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Rule changes threaten to put the brakes on Uber's luxury car service in Denver

9:54 PM, Jan 31, 2013   |    comments
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DENVER - A popular luxury car service could be forced to shut down in Denver if state regulators get their way.

Uber is a smart phone app that allows users to arrange for a personal driver in minutes.

Proposed rule changes would likely put the brakes on Uber, which offers the convenience of a cab and the luxury of a limo.

Under the changes proposed by the Colorado Public Utilities Commission (PUC), Uber could no longer partner with drivers and would have to buy and operate its own cars.

Uber's current pricing model, which charges customers based on demand and distance traveled, would be made illegal.

Also in the rule changes, limos would have to stay 200 feet from bars, clubs, and restaurants which would prevent Uber's signature quick pick-ups.

When reached by telephone Wednesday, PUC spokesman Terry Bote told 9NEWS the rule changes do not specifically target Uber.

Bote says the changes have been in works since August, the same month Uber began operating in Denver.

Kevin Labonte says his private limousine business greatly increased when Uber came to Denver.

"It's just a nicer higher level service. I've had to get more cars and hire more drivers," Labonte said.

Uber doesn't operate any limos of its own.

The company partners with private drivers and customers use the Uber app to arrange rides with those drivers.

Uber's partner drivers stay close to high demand areas, allowing them to reach a customer in a matter of minutes, similar to a taxi service.

However, unlike a taxi which can solicit customers on the street and offer a ride, limo services must be arranged in advance according to state law.

"We can only give people rides if they've requested rides," Labonte said.

Uber's popularity is exploding in Denver. They began operating five months ago and already have 200 drivers and more than 10,000 clients.

The new rules threaten to drive Uber out of town.

Denver GM Will McCollum says the Public Utilities Commission is attacking Uber's business model because partner drivers, Uber's pricing strategy and quick downtown limo pickup would all go away.

"That's why these rule changes are so threatening. We're trying to work with [the PUC] to find out why these rules need to be changed," McCollum said.

The PUC is concerned about Uber's surge pricing.

Highly inflated fares New Years Eve caught some customers off guard, even though the company warned customers via email days in advance and the app made customers accept the increased fares.

The company's website shows Uber operates in more than 15 US cities, and others around the word.

Controversy follows the company, which has faced legal challenges in San Francisco, Chicago, and New York.

In New York, Uber was criticized for using "surge pricing" to double fares after Hurricane Sandy.

In Denver, taxi companies are regulated by the PUC and taxi drivers by the city and county of Denver.

Uber avoids that regulation by calling itself an app maker that simply arranges rides with partner drivers.

An online petition to save Uber has 2,200 signatures in 2 days.

"We believe that Colorado is an innovative state and we believe that we are an innovative company," McCollum said.

Larry Stevenson, spokesman for Denver's Department of Excise and Licenses, says Uber is operating like a taxi company, without following the same regulations.

"We want the playing field to be level. You don't know what you're getting. You could possibly be price gauged. We don't want that to happen. We have to protect the traveling public," Stevenson said.

Labonte says, if those rules change, it'll be bad news for private drivers like him.

"We're fully regulated by the PUC. We follow all the rules," Labonte said. "[If] Uber was to go away, yes it would put them out of business."

Labonte says he'd have to cancel expansion plans and lay off drivers.

He says the real losers would be the customers, who could no longer use Uber to get a luxury ride.

"I think it's a really good service it provides to the community," Labonte said.
Public comment on the proposed PUC rule changes ends on February 11 and a public hearing is scheduled for March 11.

To submit a comment to the PUC to be included in the docket for consideration, send an email to:

Online petition in support of Uber

There are other apps out there that let you order a cab without making call.

Taxi Magic (Denver Yellow Cab)  
Metro Taxi Denver App for iPhone and Droid 

(KUSA-TV © 2013 Multimedia Holdings Corporation)

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