We Mobility is the latest start-up to take on the carpool fight
We Mobility has applied to try out its carpooling service, We Pool, under a regulatory sandbox program by the Ministry of Science and ICT.
"The current Passenger Transport Service Act that was revised last year only allows the use of taxis within a mobility platform. Mobility start-ups that cannot afford to buy or rent cars are on the edge of a cliff," said Park Hyun, CEO of We Mobility.
“Although the government says it will reduce the cost of acquiring taxi licenses for start-ups seeking platform businesses, that does not help much,” Park said. “Since the purpose of the carpool law is to reduce traffic congestion, we need to develop an intermediate server for peer-to-peer (P2P) car-sharing without having to buy or rent cars."
According to Article 81 of the Passenger Transport Service Act, personal vehicles cannot be used for business purposes. But carpooling during commuting hours is an exception and start-ups have previously used this loophole.
That was how Poolus and Luxi, a carpool platform that connects drivers with riders, were able to run their businesses. Luxi was eventually bought by Kakao Mobility. Park, the former chief marketing officer at Luxi, left the company to start We Mobility in 2018.
Exploiting that loophole did not go down well with the powerful taxi unions, who argued that the carpooling services were operating outside of rush hour. When Kakao Mobility attempted to launch a carpooling service in December 2018 based on its acquisition of Luxi, the taxi industry backlash was intense.
To appease the taxi drivers, with whom Kakao Mobility operates a huge part of its business, the company promised that it would only use its carpooling services from 7 a.m. to 9 a.m. and 6 p.m. to 8 p.m.
Three carpooling start-ups, We Mobility, Poolus and WITS Mobility, issued their own statement attacking Kakao's promise, arguing that those hours don't actually match the real commuting hours for lots of people.
Nevertheless, the compromise was reflected in the revision of the Passenger Transport Service Act in August last year. WITS Mobility, which ran the carpooling service Udigo, immediately terminated its service and Poolus later gave up as well.
"The revision does not properly reflect the reality of commuting hours in Korea — it's unrealistically short," said Park. "It is difficult to gather carpool participants in a situation where it may become illegal if they get out of the car at 8:01 a.m., just after the carpool permit time."
Realizing that it has become difficult to continue its business, We Mobility tried to find a middle ground. To prevent drivers operating outside commuting hours — which the taxi industry is mostly concerned about — the company created a platform that only works during commuting hours, but with more realistic commuting hours.
"If we add a carpool option to consumers without attacking taxi drivers’ rights, we can solve the commuting traffic problem," said Park. "More than 1 million long-distance commuters are traveling between Seoul and Gyeonggi every day using their cars, and 86 percent of them are driving alone. The goal is to match 1.3 million commuters using public transportation with these drivers to reduce social costs and improve the quality of commuting."
To eliminate the controversy over paid transportation, the fare is about 3,500 won ($2.90) for 10 kilometers, which is only 50 to 75 percent of the standard taxi cost. In order to make this work, the company has applied for a regulatory sandbox to extend commuting hours to from 5 a.m. to 10 a.m. and from 6 p.m. to 11 p.m. The time allowed for carpooling will be increased from a total of four hours a day to 10 hours. The target areas are Seoul, Gyeonggi, Busan and Ulsan.
"Even if we increase commuting hours, it will be difficult for drivers to turn full-time because the fare is lower than the operating cost," Park said. "As we revised it to comply with the taxi drivers’ demands, I hope we can get a chance to start the carpooling service."
But getting that regulatory sandbox is certainly not guaranteed.
"I applied for a regulatory sandbox, but I'm clutching at straws," Park said. "Since the passage of the revised bill last year March that put restrictions on carpooling hours, our number of employees has decreased from 23 to 13 and the remaining employees are currently working for free. Our goal is to upgrade mobility and fintech industry data with user data obtained from carpooling services."
BY PARK MIN-JE, KIM YEON-AH [firstname.lastname@example.org]