How Dispute Between Uber and Taxi Firms is Like Net Neutrality

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In some ways, the strike by European cab drivers protesting Uber, the mobile app-based transportation provider, resembles the net neutrality battle.

Each side believes it contributes to consumer welfare. There is a conflict between older and newer contestants in markets.

Regulation (licensing, operating rules) is seen as “fair” by one side, “unfair” by the other.

Both major providers (app providers and Internet access providers) are part of the ecosystem (Uber, taxis, owned and rented cars, bicycles, subways, motorcycles, walking).

And, unfair or not, the outcome directly affects operating cost, revenue and profit margins.

In that regard, it appears new net neutrality rules for mobile Internet access could be added when the U.S. Federal Communications Commission releases its new net neutrality rules, Reuter’s reports.

To use the Uber-taxi analogy, that would be like regulating taxis more than at present, not simply applying taxi regulation to Uber. The analogy is not perfect, since some might argue, reasonably, that the competition between Uber and taxi fleet owners is more like Google competing with Facebook.

Internet access providers are more analogous to suppliers of roads, in that sense. Imperfect analogies aside, real revenues are at stake.

So are regulatory concepts.

Taxi driver protests about Uber are about the way regulation should be conceived, says Neelie Kroes, European Commission VP.

“The old way of creating services and regulations around producers doesn’t work anymore,” says Kroes. “They must have a voice, but if you design systems around producers it means more rules and laws (that people say they don’t want) and those laws become quickly out of date, and privilege the groups that were the best political lobbyists when the law was written.”

As sometimes is the case, precisely what that means is open to vastly-different interpretation.

Clearly, Kroes argues that “regulatory capture” is not a good thing. In other words, the stated purpose of all regulation--to enhance consumer welfare--should actually be the case.

One way of implementing such principles are rules that ensure legacy providers are not be able to block competition by new providers (de jure, or “by law”), even if de facto market considerations effectively block additional competitors because they cannot make a business case). 



Contributing Editor

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