Transportation Network Company
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Transportation Network Company
Lyft, a private hire TNC.

A transportation network company (TNC) (sometimes known as mobility service providers or MSPs), connects via websites and mobile apps, pairing passengers with drivers who provide such passengers with transportation on the driver's non-commercial vehicle. TNCs include Gett, Lyft, Juno, Cabify, Uber, goCatch, Via, Ola Cabs, GoCar, GO-JEK, Careem, Wingz, Taxify, GrabTaxi, Didi Chuxing, Easy Taxi, 99 and Fasten. TNCs are examples of the sharing economy.

Legal definition

In 2013, the California Public Utilities Commission defined, for regulation 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.[1]

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."[2] 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.[3] The term "ridesourcing" means the outsourcing of rides.[4] In early 2015, the Associated Press Stylebook officially adopted the term "ride-haling" to describe the services offered by Lyft and Uber [5] to reflect the availability of private vehicles and taxis services on the platforms. Notably, "ride-hailing" makes no reference to the driver's motivation or to the trip characteristics which makes it a more accurate term given that rides are often not motivated by income[6] and that new technologies allow drivers and passengers to share common destinations [7].

Legality and opposition from taxicab operators

Taxi industry groups have argued that TNCs are illegal taxicab operations which take away their business.[8] Several communities, governments, and organizations have established rules and regulations that specifically govern TNCs and, in some jurisdictions, TNCs are completely illegal to operate. For information, see Uber protests and legal actions.


For riders

Compared to taxicabs, TNCs offer advantages to riders including the ability to:[9][10][11]

  • Request service via mobile app or website, which is not available from all taxicab companies.
  • Request service in less populated or poorer areas that are not regularly served by taxicabs.
  • Track the location of the driver and know exactly when the car will arrive.
  • Have the service monitored by the TNC.
  • Have the driver subject to background checks, training, drug and alcohol policies, and insurance coverage, depending on the jurisdiction.
  • Use a cheaper service than a taxicab, since taxicab rates are often set by local jurisdictions.
  • Get a receipt via email.

For drivers

For the drivers, TNCs provide "flexible and independent jobs".[12]

For society

TNCs allegedly reduce congestion because, since the 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)."[13]

One study showed that having a TNC operating in a city reduced drunk driving rates;[14] however, another study reported that TNCs do not reduce drunk driving rates.[15]

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.[16]

Driving the rider's car

Another variation of a TNC is to use online marketplaces to provide drivers who drive the customer's personal vehicle for them. Examples include Dryver,, and WeDrive. In these models, customers typically reserve a driver who arrives at their location, takes them wherever they need to go in their own car, and then returns the car and the customer home at the end of the reservation.


For society

TNCs increase traffic congestion in some cities, due to the large number of TNC vehicles constantly cruising waiting for customers.[17][18] Bruce Schaller's report based on New York City data suggest that TNCs are unsustainable.[19] 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.[20] New regulations are proposed to compensate some of these disadvantages.[21]


  2. ^ Virginia DMV: TNC Frequently Asked Questions
  3. ^ 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.
  4. ^ Geron, Tomio (September 19, 2013). "California Becomes First State To Regulate Ridesharing Services Lyft, Sidecar, UberX". Forbes Magazine. 
  5. ^ Warzel, Charlie (2015-01-08). "Let's All Join The AP Stylebook In Killing The Term "Ride-Sharing"". BuzzFeed. Retrieved . 
  6. ^ 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. 
  7. ^ "Set my Driver Destination". Uber. Retrieved . 
  8. ^ Alex Goldmark (August 8, 2013). "In California, They're Not Taxis, They're 'Transportation Network Companies'". Transportation Nation. 
  9. ^ Rott, Nate (August 8, 2013). "California's New Rules Could Change The Rideshare Game". NPR. 
  10. ^ "Uber is here to stay, and that's a good thing". The Globe and Mail. 
  11. ^ Megan McArdle (July 20, 2015). "Uber Serves the Poor by Going Where Taxis Don't". 
  12. ^ "The gig-economy: Uber good or Uber bad?". May 12, 2015. 
  13. ^ Felix Salmon (July 30, 2015). "New Yorkers love Uber. But is Uber good for New York?". Fusion. 
  14. ^ "Uber Prevents Drunk Driving: Advantage Over Taxis". Lyft Uber Newsletter. 
  15. ^ Fredrick Kunkle (July 27, 2016). "Is Uber reducing drunk driving? New study says no". Washington Post. 
  16. ^ Judd Cramer and Alan B. Krueger (March 2016). "Disruptive Change in the Taxi Business: The Case of Uber" (PDF). National Bureau of Economic Research. 
  17. ^ Joe Fitzgerald Rodriguez (December 11, 2016). "SF blasts Uber, Lyft for downtown traffic congestion". 
  18. ^ Charles Komanoff (Feb 27, 2017). "It's Settled: Uber Is Making NYC Gridlock Worse". 
  19. ^
  20. ^ Slee, Tom (2015). What's Yours Is Mine: Against the Sharing Economy. New York: OR Books. ISBN 1-68219-022-6
  21. ^ Vanessa Katz, Regulating the Sharing Economy, 30 Berkeley Tech. L.J. 1067 (2015). DOI 10.15779/Z38HG45

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