Longform

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.

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?

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"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.

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Joel Warner is a former staff writer for Westword and International Business Times. He's also written for WIRED, Men's Journal, Men's Health, Bloomberg Businessweek, Popular Science, Slate, Grantland and many other publications. He's co-author of the 2014 book The Humor Code: A Global Search for What Makes Things Funny, published by Simon & Schuster.
Contact: Joel Warner