Quebec’s Uber Dilemma

Uber Dilemma
In Montreal, continuity is king. There is something charming about the city’s grip on the past: walking around the Gothic Revival Notre-Dame Basilica, exploring the old port; even the dated metro system has a certain magnetism. However, taxis are an example of where “the old ways” represent an inefficiency imposed in the name of continuity.

Common complaints about professional taxis range from the cleanliness of cars to drivers’ opposition to accepting credit cards. After reaping the benefit of a monopolized industry, taxis fell to the feet of a newer, more advanced, and more rider-friendly service, Uber, in 2016. Compared to taxis, Uber is a convenient, affordable, and reliable ride-hailing service. Uber’s straightforward and rider-oriented service resulted in rapid success, and drew customers away from traditional taxi services. After a year-long trial period and pressure from local cab companies, the Quebec transportation ministry is cracking down on Uber, forcing them out of Montreal should they refuse to comply with new legislation.

The transport ministry and taxi union have long viewed driving as a full-time job. With a required “Class 4C” permit, cab drivers must undergo 150 hours of training (60 basic, 90 geographic-based) to receive a license allowing them to drive for their respective company. For reference, that is roughly the amount of time a student spends in five courses during a semester. Despite the long training, once certified, taxi drivers enjoyed the comfort of a monopolized industry. With comfort comes complacency, and with complacency comes problems. Due to monopolisation, the taxi industry set its own prices, marginalised any form of competition, and retained customers regardless of service quality, thanks to a lack of substitutes. The result was a substandard, expensive, and unaccountable transportation service.

Given the fact that a ride is ordered in Montreal once every nine seconds, Uber is looking to stay in the Montreal market

In 2014, Uber entered Montreal in an attempt to fill a void in the transportation industry. Due to their economic success, the Transport Ministry of Quebec opted to negotiate a deal with Uber. The Ministry sat down with Jean-Nicolas Guillemette, Uber Quebec’s general manager, to discuss the stipulations of a deal that would grant Uber a one-year trial period in Quebec. The deal touched all bases from licensing agreements to linguistics requirements, but the most noteworthy measure was the obligatory twenty hours of training for every Uber driver prior to beginning their work. Though twenty hours is a mere fraction of the 150-hour requisite to become a traditional taxi driver, one must consider that Uber’s business relies heavily upon part-time employment for financial success. Additionally, Uber was not accustomed to facing legislative restrictions.

According to driver testimony, Uber makes money by taking 20-40% of the rider’s total fare cost. As such, the more riders and drivers they have, the cheaper the fares become. Guillemette points out that “50 percent of Uber’s driver-partners work fewer than 10 hours a week and 70 percent work fewer than 20 hours a week.” If all Uber drivers have to undergo 150 hours of training for twenty or fewer hours of work per week, their current mode of operation would not be profitable, leading to fewer drivers, fewer customers, and, ultimately, more expensive fares.

With that in mind, Uber’s trial period has recently expired, and, given the fact that a ride is ordered in Montreal once every nine seconds, Uber is looking to stay in the Montreal market. However, increasing competition has changed the negotiations landscape. While the ministry originally looked to keep a “level playing-field” through increased legislation, the matter has quickly turned into a regulations race. The transportation ministry has outlined new sanctions for Uber, forcing drivers to undergo an additional 15 hours of training – extending the total to 35 – and being subject to background checks conducted by the police force.

Uber had happily agreed to the initial accords of the deal created for the trial period and was willing to operate under those standards, but the increased regulations have left Uber’s decision-makers feeling uneasy. Will a fifteen-hour increase in training really contribute to levelling the playing field, or are Quebec lawmakers attempting to squeeze Uber out of the market, representing a return to the days of monopoly and mediocrity in the ride-hailing market?

The new regulations look like they will remain in place, and that is a win for the transportation ministry, but a pyrrhic one at best

Despite threatening to leave upon receiving the news, Uber has returned to the negotiating table. Though the foundational terms remain in place, Quebec’s new transport minister, André Fortin, renegotiated the timetable, giving Uber a few months to implement the new regulations. Uber sees this as a time to operate with laxer rules, while attempting to renegotiate with the new transport minister, one who seems a bit more embracing than Laurent Lessard, the man who preceded him.

Ultimately, the new regulations look like they will remain in place, and that is a win for the transportation ministry, but a pyrrhic one at best. The new regulations seem to satisfy no one. The thirty five-hour training requirement is too small of an increase to appease the taxi-owners and too large an increase to keep Uber happy. Ultimately, the entire ordeal has set a negative precedent for all involved.

The Quebec Government seems to believe that the first entrant should reserve exclusive asset to the market in which they operate. This notion runs contrary to the capitalistic ideals that Quebec espouses and may be a clue as to why firms seem to be relocating from Montreal to Toronto. As such, one can only hope that they will find an acceptable compromise with Uber and reinforce their commitment to beneficial competition and innovation.

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