SAN FRANCISCO (Reuters) - On-demand ride services got the green light from California regulators Thursday in a move the services hope will help clear their legal status in other jurisdictions.
The California Public Utilities Commission created a new category called “Transportation Network Company” that will cover businesses such as Lyft, SideCar and UberX. Those companies allow customers to summon rides using apps, typically on their smartphones, from drivers who use their personal, non-commercial vehicles.
New rules will require the TNCs to obtain a license from the CPUC to operate in California; to require each driver to undergo a background check; to establish a driver training program; to implement a zero-tolerance policy on drugs and alcohol; to conduct a 19-point car inspection; and to hold a commercial liability insurance policy with minimum coverage of $1 million per incident.
“Here we’ve got the state recognizing these innovations are great for consumers and are safe, so we think other states and other countries will see that and adopt it,” said Sunil Paul, chief executive and co-founder of Sidecar.
John Zimmer, the co-founder of Lyft, said coming under the jurisdiction of the CPUC would supercede the authority of local officials, some of whom have opposed the new services. In Los Angeles, for example, Lyft and others received a cease-and-desist orders from the Transportation Department in June.
“It’s an exciting day,” Zimmer said.
The Los Angeles Department of Transportation did not immediately respond to a request for comment.
While the services have become very popular with consumers in a number of cities around the world, existing taxi companies have complained they are cutting into their business.
Editing by Eric Walsh