Best Color for Business: Is Uber a Black Car, a Yellow Taxi or Something Else?

New York City has just under 14,000 yellow cabs with medallions allowed to pick up residents for a metered fare. But some argue that number is much higher because of the disruptive app-based service that Uber provides.

While technically a black car under city statutes, some say Uber operates more like the yellow cabs whose business it is cutting into.

So what is Uber’s true color? That depends on which New York City car service sector is telling it.

Michael Woloz, an adviser for the Metropolitan Taxicab Board of Trade that represents medallion fleet owners, contends Uber’s service is a misclassification that has exacerbated the city Taxi and Limousine Commission’s struggles to ensure its regulations keep pace with the evolving industry.

Some experts disagree, arguing that the current medallion system that governs yellow cabs has created a near-monopoly on street hails and merits a separate and stricter regulatory system than Uber.

But Woloz and other proponents of stricter regulations argue that Uber, which operates five black car bases and one livery car base in the city, is hardly the traditional black car operation that has contracts with large companies to provide pre-arranged rides for employees. Instead, Uber is a service for people looking to hail rides at the last minute—just like the medallion drivers’ street hail system works.

“Uber is basically a yellow taxi that has exploited a loophole in current regulation, and it is regulated as a black car,” Woloz said. “Yellow cabs are not going to have the ability to attract and retain drivers if another entity is doing essentially the same thing, but they can offer their drivers surge price rates and say, ‘On a Saturday night you can make $200.’ ”

Yellow taxis have been governed by a medallion system since 1937, when the city government issued a limited number of medallions and required that drivers own or lease one before accepting street hails. Medallion drivers must use a standard, regulated meter fare system and cannot use radios to pre-arrange rides.

Livery cabs, by definition, work out of bases that arrange rides with customers ahead of time. They can charge fares based on zones, time or distance, but they cannot use meters, and traditionally have been barred from accepting street hails.

In 2013, however, the government authorized a select number of livery drivers to use new green cars and pick up passengers off the street when outside of the downtown Manhattan core. When doing so, the drivers must use a meter.

Black cars are a sub-set of this for-hire vehicle sector and are organized in franchise or cooperative bases. Most of their clientele—at least 90 percent—must pay with a method other than cash.

But many experts disagree with the argument that Uber should be grouped with the regulations surrounding medallion taxis.

Bruce Schaller, a former deputy traffic commissioner now running a consulting firm, said medallion fleets require more oversight because they are not operating in the more competitive and self-regulating universe of livery cabs.

“There’s a certain sort of market regulation of the industry. Right, if you don’t like Eastern Car Service, you can call Brownstone. If you don’t like Uber, you can check out Lyft,” Schaller said. “When you hail a cab, you just hail a cab, you take the next one.”

Edward Rogoff, a management professor at Baruch College who specializes in the study of entrepreneurship, agreed that medallion drivers’ near monopoly on street hails separates them from other professional car services. He said it also meant yellow taxis won’t face extinction on city streets anytime soon.

“You’re not allowed to have a meter in a non-medallion cab in New York. You’re not allowed to have a roof light,” Rogoff said. “These are all thing that the medallion industry wanted for itself exclusively over the years that regulators have given them.”

Decades under this system have made medallion taxis function as a public utility, according to Graham Hodges, a Colgate University professor and former taxi driver who wrote a history book on the city’s industry.

Hodges said Uber’s current classification makes sense, provided it abides by rules imposed on black and livery cabs. Uber delayed handing over trip data to the city earlier this year, and consequently, had five of its six bases briefly suspended.

During testimony for a Taxi and Limousine Commission hearing earlier this month, Uber officials said the company fits in the for-hire black and livery cab structure, but suggested the city should consider requiring an additional license when such bases use apps.

“Figuring out how to balance supporting the benefits of the tech industry to New York City while ensuring tech companies operate within the existing regulatory framework is key for Uber and City Government,” the company said in its written testimony. “The TLC has an opportunity to strike this balance by building on the existing FHV base license structure and requiring that all bases that utilize apps be required to obtain a separate license.”

The Taxi and Limousine Commission is considering some changes after holding hearings and experts on both sides say change of some kind is inevitable. But what striking the balance means is still up for debate.