Regulating Uber led City of Toronto to save $3.4 million

ITBusiness.ca
May 3, 2017
Brian Jackson

What began as a discussion about how to regulate Uber led to the City of Toronto implementing a new, digital Vehicle for Hire solution that created new revenue streams and saved $3.4 million in operating costs, according to the city’s nomination for IT World Canada’s Digital Transformation awards.

The City of Toronto is a finalist in the the large public organization category.

In the Spring of 2016, the City of Toronto faced an issue that many cities across North America were also pressured with. The new disruptive “sharing economy” service Uber was operating unregulated transportation and displacing the licenced taxi industry. According to one MaRS Discovery District report, Uber claimed to have 15,000 drivers compared to the 10,000 licenced taxis in the city.

After city council voted to bring private transportation companies like Uber under a legal framework, its staff implemented a new digital solution that would not only allow for rapid issuing of licences to drivers, but created new revenue for the city thanks to a service provided to private companies. Facilitated by a SAP Business Intelligence service, the city can provide companies like Uber trip data, and is earning $500,000 monthly for its efforts.

Creating the right strategy with Uber was no free ride. While many citizens were fans of the service, licenced taxi drivers protested unfair treatment compared to the new class of unlicenced drivers swooping in to take their customers. To find the best approach, Toronto’s Municipal Licencing & Standards (ML&S) division engaged global experts on the issue and collaborated with innovation hub MaRS. It held a Sharing Economy Forum in October 2015 there, and produced further study from the institution that helped inform policy.

Today, almost all transportation company licences are issued automatically by the city and can be turned around in 24 hours, seven days a week. Licences are also now digital with the creation of an e-licence, which is the first of its kind in Canada, allowing drivers to display it to police from a mobile app.

“The successful shift to digital processing and its cultural acceptance is a major step forward to support the modernization of other business processes for the ML&S division and as an example for other City divisions to model,” the city states in its nomination. “Strong partnership approaches between divisions including the City’s Information and Technology Division was key as well.”

Not only did the city find a way to allow Uber drivers to legally operate, but it took a few pages from the business model to improve the experience for licenced taxi drivers as well. For example, Uber drivers don’t have to complete a training course, but simply watch an operating instruction video and then receive constant feedback and ratings from their customers. They can also have their vehicles inspected by certified mechanics instead of a government source.

Based on recommendations from a MaRS report, the City updated its requirements for licenced taxi drivers to be more in line with that standard.

Among the savings for the city are the reduced manual processing of licences, elimination of city-run vehicle inspections, as well as taxi and limo training. The city estimates 22,500 staff hours were saved.