Towards the transportation reform: a chance for a more integrated and sustainable urban mobility system?

by Alessia Palladino | Aug 21, 2017 | The Urban Media Lab

The advent of online platforms and new technologies is breaking down traditional axes of both social interaction and commercial power, shifting the structure of traditional services[1]. The platform revolution is radically transforming an array of many sectors, like transportation, accommodations and personal services[2]. It can be considered as a pervasive innovation, which facilitates direct interactions between users and gives rise to the emergence of different needs related to data- driven trends. Services provided are often more convenient – because of the lower costs – and flexible than traditional ones.

An emblematic example falls, as well, in the field of transportation. The technical feasibility provides innovative solutions to the challenges of life, especially in crowded urban areas. Thanks to GPS-based navigation combined with real-time traffic information and mobile platforms, individuals are able to optimize their routing and schedule choices. In addiction, new methods of payment are changing the collection of user fees too[3]. Sharing economy firms, therefore, represent a reaction against the frictions of urban life exploiting such exacerbation, in order to fulfill demand for appropriate services.

Furthermore, technological progress has led the development of apps for taxi service (such as MyTaxi), but it has also allowed to flourish a non professional alternative kind of transportation as Uber, the current market leader.

As a result, these businesses interact with the traditional models, sometimes competing directly against[4], raising unfair competition concerns (as UberPop case). Italian market evolution leverages regulatory challenges due to the anachronistic legislation of non-scheduled transportation, dating from 1992. It strictly regulates only taxi and private hire vehicles, which are subject to various regulations by states and municipalities. The market has strong barriers to entry, because of the requirement of licenses as necessary condition to access and operate; moreover, local regulations too impose other limitations, as the number of taxicabs that can be registered or the place vehicles can have a ride.

Since 2015 both the Transportation Regulation Authority  and the Competition Authority has been sending signals that change is welcome, calling for a review of existing regulation, in order to remove or adapt those rules unable to correct market failures, but avoiding any qualification of new transportation services provided.

In 2015, indeed, the Transportation Regulation Authority suggested some proposal reform of the legal framework in order to include technological mobility services, even adding a new kind of transportation service, a so-called tertium genus, due to the conceptual difficulty in applying underlying rules.

Recently, the Competition Authority sent to the Parliament and the Government a report (AS1354), aimed at creating a level playing field; for this reason, the Authority suggested to:

• encourage equivalence of taxi and other non-scheduled kinds of transportation;
• guarantee the entry of new technological mobility services, which changed the whole mobility paradigm and made the legal framework outdate;
• identify appropriate tools to balance the market opening for taxi discharging public service obligations.

Finally, last August 4th, 2017 the Italian Parliament approved the Annual Law upon market and competition (Legge annuale per il mercato e la concorrenza n. 124/2017). It is the result of a longer path, started in 2015, which has experienced many changes during the time. Actually, the final text, consisting of only one article but 192 paragraphs, contains a number of important corrections compared to the original version, submitted by the Government on April 3rd, 2015. The law deals with many issues, as insurance, forensics, transportation, energy. It foresees provisions aimed at removing regulatory obstacles to the opening up of markets, promoting competition and safeguarding consumers, also in accordance with the EU principles on freedom of movement, competition and market access, as well as European competition policy.

Pursuant to clauses from 179 through 182, the Government is delegated to adopt a legislative decree for the reformation of non-line public service, in order to guarantee the development of sustainable mobility and smart cities by the next year.

In this regard, the new regulation must be aligned with guiding principles and criteria listed at clause 179, in order to:

• guarantee complementary and supplementary – to scheduled public one – transportation for all citizens;
• adapt the provision of services to new forms of mobility using technology platforms for interconnection of passengers and drivers;
• promote competition and stimulate higher quality standards;
• ensure consumer protection in the enjoyment of the service, guaranteeing more consciousness for the offer choosen;
• harmonize the regional and local authorities’ issues, defining common standards;
• adapt the sanctioning system for administrative violations identifying effective, dissuasive and proportionate penalties according to the gravity of the violation, also in order to counteract the phenomenon of abuse, requiring the power to impose administrative sanctions on local authorities in order to avoid overlapping.

Following provisions contain procedural details of the whole rulemaking process.

Even if there is not a clear stance on the way regulatory bodies should proceed, due to physiological vagueness of delegation criteria, it could represent the first concrete reaction upon the question of how to handle new market entrants.

Neverthless, the rulemaking process could seem to be arduous. It induces to reflect upon many points, as the qualification of the legal nature of innovative transportation services, the range of regulation and consequences in terms of price fixing. It should provide an appropriate solution to the ongoing problem of striking the right balance between competing priorities, such as market access and preservation of sustainable mobility.

Consequently, many other issues – not expressly mentioned – should be addressed and taken into account, as Big Data management, collection and, above all, disclosure.

Furthermore, the diversification of transportation supply must not result in the reduction of quality, or even in the increase of pollution and road congestion[5]. In this regard, it would be necessary to reflect upon the best approach able to face the complexity of urban transport systems, in order to break in a new culture for urban mobility, comply to EU legislation too.

Il progresso tecnologico ha inciso profondamente sul settore del trasporto urbano non di linea, modificando le esigenze dell’utenza e la gestione delle risorse e mostrandone l’obsolescenza normativa. La recente legge 124/2017 rappresenta pertanto un’occasione per rivisitare l’intero sistema.

[1] Motala, M.,  The “Taxi-cab Problem” Revisited: Law and Ubernomics in the Sharing Economy,  33:2 Banking and Finance Law Review (2016)  at 468.

[2] Davidson, Nestor M., Infranca, John J., The Sharing Economy as an Urban Phenomenon, 34 Yale L. & Pol’y Rev. 215 (2016)

[3] Meyer G., Shaheen S., Disrupting Mobility. Impacts of Sharing Economy and Innovative Transportation on Cities, Springer (2017).

[4] Holloway C., Uber unsettled: how existing taxicab regulations fail to address transportation network companies and why local regulators should embrace Uber, Lyft, and comparable innovators, 16 Wake Forest J. Bus. & Intell. Prop. L. 20 (2015).

[5] Iaione C., The tragedy of urban roads: Saving Cities from Choking, Calling on Citizens to Combat Climate Change, 37 Fordham Urb. L.J. 889 (2009).