American ride-sharing start-up Arcade City launched services in the Philipines on Wednesday, offering itself as an alternative to Uber but prompting an immediate regulatory crackdown.
Following Uber’s suspension earlier this week over violations of rules governing ride-sharing, transportation network companies are scrambling to take advantage of consumer demand for reliable services.
The Land Transportation Franchising and Regulatory Board (LTFRB) has identified one as U-Go, whose service will reportedly be taxi-based.
On Wednesday, Arcade City announced that its app was now available in Apple and Android versions and that it was recruiting and activating drivers across the Philippines.
The company described itself as using a “peer-to-peer” model where “instead of controlling drivers from a corporate headquarters, Arcade City frees drivers to build up their own transportation businesses like true entrepreneurs.”
Arcade City set up up a Facebook group for interested drivers in the Philippines. It said drivers would be free to set their own rates, build their own customer base and offer additional services such as deliveries or roadside assistance.
The service gained prominence last year after Uber and rival Lyft pulled out of Austin, Texas over a regulatory dispute. It was initially hailed as an “Uber for the people” given its premise of “pay what you think is fair”.
Arcade told to halt operations
LTFRB board member Aileen Lizada, however, said Arcade had not formally applied to operate in the Philippines.
“We have yet to receive any proposal from Arcade City. They need to be accredited if they are a TNC,” Lizada said in a text message to reporters.
Late in the afternoon, the regulator ordered an immediate halt to Arcade’s service.
“LTFRB strongly warns Arcade City to stop all bookings made with the use of this kind of application/platform. Otherwise, it will be constrained to take legal actions against Arcade City and its illegal transportation network vehicle service operators considered as colorum,” it said.
The LTFRB, which has been criticized for curbing a service widely welcomed by commuters, said a new memorandum circular governing TNCs would be released next month.
In the wake of Uber’s suspension, rival Grab Philippines said it had set a 1.4x surge cap in the wake of increased demand.
Carpooling not covered?
Carpooling company Wunder, meanwhile, reiterated that it wasn’t covered by TNC rules.
“Unlike taxi apps lilke Uber or Grab, Wunder drivers are non-professionals. They can only share two rides per day, one to work and one back and they cannot make any profit,” Samuel Baker, Chief Operating Officer of Wunder Carpool told The Manila Times.
“As a result, Wunder does not fall under existing regulations for taxis or app-based transportation services,” Baker added.
He claimed that their service is the only one that has actually led to fewer cars on the road, helping ease traffic congestion in the metropolis.
The LTFRB earlier this year ordered Germany-based Wunder, along with local start-up Angkas, to cease operations as they are not accredited TNCs.
Another carpooling company, South Africa’s uGoMyWay, said it currently had no plans to launch in the Philippines even as it stressed that sharing car rides was the future.
“The world over we need more people in less cars, simple as that,” co-founder Chris Megan said in an e-mail.
Asked if uGoMyWay was looking to expand in the Philippines, Megan said he was not certain if local regulators recognized the difference between a ride-hailing and carpooling services.
“We have no immediate plans, but never say never,” he said.