Test driving Uber in Seattle: Could it work in Vancouver?

A CTV News test drive of Uber south of the border shows its lower fares and quicker service could be a big win for Vancouver consumers – but Seattle leaders are warning there could be many people hurt in the transition to a new cab economy.

Observers say Vancouverites need to understand how the $17-billion San Francisco tech giant won the battle to upend Seattle’s outdated cab monopolies this summer, because the company has its sights set on Vancouver.

“You can’t put the genie back in the bottle,” said Jennifer Langston of Seattle’s Sightline Institute, who has written about Uber’s rise in the city. “If Uber wants to be in Vancouver, B.C., it’s going to be in Vancouver, B.C.”

Uber is a smartphone app that links people looking for a ride with drivers operating their own vehicles. It started in Seattle about three years ago, operating outside of the taxi regulations until it was legalized this summer.

But the service proved popular, reducing car use and even reducing drunk driving, according to some studies. Now, you’re hard-pressed to find anyone who hails a cab in the Emerald City. Anyone with a smartphone is likely to have apps by Uber, and competitors Lyft and Sidecar.

“Uber’s a great way to get around – it’s better and faster than a taxi,” said Seattle user Breanna Robinson.

“People want it and people are going to have it, because it’s an awesome resource to have,” said Joey Greenstein, who pulled out his phone and showcased the app.

Putting the app to the test

CTV News wanted to test out how the app fared compared with local taxi companies. The challenge: who could deliver a reporter faster from Seattle’s famous Space Needle to another storied tourist attraction, Pike Place Market.

The app shows how many Uber drivers are nearby, and allows you to hail one with the touch of a button. Within seconds, a driver accepts the fare, and the app’s map shows how close he is to you.

In our case, Joe arrived at the Space Needle in about six minutes. He drives his own car, and uses his version of the app to navigate Seattle.

“I’m an independent contractor,” Joe told us during the ride. “I have to provide the car. And the time. And everything. The only thing they do is provide us with the phone and the app.”

The price for the two kilometre ride showed up on the phone as $6.95 – but we didn’t need to pull out a credit card, because the money was automatically billed from the account.

“No money changes hands,” Joe said. “It’s all taken care of.”

By comparison, a traditional taxi took seven minutes to arrive, and the same trip cost $9.40 – about 35 per cent more than Uber.

The taxi driver told us that transportation apps have hurt his business: “Uber came to Seattle and they crushed our business, totally. It’s very hard to make money to live this day.”

The Seattle compromise

One reason taxi drivers say they can’t compete is the curious compromise that Seattle councilors came up with when they finally legalized the service in July.

Seattle cabs were limited to about 725, and their fares are controlled. In exchange for a protected market, each car must be insured, and its driver must face background checks. However no new cab licenses had been created in decades, so service was slow and expensive.

Initially Seattle council wanted to limit Uber and others to about 150. But a groundswell of public pressure – largely from Uber and its customers – convinced the council to allow an unlimited number of Uber cars.

“Uber has done a very good job of dropping into a city, quickly developing a base of well-connected individuals over social media and in a very short time can create a lot of noise and a lot of political pressure to allow them to go forward,” Seattle council member Mike O’Brien told CTV News.

“That’s not a bad thing. They’re forcing us to change a system that’s ripe for change. But I believe they used that power to undermine safety regulations, especially insurance,” he said.

The end result – Seattle allowed 200 more cab licenses, but did not change the regulated fare of $2.70 per mile, making it possible for Uber to undercut them.

And with legalization more than 2,000 Uber cars flooded the road, each competing for fares. Drivers told CTV News they make about $10 an hour, about half the rate the company is advertising to its drivers in Vancouver. No matter how many drivers there are, Uber takes its cut of 20 per cent.

Uber can also unilaterally change fares. A price drop this summer angered drivers. About 500 of them have joined a ride-sharing union in the hopes of avoiding a race to the bottom.

“They are not able to live off Uber. They have to fight for every trip that they can possibly get,” said Yedidya Seifu, who is one of the organizers.

“I’m no fortune teller, but they are going to get you to work for free,” he warned.

Uber says it is safe, that its drivers undergo background checks, and that its drivers are insured at or above the standard of Seattle cabs. The company has often attacked the cab monopolies for not serving consumers.

“I encourage people to think about this holistically. We’re bringing people out of their cars and utilize these alternative forms of transportation,” said Uber Seattle general manager Brooke Steger.

In Vancouver, the stakes could be higher: here, a cab license was recently sold for $968,000 – a vote of confidence in the provincial system that keeps cab licenses scarce.

There are only 588 cab licenses in the city, with 99 cabs allowed to operate only on weekends. The operating licences are all owned by the big four cab companies: Yellow Cab, Black Top, MacLure’s and Vancouver Taxi.

If Uber arrives in Vancouver, as it has done in 210 cities around the world, that value is threatened, said Carolyn Bauer of Yellow Cab. And a compromise like Seattle’s won’t help Vancouver’s cab companies survive, she said.

“How could you compete with that? It’s not fair. There’s no level playing field,” she said.

The threat from Uber is forcing cab companies to innovate as well, Bauer said. Yellow Cab now has its own app that allows a user to hail a cab, and follow its progress towards them using GPS.

“We’re not against innovation, we have innovation here,” she said.

But an app can’t change the numbers: with only 588 cabs on the road, industry studies show that on busy weekend nights, some 200 people wait at least 15 minutes for a ride. More may simply give up and not be counted. That’s a market ripe for Uber.

The tech company can’t access that market legally as long as it lacks a licence from both Vancouver and the provincial Passenger Transportation Board.

Right now, Vancouver’s city council has ordered a six-month freeze on new cabs, including Uber, while it examines the situation. There has been no application to the provincial Passenger Transportation Board.

Council member O’Brien said Vancouver has an opportunity to improve on Seattle’s example.

“You’ve got a balancing act in front of you, Vancouver. I would encourage folks to be open to innovation and the idea that tech like this helps people get around without a vehicle, that’s a great thing,” he said.

“But keep at the forefront public safety, drivers and workers’ rights and make sure they can support their family while doing it,” he said.