Uber's invasion of Canada snarled by municipal red tape

WhenUberentered Canada, it was like a force of nature, poised to blow throughthetaxi industry.

Buttheapp-based ride-hailing service hasrunhead on intothe wall of municipal bureaucracy, stalling its plans to set up shop across the country.

"In the early days, there was this sort of philosophy which basically went: dream it, believe it, achieve it. And they missed one step," said John-KurtPliniussen, an associate professor in innovation, sales management and e-marketing at Queen's University."You have to sell it or negotiate it. And that's what's happening."

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Because there are no national standards when it comes to regulating the industry,Uberhas been strugglingtocut deals,municipality by municipality.

"They have to fight every single battleat every single locality one at atime. And just because they win one locality doesn't necessarily help them next door," said Joshua Gans, a professor of strategic management at the RotmanSchool of Management.

This week, Quebec laid out its set of regulations, which would require anyone offering paid passenger transportation to have a taxi permit.

Rocky reception

Vancouver has still not welcomed Uber andMississauga, Ont., city council recentlyvoted to ban the service, although it did agree to createa committee to look into a one-year pilot project to regulatetransport network companies.

EdmontonandCalgaryhave passed bylaws aimed at legalizing private vehiclesforhire, although Uber has temporarily suspended operations thereafter the Alberta government announced it would not make insurance available to drivers until the summer. The province says it will also require drivers to have at least a Class 4 driver's licence, which is a commercial licence.

There have been some victories, however. In April, Ottawa voted to approve the service.Meanwhile,Toronto city council voted earlier this year to give Uber the green light to operate legally in the city, provided drivers purchase $2-million liability insurance and get their cars inspected twice a year.

"It's a political fight," saidMarkus Giesler,a York University marketing professor who has studied Uber.

"Uber has become more of a political party in a way, trying to influence its constituents. It has gotten extremely effective and efficient at pursuing political decision makers," Giesler said.

The fear from Uber supporters is that regulation will diminish what made the service so well-loved in the first place. But Alan Middleton, York University assistant marketing professor, said Uber should still have an edge in technology and pricing to keep it competitive.

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'From the Wild West to semi-regulated'

Middleton said Uber's mistake is that itsaw in Canada a clear advantage in transportation and rushed in, loosely aware of how regulated the field is but deeply underestimating it.

"They're moving from the Wild West to semi-regulated," he said.

Giesler said that forthe first couple of years, the company wasnaive, believing that,like any aggressive startup company,it had invented a great product that waswidely loved andwould be quickly approved.

"That's not always the case," said Giesler. "Because as innovators, you'renotreally just designing aproduct, you're alsoredesigningsociety and expectationspeople have and how we go about our everyday life and how industries are structured."

You might think politicianswould be eagerto help usher in a service so popular with voters. But some jurisdictions haveweighed the benefit of the taxi licensing fees they recoup againstthe anger some people feel over not having access to Uber.

"I think in Toronto they added up there was enough peoplewho liked Uberthat it was a trade-off they wanted to make," Gans said. "In Mississauga,it's clearly a littlebit different."

Inevitably,the fight Uber is waging with the municipalitiesto open up their marketswill help make it easier for other competitors to drive in.

"Uber around the world have taken the charge of breaking down these regulations, which is great," Ganssaid."Which is also like a gift, because as soon as they do it, [the competition]are able to walk in and get all the benefits. All of that is great for consumers."

While Uber may be doing the legwork, it alsohasthe big advantage of being therefirst and establishinga brand that automaticallycomes to the mind of the consumer.

"Uber has an insane amount of brand recognition right now," Giesler said."Uberis what Kleenex is to papertissue it became this symbolicbrand."