Would they need to pass red tape to have their customers hail with an app rather than call a dispatcher? Sounds like the medallion system isn't the only thing wrong here.
Taxis are also horrible so I'm not convinced they could compete in any case but it's not a fair playing field.
My bet though is on Lyft/Uber becoming just as horrible once the VC money dries up. It will be interesting to see what legislation will arise between then & now.