So what options does Toronto have? First and foremost, the market signals that led to the creation of UberHop should be sounding loudly at Queen’s Park and on Parliament Hill. Toronto’s transit system receives the lowest fare subsidy per rider of any transit system in North America at only 88 cents – less than half the subsidy of the Chicago system ($1.99), and nearly 50 per cent less than Vancouver ($1.63).

If Ontario and the federal government are serious about their commitments to invest in infrastructure, the needs of the country’s largest transit system, which moves 1.6 million people a day, should be prioritized. Given its only other revenue tool is raising fares, the TTC needs a more robust public subsidy that reflects maintenance, operations and investment in new capital infrastructure and rolling stock.

The other option is to enter into agreements with companies like Uber to deliver partnered, decentralized forms of transit that better reflect usage patterns and demand spikes. If the TTC doesn’t receive more funding from governments and can’t realistically raise fares enough to markedly improve service, it should explore how services like UberHop might be able to offset peak loads on popular routes without cutting into the TTC’s own operating margins.

This option has the benefit of no need for greater public investment, but it would also be tricky to implement in a way that provides appropriate profit incentives for the private sector, while still allowing the TTC to maintain profitability on its busiest routes. However, a carefully managed plan that provides limited private access on certain over-capacity routes could certainly be crafted to benefit both consumers and the transit system as a whole.

Regardless of which option is pursued (or even if both are pursued in conjunction), UberHop has already provided a valuable service to the City of Toronto. It has shone a light on the inadequate revenue tools of a municipal public transit system that is straining to provide services for a growing population.

The city and the TTC must take this signal seriously and look for ways to improve their services, either through enhanced public funding or greater partnerships with private partners. The TTC should also continue to explore how other service improvements and operational efficiencies can be realized by, for example, automating more ticket booths and exploring the feasibility of driverless subway cars.

Uber continues to teach cities around the world harsh lessons on the fickle nature of public expectations and market dynamics, and policy makers must be prepared to act quickly or be left behind as passengers vote with their phones.