How the Notion of ‘Smart Cities’ Has Changed
In my recent book “A New Digital Deal” the various building blocks for successful smart city strategies have been examined and articulated. Among the most important: the delivery models and the business architectures that accompany them.
The very notion of a “smart community”, what is constitutes, who or what is to deliver it and why – all of it has been subject to near constant change in the past fifteen years. At the heart of many definitions and endeavors has always been a technology proposition, for better or for worse. In the early 2000s, discussions, projects, pilots and thought-leadership focused on infrastructure. Broadband. High end connectivity and how that would impact (and change) the way we think of healthcare, mobility, retail or education. The second chapter was led by large technology companies and focused on solutions and solutions architectures, some of them closed and proprietary. The third chapter is focused on data. Big data, analytics, viewing the future of smart cities as a market of city data, powered by platforms.
With this third chapter having opened up, the smart city gives rise to ‘the City as a Service´. The maturing of the City as a Service concept may entail the death of the old Smart City concept with its heavy emphasis on upfront Capex investments and heavy infrastructure. Yet as the delivery models change, so do the business architectures underneath them.
Smart city propositions are moving from a hardware- and solution-driven market, to a software- and data platform-driven one, from an asset centric approach to a service centric one. Slowly but surely, community digitalization efforts are changing from having a simple transaction (say, between a municipality and a service provider) at the heart, to the smart city becoming a market place: the City as a Service is on the rise. The latter allows for the principle of ‘consumption economics’ to be introduced, with different societal stakeholders (including government and citizens) to consume ‘digital’ only as much as they need.
Platform dynamics have become common in various markets and domains. From taxi services (Uber) and apartments (Airbnb) to a medical doctor at your doorstep within the hour, platforms with their demand side economies of scale, ecosystem value creation and external resource orchestration dynamics are become common good. They may become the vehicle to drive smart cities to full maturity, powered by an ecosystem of city service providers, consumers and prosumers. However, we are not there yet. How the City as a Service evolves, when and with whom, will greatly depend on a number of questions and how communities address these. How virtually integrated should smart city business architectures and their delivery models be? Do we opt for private sector to own and manage top to bottom as in the old telco and cable company model, or do we stress the importance of keeping strategic assets within the public realm? Can a common, shared infrastructure be considered an effective foundation to ensure a free market of data and services evolves?
The analogy with an airport can be made: the airport serves as a shared platform for competing airlines, as opposed to each airline owning and operating its own airport. Broadband infrastructures, data, analytics capabilities, services, solutions, sensors: what level of vertical integration is deemed desirable by your community? What level of unbundling of these layers will help smart city free market dynamics to evolve and innovation to be continuous?
Take outdoor light poles for instance: these can be considered strategic assets in the streets of a city as they evolve to become the smart phone of the street, converging power, broadband, sensors, routers and more. Who owns that asset today and who should own it tomorrow?
Investors are increasingly interested in facilitating concession models financing the infrastructures of our day and age, including outdoor light pole led light retrofits, public wifi infrastructures and advanced street automation services, foregoing the need for cities to put the capex investment upfront. For cash strapped cities in dire need to reinvent themselves this may prove attractive, as much as it does for cities that really wish to procure smart city solutions as a service, much as one would procure electricity. The concession model can be a great way forward yet, here too, the earlier question applies: who owns the assets and how vertically integrated or unbundled should the various layers of all of these models be? How do we ensure a minimum of public control is retained over assets that are carry long term relevance and value to the community? And how can ´permanent innovation´ be baked into such longer term concession models?
Technological advances come fast, and long term concession models may be helped by ‘anti-embarrassment clauses’ that allow for regular technology refreshes and innovative input. Such constructs are already being proposed by investors acting in collaboration with service providers and technology companies. Beyond the quintessential vertically integrated telco model or the concession proposition, we may also want to put more thought into the creation of cooperatives and public private partnerships that help us to alternatives. We have made such choices before: think energy or broadband provisioning for instance. Think rural energy cooperatives emerging from the late New Deal programs to the ´broadband as a public platform and utility’ approaches adopted in the early 2000s in Europe, versus vertically integrated energy giants or the quintessential cable company. Similar choices are on our tables now and the stakes are high.
There is not one ideal choice, and no one size fits all. But the choice any community makes will have broad and long term consequences. If the choices of the past determined how we ended up organizing the energy and broadband markets for a generation or longer, the current choices may determine how we organize digitalized communities at large. Nothing could be more important. This framework of building blocks for successful community digitalization has been derived from the book ‘A New Digital Deal – Beyond Smart Cities. How to Best Leverage Digitalization for the Benefit of our Communities’, available on Amazon.
For more about the book: www.anewdigitaldeal.com
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