DENVER | All Colorado cabdriver Edem “Archie” Archibong wants is to fulfill the next stage in his immigrant success story — to start his own business.
But Colorado’s heavily regulated taxi industry isn’t cooperating, causing some local politicians to ask why government is getting in the way of the free-market system.
Mr. Archibong, a Nigerian native and married father of two, came to the U.S. legally in 1977. He joined the Army, where he worked as an optical technician and later started driving a cab to support his family. In 2008, he helped lead a group of 150 Denver-area cabdrivers, many of them legal African immigrants, with plans to start a taxi company called Mile High Cab to serve five Denver-area counties.
In July, the Colorado Public Utilities Commission (PUC), which oversees the local taxi industry, ruled that Mr. Archibong’s startup had its financial house in order. The entrepreneurs pooled their collective savings to start the company, eschewing cumbersome bank loans.
But the PUC said Mile High Cab would hurt the public interest.
“While choice is generally a good thing in a market, nevertheless, overcapacity still looms as an issue,” the PUC determined.
“Competition is good for us, good for the industry and good for the public, as well,” counters Mr. Archibong, 57.
Mr. Archibong’s company plans to charge 25 cents per mile less than Yellow and Metro cabs, the main companies serving Greater Denver. The company also wouldn’t charge for extra passengers or bags.
Joseph M. Rubino, a St. Augustine, Fla.-based transportation consultant who specializes in the taxi industry, said Denver is one of the few places that regulate taxi services in this manner.
But Mr. Rubino thinks Mile High Cab’s plans wouldn’t be in the best interest of Denverites.
“When you saturate the streets with taxis … the city starts to experience much worse service than before,” he said. Cabdrivers have to wait longer for fares and require longer trips to pay their bills.
“Most drivers hate short trips. … It’s the bane of their existence,” said Mr. Rubino, a former taxi driver.
To people like Mr. Archibong, the PUC ruling sounds like “big government” getting in the way, but Mr. Rubino said the story isn’t so simple.
“What seems like survival of the fittest now becomes terrible service for the masses,” he said. “There’s nothing more vicious than a cabdriver whose been sitting for a long time and then gets a short trip.”
Tom Russell, an attorney for Mile High Cab, said the current taxi situation cries out for more competition — and more taxis. He pointed to a February 2009 audit by the PUC of three Denver taxi companies. The audit found drivers working in the vicinity of Denver International Airport exceeded the allowable number of hours they can drive over an eight-day span — 80 hours.
Mr. Russell said Mile High Cab’s plight should have been a template for fellow immigrants.
“They did it right. They didn’t sneak into the country,” Mr. Russell said of the Mile High Cab drivers.
Even members from Union Taxi, the most recent taxi company to be allowed entry into the Denver market, testified on behalf of Mr. Russell’s client before the PUC board.
“When we asked them, ‘Why are you testifying for a competitor?’ They said, ‘Because we believe in the American dream,’” Mr. Russell said.
Ray Mundy, a professor of logistics and transportation at the University of Missouri at St. Louis, said the recent expansion of Freedom Cabs and the 2008 addition of Union Cabs oversaturated the Greater Denver market.
“Now, along comes Mile High Cab with all the good intentions … and they were going to do nothing but add to that market segment that’s more than saturated,” said Mr. Mundy, who testified before the Colorado PUC and authored a study of Denver’s taxi industry.
Mr. Mundy said the taxi business differs from other industries, which makes free-market policies less applicable.
“This is an industry where the bad will drive out the good,” he said. “If the larger companies go out of business, the call service is harmed, and the suburbs who need cabs will have a hard time getting them.”
Mile High Cab has filed exceptions to the recommended decision. The PUC, which is scheduled to hear Mile High Cab’s appeal of the ruling Sept. 29, said it could not comment further on the matter because the case is pending.
Colorado state Sen. Josh Penry, a Republican who helped create legislation two years ago meant to open up the local taxi industry, said the case is a prime example of government crushing the little guy.
“It’s big government conspiring with monopolies to keep new companies out of the marketplace,” Mr. Penry said. “It’s another example of government picking winners and losers to the detriment of regular people just trying to make it.”
The taxi struggle isn’t breaking along strict ideological lines. Mr. Russell said some local Democrats, including state Sen. Chris Romer, have been receptive to the group’s plight.
Danny Stroud, a small-business entrepreneur running for the District 1 seat in the Colorado House on the Republican ticket, said the cab issue could affect the coming elections.
Candidates outside the Denver area also may wonder how much control the government should have on business matters.
Mr. Stroud said the market should have the final say.
“They could try to run a cab company, and they may not make it. The economy could continue to go down, or there’s not enough demand. How can that hurt the public?” he asked.