Why City Council’s approval of ridesharing in Edmonton matters

Edmonton became the first Canadian city to legalize ridesharing services like Uber with Council’s approval today of a new vehicle for hire bylaw.

“The regulatory framework in the new bylaw helps to answer citizen and business demand for more choice in the vehicle for hire industry,” says Mayor Don Iveson. “It represents a significant evolution of the industry and creates a model that will enable the taxi business and private transportation providers to co-exist.”

You can read more about today’s news in Elise Stolte’s story here. As she noted (and tweeted), “the bylaw passed 8-4 with councillors Dave Loken, Bryan Anderson, Mike Nickel and Tony Caterina against.”

Uber in Edmonton

Here is Uber’s statement on the new bylaw:

“Uber applauds the City of Edmonton for its leadership in being the first Canadian jurisdiction to adopt progressive regulations that embrace ridesharing. We thank Mayor Iveson, Councillors and City staff for supporting Edmontonian riders and drivers who want more affordable and reliable transportation options.

While these newly adopted regulations contain concessions for ridesharing service providers, the rules put in place a workable regulatory approach.

The spirit of collaboration and willpower demonstrated by the City of Edmonton to modernize its transportation laws can serve as a model for all Canadian regulators and elected officials.”

They were pretty happy on Twitter too:

//platform.twitter.com/widgets.js

The new bylaw will come into effect on March 1, 2016. Uber will be able to operate under a new class called Private Transportation Providers (PTPs). As they operate more than 200 vehicles, Uber will pay a license fee of $50,000/year plus $0.06/trip, with a $20,000/year accessibility surcharge on top of that. Only taxis will be able to pick up street hails or use taxi stands, but both taxis and PTPs will be required to charge a minimum of $3.25 for any trip. Drivers will be required to carry the appropriate insurance as outlined under provincial law, something Uber is working to acquire.

The new bylaw supports The Way We Move

I think the new bylaw supports Council’s transportation goals as outlined in The Way We Move, Edmonton’s transportation master plan. Here’s what I wrote back in September:

“The discussion about Uber in Edmonton lately has focused primarily on the fight between taxis and Uber, understandably. Lots of Edmontonians have horror stories to share about taxis, and there’s no question that competition from Uber will have a positive impact on the industry. But let’s not lose sight of the bigger picture. Uber and other transportation network companies can positively contribute to Edmonton’s transportation mix. We should do what we can to allow them to operate here legally.”

Councillor Knack spoke about this today, highlighting that ridesharing is an important way to help shift away from private vehicles to more sustainable options. “The status quo can no longer exist and change has to happen,” he said.

Council did what it was supposed to

Back in the summer of 2011, Council was already investigating ways to “provide increased capacity in the City of Edmonton taxi market.” The reality was already that Edmonton’s population had grown faster than its supply of taxis, and quality of service was suffering as a result. In 2012 Council wanted to issue 100 new licenses, but the Vehicle for Hire Commission refused to go along with the plan. So Council amended the bylaw to allow Administration to issue the licenses.

Something had to change, so it’s no surprise that when Uber showed up back in December 2014 Edmontonians embraced the service. All of a sudden at the touch of a button a ride could quickly and reliably be found. Ultimately Council’s role in this debate had very little to do with supporting taxis or welcoming Uber. Instead, it was about ensuring Edmontonians could move around the city efficiently.

I think Councillor Walters said this well in his post today:

“So equality is not the goal here, but rather equity – fairness – for our public. This is not about a big, bad, sophisticated multinational giving away free cupcakes, or the local taxi companies who come in to Council and scream and shout and take their shirts off. This about the kind of vehicle for hire service we want to facilitate with our bylaw. It is about Council’s role as a maker of public policy, not as a referee in an on-going battle between two different companies.”

Perhaps City Council’s most important job is to ensure that all taxpayer dollars spent result in the best possible value for citizens. They are charged with defining a vision for Edmonton and for making sure the City is operating effectively and efficiently toward it. I think their decision today is a reflection of that commitment.

The new bylaw supports innovation & choice

Nearly every Councillor spoke today about the importance of offering choice to Edmontonians by passing the bylaw. “We have to recognize there’s a huge part of our citizenry that want something different than we’re offering them,” said Councillor Henderson. Even Councillor Oshry, who had reservations about the bylaw despite voting in favor of it, said the taxi industry had become complacent. “They have to provide a better service than in the past,” he said.

Although a few Councillors tried to include more restrictions in the bylaw, I think an appropriate balance was ultimately struck. “This bylaw enables innovation and competition, rather than constraining them,” Mayor Iveson said. Too much regulation could have hampered the rapid innovation that is taking place in the industry. Making the Uber of today legal is a great outcome, but the bylaw also opens the door to additional services in the future. For instance, UberPool is a great twist on the Uber service that could have been restricted by overly aggressive minimum fare regulations.

The new bylaw actually specifies two levels of PTPs – commercial for providers with more than 200 vehicles, and regional for those with fewer than 200 vehicles. The license fees for regional PTPs are the same as taxis at $1000/year for dispatch plus $400/year per vehicle and $60/year for drivers. That’s much lower than the $50,000/year for commercial PTPs and means we may even see a homegrown alternative to Uber.

I’m hopeful that making ridesharing legal in Edmonton will entice competitors to Uber such as Lyft to enter the market also. It would be great to have some competition and choice in the ridesharing market.

Edmonton leads the way on ridesharing in Canada

It may have been painful to get there, but Edmonton has provided a way forward for other municipalities in Canada to adopt regulations that enable ridesharing for their citizens as well. I think it’s great that Council (most of them anyway) did not shy away from this challenge and instead chose to provide leadership on the issue. And as Mayor Iveson said today, there’s an opportunity for the City to work with other municipalities in Canada as well as the Competition Bureau to ensure that citizens are getting the best possible value from big organizations like Uber.

City Council opens the door for Uber to operate legally in Edmonton

After a marathon meeting that lasted until nearly 10pm, Council eventually decided to look at new regulations that could make Uber legal while enforcing the existing bylaws in the meantime. The motion put forward by Councillor Knack also seeks additional data on the taxi industry and directs Administration to look at issuing additional taxi plates. “The world has evolved and people want choice,” he said.

Here’s the motion that Council passed unanimously this evening:

  1. That Administration work with the Transportation Network Companies and other stakeholders to provide a report, before the end of the third quarter, to include a draft bylaw that would establish public safety rules and regulations for the operation of Transportation Network Companies.
  2. That, in parallel with the work in part 1, Administration work with the Taxi Industry to provide a report, before the end of the third quarter, with a draft bylaw to amend the Vehicle for Hire Bylaw 14700 to provide for improved taxi service standards, and with recommendations for issuance of additional taxi plates.
  3. That, in the meantime, Administration request that UBER temporarily suspend operations in the Edmonton market and if they refuse, Administration take all steps necessary to apply for an injunction against UBER to prevent its unlawful operation in Edmonton until such time as UBER complies with the applicable City of Edmonton bylaws.
  4. That Administration work with the taxi brokers to obtain data from dispatch systems on number of taxis dispatched at given times, wait times for taxis, and other information relevant to allow for determination of appropriate customer service standards and expectations.

With bullet #1, the motion seeks to create rules that would allow companies like Uber to operate legally in Edmonton. With bullet #2, it seeks to address the shortcomings that currently exist in Edmonton’s taxi industry.

“I think this approach makes sense because it leaves the City’s options open,” said Mayor Don Iveson before the motion was voted on. He also reiterated the need to have more data in order to make better decisions in the future. The mayor said it makes sense to ask companies like Uber to abide by the regulations that are in place while the City works to align them with the market.

Uber is currently operating illegally in Edmonton. It launched its service back in December and the City declared that any Uber car caught operating would be considered a “bandit taxi” and face a $1,000 fine. Uber has argued consistently that its technology and business model are fundamentally different and are therefore not explicitly covered by provincial or municipal regulations. Sometimes called a ridesharing app, a more general term for Uber is transportation network company.

Yellow Cab
Photo by Dave Sutherland

The discussion centered around the Vehicle for Hire Bylaw 14700, which “regulates taxi brokers, drivers, and vehicles, but does not regulate passengers.” From the report:

“The number of allowable taxi plates within the city was frozen in 1995 to facilitate a financially viable taxi industry. The taxi rates are controlled by the City of Edmonton to ensure consumer price protection.”

Edmonton caps the number of taxi permits or plates at 1,319. It has increased the number of plates allowed a few times over the years, but the City recognizes there are still too few plates to meet demand. A report from 2007 suggests that Edmonton is 177 plates short. Council mentioned repeatedly that they have heard from constituents that there aren’t enough taxis and that wait times are too long.

At one point, Councillor Scott McKeen asked Edmonton Taxi Group president Phil Strong if the industry has been lobbying for more plates to be issued, but of course they haven’t been. “I wouldn’t know where to go,” he claimed. The issue is that by making more plates available, the value of each declines.

“Almost everybody agrees the status quo doesn’t work,” the mayor said.

There was quite a bit of discussion about the idea that the City create its own app for taxi services. The problem with that in my opinion is that what makes Uber attractive is that it works in hundreds of cities. That’s great for Edmontonians travelling elsewhere, and for visitors to our city too. A local-only app would not benefit from the economies of scale that Uber provides.

There was also a lot of discussion about driver’s licenses and insurance. Most of us have Class 5 licenses, but in order to transport passengers for profit, you need to carry a Class 4 license. You can learn more in the Commercial Drivers Guide PDF. On the topic of insurance, there was some confusion about whether or not Uber’s policy, which only kicks in if a driver’s personal insurance fails to cover an accident, was sufficient. It has not yet been tested in Canada.

Most of the speakers present at the meeting today were from the taxi industry, either drivers or representatives of the brokers. Uber’s sole representative was Chris Schafer, the Public Policy Manager for Uber in Canada. It was a packed house for most of the meeting.

//platform.twitter.com/widgets.js

The reports that the motion seeks will include a draft bylaw, so don’t expect them to return to Council until sometime in the fall. In the meantime you can try to take Uber, but know that they are operating illegally.