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Lyft, a private hire TNC.

A transportation network company (TNC), sometimes known as a mobility service provider (MSP) or ride-hailing service, is an organization that pairs passengers via websites and mobile apps with drivers who provide such services. Transportation network companies are examples of the sharing economy and shared mobility.

Transportation network companies have been noted for providing service in less populated or poorer areas that are not regularly served by taxicabs, and charging lower rates than taxicabs, since taxicab rates are often set by local jurisdictions.[1][2][3] Some reports say TNCs reduce traffic congestion: since their cars "can't accept street hails, they do much less unnecessary driving-around than either government-licensed/regulated taxi cabs (who are cruising for hails) or individuals (who are looking for a parking spot)."[4] TNCs say they provide "flexible and independent jobs" for drivers.[5]

Studies are inconclusive on whether TNCs reduce drunk driving rates in cities where they operate.[6][7] A March 2016 study by Judd Cramer and Alan B. Krueger of the National Bureau of Economic Research showed that a ride via a TNC uses capacity more efficiently than traditional taxicabs as TNC drivers are more likely to have a passenger than a taxicab.[8]

However, some have criticized TNCs as avoiding government regulation.

Definition and terminology[edit]

In 2013, the California Public Utilities Commission defined, for regulatory purposes, a transportation network company as a company that uses an online-enabled platform to connect passengers with drivers using their personal, non-commercial vehicles.[9]

Virginia defines a TNC as a company that "provides prearranged rides for compensation using a digital platform that connects passengers with drivers using a personal vehicle."[10] Other states have also regulated TNCs, including Massachusetts.


TNC platforms have sometimes been called "ridesharing", but the terms "ridesourcing" and "ride hailing" have been developed to describe the transportation services associated with TNCs. Some early reports used the term "ridesourcing" to clarify that drivers do not share a destination with their passengers and that the driver's primary motivation was income.[11] The term "ridesourcing" refers to the outsourcing of rides.[12] In early 2015, the Associated Press Stylebook officially adopted the term "ride-hailing" to describe the services offered by Lyft and Uber[13] to reflect the availability of private vehicles and taxis services on the platforms. "Ride-hailing" makes no reference to the driver's motivation or to the trip characteristics; some rides may not necessarily be motivated by income.[14] Uber allows drivers to match destinations with riders in limited cases.[15] However, using "ride-hailing" interchangeably with "ridesharing" can be misleading. Companies like Uber and Lyft prohibit drivers from picking up 'hailers' as all of their riders need to be logged through their website or mobile app software to adhere to their terms and conditions and local laws. Otherwise these companies would be categorized as a 'taxi service.'[16]


Drivesharing is an arrangement where several drivers share a vehicle to transport rideshare passengers for a fee. Vehicles used in drivesharing are not owned by any of the drivers, but instead rented from a drivesharing (third-party) company that services or is in partnership with a TNC like Uber and Lyft. Drivesharing responds to the high demand of qualified drivers who are interested in working for TNC platforms but do not want to acquire or use their own vehicle to do so. Drivesharing companies aim to help the ridesharing industry by increasing ridesharing accessibility, getting more paid drivers on the road and reducing individual vehicle ownership for drivers and riders alike.[17]

For example, TNCs are required by law to have a certain amount of wheelchair accessible vehicles (WAVs) on the road at any given time.[18] This can be a difficult requirement for TNCs to meet because TNCs don't provide vehicles and most drivers do not own a WAV, causing a shortage. Third-party drivesharing companies are stepping in to help fill that gap by providing TNC approved WAV vehicles that drivers are incentivized through TNCs to use, therefore helping TNCs meet the WAV requirements.


Taxi industry groups, labor unions, and some courts say that TNCs are illegal taxicab operations.[19][20] Several communities, governments, and organizations have established rules and regulations that specifically govern TNCs and, in some jurisdictions, TNCs are completely illegal to operate.

TNCs increase traffic congestion in some cities, due to the large number of TNC vehicles constantly cruising waiting for customers.[21][22] Reports based on New York City data suggest that TNCs are unsustainable.[23][24] The TNC model allows avoiding the costs of insurance, sales tax, mechanical vehicle inspections, and providing a universally-accessible service. Some critics believes that TNCs' success comes from being parasitic on the cities in which it operates.[25] New regulations are proposed to compensate some of these disadvantages.[26]

Services like Uber and Lyft, even taking into account trips (as with UberPOOL and Lyft Line) where multiple passengers share the same vehicle, are also worsening traffic congestion. This is because they are attracting to customers who would otherwise have taken transit, walked, biked or avoided the trip, according to a study published in 2018.[27]

Notable companies[edit]


  1. ^ "Uber is here to stay, and that's a good thing". The Globe and Mail.
  2. ^ Megan McArdle (July 20, 2015). "Uber Serves the Poor by Going Where Taxis Don't".
  3. ^ Rott, Nate (August 8, 2013). "California's New Rules Could Change The Rideshare Game". NPR.
  4. ^ Felix Salmon (July 30, 2015). "New Yorkers love Uber. But is Uber good for New York?". Fusion.
  5. ^ "The gig-economy: Uber good or Uber bad?". May 12, 2015.
  6. ^ "Uber Prevents Drunk Driving: Advantage Over Taxis". Lyft Uber Newsletter.
  7. ^ Fredrick Kunkle (July 27, 2016). "Is Uber reducing drunk driving? New study says no". Washington Post.
  8. ^ Cramer, Judd; Krueger, Alan B. (2016). "Disruptive Change in the Taxi Business: The Case of Uber". American Economic Review. Papers and Proceedings. 106 (5): 177–182. doi:10.1257/aer.p20161002.
  10. ^ Virginia DMV: TNC Frequently Asked Questions
  11. ^ Rayle, L., S. Shaheen, N. Chan, D. Dai, and R. Cervero. "App-Based, On-Demand Ride Services: Comparing Taxi and Ridesourcing Trips and User Characteristics in San Francisco". University of California Transportation Center, 2014.
  12. ^ Geron, Tomio (September 19, 2013). "California Becomes First State To Regulate Ridesharing Services Lyft, Sidecar, UberX". Forbes Magazine.
  13. ^ Warzel, Charlie (2015-01-08). "Let's All Join The AP Stylebook In Killing The Term "Ride-Sharing"". BuzzFeed. Retrieved 2017-11-15.
  14. ^ Anderson, Donald N. (2014-05-28). ""Not just a taxi"? For-profit ridesharing, driver strategies, and VMT". Transportation. Springer Nature. 41 (5): 1099–1117. doi:10.1007/s11116-014-9531-8. ISSN 0049-4488.
  15. ^ "Set my Driver Destination". Uber. Retrieved 2017-11-15.
  16. ^ "What is Rideshare? How Ridesharing Companies Like Uber Work". Commercial Driver HQ. 2018-02-04. Retrieved 2018-04-25.
  17. ^ "Autzu". Retrieved 2018-04-25.
  18. ^ "Uber does not have enough wheelchair-accessible vehicles, new lawsuit says". San Francisco Chronicle. Retrieved 2018-04-25.
  19. ^ Alex Goldmark (August 8, 2013). "In California, They're Not Taxis, They're 'Transportation Network Companies'". Transportation Nation.
  20. ^ Alderman, Liz (2017-12-20). "Uber Is a Taxi Service, the E.C.J. Rules, in Major Setback for Firm". The New York Times. ISSN 0362-4331. Retrieved 2017-12-20.
  21. ^ Joe Fitzgerald Rodriguez (December 11, 2016). "SF blasts Uber, Lyft for downtown traffic congestion".
  22. ^ Charles Komanoff (Feb 27, 2017). "It's Settled: Uber Is Making NYC Gridlock Worse".
  23. ^ Fitzsimmons, Emma G.; Hu, Winnie (2017-03-06). "The Downside of Ride-Hailing: More New York City Gridlock". The New York Times. ISSN 0362-4331. Retrieved 2017-12-20.
  24. ^
  25. ^ Slee, Tom (2015). What's Yours Is Mine: Against the Sharing Economy. New York: OR Books. ISBN 1-68219-022-6
  26. ^ Vanessa Katz, Regulating the Sharing Economy, 30 Berkeley Tech. L.J. 1067 (2015). DOI 10.15779/Z38HG45
  27. ^ "Services like UberPool are making traffic worse, study says". Washington Post. Retrieved 2018-08-01.
  28. ^
  29. ^


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