Step 1: wait for Uber to come to town
Step 2: let them build some momentum and drop some cash investing in scaling up
Step 3: act outraged when cab companies complain and promise to shut them down
Step 4: drop a lot of fines on them to absorb even more of that phat US VC cash
Step 5: repeat step 4 until the taxi companies, Uber or citizens force your hand into either legitimising them or actually banning them.
This seems to be the tactic of my home town (Brisbane, Australia). Last I saw we'd fined Uber $1.7m, all while pretending they can't be stopped and letting them operate (they just announced they're hiring more staff).
They'll have to provide a better licensing framework at some point - where I am now in Columbus, OH they seem to have a great one - but in the meantime it seems their plan is just to keep fining them to see if they're going to blink first.
As a Brisbaner I love the idea of us taking all that money. As someone that actually wants to go to places though and not be at the mercy of the taxi companies, I hope they negotiate soon and build a framework that takes into account this new age we live in.