by Alcatel Lucent
Telecommunications service providers are not playing a primary role in smart city projects, even though they have strengths and assets that can be leveraged to create the information and communications technology (ICT) infrastructure that enables smart city environments. Telecom networks are, in many cases, essential to realize the objectives of the other industries driving the development of a smart city, and machine-to-machine (M2M) and machine-to-machine-to-human (M2M2H) communications technologies (also known as the Internet of Things) are basic requirements for an effective smart city.
But service providers tend to take a reactive, back seat role in the smart city development process. Their involvement remains limited, which means they run the risk of having to compete with utilities, cable companies, and other types of service providers, to provide ICT services. By leveraging their assets in a proactive way and partnering with the key players in a smart city project, service providers can change their role from that of facilitators of other industry objectives, to that of strategic partners of the key industries and governments involved in each project.
Role of ICT
Although ICT plays a major role in the development of a smart city project, the value propositions of most smart city initiatives do not position ICT as the key to the project’s value. Because ICT is not a driving force in smart city projects, the implementation of the necessary layers related to ICT services (the communication infrastructure layer, the IT layer and the applications layer) is usually determined by the motivations behind the project and those who initiate it.
Along with the many stakeholders involved in a smart city development, each project is also driven by a variety of motivations, of which the major ones are the need to:
- construct or invent a new economic model (the economic motivator)
- reduce energy consumption (the eco-sustainability motivator)improve the quality of life in a city environment (the social motivator).
The three key motivations are not exclusive of each other and they can all be found playing a role in the initiation of a project. Despite the many factors that must be taken into consideration, smart cities present a viable business opportunity to service providers. Some opportunities are better for service providers to target on their own, while others will need cooperation and partnership with other players in the smart city ecosystem:
- IT Box projects are the best fit with a service provider’s product and service offerings
- Dream Box projects can only be pursued in cooperation or partnership with the key companies in the industry that is driving the project
- Black Box projects can only be approached if and when a service provider particpates
- Fragmented Box projects require a case-by-case evaluation, and even a project-by-project evaluation within each smart city, to better understand the covered functional areas and develop an appropriate strategy (go it alone, or enter into a partnership).
Dynamics
To better understand the dynamics of smart city development projects and the opportunities available to service providers, the Alcatel-Lucent Market and Consumer Insight team conducted an in-depth, three-part analysis of 52 smart cities.
The first phase of the study focused on developing an overview of the smart city landscape based on a review of secondary sources. The research looked at smart cities from two angles. First, it focused on key stakeholders and their contribution to the conceptualization and realization of the ideal. Second, to better understand how the stakeholders influenced development, the research focused on a thorough review of 18 ongoing smart city projects.
The second phase of the study, which was conducted in association with the EDHEC Business School of Nice, was designed to supplement the initial outside-in view of smart cities provided by third party sources with an insider’s view of smart city projects. This insider’s view was built on interviews and discussions with smart city analysts, key representatives of five of the original 18 smart cities studied, and representatives from additional projects in India and Brazil.
Finally, the third phase of the study, which was conducted in association with the Presidio Graduate School (San Francisco, U.S.A.), rounded out the initial findings through a close examination of an additional 25 smart cities. This final analysis enabled the team to develop a more detailed view of smart city categories and all the factors that influence ICT decisions.
The research revealed that how and where ICT is used to create smart cities varies from project to project. However, it is usually applied to improve a mix of public and private services:
- city administration, to streamline management and deliver new services in an efficient way
- education, to increase access, improve quality, and reduce costs
- healthcare, to increase availability, provide more rapid, accurate diagnosis, provide wellness and preventive care, and become more cost-effective
- public safety, to use real-time information to anticipate and respond rapidly to emergencies and threats
- real estate, to reduce operating costs, use energy more efficiently, increase value, and improve occupancy rates
- transportation, to reduce traffic congestion while encouraging the use of public transportation by improving the customer experience and making travel more efficient, secure, and safe
- utilities, to manage outages, control costs, and deliver only as much energy or water as is required while reducing waste.
Integrated strategy
Service providers have many assets that they can use to build a foundation for an integrated smart city strategy, and to position themselves as the key ICT providers in smart city value chains, including a trusted brand, valued for high availability, quality of service (QoS), privacy, security; sophisticated authentication and billing capabilities, potentially integrated across multiple bearer networks (fixed, mobile, Wi-Fi®); mass-market customer care and self-service capabilities; consumer and commercial distribution and marketing channels; real-time customer insights (presence, location, usage); data center scale; and technology expertise in networking, telecom, and IT.
Most importantly, service providers offer the ability to manage and ensure delivery of large amounts of data over protected, secure, and reliable network infrastructures that are required to enable all of the different visions of an ideal smart city. By leveraging these assets, service providers can change their role in each smart city ecosystem.
They can enable the seamless integration of the unique sub-systems that must be created to support each city’s services over a single telecommunications infrastructure. They can better deliver solution and service offerings that fit the specific objectives, needs and priorities of each project and its stakeholders. And they can establish strategic partnerships with the specific vendors and application developers that will support unique service and application development efforts for each city.
A strategy built in this way will make service providers prime players in smart city development efforts. It will change their role from that of facilitators of other industry objectives, to that of strategic partners of the key industries and governments involved. Most importantly, it will allow service providers to make the transition from that of providers of basic M2M and M2M2H carrier services to that of key enablers of the smart city vision.