Taxi review offers City of Ottawa advice on dealing with Uber

Consulting firm KPMG says the City of Ottawa should consider new strategies for dealing with the taxi and limousine industry, saying the current model of licensed cabs and unlicensed ride-hailing companies should not continue.

"Going forward, continuing a substantial Uber operation outside the regulated environment is not an option," said KPMG in its report into policy options released Wednesday.

• Read the full report here

The city's attempt to charge Uber drivers for violating by-laws has not worked, the consultants concluded.

"Similarly, continuing the operation of the taxi industry in its current form should not be seen as an option either."

KPMG's three approaches, which are not mutually exclusive, are:

• Reform the current taxi regime to incorporate Uber-like concepts of driver rating and allow competition and reduced fares
• Establish a new "Transportation Network Company" licensing category for app-based service models, such as Uber, to operate in Ottawa
• Get rid of the limit on the number of taxi licence plates

Modernizing the existing industry, as in the first approach, could be difficult, the report said, because of limited competition among a small number of brokerages and collective agreements that limit innovation in customer service.

The second approach of bringing Uber and other services such as Lyft into the regulatory fold has worked well in other cities, according to KPMG.

Drivers with those services would have to get police record checks and carry proper insurance — an issue "at the core of public safety". They would not be allowed to use taxi stands or pick up riders who flag them down.

Allowing anyone who meets qualifications to get a taxi plate — the third option — presents challenges, KPMG admitted.

Those who currently own plates would suddenly have all value associated with their plate eliminated, which could cause hardship if they have outstanding debt from buying it, or are planning their retirement around it. Having Uber drivers put up roof signs and take training might discourage those part-time drivers.

The report addresses several more issues related to everything from public safety to how the fare structure could be changed.

Customers believe Uber serves them better

KPMG's report on policy approaches follows six background papers released in October that covered everything from current regulations and economics to emerging industry issues and customer experience.

"Based on the analysis to date, and input from the public and industry stakeholders, it seems clear that many customers believe they are better served by app-based service models, Uber specifically, than they are by the taxi industry," wrote KPMG in the report. "Key differences are the lower price, convenience of the Uber app, and better customer service."

The strategies it suggests to update regulations could be affected by two private members' bills that have passed second reading at Queen's Park, KPMG allowed.

Ottawa South MPP John Fraser has proposed increasing penalties for drivers who carry a passenger for a fee without a licence. MPP Tim Hudak has proposed legalizing the sharing economy more broadly, including Uber but also AirBNB.

KPMG is seeking public input via the City of Ottawa's website by Nov. 30.

Its final report on the taxi and limousine industry is to be submitted to the City of Ottawa by the end of December so councillors can determine future regulations in the new year.