Can Entrepreneurs Drive People Movers to Success?

Imagine you've arrived for a meeting at a corporate campus. But now you discover that the conference room is in another building a quarter mile away. Sure, you could walk there … but in the rain? Up purrs an automated people mover, a vehicle shaped like a segment of a subway car, big enough to carry solo travelers or small groups. You step inside, press a button for your destination, the door closes, and off you go down a narrow track. Two minutes later—presto, the door opens again and you alight at your destination. You've arrived for your meeting on time and fresh as a daisy.

The concept of personal rapid transport, or PRT for short, has been percolating since the mid-1950s and is finally gaining ground, according to HBS professor Benjamin G. Edelman. Business and communities small and large are increasingly aware of PRT as a "green" solution to multiple transportation problems from (in)convenience to price to congestion, he says.

The concept is well known—you have likely encountered automated, driverless people movers in cities such as Detroit, amusement parks (Disneyland coined the name PeopleMover for its transport/ride launched in 1967), and numerous airports.

However, these systems were largely designed to move a large number of people on a fixed schedule along a track from point to point to point. In today's revival, people movers are downsized into single cars, a lightweight "pod car," that quickly ferry from one to four passengers with no waiting to a number of possible destinations.

PRT is an innovative approach to short-distance transportation, continues Edelman, whose other research interests include the design of electronic marketplaces.

"These vehicles travel on an exclusive right of way, typically an elevated guideway, though track can also be installed at or below ground level. A vehicle leaves when passengers are ready, and service is nonstop from origin to destination, with no intermediate stops for others to get on or off."

An assistant professor at Harvard Business School, Edelman recently wrote about Vectus, Ltd., a Sweden-based PRT firm, on his Web site; a case study is available from Harvard Business Press. Other firms in the PRT business landscape include Advanced Transport Systems (which won a contract for Heathrow Airport's Terminal 5), 2getthere, and Cabintaxi. In the past decade PRT projects been weighed for sites as diverse as the docklands in Cardiff, Wales; the airport-to-town route of Ciampino, Italy; and the Technical University of Eindhoven, The Netherlands.

We asked Edelman more about PRT in an e-mail Q&A.

Martha Lagace: How did you first become interested in PRT systems?
Ben Edelman: As a longtime user of public transportation, I often wish for more widespread transit links, more frequent services, and faster journeys. Yet I'm shocked by the costs of existing transit systems. At $200 million per mile (the approximate cost of recent subway projects in Los Angeles and Washington, D.C.), subways can be tough medicine. And cost aside, subways are no panacea—disruptive construction, limited residential connections, and for many routes, long trips due to line changes and waits between trains.

Most of the cost of a subway system comes from the guideway—digging tunnels, building stations, laying track. And when you look at that track, it's usually empty. Every ten minutes a train sweeps by, and then the track lays fallow for nine more minutes. That always struck me as inefficient: We built this expensive track only to leave it vacant most of the time.

PRT offers a different approach. With much lighter vehicles, the guideway can be proportionally slim—above ground in many areas, with a visual intrusion as small as an elevated bicycle path. Stations can be equally small—even integrated into the side of existing structures, improving convenience while further reducing construction costs. Because service is on demand, passengers need not wait for a vehicle to arrive, and changing lines would be a thing of the past. I had been thinking about some of these concepts independently. Then I was thrilled to learn that implementation is well under way.

Q: Have you ridden in a PRT? If so, how was it?
A: I've ridden the Vectus test track in Uppsala, Sweden, and I've toured the new installation (scheduled to open in 2010) at Heathrow Terminal 5. They're both impressive: smooth track, elegant vehicles, and a polished user interface.

Q: In 1972 a PRT was launched at the University of West Virginia in Morgantown, and it continues to operate today. As you write, the concept of PRT is not new; it has been public since the mid-1950s. Since PRT seems a great idea, how do you explain the long gestation? What have been the main obstacles to date?
A: PRT designers in Morgantown started with the right concepts—small vehicles and on-demand service. But the designers worried about the occasional rush, so they enlarged the vehicles, which required strengthening the track and enlarging the stations, which led to a cost spiral. These days, designers understand the crucial importance of small vehicles to limiting system cost. Another key improvement: Robust computer control is the core of a successful PRT—tracking vehicle locations, knowing who wants to go where, sending appropriate instructions. With modern IT, these tasks are far easier than in the past.

Morgantown's system attracted early complaints for its cost and visual intrusion. But Morgantown's PRT stacks up well against decades of shuttle bus costs—particularly given its speed and reliability advantages. Indeed, Morgantown's system provides more than 10,000 rides per day, continuing for decades with good reliability.

Q: What is the potential now for PRTs to "take off," so to speak? What are the incentives both for PRT businesses and for the public?
A: Certainly interest in clean technology is an important part of the story here. What would it take to get commuters out of their cars and into public transit? I envision a subway system with stops further apart, so long-haul transit can be faster and more efficient. Then each subway stop enjoys a feeder network of PRT serving businesses and residences with proximity at least as convenient as current bus stops, and a quality of service far above what buses can offer.

Right now, the field is wide open. Companies with existing transit experience are certainly watching PRT. But the first PRT installations are coming from small companies and entrepreneurs.

Q: What sorts of hurdles remain?
A: One challenge is general distrust in the approach. PRT is complicated—numerous small vehicles rather than a few large vehicles, computer control in place of drivers. Simulations say these changes are workable, but some people want to see proof through operational installations. That's fair—and I'm hopeful that demos will be available in 2010.

Also uncertain is public response to an elevated guideway. I well know the impact of elevated highways—recall the elevated I-93 in downtown Boston—and I'm no fan of that kind of intrusion. To me, PRT feels quite different from an elevated highway: A bidirectional PRT guideway can be narrower than a single lane of highway, and some PRT guideway designs let light pass through to areas below.
We accept all kinds of intrusions in our urban environments—buses, highway ramps, traffic lights, telephone poles. I am hopeful that PRT will stack up well—huge benefits relative to the intrusion it asks a community to permit. But a lot depends on public response.

Q: Might the potential for PRT be greater in countries with good and already-established public transportation infrastructures as compared with, say, the United States, where most citizens like and need their automobiles?
A: Certainly Americans like cars. Although no one likes traffic jams, shoveling snow in the winter, or paying for parking. With the right combination of price, speed, and convenience, PRT could beat the private automobile. There are already routes that are faster by bicycle than by car, particularly when you consider parking. PRT can widen the gap.

In the very densest cities—parts of New York City and plenty of cities elsewhere—PRT probably isn't a great fit. But even small to midsized cities struggle with automobile congestion, particularly since subways and light rail often don't match their needs. In this spirit, Santa Cruz, California, and Ithaca, New York, are already looking at the benefits of PRT.

Q: What sorts of questions should managers at Vectus or other PRT businesses ask themselves going forward?
A: I'm convinced that PRT creates huge value—reducing automobile congestion, and getting passengers to their desired destinations more quickly and more reliably. But how can a system vendor claim a fair share of that value—enough to justify building the system in the first place? One possibility is to seek government funding. That's not a bad idea—so much transit is government-funded—but it's a tough requirement for an upstart business.

Another possibility: Build PRT on a corporate or educational campus. The campus owner internalizes benefits, and could pay to build the system. I'm particularly struck by the use of PRT to increase the value of land that might otherwise be viewed as undesirable. Consider a parcel that's a bit beyond walking distance from the subway, restaurants, and the like. Right now, a developer must accept a dramatically reduced price for that kind of land. But PRT could connect outlying buildings directly to a subway platform and a restaurant district. A PRT-connected outlying building could be a two-minute ride from a subway station a mile away—closer, in terms of time and convenience, than a close-in building just a block from the station. Suddenly the outlying land is as valuable as the close-in land, and the developer can afford to pay for PRT with private funds. It's an exciting possibility, and I believe it's workable for a broad class of PRT installations.

Q: What are you working on next?
A: These days, online shoppers face deceptive offers that promise discounts ("$10 off your next order") while they attempt to check out at ordinary retail Web sites. Because an online checkout requires a series of "yes" and "I agree" confirmations, it's all too easy to press an extra button that purportedly accepts one of these offers, without realizing that the offer actually carries a charge of $15 per month or more. Notably, these offers obtain consumers' credit card numbers directly from partner sites—playing into consumers' reasonable but mistaken belief that, if an offer doesn't request a card number, the service must be free. As a result, a user may enter a billing relationship and face credit card charges without actually providing a card number to the company that posts the charges.

I analyzed deceptive characteristics of these offers in a statement to the Senate Commerce Committee in November. At present, I'm comparing these practices with applicable rules from Visa, MasterCard, and American Express. Card networks do not let merchants copy customers' card numbers willy-nilly, so I hope to get these charges removed from the credit card ecosystem.

Meanwhile, this holiday shopping season users ought to exercise special caution. A link promising extra savings may not be what it seems. Be careful even at trusted sites: Sites as well-known as Buy.com, Expedia, and US Airways all confronted consumers with these deceptive offers.

[This article was provided with permission from Harvard Business School Working Knowledge.]