Tim Winchcomb, technology strategy consultant at Cambridge Consultants, asks: where are the business models that will allow technology to flourish and make the smart city a real prospect?
We’re all familiar with the sci-fi vision of the city of the future – motorways in the sky criss-crossing between tall buildings, with fast-moving autonomous pods and mass transit systems running smoothly along them. This vision was first depicted in the 1927 film Metropolis, which was set in 2026 and in which the hero idles away his time in his pleasure garden before going on to discover the darker side of the supposedly utopian city.
Ninety years after Metropolis was released, the futuristic city predicted for 2026 still seems as far away now as it did in 1927. Our cities suffer from chronic congestion and our city infrastructure – from streetlamps to traffic lights – still mostly operates as standalone systems running on simple timed switches.
There are clear benefits to be had from decreasing traffic congestion, improving energy efficiency and making better use of city resources and services. Collecting data from connected sensors scattered around a city, processing it with advanced algorithms and then making decisions based on the output will provide enormous benefit to citizens and the environment. So where is our ‘smart city’?
Although the benefits are abundantly clear, the business models for providing smart cities are not.
A significant up-front investment is needed to provide the infrastructure and connectivity to support a smart city. Everyone will benefit from this investment but there is no clear method for investors to monetise their services. The complex web of stakeholders – from local, regional and national governments to commercial organisations, academia and the citizens themselves – offers a challenge in untangling who should do what and who should pay whom.
Let smart city technology flourish
For many smart city applications, the business case supports incremental investment for the systems specific to that application – but it still all depends on the availability of widespread connectivity. Yet there are already technical solutions available which are suitable for connecting up our smart cities, and there are others which are emerging. The providers and technologies are suited to different business model approaches as follows:
- Mobile network operators, who provide cellular coverage for our mobile phones, are well placed to upgrade their existing networks to offer the new technologies suitable for smart city devices. With only an incremental investment needed to roll out narrowband IoT (NB-IoT), operators can provide a cost-effective solution which also guarantees a high quality of service using their dedicated radio spectrum. Providing this combination of good existing coverage and carrier-grade connectivity from companies which have specialised in providing connectivity for decades offers a strong case for connecting many smart city applications.
- New entrant connectivity providers such as Sigfox can also provide widespread coverage of carrier-grade connectivity at competitive prices. Sigfox has designed its technology to be well suited to sending and receiving the small amounts of data typical of many IoT applications in a power-efficient way. Economies of scale are such that modules already cost as little as $2 and users pay a small recurring fee to be connected through the network. For smart city applications which can make do with the very low data rates and message delays of several seconds, Sigfox is a compelling solution.
- City authorities have the option of building their own dedicated connectivity, using technology such as long-range wide area network (LoRaWAN). This requires up-front investment in infrastructure, but provides ownership and control of the network which is important for critical city services. It also guarantees the privacy and control of data for applications which collect personal or sensitive data. Authorities able to invest in deploying their own connectivity in this way can spread the cost over a number of different smart city systems if the business cases justify it.
- A crowdsourced model offers an interesting new approach which spreads the cost of the investment across a number of interested individuals and organisations. This is being pioneered by The Things Network, which is building LoRaWAN networks around the world by enlisting the help of volunteers who co-ordinate their activity over the organisation’s website. Although they have communities formed in about 400 cities or regions across 74 countries, coverage even in populous city centres is patchy and it is not clear whether an adequate quality of service for any valuable smart city applications can be reached through this approach.
We are at an exciting point in the development of our smart cities. However, it is not just a question of which technologies will be successfully deployed – but how they support the appropriate commercial business models. When audiences were first introduced to futuristic cities on the big screen in 1927 they were in awe of the technology expected to be widespread by 2026. But with just nine years left, will the business models come together in time to enable the technology to flourish?