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Uber doesn’t have to work hard to top taxi services

There’s much to dislike about Uber – its business model that in essence treats its drivers as permanent temp contract workers not least of all – but the service that moved into the region last week will find favour with many. The reason is simple: price and convenience.
Uber has caused consternation just about everywhere it sets up shop. Those in the taxi monopoly decry the competition. Government bureaucrats who like to think they’re the ones in charge do everything in their power to prevent residents from saving money and making a choice that better suits their lives.
Cab owners and drivers, who’ve done little to court consumers or earn the public’s support, will be watching closely to see what happens with a class-action lawsuit filed on their behalf.
The plaintiff, Dominik Konjevic, is seeking $400 million in compensatory damages, $10 million in punitive damages and an injunction prohibiting UberX from continuing to operate in the province.
Uber is no stranger to legal action. Nor is it unfamiliar with overzealous bureaucrats and wishy-washy politicians.
“This protectionist suit is without merit,” the company said in a statement, responding to the lawsuit. “As we saw from a recent court ruling in Ontario, Uber is operating legally and is a business model distinct from traditional taxi services.”
The courts have been favourable to Uber, having rebuffed Toronto’s attempts to shut down the service, for instance.
Tech savvy – the company insists it’s a software company, not a taxi service – Uber and its smartphone app connects passengers and drivers who use their own vehicles to provide rides, typically at prices up to 25 per cent cheaper than taxis.
Cost is one big advantage, especially in this region where fees are among the highest in Ontario cities. Add in the convenience of calling for a ride and paying for it through the app, and the advantages are clear.
That Uber is a threat to conventional taxi services is clear, but the issues are compounded by the exorbitant cost of taxi licenses in many locales. Typically rationed out and sold for hundreds of dollars by municipalities, the taxi plates have become commodities, often being sold for hundreds of thousands of dollars. The bureaucratic boondoggle has created a system whereby absentee owner lease their plates, and the barriers to entry both boost costs to riders and make it more difficult for drivers to earn a living.
Uber’s arrival has driven down the cost of licenses. In Toronto, for instance, a Global News report found the price plunged from a high of $360,000 in mid-2012 to below $100,000 in mid-2014. Left to promulgate, the service will essentially reduce the licences to zero, likely a boon for the masses, though a few will lose out on their speculative ventures. Nobody should lose any sleep over that, least of all the municipal taxi autocrats.
The technology popularized by Uber and its competitors has already changed the landscape. There is no going back. In fact, technology could very well eliminate the concerns about official and unofficial drivers: autonomous cars could very well do away with any kind of cabbie. Such vehicles could also render redundant some public transit, while eliminating the major cost of operating public transportation systems thanks to self-driving buses and trains. Now that’s a technology with nothing but upside that every municipality should be rooting for instead of putting up roadblocks.

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