Cab firms may see new competition

Bill would do away with barrier; some fear possibilities

By Chris Walsh, Rocky Mountain News (Contact)

Tuesday, May 6, 2008

Denver's "big three" cab companies might soon face their first real competitive threat.

State lawmakers on Tuesday passed House Bill 1227, which, among other things, would remove a key barrier that essentially prevented new companies from entering the market. The bill now moves to Gov. Bill Ritter's desk for final approval, which is expected in coming weeks.

Its passage is a victory for independent drivers and entrepreneurs who want to start cab service in the metro area to compete against Yellow Cab, Freedom Cab and Metro Taxi.

Whether consumers would benefit, though, remains unclear. And some local officials have raised concerns that lawmakers didn't spend enough time exploring the issue. They warn that the change could hamper service during the Democratic National Convention in August and beyond.

"If you ask three or four different people what impact this will have, no one can give you a definitive answer," said Bill Mitchell, director of government and community affairs for the Denver Metro Convention and Visitors Bureau. "We don't have a clear picture of what this means for the industry."

The new regulation, part of a larger bill to keep the Public Utilities Commission operating until 2019, deals with the certification process for new cab service.

It stipulates that cab companies opposed to new entrants must prove that additional service would be "detrimental to the public interest." That's an about-face from the current process, in which applicants seeking a certificate have to prove that there is a need for additional service.

New entrants have to meet certain operational and financial benchmarks, but they now at least have a chance at starting their own service. The bill covers cab service in Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, El Paso and Jefferson counties.

A group of cab drivers that backed the bill expressed tempered optimism, saying it's a step in the right direction.

"Before it was impossible to even think about starting a company; now it's difficult," said Abdi Buni, president of ProTaxi, a union representing 550 drivers who work as independent contractors. "It won't be easy, but moving from impossible to difficult is" progress.

The ProTaxi group intends to start a new employee-owned cab service called Union Taxi.

Some cab company executives and local officials fear the new law would hurt consumers. Brad Whittle, president of the company that operates Yellow Cab, says new entrants likely would focus on the higher-profit airport runs rather than on providing service for short trips. That could force Yellow Cab to put more of its resources into competing at the airport, leaving fewer cabs elsewhere. The company also might have to scale back several initiatives, such as bringing on more vans that can accommodate disabled passengers and adding more hybrid vehicles to its fleet.

walshc@RockyMountainNews.com or 303-954-2744

What could happen if proposal becomes law

* What it does: The legislation would make it easier for individuals to start new taxi companies as of July 1. Anyone who opposes certification of a new company would have to prove that new service would be detrimental to consumers. Before, those seeking a certificate to operate a cab company had to prove there was a need for new service.

* Supporters say this will usher in a new era of competition, allowing individual drivers and entrepreneurs to start their own companies.

* Opponents say this could lead to a swarm of new cab companies focusing mainly on the airport rather than everyday short trips around the region. They also fear that shaking up the cab industry just a few months before the Democratic National Convention in August could create problems.