July 30, 1999

Hailing ... a limo?

EDITORIAL: Colorado Taxi Companies Unfairly Protected by Special Laws

Yet even that end-run might not work in Colorado's regulated cab industry.

The best of luck to Ben Sagenkahn and his upstart call-on-demand limousine service, Peak Transit, based in Woodland Park. We wish him luck not because we'd take sides in his or any other industry, but because he faces a formidable hurdle -- regulation by the state government.

As reported by The Gazette's Wayne Heilman in his column in Inside Business on Monday, Sagenkahn contends his limousine license from the state enables him to operate more or less as an ordinary taxi service in Colorado Springs because it's within 50 miles of his base.

Yellow Cab, the Springs area's only cab company at present, begs to differ and likely will challenge Sagenkahn's right to do business before the state Public Utilities Commission. Yellow contends if Peak acts as a taxi it should have to be be licensed as such -- requiring it, among other things, to equip its few vehicles with two-way radios and meters. Right now Peak dispatches by cell phone and bases fares on odometer readings. State-decreed rates are different for limos than for cabs, too.

Of course, Sagenkahn already had applied for a taxi license -- he'd been a cabbie himself, for Yellow -- but Yellow objected to the PUC over that application as well. So, Sagenkahn shifted tack and went for a limo license.

Under Colorado law, if a licensed cab company objects to a prospective competitor's application, that applicant then must prove the need for competition in that market. That's of course a tall task because it involves a lot of hypotheticals and takes plenty of money for advance market research. If, however, the applicant proves that need to the satisfaction of state regulators, then the burden shifts to the current operator to prove competition would drive that company out of business.

As protracted as that process is, it's still an improvement over the system that preceded it: Applicants had to prove that there was an urgent need for their service, and that current service wasn't meeting that need.

How did state government ever get into the business of dictating how many taxi, limo or any other kinds of transportation companies may serve a community? The premise, believe it or not, is the state is protecting consumers. Ostensibly, too many competitors would cause instability, leading to -- heaven forbid -- aggressive competition that could theoretically put all the competitors, old and new, out of business as they undercut each other.

Taxis, we're told, are a vital industry that requires protection so that service to the public isn't jeopardized. If you find yourself asking why the state doesn't intervene similarly in limiting competition among other, far more vital services -- the number of grocery stores, physicians, gas stations, etc. -- you're on the right track. Perhaps you've even noticed those other industries do just fine as it is. (Taxi-style regulation of the trash-collection business ended statewide in 1980, by the way.)

Naturally, there's no such thing as "destructive competition" -- though it's easy to see how the state-approved operators in an industry like taxicabs don't mind a legal buffer. For consumers, though, competition only stands to lower prices, improve service and expand options.

To his credit, Gov. Bill Owens was behind the effort that had relaxed taxi regulation a little, back in 1994, when he was a state senator. Surely he'd be receptive to legislation ending this burden on private enterprise altogether.

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