Transportation network company

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Lyft, A Private Hire TNC.

A transportation network company (TNC) connects paying passengers with drivers who provide the transportation on their own non-commercial vehicles. All parties connect to the service via website and mobile apps. TNCs include Lyft, Sidecar (sold to General Motors),[1] Cabify, Uber, goCatch, Via, Ola Cabs, Careem, Wingz, GrabCar[2] and Didi Kuaidi.[3] The concept was introduced in 2011 by Jahan Khanna and Sunil Paul, who would go on to become co-founders of Sidecar.[4]

In 2013 California Public Utilities Commission defined for regulation that a transportation network company is a company that uses an online-enabled platform to connect passengers with drivers using their personal, non-commercial, vehicles.[5] These platforms have sometimes been called "ridesharing", but transportation experts prefer the term "ridesourcing" to clarify that drivers do not share a destination with their passengers.[6] (The term means the outsourcing of rides.)

An early definition of a TNC was created by the California Public Utilities Commission in 2013, as a result of a rulemaking process around new and previously unregulated forms of transportation. Prior to the definition, the commission had attempted to group TNC services in the same category as limousines.[7] Taxi industry groups opposed the creation of the new category, arguing that TNCs, as illegal taxicab operations are taking away their business.[8]

The commission established regulations for TNC services at the same time as the definition. These included driver background checks, driver training, drug and alcohol policies, minimum insurance coverage of $1 million, and company licensing through the Public Utilities Commission.[9]


See also: Legal status of Uber's service

Several communities, governments, organizations, and other persons consider Transportation Network Companies to be illegal and unauthorized transportation. TNCs are legally defined as technology companies and not transportation companies. TNCs have been banned in many places.

Business model[edit]

Further information: Uberisation

Transportation network companies develop a computing platform which creates an online marketplace in which a driver and car owner registered with the company may offer their own labor and car to people who request a ride in the marketplace.[citation needed] The services offered by such companies include the maintenance of the marketplace where fare-paying customers can meet drivers for hire, vetting of drivers to ensure that they meet the standards of the company's own marketplace, and delivery of payment from customer to driver in their own financial transaction.[citation needed]

The services of transportation network companies can be in demand because of the convenience of requesting a ride by a mobile app, the satisfaction of being able to have experience monitored by the company as a third party, and because of competitive pricing for services.[10] Taxicabs can provide similar services, but while most cities require companies which provide taxicabs to meet requirements for business, transportation network companies may be exempt from such requirements due to their only providing a marketplace and not actually employing drivers or keeping automobiles.[10]