An Uneven Road
For all their headline-grabbing tactics, slick branding and David-versus-Goliath narrative, Uber gets a lot of attention. Their tech-forward solution to the age-old problem of getting around has resonated strongly with consumers, but the reality is advances in personal transportation have been disrupting cities for over one hundred years. In the past ten years alone, car sharing, electric vehicles and a resurgent bicycling culture have all been leaving their mark on the Canadian urban form (some more impressively than others). Uber didn’t invent disruption. For most, they just made it cool.
But for those who manage transportation and plan cities, Uber is something else entirely. The disruption of the transportation sector in the next ten years – from ride hailing to ride sharing to autonomous vehicles – is effectively embodied by Uber’s business plan, creating a useful shorthand and case study to examine. The response of Canadian cities to Uber’s ride hailing and ride sharing so far has been mixed at best, but some are using these diminutive early ripples as training for the waves of change autonomous vehicles are soon expected to bring.
Ride hailing: Welcome to Canada…sort of
“We got hit upside the head,” said Scott McKeen. The Councillor for Edmonton’s downtown Ward 6 was one of eight councillors to vote in January 2016 in favour of a controversial bylaw to allow ride-hailing services to operate in the city. “I got swamped with emails,” he said. “[Uber] established a campaign for people to direct their emails to this councillor or that councillor. But I was hearing it on the street, too. I was hearing it from young people. I was hearing it from my own offspring.”
Edmonton’s Vehicle For HireBylaw 17400 was the first “Uber-friendly” bylaw in Canada and permitted app-based ride hailing services to legally operate in the city. It was passed at a time when the San Francisco-based start-up was rapidly mobilizing in Canadian urban markets and plowing through any regulatory opposition. In the weeks prior to the bylaw vote, the City tried unsuccessfully to stop Uber with a court injunction, then a sting operation of drivers which yielded 70 tickets, most of which remain unpaid. “When somebody comes in and thumbs their nose at your regulations,” says McKeen, “you tend to be a little put off by that, but it’s not like we didn’t know it was coming.”
The story of Uber in Edmonton is indicative of how the company found footholds in most Canadian cities in 2016, and, indeed, most cities around the world: Uber arrives, taxi industry erupts, local authorities threaten sanctions, Uber leaves, public cries out, Uber returns to a favorable regulatory environment as authorities try to balance the fervor of the taxi lobby and the demand of consumers. The secret to Uber’ s formula is, ironically, trust.
Historically, consumers have relied on the benediction of municipalities to determine what was good and what services were allowed to operate in a city. Through licensing, permitting and safety inspections, this is how the taxi industry gained purchase even despite a widely variable, consumer-facing product. Sharing economy platforms like Uber instead rely heavily on ratings (passengers rate drivers and drivers rate passengers) and create trust directly with the consumer circumventing and diminishing the role of government entirely. The sharing economy “fundamentally changes how a company can build up trust very quickly in a market,” says Ted Graham, one of Canada’s first UberX drivers, an innovation expert, and author of 2017’s The Uber of Everything. “Not two years prior it would have taken a huge brand, lots of lobbying muscle and patience to get through some of the red tape to get established in the city.” In Edmonton, Uber customers lobbied on Uber’ s behalf.
In Vancouver, the largest city in North America without ridesharing, the story was the same, except Uber did not return following their self-imposed exile. The regulation of the local taxi and limousine industry, as Uber would find out, was not Vancouver’s rite alone. Regulation fell instead to the Passenger Transportation Board, an independent six-person tribunal operated at arm’s length from the provincial government and mandated to interpret B.C.’s Passenger Transportation Act. The Board believed Uber was a limo service. Uber disagreed. The Board threatened Uber’s drivers with license forfeiture. Uber left town and waited.
Uber’s strategy levers pent-up consumer demand against the resolve of elected officials. Their calculation has always been that the cost of operating temporarily – some say illegally – in any municipality to build up this demand is less than the effort required to change regulations, as Graham notes, through a normal course of lobbying and marketing. Addict the consumer and they will do the work for you. The challenge in Vancouver was the members of the PTB are appointed – not elected – and relatively immune to public pressure.
Uber first arrived in Vancouver (and Toronto) in 2012 as part of the company’s first North American expansion. Over five years later, the stalemate may end as ridesharing has become a provincial election issue. B.C. Minister of Transportation and Infrastructure Todd Stone announced on March 7 all forms of ride hailing and ridesharing would be legalized by the 2017 holiday season if his Liberal Party was re-elected this spring.
After over a year of consultation with other municipalities and stakeholder groups to, as Stone declared at the March 7 press conference, “get it right,” their plan looks remarkably like Edmonton’s Vehicle For HireBylaw 17400. Both the plan and the Bylaw ensure consistent safety and licensing standards for taxis and companies like Uber, while reserving cab stands, phone- and street hailing for taxis. All companies can then compete openly for the app-based hailing market; the B.C. plan including a $1 million provincial grant to help the taxi industry build an app to compete with Uber.
“Uber could not set up outside Rogers Place [in Edmonton] after an Oilers’ game and start picking up people,” says McKeen. “Part of the market was left for cabs but mostly we said, “Let the competition begin.””
Ridesharing: Driving to less
The impacts of ride hailing disruption in Canadian cities have largely been policy-based, but extension of those impacts into operations and the built form is not expected as they are with ridesharing and autonomous vehicles. In Canada, UberPool – Uber’s unique service which allows more than one unacquainted passenger to share a trip and its cost – is only available in the Greater Toronto Area, but widespread adoption and optimization of the platform algorithm could liberate space in existing rights-of-way.
Numerous studies released in 2016 alone, including from MaRS, the OECD’ s International Transport Forum and MIT, emphasize the substantial positive effect ridesharing can have on urban congestion and air quality. The MIT study, released in December by the Computer Science and Artificial Intelligence Laboratory, studied the taxi industry in New York City. If taxis transitioned to ridesharing vehicles, congestion would be reduced by 75 per cent, according to their models. Transporting more people at once required fewer trips allowing 3,000 taxis to service 98 per cent of the ridership demand with an average wait time of only 2.7 minutes. 2,000 taxis could service 95 per cent of the demand compared to the 14,000 cabs currently scouring the city streets for single-fare riders.
For Antonio Gómez-Palacio, principal of Toronto-based urban planning and design firm DIALOG, increasing the efficiency of cars on the road means more capacity coming on stream. “There is going to be more room on the road,” he says. “Some cities will use that room to do other things like increase the sidewalks, take out a lane of traffic in favor of transit or cycling trails, but some won’t do it and will squander that opportunity and it will result in more cars coming on the road.”
The UberPool service, along with platforms like Airbnb, is a harbinger of the sharing economy which, according to statistics released by Statistics Canada in 2017, is growing fast domestically, but, according to a Vansome Bourne 2016 survey, still lags behind those in many other countries. Gómez-Palacio believes the UberPool service at the vanguard of the sharing economy as a whole is building toward a profound impact on the urban built form. He suggests the vision of a city of the future may closely resemble the cities of our past. “The sharing economy today revisits society from 100 years ago,” he says, suggesting only in recent decades have cities lost their way by gravitating too far toward privatization with suburban sprawl. “We traded big parks for backyards; train stations for 2-car garages, but the pendulum is swinging back to the shared use of things without having to own them”
In a cyclical turn, an urban world of less ownership also energizes potentially disruptive technologies. As Ted Graham notes, Uber and Airbnb succeed because they build trust with a consumer base without the endorsement of municipal regulation. Where cities previously organized people around a shared interest such as public transit, their role as organizer is being replaced by disruptive technology companies. This has some municipalities unnerved and others excited about the opportunity for redefining government at its core. To realize the positive potential of an UberPool service, both with society and with the urban form, governments need now to find ways to direct the disruptive energy appropriately.
The municipal government will always serve a key role, Gómez-Palacio says, through the creation of policy which can accelerate or retard the progress toward the vision of a dense, sharing city. But, he notes, they can also lead as providers of many services related to the sharing economy: “In order to have these technologies work you need to have the digitization, the sharing of big data and often municipalities are in a great position to enable those things.”
When asked to identify a municipality welcoming in this new era of the city, Gómez-Palacio points to Toronto who have dedicated staff and substantial resources to investigating opportunities with the sharing economy and vehicle automation. “They have launched an internal department to really figure this one out,” he says. “Up to now, it has focused on creating enabling policies, thinking through implications on built form and retooling the way they provide services so they can embrace and use the technology to do the things they really want to do.”
Autonomous vehicles: Opportunity honking
Coupling the shared economy with automation is when Gómez-Palacio believes it “all becomes really interesting.” He notes about half of public and private clients he speaks with are worried about the coming changes and are looking to fend them off. The other half are more positive about how new technologies can impact the city, but he cautions about the adaptation to new technologies. “If we look at the 1940s, 1950s and 1960s when cars started to come on stream very strong,” he notes, “a lot of cities were redesigned to accommodate this technology. We’re at the same risk right now.” Instead, he advocates cities consider the next suite of disruptive technologies as tools to “deliver the cities we want.”
“One of the things we are trying to do is create environments that are walkable, focused on health and well being,” he says.”So, the question is, ‘ how do autonomous vehicles allow us to do that better and in bolder ways.’ We really need to be looking at the automation of not just cars but buses and trains and planes and boats and delivery vehicles and garbage trucks as these will all start to have huge transformative effects in our cities and our lifestyles.”
Sean Rathwell agrees. On April 19, Rathwell was a panelist at the 2nd annual Automated Vehicles conference hosted by the Conference Board of Canada in Toronto where the Ottawa-based Transit and Urban Mobility Specialist discussed results of a survey. Over the past three years he and his colleagues at Dillon Consulting were gauging the anticipation of transportation planners, transit planners and urban planners across the country for autonomous vehicles in the Canadian urban space. “
Most communities didn’t have any official position on AVs,” he says in an interview, “but all had at least one person on staff keeping an eye on the topic, trying to understand the implications for their city.”The anxiety of municipalities largely centred on the arrival timing of autonomous vehicles and the widely variable ownership models. “When you extend those two issues,” Rathwell says, “you can start to think of specific issues – parking, for example.”
Rathwell riffs on the myriad of automation-related parking: parking demand may decrease in some neighbourhoods if autonomous vehicles are driverless and can be sent away to remote or less-expensive parking options; congestion in other neighbourhoods could increase drastically if they offer those remote or less-expensive parking options; streetscapes may substantially change if they need to accommodate parking – or not; a city’s parking revenue could dry up; parking garages could come down; and parking lots could become parks. “
If you own parking lots in any city,” Gómez-Palacio adds, also a session moderator at Automated Vehicles, “the land value of those lots is starting to change. Even formally awkward sites for development, because it was hard to get parking into them, become developable. The land valuation of a lot of real estate is going to change quite drastically and readjust to what you can [now] do with the land.”Gómez-Palacio believes the “automation of everything that moves” should prompt any organization in the distribution business, including cities, transit authorities and private enterprises, to seriously “rethink their business and delivery models.” He also notes, “I work with both public and private sector developers who are starting to ask, ‘how do I [design] my buildings differently, am I going to need the same amount of parking or drop-offs of buildings.’ The garbage loading portals might look completely different once you have an automated garbage truck coming to pick up the garbage.”
Rathwell and Gómez-Palacio are also both aware of the dark side of autonomous vehicles. Rathwell cites a 2015 Canadian Automated Vehicle Centre of Excellence report which estimates over 1 million people in Canada drive a vehicle for a living and are at risk of losing employment when autonomous vehicles arrive in full. Automated vehicles, Gómez-Palacio notes, could also easily mean the proliferation of vehicles on the road and congestion if not controlled properly:“All of a sudden everyone in the household can have a car – children, seniors, the dog. Even goods can be moved around in individual vehicles.” As with ridesharing, the momentary potential for reclaiming urban space from the car needs to be realized, he says, or it will be consumed once again by the technology. “If we think about it right we can increase the quality of life and decrease the infrastructure and dedicate more space to pedestrians and cycling and all the things we want to do in our rights-of-way and public spaces.”
With so many variables and potentially perilous outcomes, Rathwell recommends his clients reverse engineer the urban future they want. “Cities should get a group of bright people and workshop through a variety of futures,” he says, “assessing what each scenario could mean for planning, policy, operation and built form. Preferred scenarios can lead you to identify the kinds of policies or guidelines necessary to put in official plans to manage progress as it evolves.”
Rathwell believes cities need not restrict their visions to only as hands-off regulator. They could choose instead to develop mobility as a service, and operate as an“aggregator of transportation” much like large communication companies aggregate telephone, internet and television services.
“I might want a mobility package that provides me with a transit pass, access to car share and bike share in urban areas plus intercity car rental because I don’t own a car – all for a certain fee per month,” he says. “Others might want parking or cabs and some bike share on the weekends.”
“Cities need to step back and consider, ‘What roll do we play in this area? Do we actually build such a system and innovatively bring these things together, or do we franchise or license somebody to provide such a service, or do we let the marketplace take care of it and our job is to provide the public transit element and nothing more? All are valid options.”
From Disrupted to Disruptor
Ted Graham has a history with innovation. While moonlighting as an UberX driver for research, his day job was as an innovations leader with multinational accounting giant PwC; he also founded Toronto’s South Core Innovations Hub. After his last UberX drive, Graham gave a popular TEDx talk, wrote a book titled The Uber of Everything, and, last September, joined General Motors Canada as their head of Open Innovation: “I spend most of my time talking to entrepreneurs, venture capitalists, incubators and university researchers, about where we’re going, how cities are urbanizing, how people are embracing this concept of sharing and access to assets as opposed to owning them.” He acknowledges the process is “part art and part science,” but one which has helped GM Canada to innovate at the pace of much smaller disruptors.
In 2016, they announced major investment into the Ontario auto sector, including expansion of their cold-weather testing facility in Kapuskasing, and creation of a “Mobility Campus” in Toronto, a software development centre in Markham, and 700 new engineering positions to help drive advancement in autonomous, connected vehicles. Signalling a strong preference for Silicon Valley North, they also launched “2908,” an innovations lab at Kitchener-Waterloo’s renowned start-up hub, Communitech. Where cities previously organized people around a shared interest such as urban transportation or public transit, their role as organizer is being replaced by companies which slide effortlessly on the innovations-disruption spectrum, a cohort unexpectedly including companies like GM Canada.
As cities change with disruptions in transportation, and the role of municipal governments change with disruption by the sharing economy, GM Canada serves cities a compelling model for the future. With 10,000 employees and over $30 billion in annual revenue, 99-year-old GM Canada is bigger than most Canadian municipalities (Edmonton, Canada’ s fifth largest city, has 11,000 employees and $2.5 billion in revenue) and has just as storied a past. Their example demonstrates how large organizations with a reputation of entrenchment can, with the right focus, move purposefully and nimbly in a new age of constant disruption. The disrupted can become the disruptors.
“Who would’ve thought that an automaker would have gone into the car sharing business,” says Graham. “People would have said you were crazy and that you are going to cannibalize single car sales because now more people can utilize this one car. But it’s part of this realization you need to look beyond the history and outside the industry at models which will really make a difference in the future.”
The uneven road ahead
“Innovation is offering something new; disruption is offering something new that challenges what was there in the past,” says Antonio Gómez-Palacio.
In Canada, ride hailing is here, ridesharing is growing and some estimate autonomous vehicles substantially flooding cities is only five years away. The road to a shared, connected and automated transportation future will be bumpy (on March 25, Uber suspended on-road testing of its autonomous vehicles in the US after one was involved in a significant crash in Arizona), but the opportunity to redefine cities and the governments which manage them is great.
“In my mind, it is a very exciting time,” says Gomez-Palacio. “But it was the same with the advent of cars [in the twentieth century]. Some cities were really destroyed by it and grew in ways that were clearly unsustainable. The same thing is going to happen now.”
“Some cities did not get entirely distracted by it and used vehicles as a way of moving forward,” he says. “They really figured it out.”