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Government walks back plan to block Uber and other online taxi apps

After saying it would consider blocking Uber and Cabify taxi apps to Ecuador internet users, the government said Monday that such a blockage was not possible.

Telecom Minister Andres Michelena

When he met with striking taxi drivers last week in Quito, Deputy Minister of Transport Iván Carvallo said he would ask the Ministry of Telecommunications to investigate the possibility of putting a block on internet taxi apps but Andrés Michelena, telecom minister, said such a move would violate contractual agreements with internet providers. In addition, he said it would be impossible to stop communications between Uber and Cabify drivers and their headquarters because the government does not control the radio spectrum on which the companies operate.

“The transportation ministry will have to find other mechanisms, such as legislation, to deal with the problem,” Michelena said.

The suggestion of blocking internet and radio access of taxi apps drew an angry response from both Uber and business leaders. “Does Ecuador want to follow the example of North Korea, China and Russia in controlling internet access? Is that the plan?” asked entrepreneurial studies professor Ramon Marti at the University of Guayaquil. “It is time the taxi owners and the government accept the reality of 21st century technology and adapt. It’s time to abandon the outdated protectionist system that has operated in Ecuador for decades and to accept the international trends that are coming whether we want them to or not.”

27 thoughts on “Government walks back plan to block Uber and other online taxi apps

  1. The “international trend” is a race to the bottom for workers in order to guarantee high returns on investment capital. Like every fortune made on Wall Street, Uber makes its money by externalizing its losses. Instead of having to maintain a fleet of cabs, run human resources, have liabilities, they’ve created an app where private citizens are merely “sharing” a ride. That means they don’t have to pay to obtain a commercial drivers license, nor do they have to subject their vehicles to the same inspections that cab drivers have to. In fact, all one has to do to become an Uber driver is download the app and sign up. What could possibly go wrong?

    The end result is that what was once honest work that a person could do to support their family is now just another casualty of the gig economy, an economy where investors make millions while the people actually providing the service work harder for less with no health insurance, no pension or any of the protections a billion-dollar company would normally have to provide for its millions of workers. Passenger stabs you in the face and you can’t work? Cab … err I mean private vehicle broke down? That’s on you. You’re not an employee. You’re an independent contractor. That costs is coming out of your pocket.

    But hey, paying $2.00 to have a car pick you up at Carondelet and take you all the way to Parque La Carolina was just too much. With Uber it only costs me $1.50 so those guys who were working hard all those years driving a cab will just have to suck it. Jeffrey Epstein needs to make a 13% return on his investments or he just doesn’t have any incentive to work hard. Priorities.

    1. Good post Jason. It is even easier to judge the uber thing if we look at it from the point of view of the public welfare.

      Of course, the obvious regulatory goal of public transport is the safety of the public (duh!), The powers-that-be should insure that drivers are properly trained, the vehicles are safe and kept that way, and conduct is closely monitored.

      Unlike the Tranvia, the drivers are making a profit so they should pay to defray the costs of the governing bodies noted reponsibilites. However, many governments merely look at taxis as a revenue source and public safety be damned. As the enormous laxi permit costs are passed on to the public, taxi licensing is merely another tax on taxi riders. But a glance at Cuenca taxis and their driving style, the public is not getting anything for the permit fees they are paying.

      Uber is adding insult to injury. Now anyone with any condition vehicle can compete with permit holders if they have a silly app. I refuse to endorese any of this nonsense, no matter where in the world I find it. (Cuenca’s lackadaisical attitude is found in many cities!) I have always had a car, and now a motorcycle for El Centro.

    2. Missing The whole point as the government too is missing the whole point – to get people point A to point B as economically as possible – and in that it has little to do with protecting other interests in end effect. Then with coming autonomous driving and not even a need to own an automobile will the auto industry be protected as well? Keeping people’s crap jobs as taxi drivers to an assumed correct economic system whichever? Both are doomed. As we advance ‘as intended’ to progress and technology to make life easier for people and the elimination of all meaningless jobs that Ai and automation will eliminate there is an exception to keep the job of Taxi driver . do you see the clear contradictions …

      1. I agree that technology will put 90% of people out of work within my lifetime. But that will require a complete reorganization of the economic system (or lead to massive civil uprising). In the meantime, the idea that Uber and similar corporations can bypass established legal controls in order to skim a little off every fare seems less like innovation and more like looking for bugs in capitalism to exploit. Then again, that’s how most fortunes are made these days. The market is very efficient so the only way to make double-digit returns on idle wealth is to find loopholes in the system.

        1. IMHO, you are correct again Jason! But these people have been told that the reason jobs and wages haven’t kept up is because they are being sent out of their country. And technology has not yet developed to the point where it can make the quality of product humans can. BUT it can make cr*p with a higher profit margin. You will see it get to the point where it can make excellence cheaply. Then no one will have a job.
          With a profit only motive, people are well into the process of dumbing down. In fact, for the next 2-3 generations the best earners will be people who still have skills and who can keep things going. Plumbers, Electricians. As quality drops, they are more and more necessary.

          We need to return to the drawing board and find something that makes sense and is less destructive. We are getting closer. First we have to watch the west implode. Certainly didn’t last very long or help the world much. 🙁
          And it has a tendency to breed fascism.

          Perhaps we can come up with something that focuses on the human conditions and advancement of the species.

    3. What could go wrong? Not much. Bad reviews mean no business. Now you don’t know what taxi driver you get and that is a bad thing.

      1. 3 sexual assaults by Uber drivers every month in London alone. Here’s an idea. Why not have an app where you can click an icon and a babysitter will show up to watch your kids? Surely bad reviews will weed out the pederasts.

        But don’t bother trying to sue them. By agreeing to use the service, you also agree to settle all disputes in private arbitration.

        This is what end-stage capitalism looks like.

        1. Correct AGAIN. But the final stage is only evident in the USA & UK There are other societies coilapasing, but not for the same reasons of those two. Other nations, democratic socialism amnd the earlier 1950-1980 variants will take longer. I cannot predict the Chinese variety of capitalism as that country has been amazing in its constant changing to meet the times.
          It is not being reported much..because US media will NOT report bad news, but world investment in USA has hit a brick wall for the first time in modern history.Trillions involved..moved elsewhere since 2017 and it is accelerating. .

          1. …hmm, maybe, but then – why have stock and bond markets not collapsed, not to speak about the dollar? A Euro cost around $1.05 at the end of 2016, it now stands at 1.11 (same with other leading currencies) and the foreign exchange market is far more important by volume than the first two. If trillions did flow out, why isn´t that reflected in the dollar which you would expect to fall significantly as investors sell their dollars and buy other currencies to invest elsewhere, even more so with the historically low interest rates in the US? What´s your theory? Don´t worry, this is a somewhat light-hearted question – if we had the answer, we would possibly not be sitting around posting here 😉

    4. Look, I have no sympathy whatsoever for Mr Epstein but I´m honestly confused now – is a 9% interest rate on a 1- year term deposit at one of the Cooperativas de Ahorro y Crédito here in Ecuador good or bad when compared to the 13% he expects? Are people depositing there (and many ordinary Ecuadoreans do so as socios) exploiting “loopholes in the system” in order to generate (almost) double-digit returns as you indicate in your other post below?

      1. Cooperativas loan money to small businesses so that they can grow. Hedge funds trade securities back and forth based on insider information and millisecond fluctuations in prices. When that isn’t enough, they squeeze workers to work unbearable hours until their bodies break, find poor countries where they can dump all their toxic waste without impunity and, the old standby, buy off politicians to get legislation that increases their profits at the expense of society. One adds value to the system, the other exploits loopholes in capitalism to receive unspendable amounts of money without adding any value to the economy. The true sign that capitalism has run its course is the fact that the people who add the least value are the ones who reap the biggest rewards.

        I hope that clears up your confusion.

        1. I am tremendously relieved that I am one of the good guys then.

          I wonder, though, what your definition of acceptable returns on investment is, percentagewise and morally as double-digit returns seem to be something you consider only achievable by exploiting loopholes in the system. 4 years ago I attended a workshop with local architects in Cuenca where most said they expected returns of around 25 to 30 percent on every project they do. Others sell the houses they construct at a profit of 100% – one of my neighbours, a civil engineer, is doing just that in our urbanización. In any case, these returns are several times what a small investor would make in a decent year on the stock market. What is your verdict?

          1. There’s a wide gulf between a person who uses their money to purchase land, build a house (or oversee its construction) and then sell it on the open market and a person who buys and sells securities back and forth on the momentum of market changes. One actually produces something while the other is simply moving money back and forth with no real contribution to the economy. Other than at the IPO and a company selling shares it holds in reserve, securities trading serves no useful social purpose yet, ironically, it is rewarded more and taxed less than actual labor.

            A person who builds and sells homes is a developer. A person who starts businesses, makes them profitable and then sells them is an entrepreneur. They’re active producers in the economy. I never said I had a problem with them. My problem is with the idle money class, the ones who, because of massive accumulated wealth, continue to reap huge rewards without producing anything and, because of their ever-growing accumulated wealth, have influence on the democratic process disproportionate to the concept of one person one vote. It’s a loophole in capitalism that cannot be closed because the same people who have the power to change and enforce laws are also unduly influenced by these parasites.

            Not that it will matter. We stand at the sunset of capitalism. The same technology that allowed individuals to accumulate irrational amounts of wealth will soon make labor obsolete. Capitalism can only function when there is scarcity, scarcity that requires the able bodied to trade their labor for the limited amount of goods and services available. It’s safe to say that at least 90% of current human “jobs” will be done more efficiently by machines within my lifetime, but in that process scarcity will become a thing of history. Without scarcity, there’s no need for a monetary system. Without paid laborers, there’s no customer base. Just like that, a system we have depended on to provide goods and services as efficiently and equitably as possible (though it sucked at the latter) will be replaced by something new. What comes next is anybody’s guess, but it’s pretty clear from where I’m sitting that capitalism has outlived its usefulness. The massive inequality it created and the violence it uses to maintain that inequality will be its ultimate downfall.

            I had an interesting thought this morning that really highlighted the absurdity of this entire global capitalist system we find ourselves in. I was listening to a current events podcast and they were talking about the debt ceiling debate in the US Congress. They noted that the US government owes $14.2 trillion in debt. I did a little searching on the Google box and discovered that according to the IMF, the total of sovereign debts worldwide in 2016 stood at $164 trillion. That’s over twice the global GDP. So if the world owes twice its global output in debt, one really has to ask…

            To whom?

  2. The problem would be solved if the taxi license can not be resold for exorbitant amounts and not limit the amount of licenses issued. When taxi licenses are limited then they are bought out quickly and in some cases held by people that are not even driving the taxis. There are also taxis that are not safe. We are told not to get a taxi off the street.

      1. I guess I wasn’t clear. I’m not abandoning CGs position. I fully agree with competition and free enterprise. I have no problem with Uber coming in and competing. I welcome it.
        What I have a problem with is some government entity limiting the amount of licenses sold therefore creating NO competition and creating a monopoly. And having a monopoly bites one in the ass after awhile because people find a way to change that.

        Then with monopoly and limited competition comes higher prices. For example rates from airport are extremely high yet the same distance in a city costs much less.

        Higher prices makes people angry so then someone comes along with Uber to create competition and the guy with the exhorbant rates and monopoly is angry.

        Then to add insult to injury this government entity allows these licenses that they create to be sold for extreme high prices and dictates who buys them and let’s their cronies buy them and won’t give Uber a license. That’s not democracy and free enterprise. That is dictatorship…plane and simple.

    1. Indeed. The buying and selling of taxi medallions is a problem in many cities. Instead of being purchased by drivers as a way to practice their trade, they’re purchased by investors and traded like securities. It would be so simple to stop this practice, but unfortunately many people in power include taxi medallions in their portfolios.

  3. The current system doesn’t give any incentive to improve the service levels. Uber does….

  4. We have used Uber around the world, and come to depend on it. We are in Chile as I write this. We are on a street where taxis are never seen (up in the hills). I can use the Uber app and have a driver at my doorstep within 3 or 4 minutes, max. He will then drive me exactly where I want to go, without my having to explain what corner to drop me off, or where the heck XXX is, without my having to utter a word if I don’t want to. The cost is not even a factor, though it might be a bit less than a taxi (if I could even get one here).

    Uber is changing the dynamics of the hire-for-single-trip business. I don’t use them in Cuenca, because there are plenty of taxis everywhere I go, and the prices are reasonable. If I lived outside of Centro though, I expect Uber would be the place I would turn to get someone to drive me where I want to go.

    1. I’ve been using the EasyTaxi app in Ecuador for several years (it was here before Uber). You push a button and the GPS tells the driver where you are. They pick you up within a few minutes (even when I lived in mostly taxi-free Guapulo) and take you to your destination on the meter. The app even tells you where the cab is on a moving map and provides you with the license plate and photo of the driver. The major difference between that an Uber is that with Uber you get in a nondescript unmarked car driven by a guy without a commercial driver’s license (and all the controls that entails) whose only qualification was to download and install an app.

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