This discussion is closely related to WhoOwnsSkyTran, but specifically examines whether SkyTran systems are likely to be "natural monopolies", and if so (we think "yes"), what the implications are for government regulation and the best course of action in their development. It may seem premature to discuss whether a system is likely to be a monopoly before (AFAIK) it has even had a full-scale demo, but that is precisely what this site is for;-).

There is also one major caveat to this and other discussions of possible negatives: widespread adoption of SkyTran systems on almost any terms would probably be a very positive development for our cities, our countries, and our planet. It is right to consider what would be better and worse ways to develop SkyTran, but by all means, let's do it!

SkyTran: a natural monopoly

The pages on this site describe a wide role for SkyTran systems in the life of a city. SkyTran can and should replace most commuter transport; most small freight and mail delivery, etc. Mobile professionals and tradespeople will ride them dozens of times a day. Production networks extending throughout a metropolitan area will produce deeply-customized products in hours, with subassemblies and parts from many vendors shuttled around with unprecedented speed and automation.

New green-field suburban communities may be built around SkyTran systems instead of automobile roads. If tracks are cheap enough and most people own a SkyTran vehicle, they might be as decentralized as today's suburbs -- private SkyTran tracks right to each garage. A much more economical approach would be a village organization -- clusters of houses surrounded by large expanses of undeveloped land -- with SkyTran portals as their primary transportation access. Roads could be much smaller than at present; perhaps just paved with gravel rather than asphalt -- they would be used relatively infrequently, primarily for heavy freight rather than passengers.

This central role will potentially create concentrations of power on many levels:

  1. In the short term, if you stop the SkyTran system, you cripple the city.
  2. In the long term, if the system owners can charge monopoly prices for a SkyTran system, they can choose a point on the demand curve that allows them to collect as profit a significant fraction of all its economic benefits (including the economic value of the environmental and quality-of-life ones). From the global perspective, the optimum price point on the demand curve for a monopoly would probably significantly reduce the usage of the system over what it could economically support, and thus its potential benefits (greater economic growth; CO2 reduction and other environmental benefits).
  3. Potentially, if the owners of the SkyTran patents and know-how can deny them to a community or country that won't play by their rules, it may suffer serious competitive disadvantages -- creating incentives to allow #2.

In a nutshell: will SkyTran systems be more like roads (government owned though often maintained by private contractors), or like turnpikes or railroads, which are often private entities? The answer has a lot to do with its market penetration. From a regulatory point of view, to paraphrase J.M. Keynes: if the SkyTran owners have a 10% market share, their customers have a problem -- they can charge what they like because they are just one transport choice among many -- but if it has a 75% market share, it's their problem -- they will surely be heavily regulated or expropriated.

The history of railroads in the US may be an instructive example. With our strong free-market ideology and the thirst for the development successful railroads had brought, in the 19th Century, railroad companies were given large land right-of-way grants and government subsidies; then successful ones were allowed to behave as almost perfect monopolists. This made a lot of investors very rich. Even the the Great Depression, railroads were able to keep prices and profits high when everyone else cut theirs. This significantly increased the economic havoc -- farmers burned corn in their fireplaces, while coal miners lined up at soup kitchens, because the cost of transporting their respective products exceeded their prices at each end.

However, eventually the backlash came. Railroads became heavily regulated; antitrust was enforced with a vengeance. Railroad unions gained some of the most egregious "featherbedding" (I believe the term originated from the then-luxurious berths some rail workers got) benefits of workers any industry. Finally, railroads' unpopularity helped make heavy public investment in interstate highways and airports popular; so eventually trucks and air transport took much more of their market than intrinsic factors (point-to-point delivery; speed) alone would have dictated, significantly increasing US oil consumption.

A libertarian critique is that the public highway system has the better model. The roads are publicly owned and tax funded (though usually constructed by private companies), but the vehicles are independently owned. Because the road is the point of potential monopoly, while the vehicles are not, this solution avoided the tortured history of railroad monopolies and became very successful -- from an environmental point of view, too successful! Automobiles brought an explosion in productivity; in personal choice and mobility. Their downsides have until recently seemed worthwhile almost everywhere. Even communist countries like France and China ;-) are rapidly embracing them.

Can a similar compromise be reasonable for a SkyTran system? From this point of view, we should be pushing cities and towns to pay for the construction of their SkyTran systems -- though the construction and operation may well be better handled by private companies.

No monopoly for SkyTran

SkyTran pods are more like Internet data packets than any current mode of transport. If any node or pathway is down on the Internet, intelligent routers automatically adjust and packets (pods) get rerouted through a different path. As long as systems are allowed to interconnect, any particular intermediary is irrelevant. Any attempt to completely monopolize a system will be met with re-routing and bypassed.