Ben Hurley Reporter

Ben covers the property industry and has a keen interest in entrepreneurship and travel writing. He speaks Mandarin and previously covered housing and urban affairs for The Australian Financial Review.

View more articles from Ben Hurley

How new smartphone booking apps flamed an old taxi war

Published 14 February 2013 00:11, Updated 14 February 2013 07:17

+font -font print
How new smartphone booking apps flamed an old taxi war

Two weeks before Christmas, a maxi taxi was engulfed by flames on Broadmeadows Road, Maroochydore, on the Sunshine Coast. Shortly after, an article was posted on the website of local union the Queensland United Hire Drivers Association, blaming the management of taxi operator Suncoast Cabs for ignoring obvious maintenance problems with the vehicle.

Suncoast Cabs general manager John Lobwein promptly got in touch with Dennis Julian, a taxi driver who sits on QUHDA’s executive. “Aside from the fact that the comment is untrue and unsubstantiated,” Lobwein wrote in a letter to Julian later that month, “it is my opinion that it breaches the company bylaws and brings this company into disrepute.”

Julian was disafilliated from the Suncoast Cabs network. And because it is the only taxi network in the Sunshine Coast, and owing to government regulations mandating that taxi drivers be part of a taxi network, Julian was effectively banished from his trade.

Regardless whose account of the incident is really true, it shows how much power taxi networks, which operate monopolies in regional towns around Australia, wield over their drivers.

For years the frictions between those who drive taxis and the networks that brand them and manage the bookings have simmered quietly. But a small group of software developers in a co-working space in Sydney have blown them into the open.

GoCatch is a smartphone app that allows passengers to directly book taxis with taxi drivers, bypassing the networks and their booking fees. Direct booking is nothing new, and entrepreneurial drivers have long given their mobile number to regular passengers, or picked up jobs from private “trunk radio” networks – something the taxi networks have been trying for years to have outlawed, with success in some states.

But goCatch and another app named ingogo threaten to facilitate direct bookings on a much greater scale. GoCatch co-founder Andrew Campbell says more than 100,000 people have downloaded goCatch, over 10,000 taxi drivers have registered to use it, and tens of thousands of people each month are booking jobs with goCatch.

The taxi networks have brought out their war chest. Around the country they have launched campaigns that claim these smartphone apps are unsafe and illegal. In NSW they bought the support of Crime Stoppers NSW – a not-for-profit company that many consumers believe is a police agency – in a campaign against “rogue apps” warning of “the risks and dangers of travelling outside the regulatory protection offered by taxi networks”. Newsletters have been sent to drivers across entire networks, threatening financial penalties and potentially disaffiliation from the network, for those who use them. And in some cases taxi drivers have been personally summoned into the network offices and dressed down.

BRW revealed on Friday that Townsville Taxis general manager Michael Jacoby allegedly made a booking using goCatch in order to catch drivers using it. He sprung Alister Smith, another member of QUHDA’s executive, and summoned him to his office. In a follow-up letter dated January 4, he threatened Smith with financial penalties for breaching bylaws by using the app.

“I stated to you that I consider that this type of service is a direct competitor of Standard White Cabs Ltd, the Department of Transport and Main Roads’ approved taxi booking company for the Townsville area,” the letter states. It has been handed to the Australian Competition and Consumer Commission, which is investigating it. goCatch co-founder Campbell, says: “It’s another example of the taxi industry trying to control the industry to the detriment of better customer service.”

He says he has heard of similar threats in Bundaberg, Newcastle, Port Macquarie and Gunnedah, plus Perth and Adelaide.

“Where the drivers are most scared is in the regional areas,” Campbell says. “It’s their livelihood.”

Whether the apps are legitimate or not is a matter of some dispute. Late last year NSW Deputy Premier Andrew Stoner flatly rejected complaints from taxi networks against smartphone booking apps after handing goCatch a $200,000 grant. “If they’ve got some other suggestions to deliver better value for users, to put the competition toward goCatch, they can do that,” he said. “That’s the way the free market works.” The NSW government is reassessing whether it should be mandatory that taxis are part of a network.

And the taxi industry has a long history of run-ins with the ACCC due to attempts to stamp out private bookings. In 1998 the ACCC struck down an attempt by a network in Wagga, NSW, to enforce a ban on private mobile phone bookings, which was accompanied by threats of penalties and a 12-month pause in trip allocations. In 2004 the ACCC reminded taxi companies “not to engage in anti-competitive practices” after striking down a similar attempt by Tamworth Radio Cabs Co-operative to ban direct bookings and restrict where drivers could buy fuel. Again in 2005 it warned Lismore Taxis Co-Operative off similar practices.

In an extensive reply to BRW’s requests for comment, Taxi Council Queensland chief executive Benjamin Walsh says the issue is not about restricting competition. Queensland taxi operators sign a service contract with the government mandating minimum levels of service, which includes dealing with customer complaints and lost property, issuing uniforms and counselling drivers who are slovenly, rude or refuse a reasonable hiring. But goCatch is effectively operating a booking company without having to meet any service obligations, which is “unethical and illegal”. “By not wishing to brand the cabs and meet the other obligations, goCatch are demonstrating they do not have customer interests at heart but are simply motivated by profit and wish others to take responsibility,” Walsh says.

And he disputes that accepting bookings from goCatch is the same as a street hail, because when drivers assess whether to pick up a customer, they are able to make a judgment about the person “either by assessing their level of intoxication or their body language, that may indicate whether they will be violent, or attempt to evade a fare”. But by accepting a booking on goCatch they don’t get that opportunity, he argues.

He cites incidents overseas of sexual predators posing as taxi drivers and says a driver could register with goCatch who isn’t a “real” taxi driver. GoCatch disputes this, saying it ensures drivers have a valid taxi licence and stores their personal identity, as well as the passenger’s.

Dr Peter Abelson, a visiting fellow at the University of Sydney who has written extensively about the taxi industry, says the taxi networks and their rules stamp out the entrepreneurial drive of taxi drivers.

“Taxi drivers find it very difficult to make a living,” Abelson says. “One way [to deal with this] is to run your own business and have your own clients, but that’s illegal.”

Comments