Amid the hype and bluster of Mobile World Congress it is refreshing to hear someone admit they don’t know the answer. Francisco Jose Jariego Fente is Telefonica Digital’s Industrial Internet of Things Director. The question he willingly accepts he can’t answer is admittedly a tricky one: what is the business model for smart cities?
Telefonica has more evidence than most for what the answer, or answers, might be. Its project in Santander has proven there is little money to be made in the hardware: the city rolled out 12,000 sensors funded by a relatively small EU1m from the EU. And the sum of the data collected from those sensors, just 5MB per day, similar to a single photo or MP3 file, suggests there is very little to be made in its carriage or storage.
The biggest challenges, and hence the biggest potential revenues, come in processing and presenting the data in a useful form. This is where Telefonica has focused its efforts and is looking to commercialise the learning from the Santander experiment. IBM too has recognised that this is where the value lies.
But this value only becomes tangible when the rest of the smart city ecosystem is in place. Cities are complicated. They are managed by multiple authorities and commercial parties. They evolve constantly, reacting to the needs of their inhabitants. And those inhabitants themselves, who in many ways represent the city much more than its buildings or infrastructure, have a say in how it develops: any executive control is limited.
Building a smart city on a green field site like South Korea’s Songdo is one thing. But there are huge drivers to smarten all our cities. And that means retrofitting technology, processes and partnerships to an existing, evolved organic environment. One model isn’t going to fit every city. Making it happen will be a process of negotiation, integration, iteration. And there will be lots of different parties involved: political leaders, civil servants, service providers, technology companies, health services, police forces, property owners and most important of all, the citizens themselves.
Brokering a framework that keeps all of these people at least relatively happy, while delivering on the promise of smart cities is no small task. It will only come through dialogue. But it’s a conversation we need to have. Because the promise of smarter cities is too great to ignore.
In the first instance there is simply lower costs, both financially and to the environment. There are lifestyle benefits: less traffic, quicker parking, more efficient public transport. Taking things a step further, there are advantages to planners: recognising a noise problem in one place might inform a change in planning to a new building nearby, perhaps requiring materials that absorb or deflect sound, or the planting of trees as a screen. Ultimately, there is the prospect of properly understanding our cities and the interactions that make them live, so that we can make more informed decisions about their future, in local government, in corporations, and as individuals.
Smart cities have long held promise, but the complexity of the problem they present has retarded their progress. To get things moving, as we need to do, a broad and open conversation between all of the interested parties is required. To agree how the interactions will be managed, and vitally the costs and rewards will be divided.