date_gmt":"2015-02-11T01:44:11","guid":{"rendered":"https:\/\/reckoner.com.au\/?p=3656"},"modified":"2017-03-06T20:00:42","modified_gmt":"2017-03-06T10:00:42","slug":"uber-brilliant-example-technology-disruption","status":"publish","type":"post","link":"https:\/\/reckoner.com.au\/features\/uber-brilliant-example-technology-disruption\/","title":{"rendered":"Uber – A Brilliant Example of Technology Disruption"},"content":{"rendered":"

I know this is a technology blog and the taxi industry isn’t really “tech”<\/span>, but the taxi industry is currently going through a blindingly bright example of how technology can rapidly upend the status quo. If you aren’t involved in the taxi industry it’s difficult to get a sense of how smartphone apps, and Uber in particular are seriously rustling some jimmies. To understand why everyone is flipping tables over Uber, you gotta understand what the status quo is.<\/p>\n

\"11531045035_dfb0204cfc_o\"<\/div>\n

The Status Quo<\/h3>\n

In Victoria, the state government decides who can drive who around and the circumstances surrounding people getting in cars as paying passengers. The instrument for government’s tentacles in this area is the Taxi Services Commission<\/a>. Both drivers and cars are licensed and registered with the TSC. The TSC also enforces the industry related laws by bringing criminal cases against people infringing them.<\/p>\n

There’s two ways you can get someone to drive you around Melbourne. A regular taxi with a meter and a sign on it saying “TAXI”, or a hire car which is generally black and fancy, which you’ve pre-arranged. The main difference between the two is that a taxi can be hailed from the street, hang out in taxi ranks and stop in taxi zones. A hire car is supposed to be for pre-arranged travel that’s booked in advance and the fee agreed upon by the driver and passenger.<\/p>\n

In order to legally do this, the car needs to have special licence plates that denote it is a licensed vehicle to conduct commercial operation. The TSC regulates this via issuing vehicle licences. Before mid-2014 you had to be part of a booking service (think 13CABS or Silver Top Taxis) in order to get one of these permits and they were only released in limited numbers every few years. The only way to practically get one was to buy it off someone else. As a result the price of permits currently hovers around $300,000. The cost of licences transfers is even tracked on the TSC website<\/a>. After mid-2014, the TSC offered 60 special permits for owner operators only, for the “low” price of $22,494 per year. This means someone who wants to buy their own taxi (which has to be picked off the official list of vehicles and modified appropriately), can pay and ideally, drive their way to fat stacks of cash money.<\/p>\n

The advantage of the $300,000 permits is that you can\u00a0assign anyone to drive for you. You earn money off it! Let’s say you purchased the plate for $300,000 and rented it out at $2,000 a month (the current assignment rate<\/a>) to a dude who can’t afford to buy one. That’s $24,000 a year. A sweet investment versus buying a house and renting it, or some shares or a term deposit. The new owner-operator permits can only be used by the person paying the TSC for the permit, so they are not as lucrative from an investment point of view and are designed to encourage owner-operator drivers. Even hire car permits (those VHA and VHB licence plates you see around) are $40,000.<\/p>\n

Regardless of who drives it, they need to be accredited by the TSC and get what’s called “accreditation to drive a commercial passenger vehicle and private bus<\/a>“. This includes a police check, a medical exam by a doctor and passing what’s now called “The Knowledge<\/a>“. The Knowledge is something London taxi drivers study years for, just check out this documentary about how rigorous it is.<\/p>\n