Transit and Micromobility (2021)

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10 Micromobility Devices and Business Models When docked bikeshare appeared in North American cities a decade ago, it emerged as a valuable service that offered wider access to clean, low-speed urban transportation and helped extend the reach of public transit networks. Few could have imagined the explosive evolu- tion of small, low-speed mobility into the variety of devices, business models, and operational arrangements that characterize the sector now known as “micromobility.” This growth has been accelerated by major infusions of private capital, rising popular enthusiasm for micro- mobility devices (both personally owned and deployed as shared services), and economies of scale for the devices and technologies that make micromobility possible. Public agencies face a moment of inflection; as the landscape of mobility options evolves, profound impacts for urban transportation may emerge from the shared bikes and scooters found in ever greater numbers in our cities. To date, much of the discussion about shared bikes and scooters has focused on impacts and regulations at the municipal level, with little consideration of the ways these new services interact with public transit or how transit agencies in particular can leverage the benefits and address the impacts of these new ways of getting around. In investigating these impacts and relationships, this study considers micromobility’s interactions with transit in geographies representing a range of urban environments, agency sizes, economic circumstances, policy climates, and existing mobility networks. Agency responses to micromobility, particularly in its dockless and motorized forms, have varied widely, from free-market pilots to bans. Municipalities were more prepared and knowl- edgeable than during the largely unregulated appearance of ride hailing, but some cities have clamped down severely, prohibited the services outright, or been very slow to create permit regimes before the services’ uptake or impacts could be understood. Transit agencies, more focused on their own operations, facilities, and ridership, have a different set of responses available to them than do municipalities and others with more regulatory roles. For transit agencies, the question often comes down to how to collaborate with micromobility companies in order to best build partnerships. As public transit agencies consider whether to work with providers, it is essential that they understand the actual benefits, impacts, and risks of various forms of micromobility to their riders and their bottom lines. Defining Shared Micromobility The term “micromobility” can encompass a broad variety of small, low-speed vehicles intended for personal transportation in urban areas. In popular usage, it is commonly applied to shared bikes (whether fully or partially human powered), motorized kick scooters, and, at times, personal transportation devices like Segways [National Association of City Transportation C H A P T E R 1

Micromobility Devices and Business Models 11   Officials (NACTO) 2019a, 5; Chang et al. 2019, 2; National League of Cities (NLC) 2019, 6]. This definition crosses several modes and does not necessarily accord with statutory definitions of bicycles, electric bicycles, motorized scooters, and other small, low-speed vehicles. In fact, even the definitions of “small” and “low speed” are fuzzy and often vary by jurisdiction or publication. While electric bicycles, or e-bikes, have been described in federal law since 2002 (15 USC § 2085) and a number of state laws since then, electric scooters exist in more of a legal gray area, and both industry and regulators have raced to define them (People for Bikes 2019). The standards organization SAE International published a flexible descriptive taxonomy of micromobility vehicles. The taxonomy is based both on form factor (e.g., scooter, bicycle) and physical characteristics (e.g., top speed, weight, width, and power source). The framework is limited to vehicles that are at least partially motorized (i.e., excluding bicycles that are fully human powered) and without regard for their deployment characteristics (i.e., whether they are personally owned or part of a shared fleet) (SAE International 2019). This provides a useful way to describe micromobility vehicles that is independent of who owns them and how they are made available for use. It also allows future vehicles to be classified based on their physical qualities. This study follows the general parameters of the SAE International micromobility vehicle definition, but it will limit itself to those deployed in shared or rental fleets and will also include standard, unpowered bicycles that are part of a bikeshare service. Specifically, this study considers as micromobility those vehicles that: • Are designed for human transport and use on paved roadways and paths, but excluding mobility aids mainly intended for use by people with disabilities (such as powered wheel- chairs and mobility scooters) as well as low-speed vehicles like golf carts, • Have a top speed of 30 mph or less (regardless of local regulations, which may cap the permitted speed lower), with full or partial human power, • Have an unloaded (curb) weight of less than 500 pounds (SAE International 2019, 6), • If motorized, rely on an electric motor rather than an internal combustion engine, and • Are deployed as part of a shared fleet available for use by the general public. Beyond e-bikes and powered seated and standing scooters, a variety of other devices fall under a general definition of low-speed, powered personal transportation devices, such as Segways, powered skateboards and skates, and powered self-balancing boards (or hoverboards). Since these are largely intended for the individual consumer market rather than fleet deployment, the types are not detailed here. This study focuses on the micromobility modes outlined by the service and vehicle types described in the following. Service Types Bikeshare Bikeshare is a service that offers short-term rental of fleet bicycles, usually for durations of an hour or less. Usage periods can range from a single ride, to 1 or more days, to unlimited rides over the course of an annual subscription (Feigon and Murphy 2016, 5). Regardless of whether it is docked or dockless, bikeshare may use bikes that are fully human powered or that provide motor assist. For more on the latter, see Electric Bicycles in the Powered Vehicle Types section. Operating Characteristics. Bikesharing comes in two major service configurations, docked and dockless, with a third, hybrid bikeshare, growing in use. Docked bikeshare (also called “station-based bikeshare”; see Figure 1) is a station-to-station system in which users unlock bikes from a fixed dock, which generally contains the informa- tion technology (IT) hardware through which it processes payments, unlocks bicycles, and

12 Transit and Micromobility communicates with the system operator’s network about the status and availability of bicycles. The bicycles themselves may contain little or no networked IT hardware. Users can purchase rides or passes via a mobile app or from interactive kiosks located on the docks, and use a key fob or radio-frequency identification (RFID) card, keypad, or app to release bikes from the dock. The location of the technology among the various system components leads to an industry shorthand using the terms “smart” and “dumb”: the dominant dock-based systems can be described as “dumb bike/smart dock” since the bulk of the IT hardware is located in the dock, with none located on the bike [Shared-Use Mobility Center (SUMC) 2019; Hernandez et al. 2018]. Docked bikeshare was the service configuration used in the early 2010s in several large U.S. metro areas for the rollout of public bikesharing, including Denver B-Cycle, Citi Bike NYC, Chicago’s Divvy, and LA’s Metro Bike Share. Due to the larger non-vehicle capital costs and bureaucratic burdens involved in placing dock infrastructure in the public way (and often connecting it to power and communications networks), private operators have been less likely to build docked systems using their own capital, instead generally acting as vendors for public systems (NACTO 2019b). The clear chain of custody for the bikes, along with secure locking at the start and end of rides, seems to result in a lower risk of vandalism and theft than with dockless systems (Hernandez et al. 2018, 13). Hybrid bikeshare uses a mix of technologies from docked and dockless bikeshare. Early on in the evolution of bikeshare, some bikeshare vendors experimented with a smart-bike/dumb-dock approach, which, although it did not become the dominant paradigm in extensive systems, was useful in smaller areas and in limited deployments and provided a precursor to the technologies underlying dockless micromobility. More recently, some systems have begun to fold smart bikes into dumb-bike fleets as other bikes reached the end of their operational life. Enabled by dockless technology, these bikes can be parked using both the traditional smart docking hardware and at “virtual docks” (i.e., anywhere the operator designates, whether it is a Credit: SUMC. Figure 1. Docked bikeshare: Divvy bikes in Chicago.

Micromobility Devices and Business Models 13   dock at all) (SUMC 2019). Hybrid systems are less common than docked systems but appear to be expanding in numbers, while many fully dockless bikeshare operations have contracted or converted entirely to scooters since the height of the dockless bikeshare bubble in 2017 to 2018 (Hirsch et al. 2019). Most hybrid systems are smaller to midsized public operations, such as Portland’s Biketown, Boise GreenBike (Figure 2), Grid Bikeshare in Phoenix, and Relay Bikeshare in Atlanta; there are a number of campus operations as well. Dockless bikeshare (also called “free-floating bikeshare”; Figure 3) locates IT hardware, including a locking/unlocking mechanism, network communications, and global positioning system (GPS) hardware, directly on each vehicle, making them smart bikes. Users locate and unlock bikes via a mobile app. At the end of a ride, users can leave the bike in any permitted loca- tion within an operating area. Locking mechanisms depend on the vehicle. In the simplest design, they contain only a wheel lock. A wheel-locked vehicle cannot be ridden but can still be picked up and moved (or knocked over). Other vehicles provide lock-to equipment— a cable or other device that allows the bike to be locked to a rack or another immovable object. Many jurisdictions require lock-to equipment to help reduce clutter and obstruction of the right-of-way. Dockless bikeshare is characterized by lower capital costs than docked bikeshare. The lower costs are achieved in large part through the avoidance of costs associated with docking infra- structure, but for some providers (few of which are still in operation), at least partly from lower per-vehicle costs—as low as $200 per bike, which was reflected in their more frequent breakdowns and replacement as compared to the heavy-duty bikes used in docked systems or by most e-bike providers (Nikolewski 2018). As a result, user pricing per trip can be lower than docked systems or transit (Hernandez et al. 2018, 32; Nikolewski 2018). Credit: Vanessa Fry. Figure 2. Boise GreenBike, a hybrid bikeshare system.

14 Transit and Micromobility However, the operating burden may be greater due to the greater need for rebalancing, as opposed to a system where docks provide an organizing principle. Rebalancing entails moving vehicles from one location to another in order to match demand and to alleviate pileups of vehicles at popular destinations. In the case of scooters and e-bikes, rebalancing is often also combined with charging operations. A far greater number of dockless services in the United States have been private, for-profit operations than have been public or nonprofit systems. Because of the lower costs, operators can show up in a city and rapidly deploy hundreds or thousands of units, and often disappear just as rapidly. Dockless bikeshare appeared suddenly in many U.S. cities in 2017 and expanded even more widely in 2018, but even before the interruption caused by COVID-19, the mode was largely in retreat, with most providers either shutting down U.S. operations or converting opera- tions entirely to scooters (Hirsch et al. 2019). Only a few fully dockless public systems remained as of mid-2020, including Orlando’s Hopr [formerly Juice (Gillespie 2019)] and Tampa’s Coast Bikeshare. Scooter Sharing Scooter sharing (see Figure 4) is a service similar to dockless bikeshare that uses the same basic technologies to enable the service but relies entirely on motorized scooters (operated either standing or seated—see Powered Vehicle Types section). A version of scooter sharing using larger electric vehicles, more akin to mopeds or Vespa-type scooters, is a growing subset of this market. Most scooter-sharing services are operated entirely by the private sector. Scooter sharing first appeared in Los Angeles County in late 2017, and over the next year spread to a great number of cities, especially in warmer climates (NACTO 2019b). By 2018, starting from almost zero the year before, scooters saw more trips in the United States than all station-based bikeshare Credit: Flickr user waltarrrrr/Creative Commons. Figure 3. Wheel-locked dockless bikes in Los Angeles.

Micromobility Devices and Business Models 15   combined (NACTO 2019b), and more than twice as many in 2019 (86 million scooter trips versus 40 million on docked bikeshare) (NACTO 2020). Operators use a mix of employee labor and independent subcontractors to accomplish charging and rebalancing. While some vehicles do have batteries that can be quickly swapped (which may present additional safety challenges) (Dickey 2019), most devices still need to be directly plugged in for several hours to recharge. This period is often when operators perform other maintenance and checks on the vehicles. Powered Vehicle Types Electric Bicycles Electric pedal-assist bicycles, or e-bikes (see Figure 5), provide riders with a slight motorized boost that increases speeds and eases hill climbing. While state and federal laws define three classes of e-bikes depending on top speed and whether they provide motor assistance, the type most commonly deployed in bikesharing services is a Class 1 electric bicycle, which provides assistance only when the user is pedaling (as opposed to control via throttle) and has a maximum speed of 20 mph [15 USC §2085 defines a “low-speed electric bicycle” as a “two- or three-wheeled vehicle with fully operable pedals and an electric motor of less than 750 watts (1 hp), whose maximum speed [is] less than 20 mph.” This definition is the core of federal consumer product safety regulations (16 CFR §1512.2) that exclude bicycles and low-speed electric bikes from the definition of motor vehicles. At higher power and speed levels, two- and three-wheeled vehicles fall under Federal Motor Vehicle Safety Standards (49 CFR §571.3), which regulate motorcycles and motor-driven cycles under 5 hp. Several states have adopted laws similar to California’s Vehicle Code §312.5 (2016), which defines three classes of e-bikes conforming to the federal definition. Class 1 and Class 2 e-bikes comply with 15 USC §2085, and are distinguished by whether the motor provides assistance only when the rider is pedaling (Class 1) or can be controlled with a throttle (Class 2). Class 3 e-bikes (also called “speed pedelecs”) are similar to Class 1, but with a top speed of 28 mph.] E-bikes offer a number of potential benefits to bikeshare by expanding the distance covered within a given ride time, expanding the reach of the system, making bikeshare viable in areas Credit: SUMC/Creative Commons. Figure 4. Electric kick scooters parked in a corral.

16 Transit and Micromobility with steeper topography, and allowing people with some disabilities or lower levels of physical fitness to use the services (Hernandez et al. 2018). Users respond to these benefits; when Citi Bike NYC introduced e-bikes into its bikeshare fleet in 2018, the new vehicles saw roughly three times the daily usage (15 rides) of the typical human-powered bike in the fleet (NACTO 2019b). Electric Scooters Electric Kick Scooters (e-scooters or Powered Standing Scooters). The first wave of scooter-based micromobility relied almost exclusively on electric kick scooters, or what SAE J3194 calls a “powered standing scooter” (see Figure 6). These one-person electric vehicles have two or three wheels, a platform for the operator to stand on, and are controlled by a throttle, brakes, and handlebars (SAE International 2019, 9–10). Powered Seated Scooters. A second scooter type, mechanically nearly identical to standing scooters, is intended for seated operation, which makes it more useful for people with physical limitations or on longer trips for which standing would be uncomfortable. At the smaller end, these vehicles look like a standing scooter with a bicycle seat post grafted on (see Figure 7), but larger versions of these vehicles segue into vehicles that are difficult to distinguish from motor scooters or e-bikes without pedals. These vehicles are distinguished from their larger motorized cousins (mopeds and motor-driven cycles/motor scooters) in that they stay below statutory limits on speed and power that require a motorcycle or driver’s license. Motor Scooters/Electric Mopeds. The largest of the vehicles deployed as micromobility are Vespa-like motor scooters, which are being offered for rental in at least a few cities around the United States (see Figure 8). These registered motor vehicles are the only micromobility mode requiring titles and license plates, are heavier and more substantial than e-scooters (though still below the 500-lb curb-weight micromobility limit), generally require a driver’s license to operate, and cannot be used in bike lanes or parked on the sidewalk. Despite these somewhat Credit: Flickr user Mike Licht/Creative Commons. Figure 5. A Jump e-bike.

Micromobility Devices and Business Models 17   Credit: Flickr user Tony Webster/Creative Commons. Figure 6. Several generations of Spin electric kick scooters. Credit: BikePortland.org/Bryn Dearborn. Figure 7. A powered seated scooter by Razor.

18 Transit and Micromobility greater user accessibility and regulatory hurdles (and greater vehicle costs), rental rates are in line with other micromobility services (O’Kane 2019). Most operators provide motorcycle helmets as part of the rental (Small 2019). Business Models and Industry Trends The Micromobility Market Shared mobility services have expanded and diversified since the advent of round-trip or station-based carshare in the early 2000s, as illustrated in Figure 9. In the early 2010s, a new wave of shared mobility services led by ride-hailing companies (most notably Uber and Lyft) were increasingly deployed by private companies, with limited regulatory intervention at the outset. Starting in the mid-2010s, more state and local jurisdictions began to regulate shared mobility services’ pricing and accessibility, labor and contracting practices, use of public space, and requirements around data sharing. Several key regulatory actions have led to legal challenges from private operators and others that are likely to be working their way through the courts for some time. The regulatory controversy most relevant to this study is the Los Angeles Department of Transportation’s (LADOT) requirement for micromobility operators’ use of the Mobility Data Specification (MDS), which has attracted privacy lawsuits from Uber/Jump and civil liberties Source: SUMC. Note: P2P = peer to peer. Figure 9. Shared mobility services have expanded and diversified since the turn of the 21st century. Credit: Flickr user Phillip Pessar/Creative Commons. Figure 8. Revel shared mopeds in Miami.

Micromobility Devices and Business Models 19   Source: NACTO 2020. Figure 10. Micromobility adoption—particularly uptake of scooters—is taking place at an accelerating rate. and privacy advocates (Hawkins 2020). The subject of MDS and data policy is explored at greater length later in this report. Dockless micromobility represents the most recent evolution of shared mobility. With the introduction of new free-floating modes, more jurisdictions have shifted to managing the public right-of-way for these services, including regulating whether they may operate on sidewalks or roads or in other public spaces. Micromobility adoption has grown rapidly, accelerating since shared scooters’ appearance in 2018 (Figure 10). NACTO estimates that the number of shared micromobility trips in the United States more than doubled to 84 million between 2017 and 2018, with the increase almost completely attributable to the introduction of scooters (NACTO 2019b). In 2019, nearly twice as many U.S. micromobility rides took place on scooters (86 million) than on docked and dockless bikeshare of all types (50 million) (NACTO 2020). Shared scooters and bikes from 19 companies operated legally in some 180 U.S. cities and municipalities on the eve of COVID-related disruptions in 2020 (Figure 11), nearly double the count for the end of 2018 (Smart Cities Dive 2020; NACTO 2019b). The trend is not limited to the United States: the New Urban Mobility Alliance (NUMO) counted micromobility operations in more than 625 cities and over 50 countries around the world as of mid-2020 (NUMO 2020). Dockless scooter programs in U.S. cities are currently dominated by a few major operators, but many smaller regional operators also offer shared bicycles and scooters in a few markets, with some specializing in smaller cities or university campuses. Large programs, with thousands or tens of thousands of vehicles, are in place in large or fast-growing cities like Los Angeles, Washington, D.C., and Austin, while smaller cities or college towns may have fleet counts in the dozens or hundreds.

20 Transit and Micromobility Business Models Transportation researchers have identified a number of ways to classify the business models at work in micromobility. In general, these are based on the public, private, or nonprofit status of the entities that own the service’s assets and operate the services from day to day. Most of the work in this area was done with respect to bikesharing, and for the most part, these frameworks continue to hold for micromobility more broadly. Shaheen et al. (2014) discuss five models: nonprofit; privately owned and operated (the model that applies to most dockless bike and scooter services); publicly owned and operated; publicly owned, contractor operated; and vendor operated. Writing about bikeshare only, Hernandez et al. simplify this classification to three types that cover the vast majority of existing micro- mobility services in the United States: nonprofit owned and operated, privately owned and operated, and publicly owned and operated by a third party (Hernandez et al. 2018). This clas- sification scheme is applied to the micromobility market in Table 1. The variety of permitting, franchise, and regulatory arrangements under which micromobility operations take place within these business models will be explored in case studies later in this report. Source: Smart Cities Dive 2020. Figure 11. Locations of dockless vehicle operations in the continental United States in early 2020.

Micromobility Devices and Business Models 21   Business Model Sources of Capitalization and Operating Revenue Operational Functions and Characteristics Notes Example Programs or Operators Nonprofit owned and operated • Startup/capital funding often through public grants, private sponsorships, or philanthropic monies • Operations supported by user fees, sponsorships, ad revenue. • Can access a wide variety of funding sources and operating arrangements • May contract with third-party vendor to operate • Responsive to public interest and local/regional goals • A dwindling model, with more organizations turning over some or all of operations to a mix of public and private entities • RideKC Bike and Scooter (Kansas City) • Pacers Bikeshare (Indianapolis) Privately owned and operated • Private investors fund startup and often much of operations. • Operation supported through user fees, sponsorship, ad revenue, ongoing investor infusions • Often the same company both manufactures equipment and operates service. • Rapid startup and expansion of operations • Daily operations activities (rebalancing and charging especially) often rely on independent contractors, with maintenance performed and overall fleet deployment planned and overseen by employees. • Most common model for dockless micromobility • Often little coordination with local authorities beyond what is required by permit/regulation • Does not require public money for operation, but may increase administrative burden on regulating agencies • Industry marked by ongoing consolidation and vertical integration may present risks for jurisdictions relying excessively on fully market- based solutions • Most scooter operations: Lime, Bird, Jump, Spin • Spin Dayton (privately owned, operations and maintenance by transit agency) Publicly owned, third- party operated • Startup funding often through federal or local grants • Operations funded by public revenues, user fees, sponsorships, and advertising. • Operations may be performed by nonprofit or private vendors. • Operations provided by a private operator that works closely with the sponsoring public entity on system planning and administration • Operating partners often have revenue guarantee and incentives tied to system performance. • Often have exclusive or preferential access to right-of-way • Model most closely tied/responsive to local public agency goals • Divvy (Chicago area) • Capital Bikeshare (D.C. area) • Link Dayton Bikeshare Table 1. Micromobility business models.