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Uber halts Anchorage ride service after negotiations with city falter

  • Author: Sean Doogan
  • Updated: September 28, 2016
  • Published March 6, 2015

Ride-sharing service Uber announced Friday morning it has suspended its Anchorage operations.

The suspension went into effect at noon Friday. The move comes after months of behind-the-scenes negotiations with the Municipality of Anchorage failed to produce an agreement that would have allowed Uber drivers to take paying fares.

Anchorage Uber drivers had been giving only free rides since a Superior Court judge ruled on Oct. 13 that if they accepted payment, it would be a violation of city taxi ordinances.

Uber said it couldn't continue operating in Anchorage without a clear idea of when it could begin charging. Uber said that it had about 100 drivers in Anchorage before it suspended city-wide operations and had given out thousands of free rides.

"Unfortunately, although we have tried for months to work with the city of Anchorage to craft an inclusive agreement that paves a path forward for ride-sharing services in Anchorage, the city has dragged its feet and failed to provide a clear end-date for negotiations," Bryce Bennett, Uber's Anchorage operations manager, wrote in a blog post Friday. "Because of the city's inaction, we are forced to make the difficult decision to pause operations in Anchorage at this time."

In November, after months of work sessions, the Anchorage Assembly passed an ordinance that directed city lawyers to work with Uber to come up with a framework of rules that would be applied to ride sharing. The memorandum of understanding would have temporarily exempted Uber from the city's Title 11 codes, which govern taxis and vehicles-for-hire. But the ordinance required Uber and the city to agree on what, if any, restrictions, insurance and driver background check requirements, and other regulations should be applied to Uber drivers.

Anchorage Mayor Dan Sullivan said a major sticking point in negotiations with Uber was insurance requirements for Uber drivers. Sullivan said he still hopes an agreement can be worked out.

"We will try to work through some of the final unresolved issues," the mayor said. "I think they provide a good service, but our challenge is: If you are paying somebody to take you from point A to point B, you do have to follow some regulations."

Sullivan said Assembly committee and work sessions have been scheduled for March 18 and 20 in an effort to find solutions to the stalemate.

Anchorage Assembly chair Dick Traini -- who along with Assembly member Amy Demboski authored the ordinance setting up the memorandum of understanding -- has said he is supportive of transportation alternatives like Uber, especially for underserved parts of Anchorage like Eagle River and Girdwood. But Traini claimed the negotiations fell apart because, in addition to insurance requirements, Uber was not budging on several other issues, like the city's demand that Uber drivers be fingerprinted, get chauffeur licenses and undergo drug testing.

"I am still hopeful that something can be worked out, but when it comes to passenger safety and basic requirements for drivers, we (the Anchorage Assembly) are not going to relent on that," Traini said.

Taxicab permit owners oppose allowing Uber exemptions from codes they are already following. The fight has played out in almost all of the hundreds of U.S. cities that have seen Uber enter their markets since the company was started in San Francisco in 2009. Uber has won most of those battles but was forced to pull out of Boise, Idaho, last week, citing failed negotiations with city officials there. It has also suspended service in San Antonio and the entire state of Nevada after similar legislative stalemates.

Uber and other ride-sharing services (also called transportation network companies, or TNCs) like Lyft and Sidecar claim they are not cab companies but technology companies. TNC drivers are independent contractors who use the ride-sharing company's mobile phone app. Customers use the app to call for a ride, and all fares are paid automatically by credit card. The TNC gets about 20 percent of the fare, and the remainder goes to the driver. Uber claims because it is a TNC, it should not have to obtain taxi permits or subject its drivers to the same background checks and insurance requirements imposed on the taxi industry.

Anchorage cab companies, and the people who own the taxi permits -- valued at tens of thousands of dollars each -- believe that if Uber is allowed to operate under a different set of rules, it would be unfair and economically devastating.

"The Anchorage taxicab industry has never objected to Uber competing in Anchorage under the same laws, with a level playing field, that apply to city-licensed taxicabs, limousines and vehicles for hire," said Anchorage Taxicab Permit Owners Association member Suzie Smith. "The taxicab industry will continue to object, however, to special laws for Uber and similar companies that would create an unfair competitive advantage."

Uber has hired a lobbyist, Patrick Carter, to work with lawmakers in Juneau, but so far no legislation to allow a ride-sharing service to operate on a statewide basis has been introduced. Uber would not say if it is working for such a law.

Bennett said the company would continue to work with city officials on finishing the memorandum of understanding, even after it pauses its Anchorage service.

The Anchorage Taxicab Permit Owners Association said it opposes any effort to regulate ride-sharing services like Uber on a statewide basis.

"I don't know what kind of real support they (Uber) have at this moment in the Legislature, but we are watching closely and educating legislators on the issue," said Frank Bickford, an ATPOA lobbyist.