Once a darling of tech-savvy cab riders and taxi drivers looking for supplemental income, technology company Uber now faces mounting anger from some of those same drivers. The popular taxi-hailing service announced to cabbies via e-mail last week that, effective immediately, it was amending their contracts to include a $10 weekly charge for the data plan of the iPhones that the company issues them. The phones are currently mandatory for drivers that sign up with the service.
“Connecting our partners with hundreds of riders each week does come with a cost,” the email states. “Since we launched in 2012, Uber has paid $10/week for the cost of data plan for every Chicago TAXI partner on our system, but at this time, this subsidy must end in order to encourage responsible iPhone use and prevent waste.”
The message notes that the $10 deduction from drivers’ statements will begin this week, and that this policy has already been in effect since October for drivers in the company’s livery service, UberBLACK.
“I’m going to return the phone,” said Mohan Paudel, a Chicago cab driver who has used Uber for more than a year. Paudel and several other taxi drivers say that $10 per week is an unreasonably high charge in a business where the margins are already miniscule. Many are now thinking of dropping the service altogether, unhappy with the company’s sudden, unilateral approach to changing the terms of their agreements.
“I’m definitely considering stopping working with Uber,” said Peter Enger, a longtime Chicago taxi driver and Secretary for the United Taxi Drivers Community Council, a grassroots organization that works on labor issues in the industry.
“I know a lot of cab drivers have gotten kind of fed up with their corporate practices. They’re now no longer open for business, you cannot just go and consult with them except by appointment,” he added. Enger and others complain that the company is difficult to reach with questions, and that often staff are discourteous when they respond to questions.
Andrew MacDonald, Uber's Midwest Regional General Manager, did not respond to questions from WBEZ about the change in policies, and did not follow up on a request for an interview.
But in the e-mail to taxi drivers, the company argues that the new charge for the data plan is reasonable because the service has allowed drivers to take home greater pay. “We understand that every cent counts when it comes to your hard earned dollars that need to be spent on your food, housing, education, and your families,” it states. “Did you know that you earn as much as 7.5% more per Uber request compared to other fares paid via credit card?”
“But we’re not making more money because we have to spend more time for the Uber customers,” countered Paudel, “because we have to go there and wait for two minutes, maybe sometimes ten minutes, and get the fare, which is— we’re wasting a lot of time on that, too.”
Other drivers agree that they typically have to wait longer when they arrive at a pickup location for customers that summon them through the Uber app. They also say they often waste time getting to Uber calls, only to have them cancelled at or before arrival. They say that Uber promises to pay them $5 for cancelled fares, but they rarely see that payment. Paudel says the new $10 charge, on top of these inconveniences, will add up to less weekly revenue than if he simply dropped Uber altogether.
The Uber notification also stated that drivers will be charged the weekly amount for the data plan regardless of whether they turn on the Uber device to take any calls in a week. Paudel said that’s not fair if he decided to take a week off. He suggested that Uber instead increase the percentage that it takes from taxi drivers’ fares, currently 2.5 percent of the metered amount.
Still, it’s not clear that taxi drivers abandoning the service would do much harm to the company. Since launching its taxi service in April 2012, the company also introduced its UberX ridesharing service, which matches passengers with non-taxi drivers. Many in the taxi industry fear that ridesharing services such as UberX, and competitors Lyft and Sidecar, directly threaten their business.
Last week, Uber announced that it was slashing its UberX fares—already lower than taxi meter rates—by 15 percent. The move follows accusations that the company engaged in price gouging on New Years Eve and in recent days with particularly inclement weather. UberX employs a surge pricing model when demand for rides peaks.