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Don't Tell Me Letting Uber Ignore Rules Is about Competition

If regulations don't apply to Uber, they shouldn't apply to taxis either.

By Kevin Campbell 28 Jan 2016 | TheTyee.ca

Kevin Campbell is an investment banker at a securities firm headquartered in Vancouver, B.C. Find his previous Tyee columns here.

I was in Houston, Texas, last Thursday when the BC Liberals performed an about-face in favour of Uber, a controversial transportation provider seeking access to the B.C. market.

At the end of my night, I asked the bartender for the name of a cab company. He told me to use Uber because a taxi would take between 60 and 90 minutes, and might not come at all.

Always a skeptic, I searched Houston taxi and called the first result. They answered after one ring and the cab arrived in six minutes. Such is the fetishization of Uber, all things ‘app' and faux free markets, at least in Texas.

Yet there is little capitalistic about Uber, or more specifically UberX, a service that connects unregulated drivers with customers as an alternative to taxis.

Consumer choice and innovation matter, but the essence of capitalism is fair competition. A level playing field means that either Uber has to comply with existing regulations that apply to taxis, or we deregulate taxis down to Uber's lower standards. You can't have it both ways and claim you're promoting competition.

Our transportation regulations were put in place by elected officials. If consumers and voters want to get rid of them, the lower standards (and cost structures) should apply to everyone in the market.

Why deregulate?

It's beyond me why anyone would choose deregulation on issues of public safety, insurance coverage, environmental compliance and transparent pricing, but this is a democracy. (I also wonder which regulated industry would be next? Will hobbyist electricians hired through an app wire your home, or an unlicensed physiotherapist show up to try to treat your herniated disc? A lot of rules can go by the wayside when cost and convenience take absolute supremacy in consumers' minds.)

Tangentially, I wonder why it's seen as a good thing to introduce changes that replace full-time work driving a taxi with part-time drivers. About 85 per cent of UberX drivers are on the job part-time, with half working less than 10 hours per week. When they work, the drivers naturally target periods of peak demand, taking the fares that a full-time taxi driver needs to subsidize the provision of service during the slower parts of the week.

And when one thinks about the taxi industry being "disrupted" into non-existence, think hard about the disabled's ability to get around.

Perhaps an employment debate is academic anyway, as there is evidence pointing to Uber's endgame of removing human drivers from its business model altogether.

I also wonder why we would choose to accrue profits to a handful of billionaires and venture capitalists in Silicon Valley instead of to local cab owners. At least 20 per cent of every Uber fare goes to the mothership in San Francisco. A chunk of that ultimately ends up in the hands of Google Ventures, a coven of Goldman Sachs private clients and CEO Travis Kalanick, the subject of no end of unflattering media profiles. Uber was recently valued at an estimated US$62.5 billion.

Finally, does anyone else find it unsettling how the company has barged into so many markets in defiance of host governments? In Toronto, Uber "declined the offer" last fall when city council asked it to halt operations while new regulations were developed. Four months after council passed a bylaw requiring UberX to obtain a licence, the company still hasn't done so. Imagine if a food producer decided to simply opt out of B.C. government regulations. Still, many markets have more aggressively paused or purged Uber's unlicensed services including Germany, the Netherlands, South Korea and -- up to now -- B.C.

Change of heart?

What prompted the BC Liberals change of heart on this issue? It may well be a perceived response to public opinion, or even a sudden surge of ideological faith.

But for an alternative explanation, look to Uber's tremendous lobbying strength. Uber is notorious for bending the wills of politicians, employing an army of 250 lobbyists and 29 lobbying firms in the U.S. alone. And that doesn't include its lobbyists at the municipal level.

In B.C., Uber's lobby effort involves two ex-members of Premier Christy Clark's staff, including her former principal secretary Dimitri Pantazopoulos.

Whatever the impetus, Premier Clark's mind seems to be made up as signaled by this sham of a poll on the party website.

If you've got grievances with our taxi industry, let's hear them. If their apps aren't up to your standards (the one I use certainly gets the job done), let them know. If there are not enough cabs on the road, write your elected representative to ease zone restrictions and issue new licenses. But, as someone who travels abroad frequently, I defy you to find a fleet of Prius taxis sporting free Wi-Fi anywhere else.

Challenges to Uber tend to solicit strong emotional responses from its devotees. I don't quite understand why, but I also have never lined-up in the morning rain to buy the next iPhone iteration.

So, if the preceding words have upset you, please revert to my core point: Choose away. Roll the dice and turn back the clock on safety and regulations. But give all participants the same chance to succeed, where everyone plays by the rules or no one does. Otherwise, instead of just sacrificing taxi licensing standards we will be sacrificing something far more fundamental -- the principle of fairness.  [Tyee]

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