Smart Cities as an Enabling Industry: Bringing Firm Strategies Back to the City

By Jennifer Clark

A Sample Smart City from IDC Government Insights (2013), courtesy Smart Cities Council

Economic geographers have long studied industries as part of the broader disciplinary project of mapping and analyzing the spatial distribution of economic activities within and across cities, regions, and nation states. In recent years, technology and innovation gained positions of prominence in these industry analyses. Researchers are particularly focused on processes of technology diffusion and how regional ecosystems absorb these new technologies and incorporate them into existing complexes of firms, industries, and industrial specializations.

One such example is the evolution of the medical devices industry into biotechnology. Another is the evolution of photographic and optical equipment into photonics. These patterns of technology diffusion and industry change are often responses to emerging new markets as well as the introduction of new materials, processes, or products that enable better, faster, or greener alternatives. In other words, new technologies enable optimization — efficiency, sustainability, or increased quality.

The shift here is considering Smart Cities as an industry and not simply a discourse or movement. It is therefore important to break down its constituent elements. Industries generally have products. Those products emerging in the smart cities scene are largely service-embedded goods with infrastructure and public service applications. These require: 1) connectivity, 2) back end analytical services, 3) storage and management services (including security and privacy), and 4) user/citizen interfaces (potentially open source).

To walk through some examples: the “smart city object” — the trash can, the trolley, the streetcar, the light pole, the traffic light — requires embedded sensors (leaving aside the question of what is being sensed for now). Those sensors require connectivity (fiber, wireless, etc…). A service contract is required to maintain and manage that connectivity. Data analytics are required to mange the resulting data and perform analysis. Interfaces and visualization tools are required to make the data accessible to the public or citizen users.

It other words, Smart Cities are a market-making enterprise — developed: 1) for people and companies to gather information about the (market) conditions around the individual and aggregated lived urban experience, and 2) for cities to collect data that could lead to the optimization of public services and the provisioning of infrastructure.

Returning to economic geography for methodological guidance, the observed process here is a form of technology diffusion familiar in the private sector context. This is technology diffusion into the public sector focused on “upgrading,” efficiency, and broadening access and opportunity.

In sum, the Smart Cities industry is focused on the design, development, and deployment of an emerging class of cross-platform, service-integrated, technology products to enhance service performance — particularly for citizens, workers, cities, or, for those with the ability to pay for that increased service performance. And here lies the particular challenge: who pays? The next step for Smart Cities may not be enhanced quality and coverage of public services but instead further public service privatization.

In observing who is promoting Smart Cities, it becomes clear that the stakeholders involved underscore the complexity of the private market vs. public sector challenge. As these private, public, and third sector networks evolve, sets of privileged places have also emerged. These places are the recipients of the demonstration project grants and resources coming through philanthropic investments, private sector partnership, and federal government competitions and challenges.

Third Sector Networks (including philanthropies and non-profits)

As we see in other industries focused on technology diffusion, the firms are in the business of carving out new markets and new market spaces. This is especially the case in fields where civic participation or social entrepreneurship is part of the user model. With Smart Cities, there is a turn towards third sector intermediaries to design, develop, and deploy smart cities technologies and infrastructure using an incremental, scale-up approach.

These third sector intermediaries set priorities in terms of use cases (such as bicycle crowdsourcing or urban agriculture).  There is an observed rise of “partnerships,” “networks,” and “convenings” arranged and organized for diffusion of best practices and the brokering of project partnerships. And there is a necessary unevenness that emerges in the deployment. Public services and Internet of Things (IoT) infrastructure investments are landing on an uneven landscape.

Public Sector Networks

The MetroLab Network is an initiative of the White House’s Office of Science and Technology Policy. MetroLab coordinates city-university partnerships in the hopes that these partnerships design, develop and deploy “Smart Cities” solutions focusing on “urban infrastructure systems, city services, democratic governance, and public policy & management.” The agencies (NIST, DOT, NSF) providing resources for these efforts emphasize open innovation and open data and the development of interoperable standards.

Private Sector Networks

An example of private sector networks is the AT&T Smart Cities Initiative that is being piloted in three locations: Atlanta, Chicago, and Dallas. AT&T Smart Cities Initiative is a consortium including Cisco Systems, Qualcomm, IBM, Intel, and General Electric. The Initiative offers cities the capacity to address infrastructure including “remote monitoring of roads, bridges, and buildings; citizen needs, such as real-time notifications of street lights and parking meters; transportation needs, such as real-time updates of train and bus arrival times; and public safety needs, such as gunfire detection technology for police officers.”

A Use Case Study: Autonomous Vehicles

A key example of a use case is the “upgrade’ to fleets of autonomous vehicles highlighted in the recent USDOT Smart Cities Challenge.  As is typical with this sort of transition — an underlying manufactured good gets an upgrade using new technologies. In this case, the individual auto remains the fundamental platform but it becomes extensively interconnected through the addition of information and communication technologies (ICT) that take driving out of the hands of individual drivers.

This use case has gained prominence not because it can demonstrably save commuting time or improve safety (although it may). It does, however, create an important new market: a customer base captured in a location with embedded connectivity — people riding in their cars on a commute or errand and now with reliable connectivity and without the distraction of driving.  This is a whole new, undistracted audience to view adds, use software, and consume media content during a part of the day largely lost to the ICT industry (precursor products include the radio, XM radio, and even way-finding applications, but all limit the interactivity of the user with the technology).

Autonomous cars may also have an effect on urban form — there may be less need for convenient parking places and more places for cars to wait on curbs rather than parking garages.  But it is likely this new array of captive consumers that presents a strategic opportunity for ICT firms.

The creation of a core and periphery of places through the pattern of uneven investments in urban innovation has deep implications for the future spatial distribution of economic activities. The core and periphery investment strategy adopted by the testbed and competition framework creates uneven capacities across cities to design and absorb new technologies relevant to both performance management and optimization.  It means that not only (some) citizens will select places based on Smart City endowments; so too will firms.

Also, the uneven distribution of technologically embedded infrastructure affects the economic competitiveness of cities both inside and outside the core. And finally, peripheral cities are obligated to adopt the designs and models developed and tailored for core cities — causing a convergence towards core cities’ needs, priorities, and circumstances as reflected in the design of “Smart City solutions.”

In is worth noting that there are some observable absences in the discussion about manufacturing and deploying Smart City technologies. First, there is almost no talk of regionalism or regional governance — the city is the actor of interest in this discourse. This is atypical in the US and leaves open a longstanding question about equity and inter-jurisdictional competition. Second, there is no explicit discussion of economic development although clearly the differential investment in these technologies changes the calculus for locational choices.

Firms often use privacy debates to justify proprietary platforms. This leads us to a discussion about the covert construction of barriers to entry to limit the participants in the Smart Cities market space.  Open innovation platforms ensure interoperability and continuous innovation and competition. Proprietary platforms create barriers to entry into this new market that has potentially broad social and economic benefits. This is why there is a rhetorical emphasis on open data, open innovation, and open access among the public sector actors in the Smart Cities debate (cities and national governments) but the model itself remains under development.



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