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Why Uber and Lyft aren't B.C.'s ride-hailing solution

Aug 24, 2019
Uytae Lee

In September, British Columbia will begin accepting applications from ride-hailing app giants like Uber and Lyft — and our province will have missed a huge opportunity.

Don't get me wrong; ride-hailing apps bring much needed innovation to an outdated taxi industry. But there's no reason why a locally developed app couldn't do what these international companies are doing.

Allow me to introduce you to Kater.

They've described themselves as B.C.'s first ride-hailing app, offering rides in partnership with the Vancouver Taxi Association since earlier this spring.

Kater has been offering rides through their app in partnership with the Vancouver Taxi Association since earlier this spring. (Submitted by Uytae Lee)

Kater's design is similar to that of Uber and Lyft in that you can book and pay for your ride using just the app. Like Uber and Lyft, both the driver and the passenger can rate each other afterwards.

I have to admit, however, that Kater is no replacement for Uber or Lyft right now.

The first key difference is Kater owns all of their vehicles. That means Kater has to physically buy and maintain each car on their platform. This really limits how fast they can grow their service compared to Uber or Lyft where drivers can use their own vehicles. Currently, Kater says it has 35 cars on its app, not nearly enough for a serious ride-hailing service in Vancouver.

And perhaps, most controversially, Kater partnered with the local taxi industry. They use licences that were issued to the Vancouver Taxi Association and pay a portion of their profits to them (rumoured to be around 20 per cent).

Those optics aren't pretty. The taxi industry has been one of the biggest opponents of ride-hailing apps in the province, so a company like Kater looks like it's just serving the status quo.

But hear me out.

If you disregard the politics and its current design, Kater, on principle, makes a lot more sense than apps such as Uber or Lyft.

The network effect

Some apps make more as global businesses because the more users, the more useful and valuable they are. This is known as the network effect and it's become a key precondition for internationally successful apps and websites.

For example, it's valuable that a friend of mine in Halifax is also using Facebook or LinkedIn so we can connect on the same platform.

Uber or Lyft don't have this effect. It makes almost no difference to me in Vancouver if someone in another city is using the same ride-hailing app as me. For those that travel frequently, the ubiquity of Uber and Lyft may be marginally convenient, as you don't have to download a new app for each city you visit.

But for most people, there aren't many compelling benefits to having rides organized through an international and somewhat monopolistic app.

Uber has had to pull out of China, Russia and Thailand because there were locally developed apps that understood the local context better and became more popular. It's fighting bitter battles against local ride-hailing apps in the Middle East, India and South America as well. These battles come at an astronomical price: Uber lost $5.24 billion last quarter.

Uber's main competitors across the world. (Source: Mark Khoury via Quora.com, 2018)

There's really no reason why a subsidized international franchise needs to be arranging my cab rides.

This points to a broader issue. We can see that much of the wealth created on the internet is being concentrated into a handful of companies right now — a lot of them headquartered in California. With that in mind, we should be very careful about what other aspects of our economy we want taken over by an international company, especially if we can see there aren't any real benefits to that concentration. Food delivery apps like Foodora or SkiptheDishes could use this kind of scrutiny as well.

Kater a missed opportunity

That being said, Kater was a missed opportunity. Its links to the taxi industry hamper its ability to be a true ride-hailing service.

But promising examples of local ride-hailing apps do exist. When the city of Austin, Texas, banned Uber and Lyft in 2016, a group of local developers donated their time to launch their own ride-sharing app called RideAustin. It's incorporated as a non-profit and riders can choose to round their fares to the nearest dollar and donate that extra money to local charities.  

Local app developers in Austin, Texas launched “RideAustin” as a non-profit ride hailing app when their city banned Uber and Lyft in 2016. (Ride Austin)

Right now is the best time to be open to any and all kinds of solutions for transportation and our options are not limited to two San Francisco-based companies. Let's not give up on Kater so easily, at least on principle.

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