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City must adapt to disruptions like Uber


Portland and other cities have been regulating taxi service for decades to make sure riders are kept safe and don’t get cheated on their fares.

For the most part, there hasn’t been much controversy around the notion that this industry should be required to adhere to basic rules about vehicle maintenance, proof of insurance, and criminal-history checks on drivers. With the advent of Uber and other so-called ride-sharing services, however, the regulatory landscape is changing more rapidly than the city is able to respond.

In short, Uber is disrupting not just the taxi industry, but also a system of regulations put in place for the way business has always been done. Now, the city needs a better strategy for adapting to a variety of disruptive technologies that are altering the face of commerce in Portland and elsewhere.

The city also needs time to sort through these issues — which is why Uber’s in-your-face decision last week to begin offering rides in Portland, with or without the city government’s blessing, was not helpful to its cause. The city has responded by taking Uber to court, further exacerbating the adversarial relationship.

The city is asking Multnomah County Circuit Court to order Uber to stop offering rides in Portland until it is in compliance with the city’s safety, health and consumer protection rules.

Uber backlash isn’t just local

Portland’s battle with Uber comes at a time when the ride-renting company is getting pushback across the globe. A district court in Nevada has ruled that Uber is in violation of state law. In India, federal authorities ordered state governments to halt the operations of all unregistered, Web-based taxi companies this week after a passenger reported she was raped in New Delhi by a driver contracting with Uber. Meanwhile, a judge in Spain banned Uber drivers from operating in the country, saying they amounted to “unfair competition” against ordinary cab drivers. Uber faces similar problems in France, The Netherlands, and the Canadian city of Montreal.

Uber isn’t a true taxi company, in that it doesn’t own cars or employ drivers. It connects customers and drivers through a mobile app. This arms-length relationship with drivers and the well-designed app have allowed Uber to offer convenient, often lower-cost ride services in most large U.S. cities (Portland being the most notable exception.) Uber drivers also appear more willing to fill in the voids around traditional taxi services — an example being the company’s push into Portland’s suburbs, which have scant presence from the region’s regular taxi drivers.

Of course, Uber’s decision to launch its service in places such as Hillsboro and Gresham also was an attempt to embarrass Portland and force the larger city’s hand. That tactic hasn’t worked, leading to the current face-off.

We continue to believe that Uber eventually will operate in Portland, but we agree with city officials that Uber drivers should be regulated in some manner. Rapid improvements in technology will change how business is conducted, but they don’t erase the real-life risks that arise when a passenger enters a vehicle driven by someone he or she has never met before.

Disruptive forces are relentless

Portland’s city government struggled with similar questions when it came to establishing rules for residents who want to open up their dwellings for short-term rentals through services such as Airbnb. However, the city developed a reasonable permitting process for these rentals, and now Commissioner Nick Fish wants to require hosts to post their permit number before getting ads on Internet-based systems.

A comparable solution may be possible for Uber, but the city and its residents also must recognize that disruption doesn’t begin and end with ride sharing or home rentals. In the past decade, most industries have been disrupted in some manner by the digital revolution. No one can predict which technological advances will catch fire and cause the next commercial disturbance.

Portland’s government leaders, however, must do more to adapt to a new reality of continual disruption. As most people in the business world have learned, no one can fully control the flow of innovation and technology, so the best approach is to be ready and willing to adjust and accommodate to a swiftly changing world. Portland’s city leaders need a better process for dealing with disruption, wherever it may arise.