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Jun 10, 2015

Getting to yes: Toronto’s legal showdown with Uber

June 10, 2015

Last week an Ontario Superior Court judge heard arguments in a court battle between the City of Toronto and Uber in a case being watched closely by policymakers and regulators from across the country.

The City is seeking an injunction that would force the company to cease its operations, including its UberX peer-to-peer private transportation network. Toronto Mayor John Tory has said that he believes Uber and similar services are “here to stay” and that new regulations are needed to accommodate these services. But in the absence of those new rules the City’s licensing and standards department is trying to enforce the rules that are on the books.

Why is a challenging and important policy debate being litigated in a courtroom instead of debated in the council chamber? Vested stakeholder interests and the time governments take to adapt make pro-active, thoughtful responses a challenge. Taxi license holders have seen the value of their plates plummet by 50% in the last three years since Uber came to town and not surprisingly they want to hold on to the value of their considerable investment. Their protests have escalated dramatically in recent weeks. By-laws drafted in the last century and revisited infrequently are not designed to cope with the PR savvy marketing and assertive business strategies of Silicon Valley companies and the ethos that Uber exemplifies.

This court battle and similar skirmishes between Uber and regulators throughout the country reveal the striking gap between the pace of policymaking and the pace of real-world change. In Toronto, the court case has delayed taxicab licensing reforms that council has been weighing since 2012 — when Uber was first making inroads into Canada.

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So what would a credible and effective way forward look like? We wrote a report in February detailing how policymakers should approach the challenges of companies in the sharing economy, such as Uber and Airbnb. Drawing on that report and looking at the current impasse between the municipal governments, Uber and the taxi companies, we suggest the following strategy for urban policymakers and politicians:

First, develop a clear policy framework and set of policy objectives that will guide all actions and decisions moving forward. The primary policy objective should be clear — a transportation network that is safe, accessible, competitive and affordable.  Our governments must also take heed of the impacts of regulatory change on the labour market. Will cab-driving become a more precarious, low-wage job option, or could changes open up more opportunities for people to earn a living? On this front, municipal engagement with provincial and federal officials on broader labour market, competitive landscape and social safety net issues is vital.

Secondly, our cities must modernize the often labyrinthine municipal codes that govern how taxis operate. Fundamentally, Uber and traditional taxi brokers are in the same business — connecting passengers to drivers that are willing to drive someone from point A to point B for a fee; how they accomplish that goal is different. Jurisdictions across the US have adopted ‘Uber legislation’ for Transportation Network Companies, generally imposing requirements around issues like liability insurance, driver criminal record checks and training. Cities should adopt a common, performance-based set of rules that treats everyone who is engaged in delivering taxi-like services in the exact same way, with the opportunity for thresholds distinguishing full-time from part-time operators. These rules should be clear, minimally intrusive and have consumer protection and choice as their guiding principles.

Thirdly, cities should make data the linchpin of their new regulatory approach. Uber has a trove of valuable data about where and when its drivers are on the road that could be leveraged to improve municipal service delivery in a range of areas like congestion and transit route planning. Increasingly, companies like Beck Taxi are also relying on GPS technology to generate those same data. This information, and the ability to rate drivers for safety and service, means that cities could significantly streamline their enforcement activities by focusing on poorly-rated drivers. Safeguards must be also be put in place for both governments’ and companies’ use of the data to protect user privacy given the sensitive nature of the information.

The time to move forward with these changes is now because within five years, the landscape may have shifted entirely again. Fully automated “self-driving” cars are being tested on public roads in five U.S. states. Uber themselves hired one third of the entire National Robotics Engineering Centre at Carnegie Mellon University for their own automated vehicle efforts. Uber’s chief executive has publicly mused about how driverless vehicles could drive down their costs to the point where fleets of shared autonomous vehicles could replace car ownership altogether.

The pace of technological change is now so rapid that laws became stale before the ink has dried. Governments across the country need to pick up their pace and keep up, both to promote innovation and to give consumers the choice and protection that they are seeking.

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Release Date

June 10, 2015


The Toronto Star


noah-head-greyscaleNoah Zon
sunil-head-greyscaleSunil Johal

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