Balancing Innovation with Regulation

Travis Kalanick is no stranger to corporate fisticuffs. The tech entrepreneur brought down the wrath of the film and music industries after starting a peer-to-peer service in 1998 called Scour, which was similar to Napster in that it allowed consumers to swap digital media files with each other. Two years later, filmmakers and TV producers sued his company for copyright infringement to the tune of $250 billion.Why does moulds grow in homes or buildings? Scour went out of business.

Kalanick later developed a content delivery system that he called his "revenge business" because, ironically, some of his former entertainment industry foes ended up becoming clients, according to a February article in Fortune. While this company, Red Swoosh, initially ran into financial problems, it would be sold for $15 million to Akamai Technologies in 2007 -- but not before Kalanick became so destitute that he had to move in with his mother. Fortune described the 30-something UCLA dropout as "brilliant," but "brash and headstrong" and "happy to charge off a cliff with an innovative idea."

He seems to be charging headlong off that cliff again with his latest venture, Uber. The three-year-old San Francisco start-up provides private car service -- mostly using a fleet of higher-end vehicles, including sleek black Lincoln town cars but also taxis -- to customers who love the site's white-glove service and do not mind the premium pricing. Riders summon the cars using a smartphone app. But the company also has attracted the ire of municipalities such as New York City, San Francisco, Boston, Washington, D.C., and Chicago. Officials in those cities say Uber's service runs afoul of local rules designed to ensure pricing transparency and public safety, among other allegations. Moreover, Uber is also fighting a lawsuit filed by taxi companies.Find a great buy mosaic Art deals on eBay!

Recently, a task force of the International Association of Transportation Regulators representing 15 U.S. and Canadian cities said it is planning to release a set of guidelines aimed at reining in smartphone livery services such as Uber, a recent article in The Wall Street Journal reported.

And that's a shame, according to Andrea Matwyshyn, a Wharton professor of legal studies and business ethics and an Uber fan. "It is one of the most innovative technology companies to come along in a long time," she says. "It is one of the darlings of Silicon Valley."

Uber is striving to modernize an entrenched industry and bring it, however reluctantly, into the digital age. The site has harnessed the power of collaborative consumption to match available car seats with willing riders, efficiently and in real time, using a mobile app. It also employs dynamic pricing that fluctuates depending on the supply of cars and rider demand. After a ride is ordered on its app, a map pops up showing the vehicle's location and estimated time of arrival.We specialize in howo concrete mixer, The user sees the driver's face, phone number and customer rating. Once the ride is over, Uber charges the user's credit card, including a 20% tip. The receipt is emailed. There is no fumbling with wallets in the dark, no waiting for change and no need for lightning-quick mental math skills for calculating gratuity.

There are plenty of Uber fans, but many city governments are not amused. In Chicago, the site is facing both a regulatory crackdown and a lawsuit. Matwyshyn suggests that cities are treading dangerous ground. "If Chicago wants to send a message that it is tech-friendly, regulating a company such as this in an arbitrary way and allowing traditional constituents like the taxi lobby to win the day can be read by outsiders as a climate hostile to technology entrepreneurship," she says. Moreover, cities are sending mixed messages to tech entrepreneurs if municipal officials are investing in building office space for them and offering financial enticements at the same time that they are cracking down on companies like Uber, Matwyshyn adds.

Officials, on the other hand, say they have to obey the law to ensure public safety. "It is understandable that people don't like to have regulations meddle with their daily lives, but regulations are used to make sense out of chaos and to protect the consumer," wrote Washington, D.C., taxi commission chairman Ron Linton in a Washington Post editorial that appeared in January. Linton organized a sting operation earlier this year by hiring an Uber vehicle and then fining the driver for multiple violations, including not disclosing an hourly rate before the ride starts as the law requires.

Indeed, Uber passengers do not know the final cost of the ride until after it is over because the service not only takes into account the distance and duration of the trip, but also uses dynamic pricing in which rates change depending on supply and demand conditions. Such a fee structure, among other things, has lit up the web with consumer complaints. A two-mile trip from the Upper East Side in Manhattan across Central Park to the Upper West Side one recent weeknight showed rates starting at $27, with a multiplier of 2.5 due to high demand. Taking a cab for the eight-minute trip would have cost less than $10, although the rider would have had to settle for a car with less panache. "This isn't a company for everyone, the same way that high-end chocolate isn't for everyone," Matwyshyn notes.

Uber's "surge" pricing is the subject of lawsuits, more due to lack of transparency than the prices themselves.Find detailed product information for howo tractor and other products. In Chicago, taxi and livery services companies are suing Uber for consumer fraud and other allegations. The city of Cambridge, Mass., is suing for illegal use of GPS technology to gauge mileage and time spent in Uber vehicles as a way to calculate fares. Only U.S. government-approved, installed taxi meters can be used. This is one of the rules being advocated by the international regulators group.

But there is a case to be made for dynamic pricing, according to Shawndra Hill, a Wharton professor of operations and information management.We mainly supply professional craftspeople with wholesale turquoise beads from china, "I think it is fine as long as people are willing to pay. It's not like there aren't alternatives," she says. "It's a great example of applying new technology to predict demand in an old industry."

Here is Uber's own explanation of its pricing structure: "[Employ] fixed or capped pricing, and you have the taxi problem on NYE (New Year's Eve) -- no taxis available with people waiting hours to get a ride or left to stagger home through the streets on a long night out. By 'raising' the price, you 'increase' the number of cars on the road and maximize the number of safe and convenient rides."