Taxicab Concessions

High-tech, high-level wheeling and dealing makes all of us fare game

On February 12, 2004, the Taxi of the Future rolled past the gates into City Hall plaza for a firsthand, high-level inspection. Among the inspectors were Mayor Bloomberg, his chief of staff, his transportation commissioner, and his information technology adviser. All gave the high-tech taxi close scrutiny.

In the backseat, behind the driver's head and mounted on the safety partition, was a computerized touch screen. Depending on which panel was pressed, it provided up-to-the-minute flight arrival and departure information for New York airports; ticket-purchasing information for movies, Broadway shows, concerts, and sporting events; news and weather; and a map of the taxi's location, complete with a red squiggle showing the cab's route as it maneuvered through the streets. Yet another screen option allowed riders to pay their fare by credit or debit card, type in the tip, and after swiping the card through an adjacent slot, receive a printed receipt.

Up front, a text-messaging system let drivers send and receive messages about traffic jams and lost property. The meter electronically logged trips, number of passengers, and cost of the fares. A GPS device provided the cab's location and speed.

Standing alongside the cab was the inventor of the apparatus, an engineer named Richard Thaler, who had been trying since 1999 to get the city's Taxi and Limousine Commission to authorize his system for use in the city's now almost 13,000 yellow medallion cabs. With Thaler was Robert Nemeroff, chief marketing officer for Melrose Credit Union, a major lender to taxi medallion purchasers, and whose ATMs would allow participating drivers to cash in their card receipts on a daily basis.

"How many members do you have?" Nemeroff recalled the mayor asking him. "I told him we had 18,000, and about 4,000 medallion loans on the street." The mayor then turned to his aides and smiled, Nemeroff recalled. "He said, 'Get this done.' Then he walked back up the steps into City Hall."


Of course nothing's ever that simple in city government, even when the order comes from a mayor who made his fortune on financial-communications technology and who has relentlessly pushed the city into adopting state-of-the-art equipment.

And things get especially sticky when it comes to the city's yellow-taxi industry, a multibillion-dollar business long controlled by a handful of powerful oligarchs and regulated by an agency seen as a haven for political-patronage appointees.

More than two years after Bloomberg's in-person inspection and Taxi and Limousine Commission chairman Matthew Daus's public pledge to get the equipment installed no later than November 2005, cabs still lack the technology that so impressed the mayor.

From the taxi-riding public's perspective, there's good cause to gripe. For one thing, New York is lagging behind other cities, where cabs already offer quick credit card payments and other service enhancements. For another, the high-tech improvements were cited by Daus as a key justification for the steep 26 percent fare hike approved by the commission in March 2004, saying they would be of "great benefit to the consumer."

"There's been more than $1 billion in fares collected since the fare went up, and there's still nothing to show for it," said Edward Rogoff, a professor of management at Baruch College and a longtime critic of the city's taxi medallion system.

Taxi commission officials now insist that a rollout of some form of the high-tech wizardry is just a few months away. But don't hold your breath. Since the mayoral edict came down, the city has spent an estimated $2 million on its own consultants to study just how the new system should be handled. It has paid for driver and passenger focus groups and an "information exchange" conference that attracted experts from the world's top communications firms. It issued a formal request for information, followed by an even more formal request for proposals.

But just where that long and winding bureaucratic road will lead is still unclear. Taxi officials tentatively approved four firms to offer their products to city taxi owners, who will eventually be given a mandatory deadline to have them installed. The winners included a pair of firms from outside the city's industry, one of them a Vancouver-based taxi-dispatch company, and the other a start-up firm based in New Jersey with no previous experience.

The other winners were both veteran insiders in New York's tightly woven taxi world. One is Taxitronic, a Queens-based company that provides most of the meters currently used in the city, and whose earlier version of wireless credit card units was panned by outside experts. The major player in the other approved company is taxi fleet owner Ronald Sherman, who heads the city's powerful fleet owners' association, and who, after publicly complaining at a taxi commission meeting that the new equipment might be too costly, launched his own private firm to cash in on the soon-to-be-mandated equipment.

There are reasons aplenty to spark investor interest. The program allows companies to collect fees, averaging 5 percent, for each credit card transaction (in the case of cabbies who lease their taxis—the vast majority of drivers—they'll have to pay it out of their share). There's also the potential for huge advertising revenue. The commission decided to allow "commercial content" aimed at passengers on the monitors, albeit with an on-off switch for riders who don't want to be bothered.

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