These new private bike-share companies are shaking up the established format – partnerships between local authorities and operators – with their new so-called “free-floating”, low-cost, decentralized and non-docking bicycle sharing systems. Looking beyond the actual service provided, these systems represent two contradictory visions that will have to coexist in the streets of our metropolises.
Two business models for two time frames
Dock-based bike sharing schemes, which have dominated until now, have been designed and built with a long-term perspective that includes the tender response, infrastructure development and the building up of subscribers. These multiple steps bind the operator to the community and its customers over the long term. Conversely, the design of the free-floating model focuses on the short term and rapid implementation. In this case, the deployment and use of bicycles does not require prior installations, contracts with city authorities, or user subscription, and can be implemented very quickly, as seen by the aggressive arrival of private companies into the market. It is a promising strategy for investors, with Ofo and Mobike each managing to raise $1.2 billion in funds (The Hustle). However, several hidden costs lie behind this apparent profitability. The first of which are incurred by the operator, who must compensate for the lack of docking stations by having a larger bike maintenance capacity. Then, there are those incurred by the community, which has to deal with the multiplication of bulky and poorly parked bikes in public spaces (The Straits Times). Finally the user also faces the price of not having a subscription, which means no degressive tariffs. Thus, where a New Yorker pays $15 a month for a City Bike pass, and a Parisian pays €39 a year for a Velib’ subscription, a free-floating bike user will quickly find him or herself with a bill of $40 a month if using these services several times a day (CityLab).
Private actors versus public partnerships: a complicated coexistence
To justify their presence in cities that already have bike-share schemes, private actors highlight the complementarity of their services. What might be perceived as competition is presented as an opportunity for communities (Recode). However, it seems that the coexistence of public and private services is more complicated than the newcomers suggest.
In Paris, the arrival of these new actors has coincided with the difficult replacement of JCDecaux docking stations and bicycles with those of Smovengo, the new Vélib’ service provider. This gave a window of opportunity to Gobee.bike and Ofo, during which they took advantage of the inconvenience caused by the ongoing work and the deployment of the new service, to attract customers who had been users of the existing Paris service (Les Echos – in French). And while the City of Paris does not plan on surrendering to these newcomers, there is even talk of introducing a tax to regulate free-floating bicycles (Innovation Mobilité – in French), other cities have indeed abandoned their own services in the face of such competition. This is the case, for example, in Minneapolis and Saint Paul, Minnesota, where city-run bike-share systems have given way to a private, dockless bike share company. The same has happened in Dallas, Texas, where the city council has backed out of a $6 million investment to establish a fleet of 400 shared bicycles, leaving the field open to three private operators (The Huffington Post).