June 1, 2018

Do Seattle’s dockless bike sharing policies support equity of access?

When evaluating how the City of Seattle’s policies affect the social equity of the bike sharing system (mostly in terms of racial and income factors), we need to consider (1) how the city requirements are defined and what the intention behind is, (2) how bike sharing companies work and what they want to achieve and (3) how their ideal setup might look like. Based on this, we can (4) assess how the requirements affect these business models and what unintentional consequences result from them and (5) give recommendations on how bike sharing policies can be made more efficient to support equitable access to these services.

We start by looking at the regulatory framework in which these businesses can operate and how this affects the services they can offer. Following a review of the requirements that the City of Seattle created for receiving a permit to offer bike sharing services, the following table gives an overview on some of the rules and their effects and restrictions on the business models.

Table 1: Bike Sharing Permit Requirements and their effects on the operators

Requirement	Effects
Framework: ●      Provider is required to teach users about threats of bicycle use, wearing helmets and the skills to ride a bicycle ●      Liability insurance ●      Low speed electric bicycles if any ●      Bikes need to be well maintained and repaired within a short time ●      Real-time data and trip and maintenance history sharing with the City of Seattle is necessary	●      Bicycles need to be easy to control by basically everyone including children and seniors ●      High speeds are not favorable as they increase the risk on the liability insurance ●      This causes an exclusion of higher speed bikes and makes bikes necessary that are low maintenance ●      Data sharing might be unsatisfying as intellectual property could be passed on to competitors easily.
Concentrations: ●      Rebalancing and removal needs to be possible within short time of notice ●      Service areas should not exceed 340 bicycles per square mile ●      Bicycles that are not moved within 7 consecutive days can be removed and stored at the cost of the operator	●      24-hour service and availability necessary ●      Rebalancing needs to be possible quickly and efficiently which efficient bike sizes and limited service areas
Service areas: ●      Fleet of at least 500 bicycles ●      Fleet size changes need to be notified previously ●      Bicycles need to be parked in side zones of the sidewalks (not in right-of-way or dense and frequently used zones) ●      Permit valid for use in Right-of-Way of City of Seattle ●      For more than 2000 bicycle fleets at least 20% of service area must include Tier 1 priority hire neighborhoods	●      High investment necessary ●      Changing fleet sizes based on seasonal or daily demands requires serious planning and decreases efficiency. ●      Potential issues with using bikes in parks, campuses and other public places ●      Hard to control good behavior of customers (risk of penalties) ●      Indirect limitations to the number of competitors in the field due to minimum fleet sizes ●      Limitations on where the service areas can be located
Fees: ●      Bicycle bond of $80/bicycle ●      $146 annual permit ●      $209 for every hour of permit review ●      Program administrative fee of $15/bike ●      Removal rates of inaccurately parked bicycles will be hourly rates plus 15%	●      Combined with the minimum fleet size the fees sum up to a high value ●      Permit review fees make it unattractive to change fleet sizes depending on seasons

The requirements seem to be reasonable and the intention behind seems to be the desire to ensure safe and predictable operations of a limited number of bike sharing services that protects the city from having to encounter issues with the leftovers of bike sharing providers that went out of business (such as left behind bikes), liability and safety issues with broken bicycles and complaints by residents and customers. In addition to this, these rules were created to support the cities ambitious plan to significantly increase bike ridership in Seattle. Thus, restrictions were defined on how and when bikes need to be removed. The data sharing requirement helps investigating the bicycle rider ship behavior to investigate how long term infrastructure planning can account for bicycle sharing services and how future policy design can be improved based on the learnings from this pilot.

Furthermore, the minimum fleet requirement enables the city to indirectly avoid too many operators, since at a certain number of bicycles, the market will be saturated, such that it is not very attractive to enter the market for new providers. This is balanced by the maximum density restrictions as this controls for a potential dominance of one provider in a certain area. As a consequence, customers are not bothered with having to hold contracts or agreements with a large number of providers, but still receive a number of alternatives, which clearly benefits the city as well. Limiting the flexibility of fleet size changes aims at keeping the number of available bicycles stable to avoid supply shortages in case of low seasons. However, the only restriction that directly aims at social equity so far is that for fleet sizes of 2000 bicycles or more, at least 20% of the service area needs to cover Tier 1 priority hire neighborhoods, as visible in Figure 1.

The definition of these areas is based on the amount of people living under 200% of the federal poverty line, the unemployment rate and the number of people over 25 without a college degree. This equity approach can also be found in the Seattle Bicycle Master Plan that aims at incorporating equity besides efficiency, environment and safety. While this seems to be a viable way to ensure coverage of underprivileged areas, we also have to look at how bike sharing providers will design their business models around this.

From the perspective of a bike sharing company, the main objective is to be profitable in the long term. In a new market, such as this one, the primary goal will therefore be the gain of market share before eventually raising prices to a level where profits can be generated. Thus many companies sacrifice profitability. It is possible to observe these dynamics in the current competitive environment in Seattle, when looking at the extremely low fares that many providers offered over the last months. Consequences of this will be a further segregation of the market that will drive some of the weaker and less popular competitors out of business. Thus, the fares can be raised to achieve profitability. In the meantime, it would make sense to find the most efficient way how a piece of the customer base cake can be conquered. Thus, it is not helpful at this point in time to create a profitability analysis, as this currently is only a minor concern for bike sharing companies and the focus should be more on keeping the cost as low as possible to survive the longest under the given budget. If I were running such a company I would focus on the following points to gain market share:

1. Provide bikes at very low fares to motivate potential customers to try the service and identify the concept of bike sharing with my company
2. Provide bikes that serve the average need while remaining cheap to operate and maintain
3. Focus on areas where bike travel is as convenient as possible to give customers a positive experience
4. Offer bikes where potential early adopters reside and pass by (demographic fit to target group)
5. Offer bikes where the mode of travelling by bicycle is most popular and serves a mobility need to achieve a high utility rate (such as commute ways in between different popular spots that are not easy to reach by public transit)

Starting with the first point, I would just follow a similar approach as the Seattle providers ofo or LimeBike and would lower the priority of profit in the first step, finance the business through VC money and thus allow cheap trial fares. Also, the provided bike models need to be as simple as possible to reduce the recurring cost for reliability, the maintenance need and safety in operations and easiness in handling, even though this might have a negative effect on the performance of these bicycles. Figure 2 shows that the majority of bicycle trips in Seattle have a length between 2 and 5 miles. Considering that longer daily commutes and planned trips will most likely be pursued on private bikes, bike sharing will probably be more attractive to cover shorter distances instead of walking, when no private bike is available. Hence, providing bicycles that are capable to cover shorter distances can be offered and do not need to offer long distance comfort. Even though this does not meet my personal needs, as I have learned through several experiences with using the bike share services in Seattle, I see why it makes sense to go this way. It might not be the best way to convince more people of the ease of bicycle riding, but considering the safety, liability and sizing needs, this is a reasonable approach.

Furthermore, to approach my third point on the rider convenience and experience, checking the bike path network in Seattle in Figure 3 shows that biking paths are widely available and distributed at similar rates across the street network. We can see that biking paths are actually widely distributed across the city but that the maps specifically point out the Alaskan Way on the Waterfront of the Puget Sound, the Burke Gilman Trail and other paths around Lake Union and along the shores. Since personal experience and also survey data has shown that riding bikes is much more convenient were car traffic is lower, we can look at the annual traffic flow in Figure 4. While most of the vehicle traffic flow is concentrated on the highways, we still find significant amounts of traffic on the main North-South traffic axes that cross Lake Union and on the connector to West Seattle and in Columbia City and Mount Baker.

 

 

Furthermore, biking is especially convenient if the elevation change is moderate or less, which can be challenging in Seattle as Figure 5 shows. We find find relatively moderate changes along the Burke Gilman Trail, within Capitol Hill and around Greenwood/Bitter Lake. Columbia City, Beacon Hill, Queen Anne, Magnolia and Lake City however show many elevation changes, which makes it relatively unattractive for biking. From personal experience as a bike commuter, I can confirm that riding bikes around these areas is not very pleasant due to the reasons mentioned above.

Having considered this, we want to offer bicycles in an environment where potential customers reside and commute. If we look at the profiles of the bicycle users, we find that biking appears to be most attractive to populations that consist of larger proportions of young, white, male and lean people. While white people still seem to be overrepresented, the racial factor does not seem to have as much of an influence since the racial share in between cyclists is approaching the racial share of the population in the US. Even more interesting, the income does not seem to have a high influence either. While the distribution in between different income quartiles shows a slightly higher popularity of ridership with lower income people (!), the distribution is relatively even across income groups. So what remains? The young and lean people. Based on census data we know that for the age group of the 20s, the highest population groups can be found around Lake Union in areas such as the University District, Ravenna, Wallingford and Fremont in the North and South Lake Union and Capitol Hill in the South (Figure 6). For the age group of the 30s, we find similar effects around Ballard, Downtown and Eastlake and Eastern West Seattle (Figure 7).

 

Finally, we need to consider where we can find the most popular biking paths and where we can expect the highest bicycle traffic volume. Figure 8 shows that we actually get the highest traffic volumes in Seattle around Lake Union, along the Burke Gilman trail and around Downtown. On this route, many public recreation sites like the Gas Works Park or parts popular with tourists and locals such as Ballard, Fremont and the downtown sights are located, which is a promising indicator for a demand for bicycles.

Considering all these factors when making a decision on a focus area, we would indeed conclude that placing most of the offered bikes in the area around Lake Union and Greenlake, along the Burke Gilman Trail and close to Downtown and Capitol Hill will be meaningful. This approach enables the company to reach the highest number of potential customers and gain market share as these areas show the highest number of potential customers in the target group, the highest level of convenience for cycling, the highest cycling traffic volumes and the most advanced cycling path network. An additional advantage is that the high service rate would increase customer satisfaction as bicycles will practically be available all the time in these areas. Furthermore, personal experience with being a bike commuter has shown that some areas in Seattle, such as the more minority populated Columbia City and Mt. Baker or Northgate and Downtown are just not very attractive biking areas as all these areas exhibit steep ascents, a high traffic volume and lacks of good bike paths. Therefore, the approach of LimeBike to specifically focus on these areas (as shown in Figure 9) makes a lot of sense. The bikes could accordingly be placed in adjacent furnishing areas that conform with the Right-Of-Way requirements, but where the level of attention is high, such that customers can find the bikes easily.

As mentioned earlier, we want to minimize our costs during the phase where we want to gain market share. Thus, everything that requires extensive cost needs to be avoided. In addition to affordable bike acquisition and maintenance costs and cycles, the main identified cost drivers are the personal hours that need to be invested to rebalance the bicycles, change fleet sizes and to offer the required 24 hr phone support and the administrative efforts on changing fleet sizes and service areas. The first can be reached through avoiding unnecessary rebalancing efforts, such that the number of employees can be minimized through focussing on smaller main service areas (which we have seen above). The second can be achieved through keeping the fleet size flat, even though the demand might be much lower during low season. This was visible in Seattle last winter when many bicycles were not moved for many weeks. In an ideal and free market, this could be achieved through limiting the service areas to a minimum around the identified areas, while providing quick and convenient support.

In the Seattle case, the rules that really affect the way how the company can operate within this given frame compared to a free market are the Tier 1 Priority Hire neighborhoods, the maximum bike density, the minimum fleet size with relatively inflexible numbers and the maximum parking length. The neighborhood coverage can be achieved easily in this case, as the areas of Ballard and South Lake Union are defined parts of these neighborhoods and are placed within the favored area of service. Thus, when further expanding the service area to the North and the South, including South Seattle and Northgate will account for this requirement. The issue with this requirement is that the policy only requests these neighborhoods to be part of the service area, not that there has to be a significant amount of bicycles offered at all times. Therefore, biking companies can easily find a work-around through just deploying a few bicycles in that area while focussing their main efforts on the areas with higher attractiveness. The unintended consequence of this is that officially the low-service areas are part of the framework but do not receive a service rate that makes it actually attractive to rely on the service. The maximum bike density requirement might still be too weak to be a meaningful countermeasure with 340 bicycles per square mile. At the same time the minimum fleet size might still be insufficient to be a meaningful countermeasure for this either. When the objective is to give access to these bike sharing services to lower income and less privileged minority groups, it would be valuable to furthermore extend the bike share permit requirements by a minimum bike density requirement, such that reliable service is provided in all areas.

Furthermore, we have identified that for companies rebalancing and fleet size change efforts are a major cost driver. This is where the efforts of the city to achieve stable fleet sizes conflict with the maximum parking limits. Hence, the high fleet sizes cause long parking times during fall and winter when cycling is not as attractive due to the weather conditions, which could be a source of complaints by affected residents. There, adapting the policies to allow an easier, cheaper and quicker process to adapt fleet sizes based on the season are desirable.

However, we need to ask ourselves, whether this will be enough to ensure equitable coverage. As I have pointed out earlier, cycling is a mode of travel that is not too much affected by income and race. Thus, the demand within these groups is similar to the ones in the focus areas of the bike sharing companies. Figure 10 shows the median income distribution in Seattle, which confirms that the current focus of the companies lies in an area with moderately high median incomes, while mostly ignoring the lower income areas in South and North Seattle.

Figure 11 furthermore shows the density of people of white ethnicity in Seattle, which confirms a correlation that the focus areas are mostly built around white dominated parts of the city. Even the proposed adaptations of the requirements would probably not have a significant effect on this, since the definition of Tier 1 Priority Hire Areas is not detailed enough. What I would propose is to require bike sharing companies to offer services in areas that account for minimum numbers of bikes in low income areas as per detailed neighborhood structures instead of ZIP codes as this higher level of detail is required to really make a difference for a wide availability of these services, while still allowing sufficient flexibility for the companies to focus on their desired areas. These could be added in a revised version or after completion of the pilot for a permanent policy.

To sum it up, I found the current measures that the City of Seattle takes to account for equitable service areas as insufficient to achieve their goals considering how the bike sharing companies can fulfill these requirements without actually reaching an effect. Instead they optimize their way on how to gain market shares, which appears to be reasonable given the high competition, but should be further restricted in the long term through adaptations on the density requirements, the fleet size adaptation processes and the equity neighborhood service constraints. In this way, the goals of the City of Seattle on equitable access and reasonable service areas and availability could be better achieved and the regulation framework could be improved.