How Uber Is Threatening a Canadian Taxi Monopoly

Ottawa has some of the most expensive cabs in Canada and they want to keep it that way.

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Oct 27 2014, 5:00pm

A Blueline taxi in Ottawa. Image: Wikimedia Commons

Let me tell you a little bit about Ottawa—the same Canadian town where Uber services have been most unwelcome—and its desperate cab situation.

The clock strikes midnight on any given Friday night in the Ottawa suburbs and someone calls a cab from cab companies like Blue Line, West Way, DJ's or maybe even Capital—notably all owned by the same cab quasi-monopoly, Coventry Connections

That ride, from an Ottawa suburb to the heart of the city, will be over $40 from places less than 20 kilometres from the downtown core.

And guess what? The city's taxis are some of the most expensive in Canada.

Enter Uber, which recently launched its UberX app in the city and claims to be offering taxi services at 40 percent less than the Ottawa cab establishment

But just days into the service, which offered lower rates per kilometre, undercover city of Ottawa workers used the app to sting two drivers with $650 fines for operating illegal cabs. 

UberX, which is Uber's rideshare offering, employs drivers who pass a security check to work as cabbies using their own cars. It made its triumphant entrance into Ottawa at the end of September with free passes for a limited time, while offering cheaper per kilometre fares.

Related: Yes, There Is an 'Uber For Weed'

"Costly sting operations that seek to protect a monopoly that has remained unchanged for decades only hurts the consumers that have been asking for expanded transportation choices," said Uber spokeswoman Lauren Altmin to the Citizen at the time. "We don't believe Ottawa citizens should be threatened or penalized for providing a safe and reliable ride to their fellow Ottawans."

THE CITY'S TAXIS ARE SOME OF THE MOST EXPENSIVE IN CANADA

But for Uber this kind of controversy isn't a new development, either. Everywhere the taxi app has gone, it's been met with the same antagonism from the domestic cab industry. For example, there's already bans in South Korea, Germany, and Spain all for similar gripes from cabbies crying foul over the cab app not playing by the same rules. 

Here in Canada it's been no different: Uber experienced stiff opposition in Vancouver, Calgary, Saskatoon, and Toronto where over two dozen bylaw infractions were filed against the app.

Uber's service map of Ottawa's transit system. Image: Twitter

But the monopoly Uber claims is at work in Ottawa isn't far from the truth. The city currently regulates the amount of taxi plates it hands out to a strict 1,188. But there are actually over 2,600 drivers in Ottawa, so some plates are rented out. In fact, if you're a cabbie that has one you're pretty lucky: the going rate is $300,000 for a plate, at least according to Hanif Patni, the chief executive at Coventry Connections.

He denied to the Citizen that his company is a monopoly because they own only seven percent of the taxi plates and the rest of the drivers they use work as freelancers for a fee.

Many drivers save up to buy plates as an investment for retirement, so, understandably, they're pissed at Uber going against the established rules and potentially driving their investment down. Mayor of Ottawa Jim Watson has their back on this and said Uber must play by city taxi rules.

Other critics in the city are calling out Uber on a number of things, including the lax vehicle inspections, which are done by photo and not in-person; the lack of training compared to a 30-day college cab-driving course; the absence of an in-car camera; and the unclear way in which drivers are insured

While critics may have a point on the in-car camera—after all, violent things do happen in Ottawa cabs—consumer comments in the app allows the consumer to filter out creepy or poor drivers.

But a new, cheaper transportation option is a must for a city that is one of the worst examples of urban sprawl in one of the most suburban countries in the world. Not to mention, buses in Ottawa from OC Transpo (there's no subway system) simply don't cover most parts of the city suburbs, especially late at night.

In fact, if Uber's numbers are to be trusted, only 19 percent of the city is within reach of mass transit. And even if you can get a bus, you're taxed with one of the most expensive bus systems in Canada at a whopping $3.40 per trip.

I reached out to Uber and the City of Ottawa for comment on this story, but neither got back to me.

Moreover, in a political city where the Parliament buildings overlook the skyline, the taxi app issue is already being politicized. With mayoral elections today, the Uber issue has sprung up in debates, while UberX drivers in Ottawa are even offering free rides to polling booths for today's voters

Not to mention, John Baird, the federal minister of Foreign Affairs, tweeted his support for the emergent cab app after city taxis apparently left him waiting for 75 minutes after five calls demanding transportation.

For its part, Uber is arguing that it's a technology company and not a cab service, which means it isn't subject to the same criteria for regulations or licensing in the city of Ottawa. In the fine print of the company's 'legal' section online it clearly states, "THE COMPANY DOES NOT PROVIDE TRANSPORTATION SERVICES, AND THE COMPANY IS NOT A TRANSPORTATION CARRIER."

Whether that's just legal posturing or not remains to be seen, but one thing is for sure, if my friends in Ottawa are any indication, Blueline or Capital cabs could be losing business. Because those Friday night calls for taxis are turning into touchscreen demands for an UberX driver.