Who Benefits by Locking Out Competition While a Mobility Revolution Surges Worldwide?
New York City officials agreed in December 2017 to renew a monopoly bike sharing contract with Motivate, formerly the owner and operator of Citi Bike, sticking with the purveyor of docked bike sharing technology in use in a large portions of Manhattan plus parts of Brooklyn and Queens.
In the midst of a global revolution in dockless electric bikes and scooters offered by multiple, entrepreneurial companies, the contract with a single company was extended not just five years — which it could have been — but ten.
This extension occurred seven months before the NYC Department of Transportation (DOT) included Citi Bike in a pilot for dockless bikes.
According to a confidential source, almost immediately after the signing of this contract, the politically-connected owners of Motivate began searching for a buyer. Motivate is backed by several players with significant ties to NYC government, including investments from former Deputy Mayor Dan Doctoroff, mega-developers and others.
Then, on July 2, 2018, eight months after the contract was double-extended by NYC DOT, the on-demand transportation giant Lyft bought Citi Bike from Motivate, as well as networks in six other cities, for $250 million.
Although the terms of Lyft’s contract to acquire Motivate have not been released publicly, we do know the terms of the original amended contract between DOT, under Commissioner Polly Trottenberg, and Motivate. That contract, last amended on January 1, 2016, stated:
“the Initial Term may be extended by DOT for up to two (2) additional terms of five (5) Years each, at DOT’s option.” (Section 2.2.2)
A Revolution on Wheels
With traditional bike sharing systems, a rental bicycle is obtained and returned to a docking station. “Free-floating” bikes, E-bikes and electric scooters, on the other hand, allow riders to pick up and drop off the bicycles anywhere rather than at a fixed station. To rent an e-bike or scooter, one typically uses a smartphone and an app. Trips are charged to the user’s credit card — although some companies offer solutions for people without smart phones or bank accounts.
These new transportation options allow underserved communities greater mobility, as you just need to find a bike or scooter using an app and GPS, rather than travel to the nearest docking station that may not be located in your neighborhood.
A Monopoly Through 2029
Given such technological growth and social change, why did NYC DOT extend a monopoly contract through 2029? Why extend a contract at all in a space that now has multiple players offering new technology solutions? Or, only for five years, until 2025, which would give everyone more time to evaluate a rapidly changing transportation landscape? Who benefits from this extension of 10 years?
We’ll let our readers know what we find out.
Scott Peterson is executive director of Checks and Balances Project, an investigative blog that seeks to hold government officials, lobbyists and corporate management accountable to the public. Funding for C&BP comes from sustainable economy philanthropies and other donors.