Uber Might Become the Real Life Manifestation of Net Neutrality’s “Fast Lanes” Debate

Let’s imagine all Uber cars become self-driving. Not too hard to imagine, right?

And let’s also assume Uber’s mission is to replace public transportation (which feels likely based on its push of Uber pool).

We also know that Uber only takes 20% of revenue and the other 80% of revenue goes to the driver. I’d imagine 20% of a driver’s revenue goes towards car maintenance, gas, etc. So that means the price of an Uber only inclusive of current revenue and maintenance costs would be 36% of the current price.

It costs me $20.00 to get to my office at the moment — meaning at a 64% discount I would only need to pay $7.20. I go to work ~20 days per month and pay for two rides (once there, and once back). This means my work transportation would only cost $288 per month. Rounding up, my total transportation, relying on Uber, would be ~$400 month.

The average monthly car payment is $479 (according to Edmunds). Car insurance costs another ~$100/month. This means that relying on Uber for total transportation will likely cost 30% less than owning a car (I didn’t even factor in gas! So probably closer to a 40% decrease).

BTW — I’m using Uber’s NYC prices, which are higher that most other places. And in my car owning statistics I used national averages. So it could get even closer to a 50% decrease.

Okay, so that all means everyone is probably going to want to just use Uber to get around… and we now have established that there won’t be a limited supply of drivers — let’s assume we can produce as many cars as needed.

I bet in that case most people would opt to take an Uber as opposed to the subway. Which means traffic in cities will become horrible.

So What Will Happen?

(1) A city may limit the amount of ubers allowed, fixing supply via regulation

(2) The city may tax Uber so heavily most people are priced out of using Uber, so that only the wealthiest citizens take autonomous cars to work

(3) Uber regulates itself, and prices itself highly enough that traffic doesn’t become overbearing and hurt the customer experience

Option 3 is the most intelligent path for Uber to take, and Uber should pursue that path proactively to avoid a tax from the city. The revenue will likely be the same, it just depends on whether or not the city will earn it or if Uber will.

And so in pursuing option 3, Uber has two more choices:

(1) charge higher rates across all cars

(2) charge extra to get in the “fast lane.”

Remember the analogy everyone used for net neutrality? Uber may be the real life manifestation!

What if Uber could charge more to go faster to get to a destination? Or to prioritize one Uber car over another in traffic, or in making a turn?

I’d pay for that when I was late to a meeting! But could someone who earned less money? Is that unfair? Is that free markets? Would it become illegal?

Is there going to be a sophisticated regulatory framework that guides the logic behind software built into autonomous cars and the controls?

Autonomous Cars Eliminate Human Error

I forgot to add that traffic may be better because autonomous cars eliminate human error, which is the main driver of traffic to begin with. And each car’s perfect coordination with another, part of the same system etc. will definitely increase efficiency.

With that being said, there will always be the ability to prioritize one over another. And in the mid-town tunnel that’s hard to ignore, no matter the efficiency.

Environmental Controls

My partner just came up with the idea that maybe if people pooled into cars together they would get priority in a fast lane because it would be better for the environment (assuming cars will still put out emissions).

So rather than it be a cost limitation, it may be an environmental one (if it turns into a gov’t regulation).

[5'9", ~170 lbs, male, New York, NY]. I blog about investing. And usually about things I’ve learned the hard way. Opinions are my own, not CoVenture’s

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