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Margaret Wente

Margaret Wente

MARGARET WENTE

The Ubers are destined to win the taxi wars Add to ...

Here’s the old-fashioned way to get a taxi in Toronto: Stand on the street and hope for the best. The worse the weather, the worse your chances. Hope the driver won’t be surly if the ride is too short/too long/in a convenient direction. Give the driver (who seems to be new in town) detailed instructions on the route. Be grateful if the car doesn’t smell like vomit/cigarette smoke/mouldy basement. Fork over twice as much as you would in New York, plus tip.

Alternatively, call a cab company, wait on hold for them to answer, then hope somebody shows up in 20 or 30 minutes, or whenever. Good luck!

Here’s the new-fashioned way. Push a button on your phone and GPS does the rest. Your app will tell you who the driver is, where he is, when he will arrive, what his customer satisfaction ratings are and how much the fare will be (including tip). The driver is likely to be courteous and professional; the car up-to-date and clean. The cost is automatically charged to your account – no cash or credit card required. Customers love it.

There’s just one catch. The City of Toronto does not want you to have this service, and has gone to court in an effort to shut it down.

Uber, Lyft and other app-based car services say they don’t need regulation because they are technology platforms, not transport providers. The taxi industry says they should be forced to operate on a level playing field. Across the urban world, the two sides are waging bitter war. In Paris, taxi drivers have slashed tires and smashed windows on Uber cars. In London, they went on strike (resulting in a sharp spike in Uber sign-up rates).

The taxi industry has tried to whip up safety fears, warning that people at the mercy of dangerously unregulated cars and drivers run the risk of accidents, kidnappings, terrorism, sexual assault and worse. But their real fear is obvious: competition. The main purpose of taxi regulation is to limit new entrants and suppress competition, thus ensuring the survival of the incumbents. Taxi medallions and licences are extremely valuable commodities, worth hundreds of thousands of dollars to the people who own them. If new players like Uber are allowed free rein, they’re going to eat the taxi owners’ lunch.

The taxi industry is powerful. As Atlanta Mayor Kasim Reed said recently, “Cab drivers can take you out.” And the regulators are on their industry’s side. This is because of a phenomenon known as “regulatory capture,” which means that the regulated parties often make the rules by which they’re regulated. Regulators are also loath to give up their powers, which they usually think should be expanded. That explains the attitude of Tracey Cook, Toronto’s head of municipal licensing and standards. She argues that since Uber is really in the taxi business, and the city regulates the taxi business, the city should either regulate Uber or shut it down.

Uber can afford to fight these battles because it has more money than God – with ungodly arrogance to match. The company, launched in 2010, has a valuation of $18-billion, more than Hertz and Avis combined. Its long-term mission is nothing less than to reinvent transportation. It wants transportation to be as accessible as running water – so accessible that people won’t even need to own private cars. You might think this appealing vision might catch on in progressive cities like Toronto. Yet progressive cities are putting up some of the biggest fights to stop it. The company can’t even get a toehold in Vancouver.

But ultimately, Uber (or others like it) will prevail. Their technology is superior and their services are highly popular with the public. Their business model is bound to make the hidebound taxi industry and its tortuous regulatory regime obsolete. Thoughtful politicians, like Toronto’s incoming mayor John Tory, understand that. These services are “here to stay,” he said this week.

In the meantime, be prepared for a knock-down, drag-out brawl. People with a lot to lose – industry or regulators – do not go quietly.

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