The Business of Ride-Sharing

The Uber regulation struggle has finally reached a tentative conclusion, and I for one cannot be happier to move on to other topics. Not because this debate was unimportant, but it has taken up it’s fair share of our time and the public discourse over the past year.


The City’s Regulations

The new regulations that were approved today in Council are going to change some aspects of the vehicle for hire industry in Edmonton. These changes are going to come into effect March 1.

After that date, Uber will be operating legally, provided that its insurance affairs are in order with the province. There will be a minimum fare for Uber rides of $3.25, but otherwise the only control on Uber rates is that they must provide you with a fare estimate prior to you accepting your trip. Uber will also pay a $0.06 per trip fee that will help to pay for their licensing fees.

For taxi street hails, little has changed. Taxis are still the only type of Vehicle for Hire that are allowed to pick up street hails and use taxi stands. The fares have also stayed the same for rides arranged through a telephone dispatcher.

What will change for taxis is that they now have more pricing flexibility when trips are pre-arranged through a dispatching app. When you book a cab ride through a taxi company’s app, they will have you agree to the fare estimate prior to booking the trip. You will have the option to either agree to the fare or shop around to get a better price. There is no price cap on either type of pre-arranged trip.

We also determined that if in fact Uber or any ride-sharing company employs anti-competitive behaviour over an extended period to purposefully undercut taxis, the City Manager and Council will be able to act and insert a higher minimum fare expeditiously.

In other regulatory news, Uber will pay a total of $70,000 per year as a dispatcher. $50,000 of that is made up by their dispatcher license fee and the licensing fees for their drivers (they must have more than 200 drivers to fall into this regulatory category). The other $20,000 is designated to go to the accessible cab fund, since Uber will be operating without accessible vehicles.

Council’s Role

There has been a lot of fervent disagreement about how Council should act on this issue, and a lot of that debate has come down to what I perceive to be a confusion between equality and equity in this case.

Comparing Uber and the taxi companies, in my opinion, is not an apples to apples comparison. While they are both Vehicle for Hire providers, the philosophical difference comes down to innovation versus the status quo. And certainly, some or our public wants the status quo. But a good chunk of our public, as we’ve learned, wants something new.

So equality is not the goal here, but rather equity - fairness - for our public. This is not about a big, bad, sophisticated multinational giving away free cupcakes, or the local taxi companies who come in to Council and scream and shout and take their shirts off. This about the kind of vehicle for hire service we want to facilitate with our bylaw. It is about Council's role as a maker of public policy, not as a referee in an on-going battle between two different companies. To me, as a policy maker, there are three elements that I consider when looking at creating a bylaw to regulating Vehicles for Hire:

  • Public Safety

  • Consumer Protection

  • Quality of Service

If we as a Council had gone beyond this, I believe we would have been over-regulating. Worse yet, we would have over-regulated to protect a part of the industry that over-regulation has already stifled.

Business is Business

Whether or not members of the taxi industry like to admit it, as an industry in Edmonton, they have some failings to face up to.

Uber launched in its first city in 2011, and had expanded to 9 cities by the end of that year. It became the ride-sharing juggernaut we now know over the next 5 years.

Business owners have a responsibility to keep on eye on potential sources of competition, and it’s fairly clear that Edmonton’s cab industry did nothing of the kind when it came to anticipating Uber’s entry into the market. The cab industry could have launched apps comparable to Uber’s at any time, but instead they took until fall of 2015, almost a year into Uber’s operations in Edmonton, to launch their city-wide app, TaxiCommander.

Taxi companies aren’t running a business in a vacuum, and the city is not their shareholder - companies and owners have the responsibility for keeping up with what is going on in their industry.

Many taxi drivers and plate holders who spoke to Council argued that we should kick Uber out of town and let the taxi industry continue as is. My question to them is, to what end? Is it Uber that is the threat to the taxi industry? Or is it the taxi industry and our regulatory framework itself that has created the conditions for so many of its potential customers to flee at the first sight of a new option? Uber’s growth in our city is because the demand is there, and it should not be ignored.

If we’d ignored it and created prohibitive regulations, this would have done nothing to drive innovation and better service and consumer protection - the very things our bylaws should be creating.

If you want to read more on the evolution of the Vehicle for Hire debate, you can check out my previous posts on the issue: