Cruise control: North Carolina has welcomed Lyft and Uber as taxi competitors, but the joy ride might be over.

AuthorPrice, Courtney
PositionStatewide: BUSINESS NEWS FROM ACROSS NORTH CAROLINA

On a quiet Monday evening in December, two couples came in The Hideout at Lonerider Brewery in northwest Raleigh and ordered a round. It was only about 7, but this wasn't the first bar they had hit. "They were feeling pretty good," bartender Tammy Reynolds recalls. "They wanted to have another beer, but they wanted to get home, so I just gave them a card." It was a coupon for Uber, a smartphone app that dispatches drivers who use their own cars to pick up passengers. The ride arrives quicker--about half the time it takes a taxi, Reynolds says--and it's usually cheaper. For Lonerider's bartenders, it's an easy way to discourage customers from driving when they've had too much to drink.

But for some states and cities, the high-tech service is a way to detour around regulations. In January, the South Carolina Public Service Commission ordered Uber to stop operating in the state, while Portland, Ore., and other cities have sued the service to shut it down. In every North Carolina city where Uber operates, cab companies must get permits and meet requirements such as vehicle inspections. That drives up their expenses, they argue, putting them at a disadvantage to the digital dispatchers. "You've got to obey the law and permits if you're running a professional business," says Dragan Zeljkovic, who owns Dragan LimoCab LLC, a Wilmington company that used to operate taxis but now focuses on private-car and limo service. "I don't think it's legal in the first place, and I don't think it will succeed."

Many of the world's biggest tech investors disagree. San Francisco-based Uber Technologies Inc. was valued at $41 billion in its latest fundraising round--the money coming from oil-rich Qatar's sovereign-wealth fund and large hedge-funds, The Wall Street Journal reported. They're betting Uber will siphon off a sizable share of fares and become a feasible option for folks who don't want to own a car. Founded in 2009, the service has expanded into 53 countries. It started offering rides in Charlotte in September 2013 and has added nine other cities in North Carolina. Uber and its largest competitor--Lyft Inc., another San Francisco-based company, which operates in Charlotte and Raleigh-Durham--contend they aren't scofflaws but innovators, using technology to meet a transportation need cheaper than cabs can. A Business Insider report last fall found the standard Uber fare in Columbus, Ohio--roughly the size of Charlotte --about 50% cheaper than the cost of...

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