The fight against Uber is one the cities can’t and won’t win

As most students know full-well, getting a cab today is not cheap. It isn’t so bad if you have three or four buddies who are willing to split the meter with you but if you’re hailing a cab for yourself it really is your last resort if you have no other way of getting to where you need to go.

I found this out for myself when I took a cab to Brock from home for the first time last week. I was astonished when we pulled up in front of the tower and the meter read $15.00. “What? Really?” I said to the driver. “That was barely a five minute ride!” I protested. “No wonder you guys are getting killed by Uber.”

I didn’t raise my voice or speak harshly with the driver. She understood my frustrations and was sympathetic overall. I simply was unprepared for the cost of the trip.

She explained in detail why the fare was so expensive and entirely out of her control. She also drew my sympathies. Cabbies are a small but very close-knit group. They look after one another, they play by the rules and they generally love the work they do.

As we parted ways and I left for class, I spent a good part of the day wondering if people like her, the old school cabbie, will still have a job in the years to come. When the mobile app, the cellphone and companies like Uber are her main competitors now, does the traditional taxis model really have any hope of surviving the future?

Uber is available in more than 300 cities around the world and expanding fast. Its app technology allows anybody with a mobile phone to hail a cab with the click of a button, putting them in touch with drivers who use their own car and who are often unlicensed. It’s this skirting of municipal bylaws, regulations, license fees and insurance costs that allows Uber to charge a much lower fare than your average taxi company.

Uber was founded in 2009 in San Francisco by two tech geniuses, Travis Kalanick and Garret Camp. It became popular overnight but it was only in 2012 that the company introduced the mobile app onto the global market.

Courtesy of nypost.com

Courtesy of nypost.com

In just a few short years it has made its founders billionaires but as the app has spread so have the challenges. Uber has been sued numerous times in various jurisdictions around the world. Dozens of cities, such as Vancouver and Edmonton, have tried to force the company to comply with municipal regulations, but Uber refuses to give in.

More recently, on September 30, the Mayor of Toronto, John Tory, and city council, voted 32-12 in favour to regulate Uber. Toronto taxis drivers, and the Toronto Taxis Alliance which represents them, have been lobbying the city for months to come down hard on Uber.

“We are not asking for any new laws or regulations. We are simply asking officials to enforce the laws which already exist,” a spokesperson for the Toronto Taxi Alliance said.

“City by-law officers could more aggressively enforce the by-laws; Toronto police are not enforcing the Highway Traffic Act. Two weeks ago, Guelph police charged five UberX drivers with violating Section 39.1 of the Highway Traffic Act in one day.”

During the vote, city council demanded that Uber suspend its service but the company balked. Ian Black, the general manager of Uber Canada, said the California-based company would not comply.

“I think Uber has a responsibility to the 400,000 riders who rely on us for transportation as well as the 16,000 drivers who rely on us for their income, so Uber intends to continue operating in the city of Toronto,” Black said.

While Tory acknowledged that any attempts to introduce a ban on the service would not work, the city should try to level the playing field.

“A legal regime that we have in place should take into account the reality of who’s participating and those who are participating should operate within the law,” Tory said.

But this is much easier said than done. Toronto is not the only city struggling to figure out what to do with Uber. Having the police issue a small fine to discourage the drivers they do find is but a slap on the wrist. Protecting taxi monopolies and forcing Uber to comply with city bylaws also ignores the real issue: an entirely new market has been created.

Toronto city council proposed to reduce the standard taxis fare by $1 as an incentive but even at that, regulated and licensed taxi simply can’t compete with the fares that Uber is charging. When you don’t have to incur the same insurance costs, maintenance requirements, or license fees, it gives you ample room to pass some of those savings off to your customers.

The frustration is starting to show. On October 1, Tory accused Uber of giving the city the “one-finger salute”. The mayor was adamant that the city will not accept a taxi service operating “outside the law” and that “Uber can and must now, in particular, demonstrate that it can earn Toronto’s trust.”

If Uber “turns around after being part of that (regulation consultation) process and say, ‘No, we’re not going to comply with any of these regulations,’ we are then dealing with people who are dealing in absolute bad faith,” Tory said.

To date, only 100 Uber taxi drivers have been charged with breaching city bylaws but even as the mayor acknowledged that the city simply doesn’t have the resources to police every Uber driver. The mayor said that continued opposition from Uber will cost them his support.

“While it still won’t be easy to close them down, I can tell right now they will have lost me as a supporter at that time,” Tory said.

“I don’t believe it is then an act of good corporate citizenship; in fact, I think it’s exactly the opposite, for them to turn around and… give us the one-finger salute again.”

While I sympathize with the average taxis driver who plays by the rules and just wants a fair industry for everyone, they are fighting a losing battle.

The governments around the world trying to regulate the service and force the company and its drivers to comply with regulations will probably win in the end but the mobile app technology has changed the nature of the game.

I think the mayor is right to try and force Uber to comply with city bylaws. If it did nothing it would be an incredible injustice to taxi drivers.

The $1 reduction in fares is gesture politics and for people who use taxis, whether on a regular or irregular basis, who are used to paying high rates, suddenly find their taxis ride is much cheaper, and available at the click of a button, it isn’t difficult to figure out which option people are likely to prefer.

As one taxi driver told me recently, “Toronto cabbies are getting killed by Uber and it’s not because it’s a better service but they just simply can’t compete with the price, it’s impossible to match,” she said.

Mobile technology has entered the business and however much governments want to enforce existing bylaws, they are fighting a losing battle.

It is cheaper, more convenient and as a digital service it appeals to countless party goers and college and university students with limited funds. Sorry Mr. Tory, whether we like it or not, the ‘digital’ taxi is here to stay.

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One thought on “The fight against Uber is one the cities can’t and won’t win

  1. The taxi industry likes to talk about level playing field and that Uber’s cost structure is lower because it’s skirting regulations and insurance and all that. There is some truth to it, but I talked to a full time Uber driver in my city and he showed me his earnings and explained so things to me.

    1- Uber deducts $1.50 (varies by city) for the Safe Ride Fee, this supposedly goes to cover insurance (like their 5 million commercial auto liability policy, which sucks in Canada (it covers everyone BUT the driver and his car, this is not the same in the US where everyone is covered including the driver while working for Uber). Uber’s SRF cut of this driver’s fares was MORE than a typical cab driver would pay monthly for commercial insurance. And the cab driver’s car can sometimes be running 24 hrs/day on that insurance. SO LETS DROP THAT ‘INSURANCE/LACK OF’ IS THE REASON UBER IS CHEAPER.

    2- Uber drivers net (after Uber’s deductions which are 25% for Uber-X, gas, vehicle maintenance/depreciation) is typically around $15/hour. Not bad, but not a glamorous full time career for most people. HOWEVER, lots of part time drivers do fairly well working a dozen hours/week doing bar pickups… sort of cherry picking the busy times, while having normal full time jobs the rest of the time. This is actually good because it helps satisfy peak demand the current system has difficulty with. At the end of a day, an Uber driver probably makes a bit more than a non-owner cab driver, as long as they aren’t working in an oversaturated market. BUT Uber never meant for this to be a full time gig. If it works for you, fine, but it’s really intended as a part time thing or to fill an employment gap.

    3. Licensing is not expensive. Many municipalities only charge a couple hundred/year for taxi/limo licenses, though it varies. Usually this is confused with the plate/medallion cost. Since only a limited number of these are made available by the municipality they become valuable and are traded as a commodity in the secondary market. The municipality makes nothing from that and it just drives fare costs up as drivers have to buy/finance the right to drive a cab from someone who got their plate/medallion years ago for hundreds of dollars. Municipalities have realized the error of their past ways and have tried to make newer plates non transferrable and other restrictions – the intentions were always to limit the number of cabs so they could all make enough money without having to cut corners and operate unsafely.

    4. Uber requires newer cares (less than 10 years) and regular annual inspections. I think compared to some municipalities that require <5 year old cars and DOT inspections, this MAY be a bit more lax, but I've seen a lot of crap taxis in my city. One CityCabs driver in Waterloo has a beat up old Saturn station wagon (GHETTOOO!) others are using ex-NYC cop cars. By contrast ever Uber I've been in my city and when travelling in has been pretty decent.

    5. Taxi drivers have to pay a monthly dispatch fee ($500-$1000 depending on the area, typically). Uber's equivalent to that is 25% of your fare. The dispatch system Uber uses is definitely one of their main selling points.

    If you really look at it, the playing field actually is pretty level (once Uber gets better insurance in Canada, which is coming, and likely won't add significant cost to drivers or riders, it's more of a regulatory approval thing for a hybrid type of insurance like many states now have). The problem for taxis in terms of competitiveness has much more to do with the millstone around there neck known as the taxi medallion (or "plate") that they paid an inflated price for, and their antiquated dispatch system. As a trade off, Uber can't take street hails or use taxi stands (but really, they don't need to…) It sucks for taxi drivers that the world is changing, but the non-owner ones can always just go drive for Uber (and MANY MANY MANY are, in fact 60-75% of my Uber drivers in KW have been ex-taxi drivers)…. it's the taxi/plate owners who are getting screwed, but that's business. Anyone want to buy a DVD rental store? Cheap!

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