• Stricter regulation of Uber and Grab by LTFRB

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    Atty. Dodo Dulay

    Atty. Dodo Dulay

    Once upon a time, the problem encountered by cab riders during the Yuletide season would be hailing a cab that would take them to their destination without demanding a fixed and excessively high fare, a prohibited practice known as “kontrata.” That is, if the cab even bothers to stop at all.

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    But in this age of smartphones and internet, the problem now are the app-based transport network companies (TNCs) that have taken over the market previously monopolized by taxicabs — Grab and Uber. Although commuters don’t have to stand in the middle of the street to hail a cab or bargain with cab drivers for lower fares, they now have to part with at least half of the ordinary workers’ daily minimum wage (now pegged as P491 in Metro Manila) to get a ride with Uber or Grab. And that’s assuming their driver even accepts your request.

    Last month, Land Transportation and Franchising Regulatory Board (LTFRB) Chairman Martin Delgra III told the riding public: “We are reviewing the current rules, and we are seriously considering to include the level of accountability on the TNCs. Hopefully, before the end of the year, we can amend the rules.” We only have 5 days left before 2016 bows out but we’ve heard nothing from Delgra. At least none that would put a cap on the fares charged by Uber and Grab which, at times, have gone from exorbitant to outright extortion.

    When you are being charged by TNCs P364 for a 4-kilometer trip after the morning rush hour, isn’t that an abuse of their government franchise? There’s a reason why the franchise given to TNCs like Uber and Grab is called a “certificate of public convenience.” It is supposed to promote public interest, meaning, the services provided by TNCs is for the convenience for the riding public.

    When TNCs charge exorbitant rates or become picky with their passengers, not only do they harm public interest, they’re no different from taxis plying our streets. They’ve become, for all intents and purposes, regular cabs except without the taximeter and body markings. They should therefore be treated the same way as ordinary taxis in terms of franchise requirements, fare rates, body markings, etc.

    People have already taken to social media to denounce the absurd pricing of TNCs during the Christmas rush. A Facebook user urged TNCs to return to the honest pricing commuters used to experience. He narrated how he “got an UberX estimate of 400 pesos which ended up being 850 pesos. Crazy. Seems very dishonest.” This after Uber supposedly switched to “upfront” charges from its former “time and distance” pricing scheme.

    A Twitter user also wrote that “Uber and Grab’s price surge mechanism is just an automated version of regular taxi drivers asking for extra fees on top of meter price.” It’s actually even worse as crooked cab drivers at least give you a fixed “kontrata” fare while the TNCs hit you with a “surge-price” after you reach your destination. Another Facebook user posted a screenshot of a P490 Uber trip which usually costs him P190.

    What aggravates matters is that Uber and Grab drivers are choosing passengers based on destination and fare amount, much like ordinary taxis. Unlike before when TNC vehicles were automatically matched with a passenger, drivers can now pick out who they want to accept. No wonder a Twitter user called TNCs as the new “isnabero vehicles” of the Philippines.

    We experienced this problem first-hand when we recently tried to book a TNC vehicle for a short trip to the mall. After the booking app went through several drivers without any one of them accepting our request, a prompt appeared on the screen saying all their drivers were busy. That, of course, is pure B.S. because the app showed there were more than a dozen TNC vehicles within a 2-kilometer radius of our location. Even TNC drivers we’ve talked to admit to picking more lucrative (i.e. less traffic) routes and higher fare passengers.

    TNCs like Uber justify their surge pricing arguing that when demand is high and there are insufficient cars in the area, “dynamic pricing will automatically go into effect in these locations to encourage more drivers to get out on the road.” For its part, Grab’s country marketing head said its fares are system-generated without human intervention. In short, they would like the public to believe that since a computer program determines how the fares are set or how driver choose their passengers, trip pricing and passenger bookings are done fairly and objectively. Tell that to the marines!

    Uber and Grab both rely on computer algorithms to calculate fares and book passengers. In layman’s terms, a computer algorithm tells the computer what to do, and how it’s going to do it. And because this is all man-made, it can be manipulated or programmed to produce a certain result.

    The problem here is that there is very little transparency as to how these computer algorithms actually work. It is this algorithm that the LTFRB needs to understand, or at the very least, exercise regulatory control over, first, by setting a cap on surge prices, and second, by fully automating passenger bookings. If taxi drivers can make a tidy profit from “kontrata” fares, why should Uber or Grab’s fares be allowed to go higher?

    Early this year, Uber was sued in the US after a commuter complained that the ride-hailing company’s algorithm violates anti-monopoly laws for “restrict[ing]price competition among drivers to the detriment of Uber riders.” And to illustrate the vulnerability of computer algorithms, Uber’s surge pricing caused a Philadelphia woman to be charged more than $28,000 (or P1.4-million) for a ride last week.

    True, DOTC Department Order No. 2015-011 legitimizing the operation of TNCs helped to vastly improve the public transport in the metropolis. But without stricter supervision by the LTFRB, the riding public will be left at the mercy of TNCs as in the case of Uber and Grab’s fare pricing and picky drivers.

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    1 Comment

    1. Nelson L. Chiong on

      Surge or whatever highway robbery by TNCs must be prohibited n not tolerated by LTFRB. Fair fare for the riding public should be the rule.