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OPINION: What's Up With Uber?

- Reuters

Bryson Guptill

Guest Opinion

The ride-hailing, smart-phone app Uber disappointed many investors on Friday, one day after it's much-anticipated initial public offering (IPO). Uber hit the market at $45 but had fallen 7.6 per cent to $41.57 one day later. That drop follows the slide of Lyft, another ride-sharing app, which is down 28 per cent from its March IPO price.

The price skid may or may not have been influenced by a one-day strike by Uber drivers earlier in the week. The drivers claim they are not getting a fair share of revenue generated by Uber and other ride-hailing companies. Those revenues are still well below expectations, with Uber losing U.S. $0.50 on every ride booked to date. The company has burned through U.S. $25 billion getting established over the past 10 years.

Uber has encountered a great deal of government resistance as it attempts to enter the taxi market in Canada and elsewhere. After much hesitation, the ride-hailing app is now approved in Toronto and Montreal as new regulations attempt to level the playing field between Uber and regular taxi services.

The government of Quebec has budgeted $500 million to compensate taxi licence holders who complained the value of their licences has plummeted since the new ride-hailing services have been approved. The subsidy will amount to $46,700 for each existing taxi licence.

is the only major city in North America that still does not allow Uber. Individual taxi licences in the city have sold for up to $1 million in the past, driven by governments artificially restricting the number of taxi licences issued. Capping the number of licences has driven up demand for licences and also the cost of taking a cab. Ironically, the higher fares have not benefited drivers, as many can't afford to own a taxi “medallion” and end up driving for someone else who can pay for the taxi licence.

My partner and I just returned from a trip to Portugal where we experienced Uber firsthand. We were in the Algarve region in southern Portugal and needed to take a taxi from the bus station to the place where we were staying. We didn't know where to find a taxi, but I had the Uber app on my phone.

The app is very slick. Type in your destination, and the app immediately tells you the cost of your trip and connects you to the closest Uber car. It also tells you the make, model and colour of the car and the name of your driver. You can watch your Uber driver getting closer on your phone. When your ride is complete, you are automatically billed (PayPal). You have the option to tip your driver by cash or by credit card. We were surprised to learn that several of our Uber drivers were formerly taxi drivers – they preferred the independence of driving for Uber.

Charlottetown doesn't allow Uber yet, but it's a service that could benefit drivers and customers alike. For drivers, it eliminates sorting out “zones” and waiting for a dispatcher to radio you a fare. It also means you know exactly what you will be paid, and you receive your fare immediately – no hassles with the customers.

For riders, it gives the security of knowing the name of your driver, when your cab will arrive, and where you are being taken (the driver's GPS shows where you are). We also found the Uber cars were exceptionally clean and the drivers very courteous. That's not always the case here at home.

Bryson Guptill worked as a senior policy advisor for federal and provincial governments in Ottawa and in Charlottetown.

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