Industry Incumbents Still Don't Grasp The Inevitability Of Digital Disruption

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Time is running out for the incumbent players in what were once traditional regulated industries. Cabcharge’s recent spray about innovative startups in the taxi industry is a case in point, and one that must reflect the view of market leaders in many other sectors.

They can rage against the march of disruptive innovation, but it won’t help – it’s already here, and here to stay.

The taxi industry is one of the most high-profile when it comes to disruption to the status quo. Regulators and legislators are increasingly backing the startup innovators– we can see this with the ongoing NSW Passenger Transit Bill 2014 currently passing through NSW Parliament. It’s a big step towards government support of innovation in the taxi industry, and it’s what we’ve been calling for, for the last three years. It acknowledges the world has moved on from sending ancient call-outs over radio when it can be mobile and much more efficient.

Governments have realised they need to get out of the way of innovative technology that improve things for the public, while simultaneously reducing the cost to the taxpayer from inefficient systems that support vested interests.

Hamish Petrie, ingogo founder

The core reason they are changing legislation is because it’s in the interest of the public. For the taxi industry, it means benefits for both passengers and drivers. Through apps such as ingogo, they are being put directly in touch with each other, taking out the lazy bureaucratic incumbent in between, with their outdated systems and monopolistic barriers. Innovation also brings down the cost of processing payments and makes it easier to request a cab while out and about with mobiles – it’s a lot more convenient and the service becomes more accountable.

The new regulations mean taxi apps will need to apply for specific booking licenses and obey the law of the land. Taxi Operators and Drivers won’t be required to be part of an expensive, old-fashioned booking network by law any more, but can run their own schedules with apps that only get paid for delivering work.

The only remaining reason a driver would need to remain part of an incumbent network is for the security systems (cameras and panic buttons) and even this will now be open to new competition. This system is really important and helps protect both drivers and passengers. The security aspect could be run through a third party security company – it would make much more sense and benefit everyone.

The latest cries of protest from Cabcharge follow three years of dirty tactics against apps and startups in the industry. It was only a couple of years ago that Cabcharge was using its mouthpiece, the “NSW Taxi Council” to bash new apps, spreading false rumours about safety and trying to roll back innovative changes that would help both passengers and drivers. The result: apps have flourished, at ingogo we’ve recorded over 1.5 million trips this year alone and our bookings are increasing every month.

Now that the Government are putting their endorsement behind new taxi booking technologies in legislation, the incumbent players are moving onto their next phase – denial. They are trying to play down what startups are achieving and how we’ve completely turned the industry upside down.

It’s a story that we’re going to see time and time again as more regulated industries are shaken to their core. The pace of innovation is only going to increase as it gets cheaper to build and launch disruptive businesses, and the technology makes it cheaper to go out and experiment and push things out to market.

If you look back to when Amazon started, they had to build their own shopping cart and payments gateway – new technology that had to be developed from scratch. Now there are countless plug-ins and e-commerce solutions that you can apply for a minuscule price. When I was building Moshtix, the ticketing platform, we had to lease servers for three years, and when we ran out of space, we had to lease server space for another three years. Today you go and rent space in the cloud by the minute, and pay for what you use as you use it.

The public and in turn the government are realising the benefits of these changes, and are asking: why should our tax dollars be going to wasteful things that don’t provide us with good services? It is getting more progressive, both in backing startups through reducing the burden of outdated and restrictive legislation, and opening data and allowing smart developers and entrepreneurs to build clever solutions to solve problems.

Startups will continue to pave the way for change and bring the best services possible to the market. Traditional incumbents need to realize that they can’t hide behind legislation forever, the world is digitally hyper connected and disruption is coming, and it’s here to stay.

Hamish Petrie founded innovative taxi service system ingogo in 2011. Since launching the company, he has secured over $7.1 million in investment. In the last year, ingogo processed more than 1.5 million taxi trips, with a forecast in excess of $100 million in payments on the ingogo platform in the coming year. You can find ingogo on Twitter @IngogoSocial and Facebook.

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