Are Denver cab companies ready for an Uber-bumpy ride?
"We are excited and ready to start our business," says Mekonnen Gizaw, president of Mile High Cab, sitting behind his new corporate desk in a small fourteenth-floor office in Aurora, an office that's nearly empty. The room where Mile High's dispatch system will operate is just a tangle of phone cords sprouting from the wall. The cashier's desk near the front door, where drivers will deal with financial matters, is bare. The phone sitting on Gizaw's desk isn't even plugged into the wall.
But soon enough, Mile High Cab will be fully operational, an outcome that's been a tumultuous half-decade in the making. In 2008, concerned about existing taxi companies' high lease rates and questionable business practices, Mile High applied to become a new Denver cab company. Its attempt faced opposition every step of the way — from politicians, from state rule-makers and, most of all, from Metro Taxi and Yellow Cab, the city's largest and most entrenched taxi companies. But finally, now that Mile High's bid worked its way through the courts, the company has just gotten the green light from the Colorado Public Utilities Commission, the state agency that regulates taxi services. Now it's filing its official paperwork, developing its taxicab color scheme and setting up that office; Gizaw says Mile High should hit the streets by early spring.
Those streets look very different than they did back in 2008, though. Over the past two years, smartphone-based car-hailing companies Uber and Lyft have launched in Denver, triggering turmoil among existing transportation services and radically transforming the very notion of hailing a cab. Meanwhile, the giant multi-national transportation firm that owns Yellow Cab is attempting to buy Metro Taxi, which could result in a single company controlling a majority of the city's $70 million annual taxi business. And finally, Mile High itself is beset by internal turmoil, with various founders challenging each other for control of the company.
Mile High Cab
Gizaw insists he isn't worried about such bumps in the road. "If you exist, you exist," he says. "Your success is based on the service you provide to the community." And with that, he hands over a sheet listing Mile High's unique services, including focusing on low-emission taxi vehicles and new cab-hailing technologies. On the top, it reads, "Mile High Cab, Inc.: Taxi of Tomorrow."
But what, exactly, will tomorrow bring?
"The taxi industry in Denver is unlike any other taxi industry in the country," says Edem "Archie" Archibong, who started out driving a cab in 1995, among the first to operate one of the purple taxis owned by the then-newly launched Freedom Cabs. Before that year, the PUC hadn't granted a license to a new taxi company in almost fifty years.
That's because under Colorado law, taxis are a protected public service. In order for a proposed cab company to gain approval, the PUC has to be convinced both that there is a public need for its services and that the new business won't put existing taxi operators out of business — and that's an extremely high bar. While Colorado isn't the only state with this sort of arrangement, most others have a trade-off: In exchange for such "regulated competition," taxi companies are restricted in how much they can charge their drivers to lease cars. But in 1991, after the PUC began looking into complaints that drivers were being charged unfair lease rates, taxi-company lobbyists succeeded in getting legislation passed that prohibited the PUC from regulating taxi companies' lease rates at all.
"The current state is the worst of both worlds for the public, which is being charged a monopoly price, and the drivers, who are being exploited with a monopoly lease rate," says former PUC chairman Ray Gifford, an outspoken critic of the current system. According to one PUC study, Denver taxi lease rates increased by an average of 5.4 percent annually between 2002 and 2008, while the market itself, based on total taxi trips, increased only 2.7 percent.
While both Metro and Yellow offer a variety of lease options, in 2012 most Metro drivers paid $540 a week to drive one of that company's 492 cabs, while most Yellow drivers paid $460 a week for one of 300 Yellow cabs, according to a PUC study. The majority of Freedom's drivers, however, shelled out just $285 per week (that figure recently went up to $300). "The reason we try to keep our lease rates down is so we don't put a huge financial burden on the cab driver," explains Freedom general manager Max Sarr. "That way, drivers won't be very stressed out by trying to work long hours and make a lot of money, and not really focused on the street." According to safety audits in 2010 and 2011, over a thirty-day period, Metro drivers had 175 violations for driving longer hours than they're allowed, and Yellow drivers had 62 such violations, while Freedom Cabs' drivers had just one over-hours violation during its own thirty-day audit.
The way the taxi industry has long been structured in this state, though, drivers have had little recourse regarding high lease rates or other concerns. With so few taxi companies allowed in the market, they didn't have many alternatives if they wanted to continue driving; as independent contractors, they had no job protection or most of the other privileges provided by the National Labor Relations Act. Some drivers claimed this situation led to an abusive workplace environment. In 2009, 21 past and present Yellow Cab drivers, all of African descent, filed a federal lawsuit against the company claiming years of discrimination and abuse. "If you look at the system we have in Yellow and Metro, with the high lease rates and inability for the drivers to go hardly anywhere else, you do have an indentured-servitude vibe going on," Gifford said in a 2010 interview on the case ("Mean Streets," December 2, 2010).
According to the suit, several Yellow Cab supervisors favored American drivers, had billed the plaintiffs questionable fees, and had subjected the drivers to verbal abuse, calling them "nigger," "African monkey," "dumb African," "crazy Somali" and "animal." Sometimes the attacks were even physical, the plaintiffs charged. Several months after their lawsuit was filed, the drivers voluntarily dismissed their case when Yellow Cab agreed to shoulder most of the costs of legally arbitrating their concerns. In February 2012, the arbitrator on the case issued his final decision, ruling that Yellow Cab's managers had used discriminatory treatment to "to stifle [the drivers'] demands for concessions and allegations of discrimination." He awarded the drivers a total of $202,100 and their lawyer $1.1 million for her legal fees.
Given all the problems in the industry, Archibong, who was still working for Freedom Cabs, was intrigued when he got a call in 2008 from his friend Rowland Nwankwo. Nwankwo, who'd driven cabs for years and was then working for Metro Taxi, had repeatedly attempted to start his own Denver cab company; he'd even received a commemorative plaque from the nonprofit libertarian law firm Institute for Justice, which had provided some help. He'd never succeeded in getting the company going — but recently passed legislation offered him hope. The new law had shifted the burden of proof to existing cab companies; if they wanted to block a potential competitor, they had to show that the existing market couldn't support more than the 942 cabs that were already allowed. Suddenly, the odds were no longer stacked against the challenger.
"Rowland had always been fighting for authority to have a cab company," says Archibong. "For the first time, the law favored the applicant. This was his best chance."
So in September 2008, Nwankwo set the wheels in motion to launch Mile High Cab. He applied to the PUC for a 150-car taxi-company license, with Archibong as his first investor. They asked University of Denver law professor Tom Russell to represent them at their PUC hearings, and soon merged with another proposed cab company, one started by Mekonnen Gizaw. They kept going under the Mile High name, and soon had enough drivers signed up to fill the company's roster. (Several of those people would later become plaintiffs in the abuse-and-discrimination lawsuit against Yellow Cab.)
Mile High's application was well timed. Less than a year later, in July 2009, the legislature reversed Colorado's new taxi law, once again making it difficult for companies to start up. While the PUC had yet to weigh in on Mile High's application, the company's proposal was grandfathered in under the earlier, more lenient standard. That standard had already allowed one new cab company in: Union Taxi, a driver-owned operation that soon put 220 orange cabs into operation despite claims by Yellow Cab and Metro Taxi that the enterprise would threaten not just their businesses, but the public welfare. And Freedom's fleet had also gotten permission to expand from 150 cabs to 250 — bringing the total number of cabs on the Denver streets from 942 to 1,262.
Freedom didn't contest Mile High's application, nor did Union Taxi. And while Yellow opposed the prospective company, its only complaint was that Mile High did not appear operationally fit — but then, Yellow itself had applied to put 150 additional vehicles on the street. (Asked why Yellow was trying to expand, one company exec explained, "The fact is that we do not necessarily believe the market needs or can support more permits, particularly not in the near term. But at the same time, if permits are being given out, we felt that to be competitive, we needed to apply.") Only Metro Taxi was officially opposing Mile High on the basis that the market couldn't support more cabs. As a result, "I thought this was going to be a smallish project," Russell said in 2010.
But Mile High faced major political opposition during its application hearings in August and September 2009. Then-Denver city councilman Michael Hancock was subpoenaed by Metro to testify about what he saw as a "saturation of taxis in downtown Denver." Then-mayor John Hickenlooper wrote expressing concerns about allowing additional cabs, quoting a letter he'd received from the Colorado Hotel and Lodging Association that complained, among other things, that Union did not have a central dispatch system — a claim that turned out not to be true. The two politicians (both of whom failed to respond to requests for comment) later collected sizable campaign contributions from Metro Taxi. Hancock, who'd gotten $3,250 from people affiliated with Metro during his previous city council campaign, received $5,500 from Metro and several of its representatives during his successful 2011 mayoral campaign. Hickenlooper, meanwhile, received $10,000 from Metro for his January 2011 gubernatorial inauguration party.
The argument that Denver's cab market was saturated was based largely on a 2007 Visit Denver study by transportation expert Ray Mundy, which had concluded that "the correct number of taxi permits in Denver is 942" — exactly what the city had at the time. This determination came despite the fact that in 1994, when Denver's population was roughly three-quarters its 2007 size, the metro area had supported 1,142 cabs. And in 2005, a little-publicized report by Cornelius Consulting for the Denver Office of Economic Development had determined, "Even though drivers may feel there are too many taxis licensed to operate in Denver, the City is not being over-served compared to cities of comparable size."
Nevertheless, Mundy's study proved to be a powerful tool. In January 2009, Robert Tschupp, vice-president of Veolia Transportation, the multinational transportation firm that now owns Yellow Cab, used it to urge Visit Denver, the Colorado Hotel and Lodging Association and Hancock to contest the PUC's decision to allow Union to enter the market. As Tschupp noted in an e-mail (which Westword obtained through an open-records request), Mundy's study had recommended that the PUC only approve taxi companies that "have a long-run view of their firm and community, professional management, modern technology, sufficient capitalization, and a legitimate profit motive in their ability to serve and expand taxi market opportunities." Concluded Tschupp: "Only Yellow Cab and Metro fit this definition." His e-mail did not note that Mundy's study had been bankrolled by Yellow and Metro.
In August 2010, in a much-delayed decision, Paul Gomez, a PUC administrative-law judge, concurred with Metro, Mundy and the politicians. While he found Mile High financially and managerially fit to provide service, he'd been persuaded that with 1,262 cabs, the Denver market was at or near capacity. That November, the PUC commissioners agreed, denying Mile High's application. Meanwhile, in the two-plus years they'd been waiting for a decision, several of Mile High's would-be drivers, including Nwankwo, had lost their jobs with other companies because of their efforts to start their own.
But less than a year later, Gomez had a change of heart while considering two other taxicab applications filed during the same period as Mile High's. He granted a new company named Liberty Taxi 150 cabs and approved Yellow Cab's application to expand from 300 taxis to 450. In his decision, Gomez did not see these decisions as a contradiction: "[The Mile High Cab rejection] relied on driver testimony as to overcrowding; that was due to the significant and substantial expert testimony that supported those anecdotal statements. That is not the case here. No expert testimony was provided regarding the public-interest standard. Therefore, since each case stands on its own merits, such anecdotal evidence is difficult to accept here without supporting expert testimony or studies."
In June 2011, though, the PUC ruled against Gomez's decision on both matters, questioning Liberty Taxi's financial fitness and once again determining that the city's taxi market was oversaturated.
But was it? In a comprehensive 2012 report on the state of the cab industry, PUC staffers noted that the total number of metro Denver taxi trips had increased since Freedom had expanded and Union Taxi had entered the market in 2008, and that on average, each of the four Denver taxi companies had enjoyed a 10.72 percent increase in their lease revenues between 2009 and 2011, nearly double the average revenue increase that each of the three existing companies had experienced between 2000 and 2007. "There may or may not be room for additional taxis or taxi companies in the metro Denver market," the report concluded, "but the increasing trip statistics and the fact that taxi revenues have outpaced other industries and economic indicators suggest that Union has been a source of healthy competition and that the market as a whole is in relatively good shape."
The drivers behind Mile High, meanwhile, continued to argue that there was still room for another cab company. They sued in Denver District Court to overturn the PUC's rejection of their application, and when they lost that case in September 2012, they took the matter to the Colorado Supreme Court — with the help of lawyers from the Institute for Justice, which Nwankwo had once again enlisted for the cause. The drivers also started a website, Mile High Cab Inc., that featured a counter listing the number of days that had passed since they'd first applied to open their business.
As those days stretched into months and years, the tables finally turned. In April 2013, nearly five years after they'd applied for a license, the Colorado Supreme Court found in Mile High's favor, concluding in a unanimous decision that the PUC didn't have adequate reason to deny the company's application.
But by this point, Mile High was facing new challenges, from both within and without. Those challenges include new players in the Denver transportation scene that are threatening to blast wide open the taxi market that Yellow and Metro have fought so hard to keep to themselves.
As Archibong notes with a wry smile, "What goes around comes around."
On a recent Thursday afternoon, dozens of people mill about Uber's office inside Galvanize, the sleek co-working space at 11th and Delaware, waiting to pick up the iPhones that will make them part of one of the most talked-about startups on the planet.
To get here, each of these people applied on Uber's website to become an uberX ride-share driver. They uploaded proof of their driver's license, car insurance and registration, and photos of the vehicle they planned to use for the work, which has to be four-door, 2005 or newer and, if possible, fuel-efficient — but other than that, can be any make or model. Once the applicants have passed background checks and checked out Uber's online training course on how to be a "five-star driver," they're invited to Uber's office, where, for a $100 deposit, they'll be given a data-only iPhone that will turn them into uberX drivers.
As soon as they walk out the door today, these drivers can use those phones to log in to Uber's system, which will alert them as soon as someone nearby requests a ride through Uber's smartphone app. If a driver accepts the hail through his phone, he'll pick up his passenger and drive him wherever he wants to go. There's no central dispatch system, no phone number to call, no money changing hands. The $2.14 base fare plus $0.19 per minute and $1.57 per mile typically charged to uberX passengers (Denver cab rates range from $2 to $2.60 base fare plus $2 to $2.25 per mile, depending on the company) is deducted automatically from a linked credit-card account as soon as the passenger's Uber app registers that the trip's over. Then the driver is off to pick up his next ride.
Roughly forty people will pick up iPhones today, which means forty more uberX drivers hitting Denver's streets. This process happens twice a week.
Will McCollum, Uber's general manager in Denver, sees this as a good thing — for drivers, for riders, for the future of Denver conveyance. "When you empower drivers to own and operate their own vehicles, they can take control over their own income, their hours, and they can improve their lives," says McCollum, who comes across more like a slick young start-up exec than a class warrior. "This market has been so underserved by artificial supply constraints courtesy of the PUC and the taxi industry. Take Mile High Cab: The taxi companies' approach has been to bleed them dry, and the PUC has been complicit in allowing that to happen."
Uber, which started in San Francisco in June 2010, rolled into Denver in August 2012, after having already expanded to thirteen other markets. (At last count, Uber was operating in more than eighty cities in 31 countries worldwide, with a new market launching roughly every six days.) The company launched in Denver with its UberBLACK service, which allows people to book rides with licensed limousines and town cars through their smartphones. While Metro, Yellow and Union have their own ride-hailing apps (called "Denver Taxi App," "Taxi Magic" and "Union Taxi Denver App," respectively), several taxi power players moved quickly to challenge UberBLACK with the same fervor that they've contested new taxi start-ups. According to e-mails obtained by Uber via a Colorado open-records request, the month Uber launched in Denver, Brad Whittle, senior vice-president at Veolia, wrote to PUC director Doug Dean and operations chief Ron Jack, saying, "I believe we have a real issue coming to us in the Colorado market that may need some rule changes or legislative changes to clarify how phone apps can and should work with transportation."
Whittle nearly got his way. A year after UberBLACK began service in Denver, a PUC administrative-law judge proposed changes to the state's transportation rules that, among other things, would have prohibited limo drivers from using iPhones or other kinds of meters to determine fares based on time or distance traveled — outlawing the technological basis for Uber and similar companies. "These laws were never designed to protect the public," says McCollum. "They were designed to make it impossible for Uber to operate."
But the news of transportation officials stonewalling a Silicon Valley darling like Uber drew far more attention than a potential cab company getting rejected by the PUC.
Erik Mitisek, CEO of the Colorado Technology Association trade group, blasted the proposal as "a troubling decision and bad signal to send to our entrepreneurs and innovators." Governor Hickenlooper complained to the media that "attempts to micro-manage limousine services constitute an overreach, are unnecessarily complicated, and are not in the public interest." A month later, the PUC rejected the proposed rule changes.
The fight wasn't over, though. A few days after the PUC's decision on the limousine rules, Lyft, another smartphone-based transportation company, announced it was coming to Denver. This operation was different: Instead of contracting with licensed limo drivers, Lyft allowed drivers to use their personal cars, each sporting Lyft's signature pink mustache on the front grill. Not long after, Uber brought its own, similar ride-sharing program to town: uberX, which offered cheaper rates than UberBLACK. Suddenly, Denver's public transportation scene wasn't just dealing with phone apps that connected the public to licensed limousines. Now the metro area was awash in a new kind of transit industry, one that wasn't regulated at all.
A bipartisan group of legislators is attempting to rein things in with a proposal that would label ride-sharing operations "transportation network companies," or TNCs, and place them under some PUC regulation. "I think Colorado is a cutting-edge state, and these new companies and this new sort of technology and innovation is reflective of that," says Dan Pabon, one of the bill's sponsors in the House. "And that manifests itself as Senate Bill 125, which ensures we have an environment where these transportation network companies can exist and operate."
Under the bill, which passed in the Senate last week with little debate and has now moved to the House, TNCs would be required to conduct driver background checks, inspect vehicles and carry $1 million in liability insurance — essentially codifying the procedures that Uber and Lyft already have in place. "What we are doing is putting legislation around our business model, so that way everyone feels their concerns have been addressed," says McCollum.
But many transportation officials and industry stakeholders say the proposal doesn't meet their concerns at all. According to spokesman Terry Bote, the PUC is watching the proposed legislation closely, and if the commission determines that it doesn't go far enough to ensure public safety, the PUC will look into crafting its own TNC regulations. Larry Stevenson, the director of safety for the Denver Department of Excise and Licenses, wants all ride-sharing drivers operating in the city to obtain a "herdic license," as Denver taxi and limo drivers do, which requires that they pass a test on local transportation laws and city streets, among other things.
And even the various taxi and limousine businesses have joined together against what they see as a common threat. In December, all four of Denver's existing cab companies, plus several limo and shuttle companies, sent a letter to Mayor Hancock requesting that he issue cease-and-desist orders to Lyft and uberX, following cities like Los Angeles and Philadelphia, which have cracked down on ride-sharing. "We are strongly united in asking to have these companies play on the same playing field as us," says Freedom's Sarr. The PUC requires taxi and limo companies to conduct more thorough background checks than Senate Bill 125 proposes, and those companies must also monitor drivers for over-hour violations, carry workers' compensation insurance, have $1.5 million in liability insurance, and have their fare rates regulated by the PUC.
"The transportation industry is at risk right now," says Kyle Brown, general manager at Metro Taxi. "The safety standards that taxis have traditionally been held to, there is an attempt by these new companies to lower that standard in order to compete. If this bill moves forward as is, you will see an anything-goes attitude. How can you trust companies that have no regard for public safety?"
But these companies are worried about TNCs for another reason, one that has less to do with the public interest. Since uberX and Lyft drivers own their cars, the companies don't charge lease rates; instead, they take 20 percent of gross earnings. And many drivers like that system better. According to Forbes magazine, San Francisco's taxi and limousine companies have lost a third of their drivers since ride-sharing options came to town. "I have been impacted, I am not ashamed to say," says Sarr, who concedes that Freedom has experienced higher driver turnover lately. Local limousine companies are struggling, too, says Adam Paul, owner of Colorado Corporate Car and vice president of the Colorado Limousine Association: "The rise of Uber and similar companies has hurt. People have lost business to their model, absolutely."
And while Brown says Metro hasn't lost many drivers to the TNCs, he predicts that turnover could come if uberX and Lyft don't face stricter regulations. Would Metro consider dropping its lease rates if the TNCs aren't reined in? "It is more likely we would change into a TNC," says Brown — despite all the public-safety concerns he's listed about such operations.
The other big question is, who covers the cost of accidents involving TNCs? "Our position is there are some gaps in insurance coverage where both the TNC drivers and third parties could be at risk, and we think those gaps need to be corrected," says the PUC's Bote. Under SB 125, a TNC company's insurance would only cover drivers once they've accepted a fare. But in a strongly worded memo to state lawmakers, Marguerite Salazar, the current insurance commissioner, and PUC commissioner Doug Dean noted that under this arrangement, insurance companies could end up canceling these drivers' personal policies, since they all contain exclusions for "livery conveyance," such as working as a vehicle for hire. Furthermore, Salazar and Dean argued, the additional risk shouldered by the insurance industry because of TNCs could lead to higher premiums for drivers all over the state. Late last week, though, both Uber and Lyft announced new company policies to cover drivers during this "insurance gap."
Passengers have their own complaints about Uber, specifically its "price surge" tactics, in which it increases rates, sometimes dramatically, to encourage drivers to take to the streets during difficult times like snowstorms or busy nights like New Year's Eve. And some Uber drivers have filed a class-action lawsuit against the company, saying it's illegally skimming their tips. Finally, the company has been called out for using dirty tricks to box out rival ride-sharing companies and lure drivers away from the competition. Uber's behavior, in other words, is starting to resemble that of an entrenched taxi company.
The difference, however, is that you don't find a lot of Uber drivers complaining about their employer — not in Colorado, at least. For five years, Ali Vazir worked as a cab driver, first for Yellow and then for Metro, where he was eventually paying $672 a week for his cab lease. That changed when he signed on with uberX last fall. "Now, if I don't make money, Uber doesn't get a penny from me," says Vazir, who explains that without a lease payment hanging over his head, he can work 35 to 40 percent fewer hours per week than he did as a cab driver. "To me, that is fantastic."
Vazir, a former industrial engineer, is so passionate about his new job that he spends his newly free nights crafting op-eds criticizing taxi operations for trying to shut down TNCs and penning letters to various city councils that are considering restricting ride-sharing companies. "I equate companies like uberX with Lincoln's emancipation," he says while driving his Nissan Sentra through northwest Denver on a wintry afternoon, waiting for the uberX iPhone fastened to his windshield to alert him to a fare. "For those taxi drivers who disagree with me? I believe they're suffering from what you call Stockholm Syndrome."
Vazir gets an alert on his phone: Someone on Zenobia Street is looking for a ride. At the address, he picks up Sam Barnes, who needs to get to a business meeting at a neighborhood Starbucks; his car won't start and it's too cold to walk. He's been happily using uberX for months, Barnes says, as Vazir navigates the short distance to the coffee shop.
Does Barnes ever use taxis?
"I couldn't care less about old-fashioned taxis, to be honest," says Barnes, shaking his head. "You either change or you die."
Loyal Merrick is having a bad day. He's had a lot of those lately. At 7:38 this morning, he got into his bright-yellow Toyota Prius emblazoned with Yellow Cab's signature green logo — a car he calls his "Queen Killer Bee" — and started work. But in the five hours since then, he's only picked up a handful of fares, including one that earned him just $3.75. "Three seventy-five? That's business?" Merrick grumbles as he cruises through downtown. "It's a slow month, anyways. But when you add to that everyone who is stealing your shit and undercutting you, how are you supposed to make a living?"
For a while, Merrick, who's been a cab driver for three years, had arranged a promising financial situation for himself. A whiz with spreadsheets and number-crunching, he realized he could take advantage of a Yellow Cab policy that allows a driver to lease his cabs to another driver during off-hours. So after he leased the Prius, he found a second driver and made enough weekly income on the deal that he could afford to work daytime hours, when there's less business, and still support his family.
That was before Uber and Lyft came to town.
Like the executives at the company he works for, Merrick doesn't think it's fair that his new competitors aren't being held to the same rules he is. But he has a bigger concern, one that led him to organize a protest against uberX and Lyft in November: the skyrocketing number of vehicles now picking up passengers in Denver. "We are competing with an unlimited number of uninsured, unlicensed drivers," says Merrick, the heat rising in his voice. It doesn't help that many taxi drivers say they're seeing "gypsy cabs" stealing their fares, in the form of limos and town cars, presumably contracted with UberBLACK, trolling downtown on the weekends and taking street hails — something only taxis are allowed to do.
McCollum won't say exactly how many UberBLACK and uberX drivers are on Denver's streets, other than noting, "I would be comfortable saying there are hundreds of drivers in both services." It's unclear how many pink-mustachioed Lyft vehicles to add to this number; company representatives could not be reached for comment.
But Yellow and Metro, which had long used an oversaturated market as their primary argument against new Denver cab companies, now shy away from complaining about the number of vehicles on the street when listing their concerns about ride-sharing operations. "We still believe the number of taxis is important for a healthy taxi industry," says Metro's Brown. "But the real concern is safety."
Merrick vehemently disagrees. "Numbers matter!" he cries, sitting in his cab. "The vehicles question is putting me out of business." And that, he argues, will impact the public. To illustrate why, he drives over to Denver Health and waits for a ride request. After a while, he scores a fare: An older woman who's escorted to his cab in a wheelchair, who needs a ride to her home just off Colfax. Once he drops her off — receiving a $14 voucher for his efforts, which is covered by either the hospital or an organization like Medicaid — he asks: "What happens when Uber puts me out of business and there are fewer and fewer cabs? Do you think those cabs that are left are going to be interested in picking people up at the hospital? Not everyone has a smartphone; not everyone has a credit card. We are not replaceable. We are absolutely essential to the functioning of a city."
And cabbies might soon have one less employer to work for. Last August, SuperTaxi, the taxi subsidiary of Veolia, the company that owns Yellow Cab, filed an application with the PUC to acquire Metro Taxi. A PUC administrative-law judge heard arguments on the case late last month; a recommendation is expected in the next few weeks. If the acquisition is approved, a single company could control 792 Denver cab permits — more than 60 percent of the current taxi market.
"It is my understanding that Metro would retain its management and its name as Metro, and operate basically the way it is operated now," says Brown. "The combined company would have more resources that would benefit in more areas being served, and would be better able to compete in a market that has changed so much. I can say we feel this would be a benefit to the public."
But University of Colorado professor Diana Moss, vice-president of the American Antitrust Institute, thinks otherwise. She testified on behalf of Freedom Cabs and Union Taxi, both of which oppose the acquisition, during the PUC hearings on the merger last month. "With more competition, you get firms competing on their merits, on price, on quality, on innovation, on getting new products to the market faster," says Moss. "When you take that away, you get higher prices, you get lower quality, you get slower innovation, you might not get as many new products coming through the pipeline."
PUC staffers have similar concerns. In their report, they advised the judge to recommend limiting the number of cabs that Metro can transfer to SuperTaxi to 264, and prohibit any overlapping areas of service once the companies have the same owner. "Staff calculates that, in actuality, Metro Taxi only uses about 54% of its available permits on a daily basis," notes the report. "However, if SuperTaxi as owner determines to use not only the permits Metro Taxi currently uses, but to operate the additional 228 unused permits, this total represents a powerful anti-competitive weapon.... These currently unused cab permits would enable SuperTaxi as owner of Denver Yellow Cab and Metro Taxi to behave predatorily by flooding the market with their additional permitted cabs in order to diminish the brand recognition and usage by the public of the Freedom Cabs, Union Taxi and Mile High Cab companies."
Ray Mundy, the transportation expert who authored the 2007 study, bankrolled by Yellow and Metro, that concluded the city's taxi market was the perfect size, testified in support of the acquisition during the PUC hearings. But Mundy, who's now at the University of Missouri-St. Louis, suggested that the fusion of Yellow and Metro could result in an even more crowded market than suggested in the PUC report: Although Yellow allows the drivers of its 300 cabs to run "double shifts," leasing their vehicles in off-hours to another driver, Metro doesn't currently permit that for its 492 cabs. If SuperTaxi acquires those taxi licenses and changes the rules, nearly 500 cabs could be out on the street 24/7. "You could dilute the market pretty quickly if you really wanted to," says Mundy.
While surely not all Metro drivers would take this option — as Merrick points out, many cabbies are too possessive of their rides — if the merger goes through, Yellow drivers might be competing not just against all the new ride-sharing drivers, but also more taxis from their own employer.
Will Yellow Cab's owners allow Metro drivers to lease their cars? The answer is unclear; the company declined to respond to multiple requests for comment. That included a call to Yellow Cab's main dispatch number at noon on a recent Wednesday, in the hope of reaching a manager. Instead, the call was immediately put on hold. "All call takers are still busy with other customers," repeatedly intoned an audio message. "Please stay on the line and we will be with you as soon as possible."
After three minutes, a dispatcher finally answered the call, ready to send out a cab.
In the meantime, apps like Uber's or Lyft's could have been used to arrange a pickup dozens upon dozens of times.
On March 5, as the counter on Mile High Cab's blog noted that 2,001 days had passed since the drivers first applied to start their company, their wait finally came to an end. This past December, in response to the Colorado Supreme Court's rejection of the PUC's original ruling on the matter, PUC commissioner James Tarpey agreed with the court, granting Mile High its 150 taxi licenses. Yellow and Metro once again tried to throw up a roadblock, once again questioned the company's financial and managerial fitness. But at a PUC meeting two weeks ago, staffers recommended rejecting Yellow and Metro's objections. And with three quick "I agree"s from the commissioners, Mile High Cab was authorized to become Denver's fifth cab company.
There was no immediate jubilation. Unlike at past PUC meetings, the hearing room wasn't packed with eager drivers. Only a handful of people involved with the case were there, including Russell, the DU professor who started working for Mile High back in 2008, and Nwankwo, who first thought of starting the company. And those two didn't speak to each other: Among Mile High's current leadership, Nwankwo and his colleague Archibong are no longer welcome.
"Mile High is a dirty word in Denver," says Archibong. "Five years! And we were felled by squabbles." He and Nwankwo were kicked out of Mile High last year; today Archibong is a free agent, shuttling passengers around Denver in his black Hummer H2, courtesy of his one-man limousine company, Archie LLC.
"These two individuals went against Mile High's mission statement," says Gizaw, founder of the nascent cab company that merged with Mile High years ago, and who replaced Nwankwo as president. "They wanted the company." Nwankwo's ouster came after a December 2010 Mile High member meeting at which Nwankwo claimed, with Archibong supporting him, that he owned 30 percent of the company. If Mile High didn't like it, Nwankwo said he could be bought out for $20,000 and two of the company's prospective cab licenses. Nwankwo's claims were counter to an earlier restructuring of the company from a corporation to a cooperative, a move Nwankwo had approved and which allowed each driver an equal share of the operation.
"I just signed that to get them off my back and so we could keep going," says Nwankwo, who questions the restructuring document's validity and argues that in any case, it doesn't negate the contributions that he and Archibong made to Mile High. He and Archibong were the ones who started the company, who originally brought the matter to the PUC, who enlisted Russell and, later, the Institute for Justice, and who urged the other drivers not to give up when so many obstacles were put in their way. "It's very hard to even watch what is going on," says Nwankwo, who now works for a Denver limo company. "Someone is going to tell me that all the work I did means nothing?"
According to Nwankwo and Archibong, their current troubles began when they questioned the actions of two others working to launch Mile High: Gizaw and Russell. They say they grew concerned when Gizaw was operating as Mile High's treasurer, claiming in their lawsuit that bills went unpaid and funds might have been improperly removed from the corporate account. And they say Russell repeatedly attempted to increase his annual pay for legal expenses from $25,000 to $100,000, a raise they both contested. "We trusted this man, because he is a professor of law," says Nwankwo.
Declining to go into the specifics of financial arrangements with his clients, Russell notes: "I took a fee in this case. It was not pro bono. It was a pretty low fee, considering how many hours I've spent over the years on the case."
In 2012, Nwankwo and Archibong demanded to inspect the company's financial records to determine whether anything was out of order. When Mile High's board of directors refused, saying they weren't allowed to open the books for personal purposes, the company's two founders took Mile High to court. And after Nwankwo continued to represent himself as Mile High's president and tried to organize a company meeting to replace the board of the directors, Mile High's board sued Nwankwo, demanding that he stop acting on behalf of the company.
In late 2013, a Denver District Court judge ruled on both matters, concluding that Nwankwo and Archibong were no longer part of Mile High and so had no right to see its records — and issuing an injunction prohibiting Nwankwo from representing himself as Mile High's president. Nwankwo says he's appealing the decision. And on March 4, the day before the PUC granted Mile High its licenses, the company filed for an injunction against three other initial founders — Ali Crowther, Adebayo John Fadeyi and Sunday Fadeyi — who claim that Mile High belongs to them.
"It's why this took five years to fight," says Russell, looking more drained than triumphant after the PUC's decision. "The certificates to operate as a taxicab company are extremely valuable."
But in 2014, how valuable is a new Denver taxi company license? Maybe if Mile High had been allowed to hit the streets years ago, things would have been different. Maybe its founders wouldn't have engaged in an ugly power struggle; maybe the company would have secured a foothold in the local market, as Union has. In the face of all these new technologies and a potential taxi merger flooding the market with more drivers than ever before, does a small, traditional cab operation now stand a chance?
Even Uber's McCollum, who cites Mile High's plight as a reason that his company's services are needed to shake up the industry, is less than optimistic about the new operation's chances. "It is not a good time to start a taxi company based on the old-fashioned model," he says. "I'll bet the guy who came out with the new horse-drawn carriage at the same time Ford came out with the Model T was a bit disappointed. That's America. The person with the best product at the best price should win."
For Nwankwo, though, the issue isn't whether a new cab company can make it — it's whether that company gets the chance to try. "What we've always asked is to be given the opportunity to compete," he says. "It should be up to you to do your best. If you don't succeed, you don't succeed."
So Nwankwo welcomes Mile High's imminent arrival on the Denver taxi scene — though he also has a more selfish reason for doing so. "This is America," he says. "I don't care who is running it; I just need someone to sue."
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