Coming to terms with the Uber effect

It was a hot day in late June. I was walking down a road, laden with bags, clutching my passport in an increasingly sweaty grip. All around me were burning tyres. Angry men were gesticulating on street corners. Roads were blocked to cars and buses. People were everywhere, trying to find a way out.

Just a normal day in France, then--or what is becoming an increasingly normal day since Uber started offering the low-cost UberPop car service in the country. Indeed, France is far from alone when it comes to suffering the reactions of taxi drivers everywhere as they go on strike and block traffic in response to what they see as unfair competition.

I do have some sympathy for taxi drivers in France and elsewhere. In France, for example, a taxi licence can set you back by as much as €240,000 ($270,000), which is a huge upfront expense and one of the main causes of the current contretemps.

However, innovative apps like Uber are not entirely to blame for the current predicament of licensed drivers.

Uber is meeting untapped market demand in several countries. Indeed, in many cases it is not taking business away from licensed drivers but creating a whole new market that comprises smartphone-savvy customers who like apps and also relish what they see as a fair deal.

In the South of France, for example, plenty of people do not use licensed taxis because they are expensive, you never know when they are going to turn up and they frequently let you down. They find that Uber is much cheaper and also appreciate its navigation technology that enables them to track a car from the moment of booking. They don't even need to have any cash on them.

What really needs addressing are the outdated systems that impose these enormous upfront licence fees, allow drivers to charge outrageous fees with no apparent means of redress if you know you have been overcharged, and are completely and utterly unable to deal with that phenomenon called "competition".

Apps like Uber are just showing what is possible. Clearly, they are far from perfect, but the opportunities being opened up by smartphone apps, mobile connectivity and new navigation technology cannot be ignored forever by the more traditional industries.

Whether Uber survives the global backlash to its services remains to be seen, but like other companies such as Airbnb that have embraced a virtual and asset-free business model, it is riding a tidal wave of change that now looks impossible to hold back.--Anne

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