Sunday, January 27, 2013

What Doesn't Happen In Vegas...

What happens in Vegas, stays in Vegas. What happens to those things that Vegas won't allow to happen here?

Uber is a cutting-edge business that is bringing new technology to an old industry. The company uses smartphone apps to allow customers to arrange and pay for car service.
Uber launched as an iPhone app in June 2010. The cars that iPhone users summon are typically town cars owned by a limousine company but not on a call. Instead of idly waiting for work, the nearest available driver answers the app call. Other cars are simply privately owned vehicles whose drivers have been vetted by Uber.

The idea worked. How could Mr. Kalanick tell? Four months after the launch in San Francisco, Uber was served with a "cease and desist" order from the California Public Utility Commission and the San Francisco Municipal Transportation Agency. "Given my background," Mr. Kalanick says, alluding to being sued at, "this was like homecoming." He verified with his lawyers that what Uber was doing was indeed legal, then the company took its case to the public through Twitter and email.

"Did you ever cease?" I asked. "No." "Did you ever desist?" "No." "So you basically ignored them?"
Since that time, Uber has launched in two dozen other cities. Its experience in San Francisco was repeated in many of those cities. But, in each case, Uber chose to fight against the forces of crony capitalism. And it continued to win victory after victory.

Except, that is, in Las Vegas.

As NPRI's Geoffrey Lawrence explains in his recent study, The Path to Sustainable Prosperity, the anti-competitive regulatory environment of the industry in Nevada prevented Uber from entering the Las Vegas market.
After examining this regulatory structure, Uber’s entrepreneurs commented that no other city where they do business imposes such high minimum rates and that these rates — even if the firm could procure a Certificate of Public Convenience and Necessity — would destroy Uber’s competitive advantage. It is particularly notable that the state’s cartel-serving regulatory structure has deterred Uber from entering the Las Vegas market even though the Governor’s Office of Economic Development has expressed particular interest in attracting high-tech firms to the state, and even made specific overtures to Uber.
That's not even the worst of it. Because of Nevada's very strict regulations, new taxi and livery businesses essentially have to get permission from the existing companies in order to become their competition.

The regulations in the transportation industry in Nevada are designed to restrict competition and protect incumbent firms. They also succeed in barring innovations that improve service and reduce costs for consumers.

So while we Nevadans can read about Uber, we'll have to travel outside of our state if we want to experience their cutting-edge innovation. The reason for that is not for Uber's lack of trying but because they've chosen to participate in an industry in which our state is not friendly to competition, innovation and customer value.

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