Taxicab Concessions

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

"For the fleet guys, it is a nice chunk of change if the ads kick in," observed a knowledgeable industry source. "There is a lot of potential for money to be made here."

Then there's the New York factor. The reason every vendor fights so hard to capture New York City government contracts is that the city's are the nation's biggest and most complicated. And when it comes to selling to government, it truly is a case of "if I can make it here, I can make it anywhere." Companies approved for work in New York get bragging rights that often propel them into other lucrative municipal deals.

But the high-tech-taxi effort has been rocky.

Taxi drivers' leader Bhairavi Desai: Questioning lucrative new contracts
photo: Giulietta Verdon-Roe
Taxi drivers' leader Bhairavi Desai: Questioning lucrative new contracts

The selection process has already prompted one probe of alleged influence-peddling by the city's Department of Investigation (officials quickly ruled there was no wrongdoing). There was also a traffic-stopping demonstration last fall organized by the increasingly influential New York Taxi Workers' Alliance, which represents several thousand drivers who lease their cabs. Dozens of angry cab drivers, many of them Muslim immigrants, rallied outside the taxi agency's Rector Street offices, denouncing the new equipment as intrusive, expensive, and unnecessary. (A similar plan to install costly, high-tech tracking devices in Philadelphia's taxis resulted in a one-day strike by cab drivers on May 17.)

Taxi Workers' Alliance leader Bhairavi Desai said last week that her group intends to ask the City Council to outlaw the use of Global Positioning Systems in medallion cabs. Part of her group's gripe is that, unlike the GPS available in newer cars, the taxi agency's model doesn't offer navigation assistance for the driver, or even a panic button in case of emergencies. "It is just to track the vehicle. It won't even be used to help a driver get to where he's going," said Desai.

There is also the looming threat of a lawsuit by Thaler, the engineer whose ideas appear to have started it all, but whose firm, Omni Media Network, failed to make the cut when the taxi agency initially approved its four winners last year. The city's contract evaluation panel faulted Thaler's setup for its passenger information monitor and text-message and wireless capabilities.

The rejection struck Thaler as odd, since approval only meant the opportunity to market his wares to city medallion owners; it didn't obligate anyone to buy from him. The wireless rejection was puzzling as well, since his partner in the proposal was telecommunications giant Sprint. His suspicions deepened when Taxi and Limousine chairman Daus wrote to him two months after the original rejection, saying the agency had erred when it flunked him on his passenger information monitor (it turned out evaluators had somehow miscounted their own score sheets).

The denial was odder still in light of the fact that Thaler's was apparently the only fully functioning system able to provide a live demonstration at the time of the contract evaluations. "The goal was not to put the vendors through the development cost up front," said taxi commission spokesman Allan Fromberg. "There is an acceptance phase to come. That's when the rubber meets the road."

But the decision to deny Thaler a crack at the taxi market appeared even stranger given that, shortly after the live demonstration for the mayor in early 2004, Daus had agreed to an exclusive pilot program that would have allowed Thaler to put his equipment into 250 taxicabs on an experimental basis—an agreement that was later canceled before it was even implemented.

"The government is bestowing on the lucky few allowed into its cartel the right to charge money to private parties who must use only their services," Robert Brill, an attorney representing Thaler's firm, told a hearing on the contracts in December. "This is a classic, illegal restraint of trade," he said.


A few weeks after the tentative winners were announced, Thaler got one more reason to be spooked about the selection process. At a lunch with two young men who had launched the New Jersey start-up firm that won city approval, he said he was told that the duo had employed a key city consultant, who served as a member of an advisory committee helping to evaluate the proposals. According to affidavits provided to the city by both Thaler and Nemeroff, who was also present at the lunch, the New Jersey entrepreneurs, Jae Choi and Oded Salomy, told them they'd retained consultant Bruce Schaller "at significant expense" to help guide them in the taxi industry. Alarmed, Thaler relayed his concerns to the city comptroller's office, which has to approve the contracts. The comptroller, in turn, alerted the Department of Investigation.

Schaller is a former policy director for the city's taxi commission who is now a recognized expert on taxi service and economics. In an interview with the Voice, Schaller acknowledged that he had provided "nominal" consulting advice in the past to a previous entity owned by Choi, whose Taxi Technology Corporation was approved to participate in the new program.

Schaller declined to describe his work, but a spokesman for Taxi Technology said it had to do with the feasibility of using a prepaid card in city taxis, for which Schaller was paid about $3,200. "This is a case of sour grapes," said the spokesman.

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