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What Are Transportation Network Companies?

Buckle Team
July 26, 2022

The on-demand transportation market has exploded over the last decade thanks to transportation network companies (TNCs) like Uber and Lyft. But what is a TNC exactly?

What is a TNC service? Also known as rideshare or ride-hailing companies, transportation network companies (TNCs) operate in the on-demand transportation market to connect passengers with rides through mobile app-based platforms.   

In the last decade, companies like Uber and Lyft have combined the traditional taxi model with online platforms to create something entirely new – on-demand transportation with unprecedented convenience for riders. The meteoric rise of these services has shaken up the taxi industry in many major cities and left policymakers struggling to impose regulations and retroactively limit the effects of this new sector regarding public space, traffic and transit. This article will dissect the TNC industry for riders and prospective drivers to ensure they understand how these services work and how they have affected policies.   

Common Transportation Network Companies

Currently, there are several transportation network companies operating in the United States. They can vary in price, size, vehicle style and amenities. One of the most ubiquitous companies within the TNC industry is Uber, which offers a variety of ride options, from uberX (lower-cost rides in smaller cars) to uberLUX (more expensive rides in luxury vehicles.) Uber has grown exponentially since its founding in 2009 and is now available in more than 80 countries and over 4,000 cities/regions in the U.S. alone.  

Other commonly known transportation network companies include Lyft and Sidecar, both of which were founded in 2012 and operate on similar models to Uber. In addition, the on-demand transportation market has grown to include food delivery services like Uber Eats and DoorDash, which work on similar technology. 

The Technology That Drives the TNC Industry

As an app-based platform, the TNC industry relies heavily on mobile phone apps to provide on-demand transportation and delivery services. Transportation network companies allow passengers to download an app to their smartphone from which they can view and select a nearby available driver and request a ride to the location of their choice. Once the passengers virtually hail a ride, their location is sent to the driver, who can easily pick them up and drive them to their destination, often at a lower cost than traditional taxi services. A completely online transportation network allows passengers to track the location of their rides, manage all payments and tips and store reviews of both drivers and passengers. 

Unlike a traditional taxi service, transportation network companies do not maintain a fleet of vehicles. Instead, they contract individual drivers who use their personal vehicles and price rides dynamically based on driver availability, rider demand and other factors. 

Complications With the On-Demand Transportation Market

While services remain popular, there are some criticisms of the TNC industry that have caused complications in the market. Because transportation network companies operate outside of traditional taxicab regulations, they can raise numerous concerns regarding safety issues and other unknown factors. 

Take, for example, the rideshare drivers themselves. Passengers don't know who they are, whether or not they've passed a criminal background check, what kind of drivers they are or if they have adequate gig insurance to cover injuries to their passengers and others in the event an accident occurs. 

The TNC Industry vs. Local Government

Rideshare companies are often criticized for unfair competition with traditional taxi services – transportation network companies are not subject to the myriad of regulations that apply to conventional taxi services, making competition nearly impossible. As a result, local governments now struggle with understanding how to balance new technology and business with the harm caused to existing businesses and the potential loss of taxicab driver jobs. 

While it varies by location, local governments are taking various approaches to the TNC industry. Some cities worldwide have opted for all-out bans to protect existing businesses and jobs and reduce the perceived safety dangers of unregulated transportation network company drivers. Other cities are taking a more subtle approach and are instead adopting ordinances that limit the number of vehicles operating within a city. Cities are also adopting more regulations requiring drivers to have certain levels of Uber insurance or Lyft insurance, along with completing drug tests or background checks.  

Transportation network companies promised their services would revolutionize the on-demand transportation market (which, in many ways, they did.) However, complaints from traditional taxi agencies and labor advocates have driven cities like Seattle and states like Texas to provide a consistent set of rules regulating TNC industry operations.  

What Is TNC Insurance From Buckle? 

TNC drivers now have an option to get adequate and affordable gig insurance to ensure they meet the regulations and standards of any city where Buckle is available. Buckle has built something specifically for transportation network company drivers to ensure they remain covered with every ride. Buckle isn't tacked on to your existing insurance – it's a brand new insurance policy for the unique on-demand transportation market. With one low rate, you can replace your current policy and be covered on and off the apps for all major transportation network companies. That includes Uber, Lyft and DoorDash insurance. Get your free online quote in just five minutes with Buckle today. 

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