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Where we stand on dockless bike sharing

by Kevin Bell | May 08, 2018

Here at Boulder Bike Sharing (doing business as Boulder B-cycle), we’ve been keeping a close eye on the dockless bike sharing industry since it first came on our radar in 2016. With the City of Boulder currently working on regulations for dockless bike sharing to operate in Boulder, we want to proactively let you know exactly where our organization stands on the issue.

Background:

As Boulder Bike Sharing, the 501(c)(3) nonprofit owner and operator of the Boulder B-cycle station-based bike sharing system, we are an independent, mission-driven nonprofit. We operate under a master agreement with the City of Boulder, and they, along with a collection of generous sponsors and corporate members, contribute around 60% of our total operating budget each year. The remaining 40% comes from riders paying to use the system.

Our mission is as follows: We are dedicated to implementing and operating a community-supported bike-share program that provides Boulder’s residents, commuters and visitors with an environmentally friendly, financially sustainable, and affordable transportation option that’s ideal for short trips resulting in fewer vehicle miles traveled, less pollution and congestion, more personal mobility, and better health and wellness. Since 2011, the Boulder B-cycle program has provided 400,000+ rides, with about one in three of these replacing vehicle trips and most costing riders less than other modes (personal vehicle, transit, and ride-sharing).

Dockless Rising:

Within our mission, we embrace new technologies that can bring biking to more people, and we believe that it’s possible for dockless bike sharing to provide a real benefit to the Boulder community. Dockless bikes are shared bikes that don’t depend on the infrastructure of stations for access. Instead, they are equipped with GPS-enabled, smartphone-activated locks that immobilize the rear wheel of the bike when not in use, though some dockless bike models also tether to fixed objects like bike racks.

We aren’t married to any one particular bike sharing technology, and indeed, the future of bike sharing may be dockless. But it’s by no means guaranteed. Both the dockless bike sharing model itself and the for-profit structure under which all dockless companies currently operate translate into substantial changes to the rider experience and to the relationship between a bike share program and the community it calls home, and it behooves communities exploring dockless bike sharing to consider these changes in full.

Benefits and Drawbacks:

Since May of 2011, we’ve successfully operated a dock-based system here in Boulder with an extremely high level of predictability and accessibility. This is largely due to our commitment to actively redistribute bikes and reward riders for their own rebalancing trips in order ensure availability for riders who want to depend on bike sharing as part of their daily transportation habits. Indeed, the Boulder B-cycle system operates 24 hours a day, its stations are operational in excess of 98% of this time, and they spend less than 4% of that time either full or empty. Dockless bikes de facto avoid full or empty station problems, and they offer riders the appealing feature of ending a trip away from a station, though in order to model the beginning-of-trip predictability of station-based systems, dockless systems will require an equal (if not greater) operational investment due to the need to collect bikes from a much wider range of possible destinations.

As far as the convenience of accessibility is concerned, our docking stations allow riders to check out bikes using a credit card, a membership card, a text message, or a smartphone app. We believe that this level of accessibility is critical to ensuring that as many types of people as possible have access to our bikes. By contrast, dockless companies require either a location-enabled smartphone app, or a charged cell phone to check out bikes. While the market penetration of smartphones is increasing, we believe that limiting checkout methods in this way presents mobility obstacles and ultimately excludes part of the population that would otherwise choose to use bike sharing.

The ability to end a trip anywhere is a positive end-of-trip benefit for riders, though attention to the potential impact to the public right-of-way is needed. While well-run dockless systems aren’t prone to the kinds of worst-case scenario images that are making their way around the internet, they do depend much more on scrupulous behavior by all riders to avoid locked bikes obstructing sidewalks and bike paths. This can occur whether or not dockless bikes are tethered to locking infrastructure, though systems operated in an untethered manner introduce the possibility of non-riders relocating the bikes by simply lifting up the rear wheel. Boulder’s current dock-based system makes use of public right-of-way and private property, but it does so on a fixed basis according to the limited square footage and locations set aside for us in established permits and license agreements.

Notwithstanding these concerns, dockless bike sharing does provide benefits that a dock-based system cannot. In addition to allowing riders to end trips at destinations of their choosing, lower-cost bikes allow companies to deploy many more when launching a system, with these costs borne by private companies and investors. This funding structure could be a boon to cities, potentially eliminating the need to subsidize operations and source grants. However, the long-term financial viability of dockless companies has yet to be tested, and the difference between for-profit and nonprofit business models is perhaps just as important as the docked-versus-dockless discussion.

Behind The Scenes, and Why It Matters:

As a community-based nonprofit, one of our most important values is transparency. We believe that planners, researchers, advocates, and the general public have a right to have access to anonymous bike trip records and our financial information. For that reason, on our website, any member of the public can view and download records of more than half a million bike checkouts since we launched in 2011. Our annual reports and IRS 990 forms detail our finances, showing where our funds originate and how they are spent. And while we’re very open about our organization’s data, we’re also very protective of our user’s personal information; we will never, ever sell our users’ data to a third party.

While for-profit companies have so far stated that they also do not sell rider data, the prevailing wisdom among industry business analysts is that the venture capital investment driving dockless bike sharing companies so far assumes revenue streams beyond simply bike use, including mining user data. Competition between dockless companies could explain why these companies don’t disclose metrics such as actual operating expenses, cost recovery from user fees, and trips per bike per day, but this lack of transparency creates one more obstacle to assessing the viability of this new business model. To be clear, our experience points to bike sharing not being a profitable industry in Boulder.

This brings us to the subject of financial sustainability. We’re entering our eighth year of business here under a consistent business model in which the portion of our operating expenses not covered by user fees is subsidized by a collection of generous local sponsors and an operating grant from the City of Boulder. In 2017, 43% of our operating costs were recovered from user fees; when our corporate membership programs are included, that figure jumps to nearly 60%. Consequently, the Boulder B-cycle system’s per-trip cost and farebox recovery are impressive when compared to transit, and our sponsor-based model means that we have no investors seeking a cash return on investment.

A Dockless Future?

Ultimately, given this current reality, here’s where Boulder Bike Sharing stands on dockless bike sharing: the technology behind it is promising, but communities must be vigilant in ensuring that bike sharing programs continue to provide dependability, accountability, and affordability. This means ensuring adequate operational investment in both rebalancing and maintenance. It means ensuring that data captured by bike sharing operators is shared in a way that benefits the community. It means having a larger conversation about whether or not we’re satisfied to have access to a cheap service in exchange for sacrificing the privacy of our personal data. We would be more than willing to partner with a dockless bike sharing company here in Boulder, provided that company is willing to make the investments and commitments necessary to create a quality program for the Boulder community.

In the long run, our vision for bike sharing in Boulder is one that includes the flexibility and lower capital costs of dockless systems, while maintaining the dependability of station-based systems, and the transparency of nonprofit systems. The closest extant program to this vision to date is Portland’s Biketown program, which operates on a smart bike and geo-fenced simple hub model, allowing riders to pay extra to lock a bike away from a hub, and to receive credits for bringing bikes back to hubs that have been locked up elsewhere.

Whether or not this vision will be fulfilled depends on a number of factors, including regulation, availability of funding, and the will of the Boulder community. In the meantime, we’ll continue running the best bike share program we can with the resources that are at our disposal.

Ride on,

The Boulder B-cycle Team

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