Unprepared and incompetent (Part 2)

This whole episode on LTFRB and transport network companies Uber and Grab shows how unprepared and incompetent government regulators are in meeting the challenges of today's technological innovations.

As I wrote in my previous column, regulators have been erroneously applying the same outdated regulatory framework to the innovation brought by Transport Network Vehicles Services (TNVS).

Consider the report of Scott Wallsten (2015) in a study he did using data from the New York City Taxi and Limousine Commission, as shared by University of the Philippines researchers (Paronda, Regidor, Napalang, 2016): "Data  reveal  that  the  number  of  complaints  per  taxi  trip  in  NYC  has  declined along with the growth of Uber. Customers who used to complain, switched companies  instead  of  complaining  and  taxi  drivers  responded  to  competition  from  Uber  by increasing quality of service."

In the Philippines, it is quite obvious that current systems and regulations have failed to encourage taxi operators and drivers to improve the quality of their service. The old but still existing model of taxi service no longer works, especially if running without competition.

Taxi operators have less incentive to maintain a fleet of impeccably clean and comfortable cars. Under the "boundary" system, taxi operators are simply after the fixed rental income they earn from the taxi drivers for the use of the taxi.

Taxi drivers, on the other hand, are under pressure to meet the quota or boundary, which explains why most of them are reckless behind the wheel. They too have no incentive to keep their taxis clean and in excellent condition because, aside from they don't own their units, no regulator is actually watching them. (And by the way, poverty is no excuse for untidiness.)

Also, taxi drivers know that harried commuters are left with really no choice when they hail on some random taxi on the street to get a ride. And worse, many of them especially in Metro Manila take you to your destination through the longest possible route in order to milk as much cash as they can from your pocket.

The LTFRB may argue that passengers can always file a complaint before the agency in order to report a bad taxi service. Where is LTFRB's common sense? Unless the violation is really life-and-death serious, ordinary passengers will not take time off from their hectic schedule in order to pursue a complaint against erring drivers.

The LTFRB is mainly reactive rather than proactive in fulfilling its mandate. Merely reacting to a problem or complaint as they come is impractical and an utter waste of government resources because it requires a lot of time and personnel. It is a system that thrives on disorder because the LTFRB wants to be seen as the savior and disciplinarian who will save the day for the commuters against erring taxi drivers and operators. Meanwhile, the problem as a whole never really gets resolved.

With transport network companies, there is a rating and vetting mechanism that weeds out the bad or poorly performing drivers. Because rating and reporting are done online, it is fast and efficient. Likewise, features like dynamic pricing, ridesharing, and electronic booking and payments make TNVS very attractive to commuters.

It does not mean, however, that with TNVS government regulation is no longer needed. Yet despite the availability of information worldwide, Philippine regulators do not seem to be learning from the specific solutions that many states and cities abroad have applied in regulating the operation of transport network companies.

Although the debate over how to regulate TNVS continues to this day, jurisdictions like that in California have passed regulations that are founded on the principles of transport efficiency, convenience, public safety, and fair business competition. Without overlooking the local context, what is needed in our country is the intellect and political will to introduce and implement regulations based on those principles and yet responsive to the challenges brought by what is now increasingly recognized as the sharing economy. And of course, there must be a complete lack of corruption. (I see that smirking face.)

I challenge our regulators and legislators to study TNVS and its implications further beyond their usual frame of mind. Our country has many technology scholars who have studied the various effects and implications of information technology and the so-called disruptive innovations on the market. Regulators can consult them in drafting new policies that should now replace outdated ones.

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