City Hall

Even if Uber Were a Normal Cab Company, It Couldn't Operate in Dallas

Today, in the first of three public forums on taxi and limo regulations, City Council members learned what has been clear since Dallas began its crackdown on Uber: The system, particularly for taxis, is completely rigged.

That's partly by design. Historically, because cabs fill an important gap in the local transportation network, the city has treated them as much like a utility (e.g. gas and electricity) as an ordinary business, hence the heavy regulation and high barriers to entry. It's all in the interest of ensuring consistent and reliable service. That's the idea, anyway.

What's actually happened is that the regulations, and the way the city has applied them, have screwed consumers and stifled competition, not just from tech-centric startups like Uber, Sidecar or Lyft, but from any entrepreneur hoping to break into the traditional taxi business.

Case in point: Jimmy Martin, director of code compliance in Dallas, testified at the hearing that the number of cab permits is capped at 2,020. The number is calculated each year based on traffic at DFW International Airport and Love Field and it's designed to make sure there aren't so many cabs on the road that the average driver can't make a living.

See also: Cabbies Say There's a Taxi Monopoly in Dallas, and They're Fighting to Break it Up

"A decade ago, the cab drivers came to the city and they were concerned because [the number of taxis] was unlimited, and what they were seeing as the cab drivers was that there were more and more cabbies and they couldn't make an income," said Assistant City Manager Jill Jordan.

If the city is going to treat taxi service as a utility, then it has a legitimate interest in making sure companies and drivers can stay afloat, and a cap on permits isn't wholly unreasonable. But it undercuts the purpose of the rule and becomes a weapon against competition when existing cab companies are allowed to squat on permits, as is currently happening in Dallas.

As it stands, all 2,020 permits are spoken for, yet there are only 1,730 cabs on the road. That leaves Dallas 290 vehicles shy of its optimal number of taxis, and it prevents new companies from breaking into the market.

No figures were available at the hearing on what companies are keeping those permits in their back pocket, but it's a fair bet that Yellow Cab, which controls about three-fourths of the local taxi market, is sitting on some of them.

A handful of committee members -- Philip Kingston, Scott Griggs, Lee Kleinman, Sandy Greyson -- wondered whether the permit cap should scrapped, or if there could at least be a rule that caused unused permits to sunset.

"Why don't we just let the market decide how many should be out there?" Griggs said.

But this was not a meeting about changing rules; it was about learning the ins and outs of the current rules. When Griggs began to muse on the wisdom of effectively treating cab companies as a regulated monopoly, committee chairwoman Vonciel Jones Hill cut him short.

"Your comments are more attuned to the third sector of these hearings," she said.

Send your story tips to the author, Eric Nicholson.

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Eric Nicholson
Contact: Eric Nicholson