Dockless Bike-Sharing: the next regulatory quagmire

by Conor Brennan on 15 Aug 2017

This summer, Londoners will have noticed the addition of new bicycles parked in various locations across Britain’s capital. Closer inspection of these bikes reveals that they are ‘oBikes’ - a bicycle which you can unlock with an app on your phone and use at very little cost, without the need to park at docking stations. 

This is the premise of dockless bike-sharing schemes – a transport sharing model which is growing rapidly across the world.

Dockless bike-sharing schemes use the connective power of smartphone technology to make hiring a bike easier and more convenient than ever before. Typically, users download an app to their smartphone, locate an available bike via an interactive map, scan the QR code on the bike’s lock to unlock it, and when they are finished using the bike, simply manually close the lock to stop the timer on the app. The environmental, economic and health benefits to such a scheme are immediate and manifold.

Where there is rapid growth, regulation is likely to follow

Like most fast-growing innovations in the broad sector known as the ‘sharing economy’, where there is substantial growth, regulatory scrutiny is likely to follow. These new bike-sharing schemes appear to be no different. Currently, from a UK perspective, it is a regulatory ‘grey area’ when it comes to rolling out this new transport model in cities. Aside from the obvious safety standards of the product and liability issues that come with the service industry, as no additional infrastructure is required (e.g. docking stations or pay points) local authorities do not have defined licensing regulations currently in place for dockless bike-sharing initiatives.

Such a dearth in explicit local authority powers to regulate which companies enter its jurisdiction has caused Cambridge Member of Parliament Daniel Zeichner to call on central government to give local authorities increased powers to regulate bike-sharing schemes. At the time Cambridge City Council was reproaching bikes-sharing company Ofo for launching in the city without full permission, particularly citing street clutter as a key issue. Ofo soon re-launched the service with a fraction of the number of bikes that they had initially envisaged.

This is an example of local authorities utilising their soft power to deter unwanted bike-sharing companies from entering their city. However, some local authorities are worried it is not enough. After oBike launched in London, Hammersmith and Fulham Borough Council publicly criticised oBike for their lack of engagement, while Transport for London (the body that oversees the established Santander Cycle scheme, which uses docking stations) announced “We'll not tolerate people bringing schemes to London without engagement. We'll remove them if they are causing any danger”. Hammersmith and Fulham has taken to pinning notices on some oBikes stating that it is viewed as abandoned property and will be removed under the Highways Act 1980. Similarly, this summer, in Ireland, Dublin City Council reprimanded Bleeper Bikes for entering the city “without permission” and called for the City Council to quickly draw up new ‘bye-laws’ to regulate bike-sharing schemes.

In the last three months, the UK also saw two other large-scale launches in Bristol (YoBike) and Manchester (MoBike). Both of these launches had the backing of the local authority, and local residents and visitors to these cities will notice how each initiative has quickly ensconced itself into the city environment. However, oBike appears to have sufficiently ‘rocked the boat’ that some stakeholders believe it is now time to subject this new transport model to the same rules as traditional docking bike-share schemes. Two possible ways the industry may introduce new guidelines, where we have already seen some progress made, is through self-regulation by way of an agreed industry code of conduct or a top-down central government piece of legislation to delegate specific powers to local authorities.

Is the market too fragmented to self-regulate?

In the case of self-regulation, or an industry code of conduct, there has been some progress made in the UK.Bikeplus, a UK body for bike-sharing, has published a guide to “Successful Bike Share Scheme Development” and has developed an accreditation scheme for private companies. Already some bike sharing companies have registered with Bikeplus and signed up for the voluntary accreditation. It remains to be seen whether this project will expand across the market and ultimately form the basis of a regulated market in the future.

Ultimately, competing operators have been slow to pull together to form a unified position of the gold standard for dockless bike sharing in the UK. Instead operators tend to rely on individual local authorities approving particular schemes, leading to varying degrees of quality and standards across different locations. Ofo, for instance, has published its own Code of Conduct and self-imposed standards that it will adhere to. For those operators that do not sign-up to the voluntary Bikeplus scheme this approach may be an attractive option, but it further fragments the minimum standards in the market.

Growing calls for Government intervention

When the aforementioned Daniel Zeichner MP questioned the Government on bike-sharing regulation, he was told by the UK Transport Minister that the department is “monitoring” the situation. This procedural response did not please the Labour MP. His idea is that central government should give local authorities specific powers to regulate bike-sharing as they wish. As we see more bike sharing schemes rolling out across the UK, we can expect some local MPs to voice concerns over aspects of the schemes (street clutter; safety; privacy; vandalism; cost to local authorities etc.) and the lack of power for local authorities to dictate the terms of how these schemes operate.

At European-level, a common position paper was issued by the International Association of Public Transport (UITP), the European Cyclists’ Federation (ECF), and the Platform for European Bike Sharing and Systems (PEBBS) on what they term “unlicensed dockless bike sharing”. The paper proposes a template framework which local authorities can adopt to manage the arrival of dockless bike sharing schemes. A key recommendation among the suggested principles of any framework is that public authorities have the power to approve a shared bicycle company to operate in a certain location through a licensing regime, similar in many respects to the tendering process used for docked bike sharing schemes.

There is no doubt that the organisations involved will use this common position to promote their concerns among officials in Brussels.Whether this framework for regulating bike sharing gains traction at EU-level remains to be seen. This is not inconceivable given the work the EU is engaged in on the sharing economy recently. The European Commission has developed guidelines for the ‘collaborative economy’ which is likely to be more detailed and address sector-specific issues, like the on-demand transportation market, in the future.

Will Europe inevitably follow Asia?

Although large-scale dockless bike sharing may be a relatively new challenge for city authorities to overcome, there are some cities in Asia which have seen enormous growth of bike sharing for many years. The top two companies operating in the Asian market, Mobike and Ofo, have built 11 million bicycles and raised over $2.1bn combined in the last year. Some authorities feel the service has overwhelmed cities and earlier this year Singapore issued a new regulation which will fine operators that do not ensure its bikes are parked in the designated locations, while Beijing has capped the number of shared bikes allowed in the city and eight districts in Taipei, Taiwan will ban all bicycles from being parked in paid parking slots for motorbikes.

It would be too simplistic to conclude that just because the Asian market was ahead of Europe in introducing large-scale dockless bike sharing, that the same reaction will play out in Europe. For one, the roll out of these schemes is likely to be on a smaller scale and in a more phased manner. It is also worth noting that key stakeholders in the debate will be familiar with many of the stories of mass deployment of bikes in Asian cities and are wary of the same process happening here. At this point it is too early to predict if, and how, European regulatory authorities will react in kind.

For now, the approach of various local and city authorities in the UK and across Europe is likely to remain varied and cautious. Despite the absence of a uniform regulatory framework, large bike sharing companies will continue to invest in new marketsto introduce the next generation of bike sharing, giving cyclists greater freedom at a lower cost - we await to see how any new regulations impact on this expanding industry.


Topics: Energy policy, UK politics, UK business, Economic policy, Big Tech, Conor Brennan

Conor Brennan

Written by Conor Brennan

Conor is an experienced consultant who advises clients in the data economy, insur-tech, and energy sectors.

Get the latest updates from our blog

Related Articles

In advance of the General Election on 4 July, Parliament has been formally dissolved. This Parliament, ... Read more

The Digital Markets, Competition and Consumers (DMCC) Act establishes a new regime for digital competition in ... Read more

The prime minister has announced that he is calling a general election on 4 July. Here is what happens next. ... Read more

The Media Bill is a broad piece of legislation which will, amongst other things, makes changes to the way in ... Read more