We live in an age of disruption. The internet has turned many industries inside out, forcing established players out of business while rewarding new entrants who offer better products and increased convenience at lower price points. We’ve seen Apple disrupt the music distribution industry, just as Netflix took down the local video store.
Change is happening all around us, and we’re just getting started. Amazon is threatening bookstores and traditional retail, and we’ll soon see many other examples of disruption as both bandwidth and smartphones become more ubiquitous. Remember when computer training was expensive? You can now acquire leading edge skills using online video training for only $25 per month on services such as Lynda.com. And that training features access to some of the top experts in the software industry!
Uber – the new kid in town
Which brings us to a product we all use. Transportation. Whether we fly, travel by train or use local transit – we are constantly seeking out the most convenient service and the best possible price point. And that’s a good thing; competition is what drives innovation, which in turn results in better products being offered at a lower cost.
Problem is, certain industries have chosen to stifle competition by embracing monopolistic business practices that protect their own interest at the expense of the consumer. The taxi industry is a prime example. I recently took a taxi from Barrhaven to the Ottawa airport and was shocked at the $40 fare for a 20 minute one way journey. After all, that’s what I pay for half a tank of gas. This price point is much higher than it should be.
I’ve heard many complaints about people calling for cabs and waiting hours for service. I must say I’ve never personally experienced this (I’ve always received prompt service from friendly, professional drivers), but then again, I don’t use cabs all that often. But if our taxi fleet is insufficient, it’s simply due to artificial barriers that limit the number of vehicles allowed to operate within city limits.
Without doubt, the taxi industry is ripe for disruption. New entrants such as Uber, who use a more efficient dispatch framework, would help bring prices down while increasing convenience for the consumer. Everyone would win, with the exception of those who benefit from the current monopolistic framework. We need to break down old barriers and introduce a new regulatory framework that will benefit current players, new entrants and most of all, the consumer.
But I’m certainly not advocating for a free for all scenario where anyone can start their own taxi business overnight. That would be chaos. Not all regulations are bad. Just the ones that stifle competition.
Driver Background Checks
I think we all agree that any operator needs to ensure that their employees be subjected to comprehensive background checks. Even if new entrants promise to do this voluntarily, it should remain under the purview of the city.
Vehicle inspections and standards
The city should also be responsible to set standards for vehicle age, mechanical soundness and cleanliness. The city should also have the right to perform spot inspections to ensure compliance.
The practice of limiting the number of licenses and vehicles allowed to operate on the streets of Ottawa needs to be abolished. As long as other rules are followed, let the market dictate how many vehicles should serve the local market. A larger fleet will result in more convenience and lower prices for the consumer.
The city and taxi industry needs to get out of the business of setting fare rates. Let individual drivers set their own rates. Some drivers might offer luxury services for a higher rate. Others might offer lower fares by driving more fuel efficient vehicles. Point is, let the market (and the consumer) dictate what a fair price is for their local transportation needs.
Resistance is futile
Imagine a new kind if taxi service. One that makes use of the GPS functionality in our devices to quickly match a driver with a customer.
A service that would allow the consumer to rate drivers, and the drivers to rate passengers.
A service that would allow women to choose a female driver if it makes them feel safer.
A service that would lower the cost of municipal transportation.
A service that would create new local jobs for the self employed.
Change is never easy. Especially when it affects an entrenched regulatory framework that benefits the few at the expense of the many. Monopolies need to be broken, new rules adopted and old ways of thinking set aside.
Disruption is at hand. We can choose to fight positive change, or we can reset the playing field in a manner that keeps the best of existing regulations while opening up new channels for increased competition and lower prices for the consumer.