Part D – Understanding and improving industry performance (PDF ...

Chapter 11.
11. Networks
Key messages
• The role of Network Service Providers (NSPs)
is a critical area that must be addressed in
order to deliver sustainable taxi reform.
• There is considerable consumer
dissatisfaction with the quality, reliability and
accountability of booking services provided
by NSPs.
• Government intervention in this market in the
form of the taxi industry accreditation scheme
has failed to result in measurable improvements
for taxi consumers and the objectives of
accreditation have not been achieved.
• There is confusion as to the role of NSPs and
the Government in ensuring service quality
and scope to better clarify roles.
• There is scope to reduce regulatory burdens
on networks by rationalising existing regulation
affecting them whilst at the same time clearly
indicating areas of responsibility.
• The current high barriers to entry in becoming
a new NSP prevent new competitors from
emerging and deliver minimal benefit to taxi
users or taxi operators.
• The current fee structure for affiliating with
NSPs is inefficient and is a result of the
imbalance of bargaining power between
suppliers (NSPs) and consumers (taxi
operators) in this market.
• Introducing more competition to the market
for taxi booking services is likely to increase
innovation, encourage better marketing of
taxis as a transport option and deliver higher
quality and greater choice for consumers.
• Taxi operators will also benefit from increased
competition in the market for network services
by having greater bargaining power to obtain
improved choice and better value for money.
In Victoria, the centralised booking
and dispatch of taxis is delivered by
companies known as network service
providers (NSPs).
While customers may hail taxis directly on the street or
obtain a cab by waiting at a rank, they can also book a
taxi by contacting an NSP.
The inquiry has heard from many taxi users and industry
participants about their concerns and experiences
regarding NSPs. The main themes raised with the inquiry
are dissatisfaction with the reliability and accountability of
booking services provided by Melbourne NSPs and the
effects of current market dominance of the larger NSPs.
Customers consider that NSPs lack accountability for
service standards and many taxi operators and drivers
perceive that NSPs deliver poor value for money for the
services they provide to the industry.
This chapter sets out the concerns raised with the inquiry
about NSPs and pre-booked taxi services. This chapter
analyses criticisms that networks lack accountability
for the services they provide and identifies areas where
failures in regulation have led to a market typified by
weak competition and unsatisfactory levels of customer
service. Finally, this chapter considers options for reform
to address these problems in Victoria, as well as reforms
undertaken in other jurisdictions.
11.1. Introduction
With over 5,000 taxis operating across Victoria, NSPs
have for many years provided the link between drivers
of taxis and customers wishing to book a taxi. NSPs
bring many small taxi operators together with one
single point of contact for customers. NSPs coordinate
communications within an otherwise de-centralised
industry by accepting bookings from customers and
transmitting booking details to a data terminal installed
in taxis.
Under legislation that has been in effect for many years,
all taxis are required to be affiliated with an NSP. This
is known as mandatory affiliation. While not a stated
objective of the legislation, the inquiry understands that
this affiliation requirement is in place to facilitate universal
access for customers booking taxis and to provide a
mechanism to track vehicles to ensure the safety of
passengers and drivers.
The taxi industry accreditation scheme that was
introduced in 2007 and applies to NSPs has not achieved
its objective to provide a safe, efficient and reliable taxi
service with regard to NSPs.
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