Analyst Q&A: Smart cities – a world of possibilities
VP – End Markets/Verticals ABI Research
Head of IDC Government Insights Europe IDC
Founder CRA & Associates
Industry Analyst - Visionary Innovation Group Frost & Sullivan
Experts from four top analyst and consulting companies – ABI Research, IDC, Frost & Sullivan and CRA & Associates – explore the current development of smart city innovation around the globe and offer their vision on investment possibilities for operators and other businesses.
Q: Where and how will smart city innovation really bring a change for citizens and businesses?
Dominique Bonte (DB) Generally speaking, smart citiy technologies enable bringing more advanced and more affordable services and solutions to citizens, improving the overall living experience and convenience, safety, security and prosperity through economic activity and growth across all segments and services (mobility, energy, utilities, government services). More recently, resilience has come to the foreground as a key requirement to protect cities against emergency situations like climate-related flooding and drought, hurricanes, earthquakes and tsunamis, and cyber attacks, diseases and wars, but also economic and social crises. The most visible and tangible benefits of smart city technologies for citizens include crime prevention and road safety, air quality and overall environmental sustainability, quality and price of utilities and services, high-quality city infrastructure and the level of economic and social activity, all of which can be enabled and/or enhanced by a range of technologies. Finally, as cities are in the middle of the fight against the pandemic, cities are deploying a range of technologies including smart cameras and drones to help enforce social distancing measures.
Joe Dignan (JD)
The smart city arena is maturing into IoT platforms that create data, data exchanges that can synthesise the data, digital twins that visualise the data and return on investment (ROI) models that can prove the success or otherwise of the intervention. With a single view of a citizen across government and a single view of government for the citizen there will be great strides in health, education, mobility and resilience.
Charles Anderson (CA)
When smart cities start out, they focus on leveraging technology and data to drive operational efficiency and improved decision-making across its various agencies because these solutions tend to have a clear ROI. However, as they evolve, they need to set regulations, create policies and implement solutions that benefit the other key stakeholders, namely businesses and citizens. For businesses, it’s more than implementing new technologies and solutions. It’s about creating a set of policies and strategies to ensure a transparent, efficient and competitive business environment to serve the existing businesses operating in that city as well as attracting new ones.
For citizens, the objectives are to improve inclusiveness, services and the quality of life for the people who live there. Again, it’s more than just technology that is involved. Cities can implement policies and strategies related to, for instance, improving air quality and reducing traffic congestion, which will improve the citizens’ quality of life. But cities can also digitise their citizen service offerings to streamline and enhance the way they interact and transact with their citizens.
Malabika Mandal (MM)
We have observed smart solutions such as low-energy localities, connected infrastructure and sustainable urban mobility solutions that have gained immense potential within the smart city space. Main innovation themes within the smart city sphere are mainly observed in the delivery of these smart solutions.
Smart mobility: the biggest mobility innovation in next few years will be energy-efficient public transport as well as increased automation support by electric vehicles. For example, the city of Helsinki is already piloting electric-powered self-driving buses known as robo-buses in real-life traffic conditions, which are expected to start their services within next 5 years.
Smart energy: smart cities are working towards achieving the goal of zero carbon emission by next 10-15 years. Innovations will be prominent in areas like smart energy management, renewable energy and energy distribution systems. For example, more than 50 per cent of homes and businesses in the city of London have been already connected through smart meters and 85 per cent of homes and businesses are expected to be connected through smart meters by 2025.
Smart lighting: connected or networked street lighting infrastructure provides additional 20 per cent to 30 per cent energy savings on top of the 50 per cent savings achieved by switching to LEDs. Smart cities have taken a step ahead through innovation in smart lighting by developing smart street lighting programmes that can support multiple smart city applications. For example, Copenhagen is testing the use of light controls and intersection-based occupancy sensors to provide extra illumination to bicyclists at cross intersections.
Q: Which countries have made real strides towards establishing smart cities and why are these areas more advanced than others?
DB City-states like Singapore and Dubai are among the most advanced and visionary regions in terms of the adoption of innovative smart city technologies such as driverless shuttles, blockchain, passenger carrying drones, renewable energy (solar panels built into road services, etc.), vertical farms, and more generally e-services for healthcare, education, etc. They are also deploying digital twins as the ultimate design, planning, maintenance and management tool for advancing the smart cities agenda. As a general rule, many Asian megacities face a higher level of urgency to move ahead with smart city agendas due to critical problems related to pollution, congestion and overpopulation, putting a strain on the delivery of utilities and services. This prompts many to accelerate vehicle electrification and renewable energy programs in the form of microgrids and micromobility, as well as smart waste management, recycling and water processing as part of a wider shift to urban circularity.
Smart cities is a marketing term for advanced urban digital transformation, and it is not a single market. There are major differences between greenfield new cities in the developing world and retrofitting existing cities in the developed world. Equally, there are differences of approach in command and control and democratic countries. In essence, it is easier to mandate something than to get agreement. Ergo, we should stop talking about smart cities as one market.
The cities making the greatest strides are those that have the best cross-ecosystem collaboration combined with a proof-of-concept (POC) deployment model that creates a quick and easy process to test new smart city solutions. Taipei City, for instance, has proactively engaged more than 500 technology vendors and run over 200 POCs in recent years. Their collaborative model allows them to quickly evaluate new, innovative solutions across all their government agencies to see which deliver tangible value. If they deliver, they move forward. If not, they move on. These POCs can be delivered and evaluated over a period of months, whereas many cities require years to test and evaluate their POCs. Sad, but true.
According to our recent study titled “Global Smart City Scorecard 2020”, cities such as Amsterdam, Seoul, Singapore and Copenhagen have the highest average scores across all indicator categories. Seoul and Singapore lead in the overall data strategy approach, which focuses on data integration, analysis and support of its critical economic sectors. Amsterdam and Copenhagen are front-runners in the use of data and IoT to improve urban life as well as develop more unified smart city services and sustainable footprint. Our research indicates that European cities have more emphasis towards smart mobility, sustainable environmental goals, data-driven development and urban innovations than North American cities.
Q: What’s the role of 5G and technologies like AI and IoT in accelerating the smart city vision?
DB Both 5G (and more generally IoT) and AI are key enablers of advanced smart city technologies such as smart traffic and surveillance cameras, remote asset monitoring, and driverless mobility and touchless delivery. AI in particular has been a key enabler of a range of smart, automated, innovative services. In the future 5G, AI and IoT will come together to allow offering low latency and highly reliable edge cloud (also referred to as multi-access edge computing – MEC) services for the monitoring and control of autonomous assets like delivery robots, drones, driverless shuttles and emergency response systems. More generally, it will allow sharing critical data in near real time for enabling wide-ranging demand and emergency response solutions.
There are a plethora of new technologies coming into the market of which 5G, AI and IoT are but a few. If we also include edge computing, VR and AR, quantum and deep learning we have a whole new palate to work with, but the main consideration is not to see them as solutions but components of a value proposition. The market still sells individual point solutions, but the arena needs gestalt solutions.
5G and AI are not solutions, rather, they are technology enablers, so it is more about how cities use these new enablers, combined with the existing and new data they collect, to design solutions that deliver value to the various smart city stakeholder groups. In the coming 12-24 months, I believe AI will deliver the most value as cities learn to turn the massive amounts of “dumb” data they collect into actionable intelligence. It will be difficult for cities to do this on their own, so most will create partnerships to achieve their objectives. One interesting smart city public-private partnership that was announced in 2020 is between Songdo, South Korea, and Stanford University. Stanford will create a research facility in Songdo to evaluate the data captured to identify opportunities for driving operational efficiencies, reducing costs and identifying new revenue streams. The benefit of partnering with higher education is that it gives the city access to some of the “best and brightest” talent – and the university benefits by being able to provide the students studying data science with an incredible amount of data to experiment with. A true “win-win” collaboration.
With the advent of widespread 5G availability, large-scale adoption of these disruptive technologies by smart cities will help deliver intelligent services. We observed that new technologies such as crowd analytics, real-time dashboards and AI-based surveillance systems have been widely adopted by smart cities during the Covid-19 pandemic. As we move into the new normal, smart cities will focus more on developing collaborative data-driven infrastructure to provide appropriate healthcare facilities as well as public security. More business and public entities will set up holistic digital platforms leveraging IoT devices installed across the city.
Q: What do operators need to do to secure return on investment from smart cities?
DB Set up close and long-term partnerships with city governments demonstrating both the benefits for citizens and the operational cost savings of their solutions; being flexible in terms of payment and financing models favouring recurring business models over upfront payments. They need to offer flexible, interoperable and open platforms and systems allowing cities to gradually grow and expand their smart city systems and solutions. Operators need to consider a more long-term lifecycle approach in terms of ROI when working with governments and cities.
JD This is not rocket science and can be distilled into a four-step process. Firstly, agree the outcomes that are required. Secondly, identify what people will have to do differently to achieve those outcomes. Thirdly, provide the digital infrastructure people will need to change what they are currently doing. Finally, be able to measure the difference.
CA Connectivity is a declining revenue stream, so they need to move into hardware, software (e.g. platforms) and services spaces. To do that requires a different mind-set, strategy and set of skills. They need to bring in people, and partners, that understand the technical requirements and procurement processes of the 25-30 government agencies each city has, and tailor a suite of solutions that meet them. Partners also are key to help operators get access to the purchasing decision makers. Even if the operators aren’t the “lead” vendor for the initiatives, they can provide the connectivity required for the initiatives – and hopefully some of the hardware, software and services requirements.
One interesting partnership in this space is between Microsoft & Telstra to create digital twins of commercial buildings. They are initially doing this with Telstra’s larger sites to prove how digital twins can reduce energy costs and consumption, streamline facilities management and extend the useful life of assets. It is a good match – Microsoft’s value add is its analytics expertise and Azure platform, while Telstra dominates the enterprise and public sector business in Australia, and all enterprises and public sector clients have a property portfolio. I fully expect to hear more partnerships between Microsoft (and AWS and Google for that matter) and operators looking to target the smart buildings space as the industry realises building management is a data problem, not a real estate problem.
MM Smart cities can deliver a return of investment only when they are more agile, collaborative and resilient that can swiftly flex to the varying needs of citizens and businesses. We have identified three main areas where smart cities can improve to deliver a return on investment.
Firstly, testing before actual implementation of projects to minimise unnecessary cost burden. It is essential to investment in pilot programs of smart projects, developed with new and advanced technologies before actual implementation.
The other areas are increased private and public collaboration. City governments need to collaborate with citizens and private and public enterprises to develop new business models such as co-creation and crowd-sourcing, which will help upturn proficiency and effectiveness of the government as well as increase transparency and trust among citizens for efficient city governance.
Q: How will the smart city concept provide ways to boost social inclusion initiatives?
DB Social inclusion is increasingly seen as a critical enabler of smart city strategies; city governments start understanding that without involvement and buy-in from citizens from all layers of society they will struggle to implement their programs. At the heart of social inclusion is the sharing of data (either as part of IoT platforms or digital twins exposing data to the wider public) and the active consultation of citizens to seek their approval about new services and projects; as it relates to reaching disadvantaged and/or impoverished citizens and neighbourhoods.
The traditional digital channels can be complemented by alternative communication systems such and smart kiosks (Verizon’s smart communities concept); as it relates to mobility. Cities have a duty to make sure all citizens are served by both traditional transit and new forms of smart mobility by, for example, regulating the population reach of ridesharing providers and/or offering more flexible forms of on-demand transit.
Technology can help make “public” services more profitable by advanced demand-response solutions; economic activity in cities is mostly clustered around microcities positioned in and around airports, venues, etc., leaving out parts of the cities in between.
Social platforms were already popular before Covid-19 but the pandemic has made them ubiquitous and has accelerated our movement towards a digital society. This in turn has created the force majeure for superfast connectivity as a basic utility. Again, there are major differences in infrastructure maturity globally, but this is one area where 5G can really come to the fore. There is an enlightened self-interest aspect in this for the public sector. The more people connected, the more opportunity for public service channel shift. This will improve efficiency but, more importantly, remove cost – something all public services will be looking to do in the future.
Boosting social inclusion is talked about a lot. However, before Covid-19, we didn’t see much action. Then, overnight, the world changed. Cities all over the world closed schools and went to online learning. The challenge is most cities will have students that don’t have the access to computers and high-speed internet at home, so how do you ensure these students don’t get left behind? This happened in Philadelphia during their initial lockdown. The city had tens of thousands of students without the necessary tools for online learning.
Within just a couple weeks, the city was able to push through initiatives that addressed the issue, including procuring Chromebooks and connectivity for those without a home computer. What impressed me with this initiative was the speed of delivery. Cities are known to have long, drawn-out decision making and procurement policies. In a normal world, this could have taken years, but due to Covid-19, they proved these long cycles can be cut dramatically.
There are several evidences of smart initiatives leading to sustainable environment and also enabling more citizen involvement in co-creating city services. For example, Amsterdam’s innovation platform named Amsterdam Smart City, in collaboration with companies, other smart city administrations, education institutes and citizens, nurtures pioneering concepts and sustainable solutions to urban challenges of the city. Paris is focusing on shaping a connected urban environment in an open configuration, taking into account citizen inputs and pushing an eco-friendly and resilient urban development plan. Paris’s Open City Model emphasises collaboration among citizens, as well as other smart city stakeholders; citizens are invited to submit project ideas and comments regarding the smart and sustainable strategy online.