India's Ban on Online Taxi Services Raises Concerns

    25 December, 2014

    From VOA Learning English, this is the Economics Report.

    The Indian government recently called for all unregistered taxi services to halt operations. The order came after the reported rape of a woman by a driver for the company Uber in the capital New Delhi. Uber uses a mobile app to link drivers and people seeking a ride.

    A statement from Uber said the company will "work with the government of India to establish clear background checks currently absent in their commercial transportation licensing programs."

    The incident has brought attention to the issue of rules for mobile service businesses. The issue has grown more important with the expansion of what is called the "sharing economy."

    India's Ban on Online Taxi Services Raises Concerns
    Uber taxi drivers hold placards during a protest against the ban on online taxi services, in New Delhi, Dec. 12, 2014. (REUTERS/Anindito Mukherjee)

    Uber has been expanding quickly. The company says it operates in over 200 cities and over 50 countries around the world. Its fast growth has led financial experts to value the company in the billions of dollars. However, Uber's expansion has placed it in competition with existing taxi services and caused some cities and countries to ban the ride-sharing service.

    Uber has faced or is facing bans in Germany, Spain, India and Thailand. Franch recently said it plans to block Uber services that use non professional drivers. In the U.S., opposition is widespread but uneven.

    In Pennsylvania, for example, UberX, a low-cost ride-sharing service from Uber can operate anywhere except the state's largest city Philadelphia. There, Uber Black, a more expensive limousine service from Uber, and other taxi services legally operate with licenses from the Philadelphia Parking Authority.

    The sharing economy permits individuals to rent things they own such as a car or an extra room to people anywhere using mobile apps. Even payment is through an app.

    The issue is that these transactions are not supervised the way taxi services or hotels are. Critics say they can be unsafe. Philadelphia Parking Authority director Vince Fenerty calls the unregulated taxi services "hacks."

    "They are basically running what's called a hack taxicab service. A totally unregulated service which brings into question the safety of the passenger, the credentials of the driver and the mechanical workings of the vehicle. They submit to nothing."

    Uber says on its website that every ridesharing driver is investigated using a criminal background check. But in the reported case in India, the company is accused of not performing a check of the driver's criminal record.

    Uber has been supporting changes in local laws to permit its service. The city of Chicago has approved rules for a mobile app to assist taxi services licensed by the city. New York is considering a similar measure.

    And that's the Economics Report. I'm Mario Ritter.