We've seen the problems with the taxi system as it is. The Bloomberg administration's "Borough taxi" proposal is pretty complicated. The City will auction off 1,500 new citywide taxi medallions, and the bidders will get 6,000 new "borough only" medallions. The details are hazy, but it sounds like if you buy one citywide medallion, you get four "borough only" medallions free.
Why such a complicated proposal? Let's look at some other possibilities. First, what if the city got rid of the medallion system and simply charged a nominal fee to every taxi driver? Yellow cabs are already charged $550 per year, and livery cabs pay $275 per year. So $550 a year and you can operate a yellow cab anywhere in the city.
I would imagine that most of the livery cabs would convert to yellow cabs as soon as they could. You'd see a lot more taxis in Manhattan at rush hour, and less in the "inner boroughs." On off-hours, though, you'd see a lot more taxis in the boroughs because there just wouldn't be enough demand in Manhattan for all the cruising cars. Would the quality of driving in Manhattan decrease? I'm not convinced. Certainly, reliability in the inner boroughs would go way up. Would there be taxis cruising outer neighborhoods like Bellerose and Throgs Neck? Doubtful. So this would help the availability problem in Manhattan and solve the reliability problem in the inner boroughs, but it might reduce availability in the inner boroughs.
What if instead we added some yellow cabs, and then converted all the livery cabs to "borough taxis"? The borough taxis would be painted a uniform color scheme and outfitted with meters and availability lights, and allowed to pick up street hails and set up legal taxi stands - but only outside of Manhattan below 96th Street. There would be a fee, but it would be lower than that for yellow cabs. The additional yellow cabs would take care of the availability problem in Manhattan, and the standard color, lights and meters would take care of the reliability problem in the boroughs. The availability problem in the outer boroughs would remain unaddressed.
So why make it so complicated? There are people who claim that yellow taxis are safer, but the medallion system only reduces the pool of drivers, it doesn't come with any additional safety requirements. In fact, Bruce Schaller found that livery cabs have 3.7 livery crashes per million miles traveled, as opposed to 4.6 yellow taxi crashes. You could argue that taxis cause congestion, so we want to keep the overall number of taxis down, but the medallion system just winds up concentrating them in the area with the most congestion - Manhattan below 96th Street. A congestion pricing system - even one just for taxis - would be a more effective solution.
Stay tuned for the answer.