Looser regulations drive taxi competition

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Yellow Cab of Colorado Springs is the only taxicab service in the city, but a Denver cab company is trying to break into the market.

Yellow Cab of Colorado Springs is the only taxicab service in the city, but a Denver cab company is trying to break into the market.

Businesses that are now regulated by the Colorado Public Utilities Commission enjoyed the benefits of a government-guaranteed monopoly until 1994, when the legislature changed the “entry standard” from regulated monopoly to regulated competition.

For cab companies competing in markets with populations of 60,000 or more it meant a new applicant seeking to enter the market must prove that there is both a public need and that any existing service provided by incumbent carriers is substantially inadequate.

Despite the changes, the new regulatory maze discouraged all but a few would-be competitors from entering the Denver market. Since the burden of proof fell upon new applicants, the process was both expensive and time-consuming. As of March, 2008, three companies controlled the Denver market, with licenses to operate up to a total of 942 cabs.

In 2008, the legislature again directed that the PUC loosen its regulatory bonds and approve any credible market applicant.

The first new entrant, a new, cooperatively owned company, Union Cab, started operations with more than 200 owner-drivers, many of whom had worked as lessors for one of the three legacy companies in Denver.

Six more companies are currently seeking PUC approval to operate in the Denver metro area.