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Uber gets a lift from the Competition Bureau
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Uber gets a lift from the Competition Bureau 

“The check engine light is glowing on the dashboard of the Canadian taxi industry,” John Pecman, federal Commissioner of Competition said is a white paper released last week. “What has traditionally been a tightly controlled business is now threatened by ride-sharing services that operated outside existing regulations. These new services, like Uber and Lyft, use technology that deliver advanced offerings that can sometimes provide cheaper, higher-quality services for Canadian consumers.”

 

The paper said that while taxi operators “bound by existing regulatory rules” are calling on cities to “do something” about the new entrants, regulators need to overhaul such rules “before the whole taxi system seizes up.”

Uber Technologies Inc., is an American international transportation network company based in San Francisco, Calif. Founded in 2009. The company developed a mobile app which allows consumers with smartphones to submit a trip request which is then routed to Uber drivers who operate cars that they own.

Rides provided by Uber drivers are typically 40% cheaper than the cost of traditional taxi fares and many customers say the wait times are half as those of traditional taxis. Uber is now available in 58 countries and some 300 cities.

The lack of an even playing field has been a sour point for traditional operators.

The service has met stiff opposition from traditional taxi operators and drivers, even in Canada, because Uber drivers are eating into their marker but are also not subject to regulations and licence costs which the old school services have to shoulder.

In many jurisdictions, traditional taxi services cannot vary their prices in response to consumer demands, they are bound to drive only certain types of vehicles and only a limited number of taxis are allowed on the road.

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competition but provide for oversight and public safety, and the demands of consumers, who are attracted to the low prices and high service levels of innovative new providers. Some regulators have tried to use law enforcement and the court system to bring everyone up to the existing standard of regulated taxis, with mixed results for businesses and more negative results for consumers.

The good news is that developments to date point to a clear way forward: If the old ways cannot bring about a satisfactory solution, then all that is left is to embrace change.

In most municipalities new taxi plates are not issued every year, but rather based on population growth or other policy considerations. While some taxi drivers may own their plate, others must rent from a taxi brokerage or other private party. A substantial number of the available plates are held by owners who do not drive taxis themselves, but instead hold them for rental income or investment purposes. For instance, the cost of a single standard taxi plate could reportedly be as high as $360,000 in Toronto, according to the Competition Bureau.

In issuing its recommendation, the government body is acknowledging the rise of mobile and sharing economy or so-called “Uberification” that is altering various traditional business models.

In recent years, for example, the hotel industry has been faced with the challenge of Web sites that serve as listings for people who are offering their own rooms and homes for rent and for people who are looking for temporary lodging. One of the most popular sites is Airbnb which has over 1.5 million listings in 34,000 cities and 190 countries.

In cities like Toronto, Montreal and Vancouver, charges have been laid against hundreds of Uber drivers. The service has been banned in Vancouver and Halifax and Uber has been suspended temporarily in Calgary.

But Pecman believes banning the service is not the answer.

“The arrival of ride‑sharing services presents an important opportunity for regulators—an opportunity to inject increased competition into the taxi industry by creating a single, level playing field for all,” he said. “Consumers would benefit from competitive prices on a variety of innovative choices while all service providers would have an equal chance to compete.”

For example, the bureau’s report found that since Uber was introduced in Toronto the price of taxi plates has gone down from $360,000 to $188,235 in 2014.

The current environment “demands a re‑think of existing regulations to provide an even playing field upon which ride providers can compete,” Pecman said. “Ultimately, regulations on taxis need to be relaxed, and regulations on new providers may need to be increased to ensure that legitimate policy objectives like public safety are met.”

Ian Black, general manager of Uber Canada, said the bureau’s report confirms that current bylaws are anti-competition.

“Taxis should have a lower regulatory burden and be allowed to compete in a freer market,” Black said in an interview with the Star Daily Standard. “Similarly there should be regulations on ride sharing and we welcome regulations on ride sharing in Canadian cities.”

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