The deadlock on Uber and the regulation of individual transportation is far from over in São Paulo. Over recent weeks, there have been important changes in the executive and the legislature branches. While the councilors won approval of a new law for taxis apps, the City has launched a public consultation with an innovative proposal for regulating “accredited transport operators” that make use of urban road.

In this text, we explain what are these changes and what is proposed in the public consultation launched in São Paulo. What is at stake is the future of individual transportation mediated by new technologies for nearly 20 million people.

What are the new rules approved by the Legislative Power in 2016?

On Tuesday (January, 5) two acts were approved in São Paulo, Municipal Act n. 16.345/2016, which creates new rules to taxi service, in case it is requested by app or internet in the city, and Municipal Act n. 16.344/2016, which raises the value of the fine paid by carriage of passengers in non-authorized vehicles. These new rules make even more complex the already troubled legal scenario of individual transportation in São Paulo, which was amended several times over the past few months by decisions of the Executive, Legislature and Judiciary branches.

The way it was drafted, Municipal Act 16.345/2016 blurs even further the discussion on the regulation of companies like Uber and Waze, which offer (or intend to offer) technology services to individual transportation of passengers, a controversial legal concept. According to this Act, the provision of taxi service through application (app) will depend on accreditation with the government, which can only be done by companies based in the city of São Paulo. Fines for both companies and individuals are predicted in case of noncompliance.

The punitive nature of these new legislation, approved by the municipal legislature, clashes with a recent initiative for regulating an innovative model of individual transportation, launched by the City of São Paulo in the last days of 2015. The decree project, which will receive comments, contributions and suggestions until January, 27 is quite sophisticated and proposes to regulate Accredited Transport Operators (OTCs in Portuguese’s acronym), defined as “technology operators responsible for the intermediation between drivers providing service and users”.

In order for the OTCs model to work it is necessary to establish that individual transportation in São Paulo will be of two types: i) taxi drivers (mediated by applications such as Wappa, 99 Taxi and Easy Taxi) and ii) registered drivers in transport carriers (mediated by companies like Uber, BlaBlaCar, MeLeva and Ponga).

What changes with the regulation proposed by the City?

The City Hall of São Paulo proposes a new regulation, which differs from the rules approved in large (North and South) American cities, such as New York, Mexico City and Bogota.

Among the many innovations proposed, it is charging for the use of urban road, which will be conditioned to the purchase of kilometers of credit for OTCs, upon authorization of the government, issued after payment of public price. An interesting aspect is that these credits will serve as a regulatory instrument to control the use of public space and the exploitation of urban road, according to municipal public policies.

Furthermore, the use of credits by the OTCs may fluctuate depending on variables such as time of the ride, start and ending points, or type of car used. That way, it is possible to encourage behaviors of agents, charging less for rides on the outskirts, off-peak hours, or with cars adapted for users with disabilities or reduced mobility, for example.

Another interesting novelty of the proposed model is the data-sharing obligations between the OTCs and the City, which will be centered on Laboratory of Technology and Protocols for Urban Mobility – the Mobilab. Thus, the OTCs will supply the government with important data for the control and the regulation of urban mobility policies, such as length of races, maps of the paths, and evaluation of services. This is a crucial point to think about the regulation of ‘smart cities’ and the government’s dependence on data captured by private agents.

Under the decree project, the regulation of individual transportation by OTCs will be in charge of the Secretariat of Urban Infrastructure and Construction (Siurb) from City Hall. This allocation of competence also helps to differentiate the OTCs model of traditional taxis, whose jurisdiction lies with the Secretariat of Transport (SPTrans). On the one hand, the separation of powers seems to be interesting in light of the different regulatory objectives sought with the proposed regulation, on the other, the intimate relationship between OTCs and the taxi service can generate some mismatches due to the duplication of regulatory authorities.

The establishment of the Municipal Committee of the Road Use (CVMP) appears to have the purpose of policy coordination. However, its institutional design does not seem to have accomplished all the sectorial interests involved, bringing only a permissive rule of participation from other agencies and municipal entities.

The proposed regulation, however, deserves acclaim for several innovations. In addition to creating a new legal category and the flexibility of the credit purchase system by use of the road, there are also incentives for car sharing (technological platforms are obliged to offer sharing services) and encouragement for the participation of women.

How participative is the public consultation?

The preliminary regulatory process also deserves praise. As we have defended in our contribution to the Chamber of Deputies, successful international experiences for the regulation of individual transportation were the result of debates and deliberation with stakeholders and civil society. In this sense, the opening of public consultation by the São Paulo City Hall is important, because it enables social participation in the definition of this important public policy.

The online platform created specifically for this purpose, however, is quite limited and falls far short of other successful participatory experiences carried out by the City of São Paulo (such as the Plano Diretor Estratégico and Lei de Zoneamento), and the federal government (Marco Civil da Internet and the Data Protection Draft Bill). The format adopted by Siurb was not the interactive draft, but a form that allows only specific contributions (limited to 500 characters) to each of the Decree articles. In this model, there is no debate among the participants, neither is possible to submit technical documents with deeper analysis.

Will the deadlock come to an end?

It is early to say whether the proposed separation between public individual transportation (taxi) and individual carriage by OTCs will succeed. The public consultation process is one in a series of other legislative initiatives, such as new bills prohibiting and allowing transportation services.

In addition, there are potential conflicts between the decree of City Hall and existing legislation on the sector, which would have to be canceled by rules of the same hierarchical level. There is also the risk that the attempted regulation by City Hall is seen as outside its jurisdiction, requiring federal law to regulate the matter.

The success of the proposal will depend on the effectiveness of the public consultation, the degree of mobilization of technology companies, the reaction of taxi drivers and councilors and the degree of interest shown by citizens. It is important to remember that what is at stake is not the legal status of Uber, but something greater: new technology and transportation companies and the importance of identifying what matters in this type of regulation.

Authors: Rafael A. F. Zanatta, Beatriz Kira e Pedro B. C. de Paula