Municipal governments across Canada regulate the number of cabs allowed to operate in a city and the fares they can charge. As the Frontier Centre has argued in its previous two papers, this system leads to poor service for customers, exploitation of drivers, and undeserved monopoly profits for those fortunate enough to own scarce taxi plates.
This new paper sets out a plausible scenario where, within the next five years, all taxi ordering, dispatch, pricing and quality control will be done by a decentralised network of smart phones held by passengers and drivers alike. In this scenario, which municipalities and the taxi industry may be powerless to stop, passengers will simply use their GPS enabled smart phone to hail a ride to wherever they may be, and drivers in the area will respond with a proposed pick-up time and price.
The technology already exists: Avego Driver is a smart phone application that already allows drivers and passengers to connect and share rides in real time assisted by GPS. It allows for electronic payment from passenger to driver, and the technology is being promoted in a pilot program by the city of San Francisco. With a few small software tweaks, this software and others like it could completely replace all existing infrastructure that supports the taxi industry.
Smart phones will soon be ubiquitous: Statistics Canada reported that by 2007 three quarters of Canadian households had a mobile phone of some kind. Trends at that time suggest the number will be higher still by now. Meanwhile Gartner research project that 95 million smart phones will be sold in the United States in 2011. It seems likely that almost everybody except for some among the very old and the very young will have a smart phone within five years.
A decentralised smart phone system will be better: The current taxi industry and its regulations are supposed to provide telephone dispatch and guarantee the price and quality of taxi services. Advocates of continued regulation argue that without municipal controls on the number of cabs and the fares they can charge, the public will not be able to access reliable taxis at a fair price.
A system of taxi dispatch by smart phone would solve the following problems:
- Ordering a taxi online using a location-aware, GPS-enabled, smart phone system that knows where taxis are in real time would be much more efficient than the current system of telephone operators and radios;
- Quality control will be much more efficient when every single driver and passenger has a reputation built up by feedback from previous trips that can be seen by both parties before each trip is agreed to;
- Price competition would occur because passengers could select from a range of drivers in their area when ordering a cab, and those drivers could offer a price for a trip.
