What’s the Regulatory Landscape for Bike/Scooter-Sharing? (Part 1 of 2)
Here’s how new mobility companies are being regulated by city governments (just like the ones that came before)
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In this two-part series, Billy talks about how bike/scooter sharing companies are regulated in US cities and what companies can do to work with cities to succeed
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If you’re a shared-mobility company providing car-/bike-/scooter-/e-bike-sharing products and services, or someone considering investing in one, you’re probably going to worry at some point soon about the challenges of government involvement. You don’t need to see government as an obstacle. Handled right, government can actually help you succeed and help yourself while you help others.
I’ll share some thoughts with you based on a dozen years of public sector experience, mostly at transportation agencies, where I was involved in the funding, implementation, and management of shared-mobility programs.
It’s still the old world
Scooter-sharing is the latest craze in the new shared-mobility arena that is growing quickly and probably here to stay. Companies like Jump, Spin, and Lime are in the game, providing electric scooters that can be accessed via smartphone. Before scooters came dock-less bikeshare where bicycles and e-bicycles could be picked and dropped off at virtually any location. Lime, Ofo, Zagster, MoBike, Spin, and Jump bikes operate in this space in your city. Before dock-less bikeshare, there was dock-based (or station-based) bikeshare. And before dock-based bikeshare, we had car-share.
It’s been an evolution, but the operating model has somewhat remained the same: give a customer access to a fleet of vehicles for a short period of time within a defined geographic area for a pre-determined fee. The older models give access to bikes and scooters through websites and key fobs. Newer models give access via smartphone.
Car-sharing companies came first in the U.S. I remember hearing the pitch from Zipcar in my first full-time government job at the City of Baltimore around 2005 — pick up and drop off cars at designated parking spaces throughout the city. About 8 years later in Baltimore’s Department of Transportation, I was asked by Zipcar to clear designated Zipcar parking spaces of illegally-parked cars and mark their spaces so no one could mistakenly illegally park there.
I had a concept at the time to foster an open market for the mobility sharing economy in Baltimore by trying to introduce car2go and a bikeshare system to the City of Baltimore. Like dock-less bike-share, car2go lets people pick up and park conspicuous blue and white smart© cars in public parking spots throughout a designated area. Car2go was interested in entering the Baltimore market but the Parking Authority, a separate agency from the DOT, had authority over its entry into the market through its parking permitting system. Ultimately, car2go didn’t enter the Baltimore market, and, in my opinion, the city is suffering for lack of transportation options like it.
The bikeshare system I envisioned was one where we, the City, would hire a dock-based bikeshare vendor, which we had been in the process of procuring while I was at the DOT, to operate in the dense City center, and a dock-less bikeshare system in less-dense areas. I was in discussions with both Alta (now Motivate) and Social Bicycles (now Jump, acquired recently by Uber) to put this plan in place, but I left my DOT job before it could be implemented. Years later, after the procurement I handled fizzled because of troubles at Alta, the City ultimately went with a new dock-based vendor, Bewegen.
My concept wasn’t far-fetched. As cities across the county have seen in the last few years, dock-based and dock-less bikeshare systems can co-exist, just as Zipcar and car2go have co-existed in cities for years. The obstacle in the way of an open market for vehicle sharing is essentially fear by public officials to take risks and try something that hasn’t been done before or to alienate vendors currently dominating the shared mobility market.
Government agencies are often somewhat conservative and slow to adopt new practices, technologies, and trends. They prefer to repeat what has worked in the past to cause as little reaction from press, politicians, and people. Your local DOT director often prefers to spend her time working on a set of initiatives for the agency, priorities that move the agency forward, not reacting to fires created by media, city council, and citizen complaints. Unfortunately, many end up spending more time putting out fires. If you’re reading this, then maybe you want to be something more than a fire drill to the government officials that could determine your fate.
It’s no surprise that the Zipcar and the dock-based single vendor, or monopoly, model of car- and bike-sharing gained a foothold in American cities in the 2000s. Cities took their usual model for hiring private vendors — issuing a Request for Proposals and selecting a winner — and applied it to car-sharing and bike-sharing. In Baltimore, Zipcar and Alta (and then Bewegen) won. This monopolistic system prevailed because it’s the system governments use to acquire goods or services using public funding or other public resources. The government contracts with companies to provide vehicle-sharing programs and the contract can detail the resources the public and private sectors contribute to the program (profit-sharing, public subsidies) and operational requirements (how many cars or bikes are available at any given time, when and how cars or bikes will be “rebalanced” across designated parking space or docking stations).
Car2go and dock-less bikeshare — and now scooter-sharing — companies operate under a different model primarily due to the fact that there’s no public funding going into the programs. They’re not looking for public funds to finance their launch and operations in a city as station-based bikeshare programs have done. And the city governments aren’t looking to fund dock-less programs if they can be offered at no cost by the private sector. All the companies are looking for from cities is permission to use the public space (or as government folks call it, right-of-way) for people to pick up or drop off the vehicles. They need a permit. Of course, they could deploy vehicles on a city’s streets and sidewalks without city permits, but that would be a good way to get off on the wrong foot with the city.
So, the regulatory environment that new mobility providers are operating under is basically local public space or right-of-way permits. (Federal and state regulations come into play if state or federal money are used to fund the vehicle-sharing program. For example, the dock-based bikeshare program I worked to establish in Baltimore was going to be funded partially with federal funds and state planning dollars, which required conformity to regional plans, measurement of benefits, and regular reporting. Since today’s new mobility providers are offering vehicle-sharing programs that don’t need any public subsidy, federal and state regulations are unlikely to be of much concern.) The company pays a fee for the right to park the vehicles at certain locations. A fee is involved and the permit must be renewed periodically under potentially different terms than the prior permit. The city approves and enforces the permit. Just like car2go operates under a blanket parking permit in DC, dock-less bikeshare, and now scooter-sharing providers are going to have to seek and get approval for blanket permits that require the companies to pay a fee for the right to have the vehicles occupy the public space (sidewalks, parking spots, streets).
In many cities, dock-less bikeshare and scooter-sharing companies are operating under pilot programs. Cities often pilot initiatives when they see a need to deal with what they haven’t dealt with before, so they regulate in a controlled environment (“no more than x vehicles in y area at any given time”) for a short period of time, taking in public feedback and data. These programs will end one day, and the likely outcome is that the dock-less bikeshare and scooter-sharing companies will have to operate under a similar permitting regime that, in the best cases, will apply similar permitting terms and conditions to all, but likely will vary from city to city. Being risk-averse, city officials will end up copying the permitting scheme that works in other less risk-averse cities at the vanguard of the mobility sharing revolution (Washington, D.C., San Francisco, Seattle).
So, the lesson to shared mobility providers is to get involved in the creation of the permitting regime in cities now. Investors should put their money in companies that are working with cities to shape permitting structures. Companies that know better aren’t just dumping shared vehicles on city streets hoping that cities won’t notice or turn a blind eye. They know the permit terms and conditions they prefer. If I were a provider, I’d make the heads of city DOTs, Mayor’s Offices, and planning agencies know who I am and what I’m about. I’d take my fate into my own hands and create a model permit that I’d want cities to govern me by, and I’d be serious about it. I’d include provisions in my model permit that both the government and I want and could live with. But what is it that governments want? I’ll answer that in my next article in part two of this two part series.
Thanks for reading! I am a consultant based in Los Angeles, after having spent a dozen years working in city and state government. I can be contacted at mr.mobillyty@gmail.com for more information on this and other urban mobility topics.
