Uber hopes to reach deal with City of Toronto

Uber Technologies Inc., owner of a smartphone app that lets users hail rides with a touch of the screen, says it’s working to reach an agreement with the City of Toronto over its operations here.

“In our view, the best solution is a negotiated agreement, a change to the regulatory framework,” said Ian Black, general manager of Uber’s Canadian operations.

“It’s slow going,” he acknowledged. “It’s been two years and we’re still working on a solution.”

Uber, a San Francisco-based company, just raised $1.2 billion (U.S.) of capital from investors such as Fidelity Investments, BlackRock Inc., and Google Ventures, and is estimated to be worth $17 billion (U.S.), so it is armed with deep pockets as it aims to shake up the taxi business.

It now operates in more than 140 cities in 40 countries around the world, offering taxis, limos and car-sharing services, allowing customers to request drivers via their smartphones, and bypassing taxi companies.

Uber’s car-sharing services are not available in Canada yet, though the company says it is studying the idea.

The City of Toronto (along with some other governments and regulatory agencies) argues that Uber needs to be licenced. The company disputes that, saying it’s not a taxi service, but rather a technology company, and therefore not subject to the traditional rules.

That argument has infuriated taxi companies, which say that approach creates an unfair playing field where Uber can escape licensing fees and higher insurance rates — obligations that traditional companies must meet.

Taxi companies also say Uber can undercut fees — though some riders have complained about its surge-pricing model, where prices can jump depending on supply and demand, going up during thunderstorms or as bars close.

Uber says surge pricing is merely a way to lure drivers to a geographic area where users are looking for riders, and that the period doesn’t usually exceed 10 to 20 minutes.

The City of Toronto has charged Uber with 35 bylaw infractions related to operating an unlicensed limousine and taxi businesses. A court date is set for August, but Black says both parties are interested in reaching a settlement.

City spokesperson Tammy Robbinson said the two sides have not had any discussions since 2012, but confirmed a meeting is scheduled for mid-July.

She declined to describe the meeting as negotiations, but said senior city management from municipal licensing and standards and the legal department are expected to attend.

When asked whether the city is open to reaching a settlement with Uber, Robbinson declined to comment, saying the issue is before the courts.

Uber is quickly expanding across North America and into Europe, where organized anti-Uber taxi protests have snarled traffic. It’s clear that different governments have many different interpretations of Uber and its operations.

In London, England, the transport regulator ruled that Uber would be allowed to operate legally, though the permission will last only until courts weigh a challenge filed by the city’s taxi drivers’ association, expected to be heard later this year.

Other jurisdictions are trying to block Uber’s operations, including Virginia, which issued a cease-and-desist letter in June, and Pittsburgh, where judges ordered a halt to operations until Uber has permission from the state’s public utility commission.

In recent weeks in Canada, Uber has expanded beyond Montreal and Toronto, adding Mississauga and Halifax.

The City of Mississauga has indicated that a taxi brokerage must be licenced with the city, or it will face bylaw infraction charges.

Enforcement officials are reviewing the matter with the legal department and are “determining how we will move forward on this,” said Mississauga spokeswoman Finola Pearson in an email.

In Halifax, where Uber just had a “soft launch,” using what is known in the business as black cars or limos instead of taxis, Black says the company does not facing any licensing challenges.

Uber met with officials of the Halifax regional municipality last Thursday and informed them they only intend to operate limousines with licensed limo drivers, said Halifax spokesman Brendan Elliott.

“It looks they have done their homework,” said Elliott, noting his city does not license dispatching services. “They are using limousines and those drivers who already have limousine licenses.”

Uber officials insist that their business is so new that often suitable regulatory frameworks don’t exist. They tout a recent decision by Detroit city council to grant two-year agreements to Uber and rival Lyft, which will allow them to operate in exchange for adhering to new local safety regulations.

The agreements are seen as temporary measures until Detroit city council decides whether to update rules around companies that don’t own cab or limo fleets, but serve as high-tech brokers between drivers and riders.

“Toronto aspires to be a city that embraces innovation,” said Black. “Frankly, part of that is embracing or seeming to embrace leading-edge models.”