Uber and Lyft in B.C.: Why the long wait?

Why has it been so difficult to get Uber and Lyft in British Columbia?

I used to think the answer was obvious — the taxi industry lobbies the government to keep ride-hailing apps out because they're worried they can't compete.

And while that's sort of true, it's not the full story.

Evidence suggests taxi companies shouldn't be so concerned about ride-hailing apps taking customers. A study of American cities from the University of Oxford found the number of taxi drivers actually increased after Uber was introduced.

That's because ride-hailing apps attract new customers, growing the ride-hailing pie so to speak.

Historical investments

I think the real reason can be found in a report to the provincial government from economist Dan Hara who wrote that adopting ride-hailing apps depends on "the appetite for innovation and the degree to which protection of the taxi industry's historical investments is desired."

So, what are these historical investments? Well they start with something called the Passenger Transportation Licence.

To operate a taxi in B.C., you need one of these licences for each vehicle you use. They aren't that expensive. Each one costs $200. However, getting one is a somewhat arduous process that effectively limits the number available. As a result, a secondary market has sprung up where a licence can be worth as much as $1 million.

When a company like Uber offers as many drivers as we want, those licences become almost worthless.

So I think it's worth asking, why do we have limits in the first place?

Uytae Lee takes an in depth look at the controversy surrounding ride-hailing in B.C.

How did we get here?

I came across an academic paper called the Canadian Taxi Wars and it turns out the taxi system we have today is a result of the Great Depression. Back then, there were much looser rules and pretty much anyone with a car could be a cab driver. So, when the Great Depression left a lot of people without jobs, that's exactly what many of them did.

This really backfired. There were too many people driving and not enough working people to pay for rides.

The result?

A price war where ride prices dropped so low that taking a taxi became about the same price as taking the bus. Drivers across the country protested and the the government decided to intervene. That's when the limited taxi system we have today was established.

It's a far-from-perfect system but it is one that has stayed pretty stable since the 1930s. Uber has only existed since 2009. Its real test will be during the next recession.

Challenging fundamental beliefs

Uber and Lyft are not just challenging cab companies, they're challenging a fundamental belief we've long held about the taxi industry. That belief is that there needs to be limits on the number of cars for long-term viability. 

In B.C., the government has decided that, for now, there will be no cap. But some cities are going back on this principle. Just last year, New York and Spain imposed limits on the number of Uber and Lyft drivers.

So, at this point, it seems the only thing certain about ride-hailing apps in this province is the debate is far from over.

To hear Uytae Lee weigh in on the ride-hailing debate, access the audio link below: