Regulating on-demand transport technology

Within days of Uber launching its operations in Dhaka, Bangladesh Road Transport Authority (BRTA) suspended its operations on the ground that it was illegally providing a taxi/private hire service (BRTA Notice, 24.11.2016). Now there is discussion on how to bring Uber within the country's legal framework (Dhaka Tribune, 26.11.2016). This article will highlight the regulatory challenges that 'on-demand transportation technology aggregators' (hereinafter ‘aggregators’) like Uber pose and recommend steps that can be taken to harness the value of these enterprises without harming the individuals that use them.

The suspension rests on the assumption that Uber is a taxicab/private hire company itself. In contrast, Uber has presented itself as an online labour brokerage that employs no drivers and has no fleet but rather dispatches 'independent' drivers to passengers logged-on their app. In some countries, it connects non-professional drivers in unlicensed vehicles to passengers, while in many others it is limited to those that have private hire vehicle licenses or contracts with taxicab operators. Prior to its ban, it is reported that Uber exercised the latter option (Dhaka Tribune, 23.11.2016). Under the existing regime, it would be difficult to square Uber's business model with the Taxicab Service Guidelines 2010. While the latter requires certain distinguishing marks (Articles b(5)-(6), f(1)) to be used, fixed transparent fares (Articles e(1)-(2)) to be charged and mobile phones not to be used while driving (Article i(9)), Uber's business model generally uses well-conditioned but anonymous cars, imposes 'surge' pricing to automatically raise fares during peak periods and penalises drivers who do not follow designated routes on their smartphones.

Contracting with private-hire vehicles that are driven by the individuals who own them, could be a legitimate alternative, yet the requirements to obtain a distinct series registration, distinguishing marks and colours etc. are onerous and not fit-for-purpose. It is also evident that the permits granted under these laws do not contemplate the use of internet applications for navigation and customer complaints or GPS tracking of vehicles. Retrofitting existing rules, as initially attempted in India by extending old licensing rules for 'radio taxi' operators to aggregators, had little success and a fresh approach is required. 

In addition to licensing reforms, authorities need to consider who will be responsible for the working conditions of the drivers. Is the driver self-employed, using an online platform to secure client-passengers or is he a worker in a subordinate, dependant relationship? While the argument that drivers are workers of taxicab companies has strong legal footing, the insertion of aggregators complicates the picture as they seek to contractually carve out any responsibilities they might have to the driver or the passenger. However, a growing body of judgments, including one delivered in London on 28.10.2016, reveals that as aggregators wield significant influence on how a driver carries out their duties, a dependant relationship exists between them (paras. 92, 98). Yet, even if aggregators are employers, what class of worker is a driver who can log-off an app at any time? Here questions may be asked whether the existing classification of workers as permanent/casual is adequate.  

The aforementioned regulatory 'grey' areas are the tip of the iceberg. The operation of aggregators may raise concerns about passenger discrimination and safety, secure handling of private data (Sec.63, ICT Act 2006) and anti-consumer allegations for arbitrary pricing. Conversely, as rival aggregators have similar products, issues regarding copyright and patent infringement might also arise. Future clashes with rival aggregators or drivers' associations regarding abuse of market dominance (Sec.16, Competition Act 2012) may occur if this industry grows.

This shouldn't be grounds for an indeterminate ban. A compromise should be struck between preserving laudable protections and enabling a culture of shared, convenient commuting. One option could be introducing the“on-demand transportation technology aggregator” category into our laws as has been recently done in various parts of India through advisories and guidelines. Following a multi-stakeholder consultation, the BRTA could consider issuing a new form of permit for aggregators that wish to operate in Bangladesh on the condition that they maintain detailed, up-to-date records on their drivers and vehicles, ensure passengers are not discriminated against or their safety threatened and cooperate with government authorities when required. Concurrently, licensed vehicles could be exempt from having distinguishing marks, colours or a separate registration category. This permit could be complemented with guidelines setting out best practices on data protection, pricing, and maintaining a 'level playing field' in the road transport market.

With regard to their drivers' employment status, some scholars (Harris & Krueger, 2015) have argued for introducing an intermediate category of 'independent'/'dependant' workers between employee and self-employed. For the sake of simplicity, it may be preferable to preserve a presumption towards 'worker' status– but only if a certain amount of time is spent using the aggregator's platform or an amount of income earned (Cherry & Aloisi, 2016), as specified under law.

The writer is a PhD candidate, Company Law Department, Leiden University.