Technology firms are vying to sell the ‘Internet of things’ to city authorities, but Chris Edwards finds that there are legal and organisational hurdles to clear first.
At the end of the previous decade, when the European Union looked for a testbed for the concept of technology-assisted ‘smart’ cities, the mayor of Santander in northern Spain saw an opportunity to use the technology to support his own city’s development. “Five or six years ago we started to elaborate our strategic plan for Santander 2020,” Iñigo de la Serna explained. “For two years we discussed the kind of city we wanted to have and settled upon two main pillars: cultural development and technological development. From the beginning we were convinced that the smart-city project was a golden opportunity for us.”
One driver was the idea that being Europe’s largest live laboratory for smart-city projects would bring investment by technology companies and encourage startups that could form a cluster of companies offering highly skilled jobs.
The second was to streamline the way the city works. “We have to change the way we provide public services,” said de la Serna. “We can use sensors to optimise our systems. A truck need not collect refuse from a container if it’s not full.”
Cities around the world are being encouraged to go smart by a number of technology companies, from chipmakers to telecom service providers, as they vie to corner the next wave of the Internet - the Internet of Things. Their aim is to charge for data sent in from a forest of sensors deployed around cities that will, they say, help to stop the urban infrastructure from crumbling under its own weight.
Douglas Gilstrap, head of strategy at Ericsson, points out: “Seventy per cent of the world’s population will be in cities in 2050. We have to think about the infrastructure.”
ARM CEO Simon Segars, speaking in October at the company’s TechCon gathering in Santa Clara, explained: “People are already living in cities that are congested. When you live in a city of 20 million people, try finding a parking space. Just moving people around is going to be difficult. As urbanisation grows, the Internet of Things offers a potential solution.”
Despite the promises, the tangible benefits to the city are not entirely clear so far. The Santander researchers believe they have achieved some reduction in congestion thanks to the parking sensors, but with limited data. José Manuel Hernández-Muñoz, technology expert at Smart Santander lead partner Telefónica, said: “We achieved a reduction in time for parking of five to six minutes on average. But it is not representative of the whole city. We defined a small area for the measurement, so it is difficult to make an extrapolation. But we have measured a 25 per cent reduction in the fuel consumption of the service that collects [communal] garbage.”
Even if a case can be made for the Internet of Things to manage cities better, authorities may find it difficult to put the technology into action. In Europe, government policy can limit the freedom of local councils to introduce smart-city systems, and the departmental organisation of the councils themselves can lead to problems.
Javier Martinez, director of business and commercial development at parking sensor specialist Libelium, said at the recent GigaOm Mobilize conference: “One thing is conceiving the solution and selling it. The other is the actual deployment. When we deployed our sensors for a smart-city initiative, we found the proposal was horizontal but the city itself was not; there hadn’t been communication between departments. The mobility department, which was responsible for parking, had not warned the lighting department that we need to install our equipment on lighting poles. There is no point in taking a horizontal approach if there is no alignment with the end user.”
Although Santander was able to coordinate the placement of network equipment using its lighting network to pick up data from parking sensors, de la Serna said restrictions on the types of contract introduce further roadblocks. Similar to the public-private partnership deals in the UK and elsewhere in Europe, these are long-term, largely inflexible contracts.
“We have a problem with smart water management because we have a contract for the next ten years,” he said. “So we opened a new contract for a small area of around 15,000 in which we could introduce the most modern technology available to create a prototype.”
De la Serna added that some changes will have to be made at the national level: “We are trying to get changes to legislation to establish new contracts with the private sector. We have to be more flexible.”
Although the ambition of companies such as Telefónica is to sell ‘smart city as a service’, it’s not clear how the projects will be financed long-term. Deals will be more dynamic and may involve different pieces of the smart-city network seeing money flow between the contractor or the city depending on circumstances.
“Technical people in the municipality have tried to see how they can fund these projects. We are telling the government we have to change the relationship between public and private services. When we establish a new contract we need to be more flexible and be more like partners.”
Raghu Das, CEO of analyst firm IDTechEx, compared the situation to that of RFID, arguably the first application to use Internet-of-Things concepts: “The pay-per-data model has been tried for RFID but has not been overly successful. I think the service model is a good one for smart cities but probably if it is more aligned to the value gained from the data. I’m not sure if the users will want to have to make sense of the data themselves - they probably want the filtered actionable results.”
Varun Nagaraj, senior vice president of product marketing and planning at Echelon, which developed its pre-‘Internet of Things’ industrial-networking protocol 25 years ago, said companies have made successes of selling technology-assisted management services, citing Honeywell for building management as an example.
“The market for smart street lighting has taken off where the model is based around managed services. China has more intelligent street lights than any other country,” Nagaraj said.
However some aspects of the model involve the unusual characteristics of Chinese capitalism, partly fuelled by massive growth in bank lending. “Typically, these services get a big bank loan and then go to the municipality, asking to take over the street lighting network. They pocket the difference.”
The problem for providing individual managed contracts is that cities will find it hard to reuse the data for other systems. For example, the sensors that detect traffic to determine how bright the street lights should be cannot easily be passed to traffic-management systems. Smart Santander researchers see this as important in driving future work.
Guillermo Bataller, project manager at Telefónica, said one of the findings has been for the need to deploy multifunction sensors “to support the maximum possible number of services”. This massively expands the possible scope of any smart-city system.
“Connecting cities is a huge undertaking - one I don’t think any one company is in the position to do. They will need to start on specific challenges and problems,” said IDTechEx’s Das.
China has started specific projects but it is not yet clear that any of these systems will support the right standards and incentives to allow the data to flow between a number of service providers - or that cities will be in a position to finance it.