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Uber Ridesharing Service Launching Today in Hamilton

The fast-growing upstart taxi service launches in Hamilton today at 2:00 PM, despite a Council warning that it will charge Uber with violating the City's taxi regulations.

By Ryan McGreal
Published July 23, 2015

Uber is hitting the Hammer. The brassy upstart taxi platform is launching in Hamilton today at 2:00 PM with its core vehicle hiring service, UberX, which allows customers to hire drivers via the Uber application.

Uber is also launching today in London, Waterloo Region and Guelph.

Companies like Uber represent part of a broader shift, especially in urban centres, toward an economy and culture of resource sharing. Combined with walkability, cycling infrastructure, bike sharing and improved transit, car-sharing and ride-sharing services contribute to a mix of transportation options that can match or even beat car ownership on affordability and convenience.

Nevertheless, Uber is in for a fight to be allowed to operate in Hamilton. City Council recently determined that if Uber launches here, the City will treat it the same as traditional taxi service and will file charges for violating the taxi licencing bylaw.

It is not at all clear whether those charges will stick. The Ontario Superior Court recently ruled against the City of Toronto on its attempt to define the ride-sharing service as an unlicenced taxi and shut it down.

In his ruling, Justice Sean Denphy wrote:

Have the city’s regulations, crafted in a different era, with different technology in mind, created a flexible regulatory firewall around the taxi industry sufficient to resist the Uber challenge, or have they instead created the equivalent of a regulatory Maginot Line behind which it has retreated, neither confronting nor embracing the challenges of the new world of Internet-enabled mobile communications?

It will be very interesting to see how the Uber launch plays out in Hamilton.

How Uber Works

Uber was founded by Silicon Valley technology entrepreneurs to disrupt the traditional taxi industry by creating a more seamless, data-driven technology platform to connect passengers and drivers.

To use the service as a passenger, install the Uber app on your mobile device, then use the app to request a driver to take you to your destination.

The Uber platform locates the nearest driver and dispatches them to pick you up, while also letting you know who the driver will be. When you arrive, the fare and any tip is paid automatically from your credit card and you have the opportunity to rate the driver.

If you are a driver, in turn, you are dispatched automatically based on your proximity to the passenger, you don't have to deal with money, and you have the opportunity to rate your passengers.

The company argues that the traditional taxi business model concentrates most of the power in the hands of the few people who own taxi licences. The value of those licences is driven up by artificial scarcity, since there are strict regulations on how many licences can be issued.

With Uber, fares are often significantly cheaper for passengers and drivers get to keep most of the revenue. The company takes 20 percent and the driver keeps the rest.

As the service grows and matures in a market, Uber is able to roll out additional products, including luxury vehicles, accessible vehicles for disabled passengers (currently available in Toronto) and a discount pooled ride service that automatically matches two people who request rides along similar routes.

Rapid Growth, Growing Pains

Uber launched in 2009 (as UberCab) with with $200,000 in seed funding. Since then, it has grown explosively and now operates in over 320 cities. The company is privately held but was recently valued at $50 billion in an investment round. Its list of investors includes Google Ventures and Goldman Sachs.

As Uber has rapidly grown, controversy has grown with it. The company is going head-to-head with an entrenched taxi industry which has long been accustomed to having a monopoly or near-monopoly in most cities.

A recent Globe and Mail article unpacked the "dirty dealings behind Toronto's cab business" and the role Uber is playing in breaking the monopoly power of the taxi licence holders.

The taxi industry has fought back with a campaign called "Who's Driving You?", which compiles a list of reported incidents involving rideshare drivers.

In turn, the company touts stringent oversight processes, including running background checks on its drivers - in Canada, Uber runs National Criminal Record Checks as well as local police database searches, including lifetime sexual offence, DUI and traffic offence convictions - and requiring annual 26-point vehicle inspections.

Uber also provides $5 million in contingent auto insurance coverage for injury and property damage, so passengers and third parties are protected even if the driver's insurance does not cover a collision that takes place while the automobile is being used commercially.

However, last year a San Francisco Uber driver was discovered to have had a felony conviction in 2009 and a felony charge from 2012 for allegedly selling cocaine, and was also on probation for an assault. Yet the driver did not fail Uber's background check.

Controversially, the company also takes the stance that it is not liable for the actions of its drivers, who are independent contractors rather than employees.

In another San Francisco case, a driver failed to yield at a crosswalk and collided with a woman and her two children crossing the street. The six-year-old daughter was killed. The driver was in between rides but had the Uber app running on his phone.

The family filed a wrongful death lawsuit against both the driver and the company, but Uber's lawyers claimed the driver was not dispatched on a ride at the time of the collision.

Aggressive Tactics

Uber has a reputation for being highly aggressive in its business practices, taking the approach that it is better to ask for forgiveness than permission when dealing with the hidebound taxi industry and the legacy of heavy-handed municipal regulations.

The company's position is that its innovative service is different enough from traditional taxi service that it should not be regulated the same way.

When Uber decides to expand into a new city, it just goes ahead and launches, trusting that once the public has had the chance to use the service, its enthusiastic customers will pressure the government to let it keep operating.

While the company encourages direct citizen engagement on the ground, it also has an aggressive team of lobbyists working to change legislation at higher levels of government to allow the app-based taxi service to operate under different rules than traditionally licenced taxis.

Uber CEO Travis Kalanick has a bombastic online presence. He generated controversy last year in a GQ profile where he cracked a joke about using the company to get women on demand: "We call that Boob-er."

Kalanick often goes head-to-head with politicians on social media - most recently in a twitter war with New York City mayor Bill De Blasio, who proposed limiting the number of Uber licences granted while the city studies their impacts on traffic.

Many New Yorkers rallied to the company's defence, crediting Uber with providing a cheaper, more reliable alternative to the city's Yellow Taxi monopoly. In New York and other American cities, the company has been lauded for reducing the discrimination that goes along with "hailing while black".

Uber vice-president Emil Michael stirred controversy in 2014 when he suggested that Uber should hire a team of investigators to look for dirt on journalists who write negative articles about the company.

Uber's business practices also extend to directly undermining its competitors by having Uber employees order and then cancel rides with Lyft, a competing service, in order to reduce its capacity.

Uber did the same thing with Gett, another competitor, and tried to recruit the drivers to switch to Uber.

Surge Pricing

One of the most interesting and controversial aspects of Uber's business model is its practice of what the company calls "Real Time Dynamic Pricing", also known as surge pricing.

The Uber platform is essentially a market for taxi rides, with customers and drivers independently and voluntarily choosing to enter an exchange. Whenever demand for Uber drivers increases significantly, the pricing algorithm raises the cost of a ride in order to induce more drivers to sign on and provide additional capacity to meet the higher demand.

For example, on Monday, June 8, 2015, a communications failure at Toronto's TTC shut down the entire subway system at the start of morning rush hour. In response to the spike in taxi hailing requests, Uber implemented surge pricing at three times the normal rate.

In terms of pure economics, surge pricing makes perfect sense: when demand for a service increases, the price increases to incentivize more supply. As Uber explains: "When demand outstrips supply, surge pricing kicks in to help bring more cars on the road."

Uber also notes that passengers are notified when they hail a ride that surge pricing is in effect, so they have a choice of whether to pay the higher rate or wait until the surge is over.

And it seems to work: Uber adopted the model after a pilot project in Boston found that dynamic pricing was able to increase the supply of drivers by 70-80 percent during the hour or two after bars closed on Friday and Saturday nights.

The problem is that most people don't think like economists. To someone who is scrambling to get somewhere - especially during a crisis - surge pricing can feel a lot like price gouging.

In December 2014, a hostage crisis in Sydney, Australia triggered a four-times price increase, which in turn triggered a wave of outrage. Uber quickly backpedalled, refunding passengers and offering free rides to people in the affected area.

Since then, the company has adopted a policy that it will cap surge pricing at three times the normal rate during a crisis.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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By bvbborussia (registered) | Posted July 23, 2015 at 09:30:39

I welcome it

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By kanye4panAm (anonymous) | Posted July 23, 2015 at 11:43:38 in reply to Comment 113012

I second that #capitalism

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By mdrejhon (registered) - website | Posted July 23, 2015 at 11:52:05 in reply to Comment 113020

Ironically, it can be #socialism or #freeenterprise too.

Imagine microtransit -- -- municipally-provided Uber/UberPOOL via self-driving cars and minibuses.

Or non-profit carshare services (Autoshare/car2go) becoming Uber competitors when all these cars are hailable & self-driving, and exist in big 10,000 fleet numbers city-wide. No suburb car ownership needed, if you don't want to own a car!

These will rapidly shuttle suburbanites to bus stations, train stations, subways, etc.

And car owners who lose a job / go to school / need to pay car bill -- Can opt-in their own self-driving cars into unattended Uber service whenever you're at home/work/school. Your car goes off by itself to do Uber/public-style service, while you're not using it. Then your car goes by itself to a cleaning service after Uber/public duty. Then your owned car goes back to you for your commute home (along with other automatically carpooled passengers headed near your home, for extra profit).

Government funded, capital funded (stock IPO), self funded (your own small business).

More people per car. Fewer cars per citizen. Road capacity goes up! No streetside parking as cars are self-valeting. More bike lanes, people, faster public transit, Less congestion.

The first Category 3 self-driving cars won't do it.

But when fully automatic self-valeting Category 4 self-driving cars arrive, it can happen.

Comment edited by mdrejhon on 2015-07-23 12:01:51

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By mdrejhon (registered) - website | Posted July 23, 2015 at 12:08:50 in reply to Comment 113022

Properly done, in year 2050, perhaps TTC/HSR/GO can even operate a fleet of self-driving cars as uberPOOL-style suburban connectors to the nearest subway/LRT/GO station. Last mile connectors to public transit.

Tap a button on your phone -- -- and nearest best-route-match driverless municipal carpool/vanpool diverts to your location, delivers small groups of residents to bus/LRT/subway/GO station, quickly in 5 minutes. Better than infrequent near-empty large suburb buses whose bus stop is a 10 minute walk away.

So, there'll probably be municipally-funded uberPOOL-style services by 2050. Slowly converting suburbs to better sustainability in humankind history, using less resources to move more people faster, cheaper, more profitably, more efficiently.

Comment edited by mdrejhon on 2015-07-23 12:14:43

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By ergopepsi (registered) | Posted July 23, 2015 at 15:17:45 in reply to Comment 113024

This will happen. It is inevitable. Either your own car or one from a fleet will be summoned to pick you up and take you home / to work.

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By mdrejhon (registered) - website | Posted July 23, 2015 at 15:23:56 in reply to Comment 113034

...you press a button and then a neighbour's unused self-driving car (opt-in) pulls out of driveway half a block away. Magic.

Even the Ford Inc. (the car company, not the exmayor) has enough vision to see this, since Ford has launched a car-sharing program to reduce your car bill. Now when they're driverless in the future, they'd self-valet to you like Ubers!

Eventually policies need to be done to optimize this (penalize empty vehicles going long distances, reward fuller vehicles and public transit connections). Once they're fully mature of course -- probably a few decades. Cities that do this properly will leap ahead.

Comment edited by mdrejhon on 2015-07-23 15:32:54

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By Pxtl (registered) - website | Posted July 23, 2015 at 10:04:29

Uber is one of those really frustrating moments where I loathe everybody involved in this. Uber seems to celebrate a sort of Randian anarcho-capitalist ideal where laws are made for other people... but at the same time, the only way they could exist is by scoffing at laws since the laws around taxis are completely insane. I mean, the medallion/plate racket is a farce, and the fact that cities prescribe the price of trips in various zones is an anachronism now that route-planning technology lets Uber quote a price to the rider before the rider even sees a car.

Hopefully Uber will demonstrate that the taxi industry needs a certain amount of de-regulation and opening up of the market (not to the absurd level that Uber celebrates, of course) and more moderate players will join the fray.

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By highasageorgiapine (registered) | Posted July 23, 2015 at 10:43:18 in reply to Comment 113013

wholly agree with this comment. cab service is hamilton is abysmal. i don't know how many times i have called and never had a cab come, or after specifically requesting a working debit machine the arriving cab driver mentions theirs is busted half way through, it just is frustrating to take a cab in this city.

on the other hand, uber is run by a bunch of snakes who are deceptive at best. it's an exploitative business model that puts the drivers and passengers at risk while they reap most of the profits. people talk about the "sharing economy" as some revolutionary thing where it's often just a technology driven cottage industry. for those who understand the history of that term, it's not a quaint or desirable thing at all.

i think in time there will be positive changes as a result of these services though.

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By mdrejhon (registered) - website | Posted July 23, 2015 at 11:36:22 in reply to Comment 113014

BTW, equivalent of a share economy existed tens of thousands of years. We traded furs, shared milk from animals, shared wood for fires, shared huts with travellers on old silk road path, often in small primitive civilizations where everybody was in earshot of each other.

IF we broaden the term to "silly levels", then:

  • Buses are share economy. (shared ride)

  • Trains are share economy. (shared ride)

  • SoBi bikeshare is share economy. (shared bike)

  • Borrowing uncle's car is share economy. (shared car)

  • Stadiums and arenas are share economy. (shared building)

  • Uber is share economy. (shared car)

  • Parks are share ecnomy. (shared land)

  • Garage sales and Kijiji/craigslist/ebay is share economy. (sharing/trading)

  • Etc.

It's only because software/apps make the share economy easier again in big megacities, almost as easy as it is for tiny towns 10,000 years ago!

The hipster term "share economy" is just silly. It's old news. We've been sharing FOREVER. Apps just make it easy to share rides.

Comment edited by mdrejhon on 2015-07-23 11:51:15

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By mdrejhon (registered) - website | Posted July 23, 2015 at 11:24:24 in reply to Comment 113014

That said, I agree with your writing for the most part.

Except for 2 items:

(A) On average, Uber has surprisingly been safer than taxis (surprise). Yes, you hear about that Uber horror story that the media hypes, but statistically, overall average horror-rate is lower than with taxis.

(B) Share economy has always existed for tens of thousands of years. We used to trade furs & share milkable animals & share tools. We used to be small groups in a small town. Big cities made share economy hard again (compared to millions years before skyscrapers). Smartphones makes share economy easy again even in megacities. Share economy is here to stay, it was here for millions of years.

These TWO ITEMS are the only disagreement I have with your post.

More detail.... Even with the few Uber reports that show up, there are more taxi horror stories (involving hospitalizations and deaths) than Uber horror stories (even including the rapes). From an objective study, I am surprised that lightly-hastily-background-checked private drivers are ending up safer on average in many North American cities. This is surprising, considering I thought regulated taxis would have been safer.

Also, sharing economy is much older than modern capitalism (While fun for an entrepreneur, it's important to be a good History Student -- ignore the hipsterization of newly invented phases like "share economy").

While I use Uber, I agree about the somewhat deceptive nature of some of Uber's tactics, given some of the known antics of the CEO, but I still use and like Uber. It's a good service for civilization.

We need to fix third-party hailing services, so they are good citizens in our country. Uber paying HST, cities doing new taxi regulations that support ride-sharing services, etc. I'm willing to take the risk with Uber, please let me. Also I am deaf (since birth) so I dislike taxi phone lines. Even if we ban Uber, I'd like to see Uber-like services pop up. Fix the broken taxi laws, please.

Comment edited by mdrejhon on 2015-07-23 11:48:17

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By kevlahan (registered) | Posted July 23, 2015 at 12:05:45 in reply to Comment 113018

There is a difference between bartering (exchanging goods or services rather than using money as a medium of exchange) and the sharing economy we're talking about with uber or sobi (paying money to use something from as needed rather than owning it).

And then there is the question of how to pay and provide for goods and services: run by the government or non-profits and paid through a combination of general or specific taxes and user fees, or run by private companies or individuals for profit and entirely paid by the users (although usually with some of the costs also borne by society as a whole).

You could also have a barter-based shared economy, but that would be far more complicated, especially with strangers (there is a reason we invented money).

What we've seen is that with the internet, smartphones and gps it is becoming much easier to share certain goods and services (like cars, tools, bikes or spare rooms) that are under-used by their owners.

The sharing economy is just a much more efficient and fine-grained form of renting. But ease of use and flexibility (e.g. real-time pricing, internet communications and gps) is making all the difference!

Comment edited by kevlahan on 2015-07-23 12:07:18

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By mdrejhon (registered) - website | Posted July 23, 2015 at 12:16:11 in reply to Comment 113023

Correct...

But did you know in some languages other than English, French and many other languages, the equivalent-language word they use for "trading", also applies to a piece of paper money or a coin? Sometimes only a foreign word roughly similar to "transaction" is available.

We're just nitpicking on English vagaries. Spun literally, "trading" can be applied to trading a piece of cash for a piece of consumable.

But we don't use the English language that way.

Also from another POV, "share economy" may not exist at all, if spun a different way, because we pay a bus fare, we pay admission to a stadium, we give milk in exchange for a fur pelt, we receive a chicken for a stay in our hut. We trade a piece of info for a different piece of info. We trade a map for a book. We trade cash for an item. If we view it from that perspective, the "share economy" never existed -- it's more "trading economy".

That was also, indirectly, my point too. :-)

The hipster phrase that primarily exists only in the English language, "share economy", to apply to this great technological glue of multiple now-common things to instantly provide an easy ride "transaction". The line between "share economy", "trading", "purchasing" -- has historically been really blurry.

It's great we've managed to combine a GPS, plus an electronic map, plus a pocket computer (aka "smartphones") -- and thanks to Intel/Bell Labs/Einstein/Etc that made all the tech possible -- into a disruptively much easier ride transaction which we now can enjoy. Even if ride transactions has existed forever; as long as civilization existed.

Uber drivers just has a phone that tracks their unmodified car and broadcasts it to users' Uber maps. Users have a phone to automatically attract nearest Uber drivers to their GPS location. Voila. Not just Uber, but other hailing services too, whether private or publicly owned.

It's nice to now be able to push a button and have a car almost suddenly show up at your GPS location, already pre-paid and already pre-routed to where you want to go. Eventually, Hertz, ZipCar and TTC can all do this, when self-driving cars are mature.

I expect even Toronto's TTC to do things similiar to uberPOOL, by Year 2050, once fully self-driving minibuses arrive with good safety records. Cheaper to run in low-transit suburbs where big buses run almost empty. Front door service. Good transit connectors when you're far away from a frequent bus/train route.

Comment edited by mdrejhon on 2015-07-23 12:57:09

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By j.servus (registered) | Posted July 24, 2015 at 13:10:31 in reply to Comment 113025

My impression is the point of "share" in "share economy" is not "shared" as opposed to "bought," or "sharing" as a metaphor for "barter" or "exchange," but rather "shared" as opposed to "owned." The prevailing model in our society in recent decades has been owning your own stuff - your own car/lawnmower/compound mitre saw/whatever. But that turns out not to make sense for many items that are used occasionally but recurrently. So you get a cooperative ownership model, either formal or informal, where the costs of owning and operating are shared in some proportion to use (or means, etc.).

If "sharing" means cooperative ownership-, cost-, and use-sharing, then the bikeshare and carshare cooperatives seem to be institutionalized extensions.

In this sense of "sharing," Uber is not really a "share" model (any more than renting a cottage instead of owning one is). It probably gets associated with "sharing" because it extends the trend away from privately owning and maintaining a vehicle that mostly sits tight, and also because renting, like the kinds of "sharing" I have been describing, is a way of distributing costs in proportion to use (but owning/operating are related to someone's profit motive).

The inconvenience of "sharing" is working around other people's interests in using the common property. But what seems to be really new now is the technology which makes it possible to use something like Uber basically on demand. In that connection, the surge pricing probably makes some sense, since the pricing mechanism functions (in part) to match supply with demand, thus ensuring everyone who wants the convenience of a car and is willing to pay for it, can actually get it.

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By avant (anonymous) | Posted July 23, 2015 at 12:31:40

"Controversially, the company also takes the stance that it is not liable for the actions of its drivers, who are independent contractors rather than employees."

Same thing applies to our local cab companies. They're just dispatchers. The funny thing is, they did this to be cute around employment laws, but ended up simply being exactly the same kind of middle-men as uber but using outdated technology. So where the status quo is owners, drivers, dispatchers, and a licensing office concerned about quality of supply, it seems to me that any situation that can maintain good supply, get rid of the owners and improve the dispatcher is only good.

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By jason (registered) | Posted July 23, 2015 at 17:33:56

any decent options for transportation are welcomed in this city.

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By Keith (anonymous) | Posted July 23, 2015 at 17:58:05

Couldn't be happier for this! Hamilton taxi service is the only thing that makes the HSR look good. While I sympathize with taxi drivers, the fact is the industry is no longer relevant and either needs to evolve or go the way of the milk-man.

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By Jer (anonymous) | Posted July 30, 2015 at 14:53:40

Whenever I see an HSR bus driving around in the evening with a handful of people on board, I wonder how much money the city is losing. Maybe public transit can run like Uber: Pick you up at your door in a minibus and drop you off at your destination with a few detours along the way for other passengers. That would be so much faster than waiting for busses and transfers. Then again, this sounds a lot like DARTs, and they can't balance the books, so what do I know?

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By mdrejhon (registered) - website | Posted August 04, 2015 at 10:52:57 in reply to Comment 113196

GO Transit DIAL-A-BUS did this from 1973-1976. Not limited to the disabled. Using a callcenter that tracked the buses via CB radios.

But today, it would be vastly more efficient than the most-money-losing bus routes, with Uber-style hailing interfaces, would be open to everyone, and the fleet would be big enough for taxi-style quickness (or better) of 5, 10 or 15 minutes depending on area.

Problem is....It needs to be legal.....Right now there's only UberX and UberPOOL.

Gotcha.

But once a municipality decides to compete with taxi companies and Uber, watch out -- this is a viable form of new public transit much more cost-efficient-to-run than the 1970's GO Transit DIAL-A-BUS service. Tap a button your smartphone and a muncipal carpool-minibus (best-fit to route of your destination) hybrid shows up at your GPS position within 10-15 minutes.

It can be a public transit connector, such as bringing people to major corridors such as the Hamilton LRT.

Comment edited by mdrejhon on 2015-08-04 10:56:13

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By Jackflynn (registered) | Posted July 29, 2017 at 14:03:24

Uber has been massively successful because of it's convenient way of connecting to driver and the riders along with their robust tracking system. Really makes traveling much secure and hassle free. Uber App can be installed from here: https://tutu-app.com/download/

Comment edited by Jackflynn on 2017-07-29 14:03:35

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