• Urbanization is one of the strongest current global trends. The UN expects that more than 70% of the world’s population will live in a city by 2050.
  • Both developed and emerging countries are urbanizing and the role of cities within society and economies is expanding.
  • Cities are going through a deep transformation – the main driver is digitization. ‘Smart cities’ highlight the stronger relevance of cities for society and populations in a world marked by strong technological advancement

According to the London-based think tank, IHS Markit, the number of smart cities is expected to rise to at least 88 in 2025 with Asia-Pacific taking the lead.[1]

In order to better understand the drivers of this growth as well as the challenges and opportunities it presents, an understanding of exactly what smart cities are and how they develop is needed.

To this end, The Foresight team at AXA Group took an in depth look at how cities the world over are developing and have outlined four different ways of thinking about the drivers of this growth.

Where we are now

Asia and Northern European countries appear to have the most innovative experimentations to date and appear as the most advanced regions.

The biggest driving factor behind Europe’s smart city development has been the EU’s aggressive goals to reduce fossil fuel consumption. The European Commission has earmarked €365m to back the European Innovation Partnership on Smart Cities and Communities, which has been tasked with developing partnerships between city governments, technology providers, and researchers to accelerate smart city development.

In Asia, several national governments such as China, India, and Singapore have pledged a portion of their budgets for smart city projects to increase their cities’ global competitiveness. China has set aside US$16bn to develop 193 localities and economic development zones; India pledged to invest US$15bn for its 100 smart cities ambition by 2022; and Singapore’s latest five-year plan includes more than US$13bn investment in technology solutions for its ‘smart nation’ objective.

Beyond these core regions, many countries have made institutional investments, but amounts are still limited, e.g. the US Department of Transportation invested US$165m in smart cities solutions in 2016, while  Australia has also unveiled the Commonwealth’s Smart Cities Plan with an initial budget of AUS$50m targeting every Australian city.

In contrast, some private companies made more significant investments, e.g. General Motors purchased San Francisco-based Cruise Automation – a company that turns certain types of cars into autonomous vehicles – in a deal that allegedly amounted to US$1 billion and invested US$500 million in Lyft’s riding sharing service to create an on-demand network of self-driving cars.

But, while there is no doubt that cities will continue to grow and to get ‘smarter’, there is no national or legal international agreement on the definition of a “smart city”. It rather depends, not only on the context, countries and stakeholders leading the evolution of cities, but also the variety of technologies and volume of new data that may help a city to get “smarter”.

Risks to this current outlook

Equally, while predictions are that smart cities will continue to grow in number, there remain a number of factors that can inhibit such growth. These include:

Technological risks, such as cybersecurity threats and data storage issues[2]

– A lack of funding in the public sector, a lack of political will or a lack of capabilities and resources. Transition to data-heavy system takes time for cities, just like corporates that are also digitizing progressively. A top-down approach rather than a participatory bottom-up schemes might also be to blame[3]

A corporate, “siloed” approach to a civic topic, leading to silo business models (focused on mobility, energy or security). Although it could be argued that it allows for a test and learn approach, it also hinders a more holistic approach that could benefit municipal policies overall. The existence of multiple public stakeholders with complementary roles (cities, provinces, regions, local state-related organisms…) also sometimes makes project management difficult, adding to the fact the local governments have not been used to working with unconventional stakeholders such as start-ups. Social acceptance and adaptation time, e.g. citizens’ willingness to share their personal data with local governments or infrastructure operators.

Disclosing some types of data may be counter-productive, e.g. data that are relevant for Smart Security but that expose a city’s unattractive aspects that led to property devaluation in known cases, e.g. risky neighborhoods

Regulation can be both a blocking and an enabling factor. So far, most cities rely on existing juridical frameworks to tackle the new issues arising with smart cities, such as liabilities or public contract laws or data protection. Data protection laws in Singapore, in the United Kingdom or in France are used to as a common background for innovation, which can sometimes slow down the development process. However several regulatory initiatives, although in their infancy, have been launched on interoperability and data portability problems, a central enabling factor for smart cities to develop, as the use of data is currently extremely complex due to proprietary systems and legal barriers on data privacy and data protection. These initiatives include:

International standards forums on Big Data, the Internet of Things and Smart Cities, e.g. the International Electrotechnical Commission, or the European Union (Digital Single Market and the Horizon 2020 financing program)

National initiatives: the British Standards Institution is working on development of standards, Germany is the first European country to create a highway’s code for driverless vehicles[4], the White House released a new legal framework for driverless cars uses in the United States last September[5].

Four approaches to consider

1: A Sectorial Approach focusing either on smart mobility, smart security, smart energy/water or smart health

This approach could also be called the technological vision. Through it, actors involved aim at optimizing punctually some of the urban functions of the city. As of today, smart city developments are very sectorial. Very few cities are able to implement a fully global smart strategy. This is mainly due to the various hindering factors listed above. For public stakeholders, smart city as a “magical” solution to all issues is, in any case, unrealistic.

Indeed, the resources are limited, the problems of development are numerous, and all cities are facing different realities. And, in that regard, face very diverse problems. Therefore, smart solutions are to be implemented pragmatically on a case-by-case basis. For some, like Eric Legale, the Director of Issy Media, Issy-Les-Moulineaux’s unit in charge of smart city’s projects, the holistic smart city is a dream, sold by the industrials in order to convince other stakeholders to invest in their projects[6].

It is a mistake to believe in a perfect city, totally clever and responsive, able to answer to all kinds of issues. Even more, it could become a threat if too much money is invested because the smart city must first and foremost respond to citizens’ needs. A city like Masdar, in the United Arab Emirates, which was built up from scratch using all possible sustainable and technological means (e.g. naturally ventilated buildings, autonomous vehicles) to develop in the desert, may fall short of its ambition if it does not succeed in attracting inhabitants.

This also fits in with the social expectations. Citizens do not want depersonalized, highly structured and cold cities but rather a more efficient yet still humane environment. The spotted sectors where smart city’s projects are most developed are therefore smart transportation and mobility, smart security, smart energy/water and smart health.

2: Data-led, dedicated to risk prevention, prediction, management and assistance.

Big data has been a buzzword for some time, but bringing insights derived from the analysis of big data to bear on cities in order to help solve specific urban problems could be a driver of development of Smart Cities. This data could come from either the private sector – where a number firms have been collecting all manner of data for many years – or through broader collaborations.

The goal would be to optimize the resources in order to guide decision making on everything from building codes to streamlining services. As an example, innovation foundation, Nesta is currently running a project, plotting housing complaints on a map to localize current hot spots of unlicensed landlords over stunning rental properties, in order to improve the city’s services. There is a need for such offers. Cities require roadmaps, because they have to prioritize their objectives and allocate resources accordingly.

3 – Transversal approach, trans silo data crossing, relying on smart city open data platforms

The problem with the two previous approaches is the risk of interoperability issues, inefficiency and unnecessary costs due to tasks done twice or more by several stakeholders. There is also a concern that a lack of overall coherence and the new threats – such as cyber-security – could arise from this disordered development. Indeed both the approaches one and two are working in silos.

Smart cities offer formidable chances to build up a brand new and dynamic ecosystem that would include researchers, business developers, public stakeholders and citizens.

Of course, initiatives using these opportunities are already in development. IRT SystemX for example is a French lab bringing together possible stakeholders for specific smart city projects, thus creating a melting pot of interactions between public stakeholders, private companies and researchers. NUMA has, similarly, developed three different departments: one dedicated to events and co working whose goal is to create an innovation ecosystem in Paris, one for the acceleration of early stage startups (intensive 4 months incubation), and one on Open Innovation programs.[7]

Beyond Big Brother

By pooling the skills and the platforms[8], such initiatives offer a vision of the bigger picture of smart cities. By doing so, it also helps face current issues hindering smart cities development such as citizens’ defiance towards the technological “Big Brother” aspect of smart cities. In that sense, it is important to include the people[9] so that they realize the value they have to gain in such development[10].

Smart cities are not about technology as an end but rather as a tool to enhance well-being and resources management smartness. To achieve this, private stakeholders have to keep in mind that the cities’ collectivities should remain the leader for change[11]. They are both the place where real needs may be identified and concrete solutions may be tested. Without knowledge of what people could expect and experimentations, smart cities’ initiatives are doomed to fail.[12] Singapore is probably one of the best examples of the City Hall as the integrated strategic room for complete city management[13], yet we should keep in mind that it is linked to the very unusual political history of this strongly-led city-state.

As opposed to the other scenarios where data sharing is challenging due to proprietary systems, such a vision allows thinking about an even smarter city that would offer a greater transversality through Open Data initiatives, which are ideal to cross silos.

Data-driven management

For digital solutions to be developed, data is needed. Multiple examples of startups or private companies unable to extend their services from one territory to another due to a lack of data or a lack of data interoperability reveal that data management is at the core of smart city’s projects successes. Building up open data platforms could be one way to settle these problematics.[14]

This is a real society subject, as it shows that no actor may have a global solution to certain highly complex problems. But, sharing knowledge on certain events may provide the ground for innovative and performing solutions.[15] This is the vision public stakeholders, like Romain Tales, from French initiative’s Etalab, are striving for.

Two models are so far observed: cities that aim at managing themselves their data, like Lyon that makes private stakeholders pay for the access to their open data platform in order to increase their public budget – and cities that ask big companies to manage their data in exchange of concrete and efficient services28. Following the same logic, integrating the citizens in a human-centric project management system is also a core element of smart cities success. Here again new technologies provide solutions to make people’s voices better heard in the debate. Make Sense for example is an internationally developed platform where community in need of help may find members willing to help. Built up by a startup local governments now use it to better understand the specific needs citizens may have.

So far however, many technical and sociological issues arise from this proposed solution. First, it would be very hard to build up this integrated platform with all the data gathered in the cities because of their complexity, and the stakeholders’ own conflicting interests. Moreover, provide a secure platform is complex, as such a solution would also widen the scope of vulnerabilities to attacks.

4 – A long-term, disruptive vision based on current most advanced research: The metabolistic city

Mathew Gandy & Erik Swyngedow, both geographers, are the first ones to introduce the concept of the “city metabolism”. A double idea lies behind this concept: cities are, at the same time, developing like natural bodies, and therefore they could also integrate natural features in order to respond to their needs.

When studying the history of cities since their earliest days of their existence, it is clear indeed that cities are not developed in a highly rationalized way but rather according to movements and flux close to those that structure ecosystems.

Thus, stakeholders of the city are also aiming at respecting the “natural” tendencies of cities, by giving them the tools to be better implemented. This is a new sociological and technical trend of thought that has been developing for the past six years, theorized by people like Michael Batty, in his book The New Science of Cities. The greater the city, the more sub-centres there are and the more important it is to facilitate their development. Private companies already offer to favour the polycentric structure of the urban villages, like Bouygues Construction, which proposes to support projects allowing multi-activities to be implemented in one place.

In parallel to this, new technologies may be used as a tool to promote more natural solutions, in line also with the environmental issues cities are encountering. For example, new technologies could be a tool to enhance nature, to make more resistant materials, more versatile and adaptable. The French startup Woodoo is developing a DNA-modified material supposedly able to become the building tool of the future. Some cities, like in Sweden, are not even using specific technologies to become smarter. By implementing nature-based solutions, they aim at answering simply to citizens’ needs.

The four  scenarios outlined above, aim to show how varied the dynamics animating cities are. These different factors offer multiple opportunities and provide numerous challenges, but the first step to ensuring that the opportunities outweigh the challenges is to gain a clear understanding of what exactly a smart city is now and, more importantly, what it could become in the future.

 

[1] The estimated number of smart cities is based on IHS’ definition of smart cities: “cities that have deployed—or are currently piloting—the integration of information, communications and technology (ICT) solutions across three or more different functional areas of a city.” Asia-Pacific will account for 32 smart cities of the total in nine years’ time, Europe will have 31, and the Americas will contribute 25.

[2] Power Donal, “How will smart cities avoid data overload?”, Readwrite.com, 06/21/16

[3] Institut de l’entreprise (2016): smart cities, Efficiace, innovante et participate, Paris.

[4] Technology News, Germany to create world’s first highway code for driverless cars, 21/09/2016

[5] The Verge, New rules of the road for self-driving cars have just been released, 19/09/2016

[6] Interview with Eric Legale, DG of Issy Media, 10 October 2016

[7] Interview with Clémence Fisher, 17 October 2016

[8] NB: The IRT SystemX is one of the eight institutes for technological research that have been established by the Government to enhance the country’s attractiveness. Created in 2012, it is focused on digital system engineering

It is comprised of 10 founding members: Alstom, Renault, Bull, Kalray, Sherpa, OVH (private companies), 3 academic partners (Inria, Institut Mines Telecom, FCS Campus Paris Saclay), and based in a competitiveness cluster (Systematic Paris-Region). Source: Interview with Charles Kremer, Program Director Smart Territories, 9 September 2016

[9] Pauline Canteneur, « San Francisco demande aussi à ses citoyens de redessiner son métro », L’atelier.net, 31 August 2016, accessible on : http://www.atelier.net/trends/articles/san-francisco-demande-citoyens-de-redessiner-metro_443269, last accessed on 2 February 2017

[10] NavadhaPandey, « Smart cities could result in social inequality, say experts, The Business Line, 15 September 2016, accessible on: http://www.thehindubusinessline.com/economy/smartcitiescouldresultinsocialinequalitysayexperts/

article9111629.ece, last accessed on 2 February 2017

[11] Conference by Benjamin Barber, “Pourquoi les maires devraient gouverner le monde”, TED Talk, June 2013, accessible on : https://www.ted.com/talks/benjamin_barber_why_mayors_should_rule_the_world?language=fr, last accessed on 2 February 2017

[12] Interview with Charles Kremer, Program Director Smart Territories, 9 September 2016

[13] Jason Schueh, “Smart Cities Are More Pragmatism than Pure Invention”, GovTech online, 8 September 2016, accessible on http://www.govtech.com/civic/SmartCitiesAreMorePragmatismthanPureInventionSingaporeCIOSays.html, last accessed on 2 February 2017

[14] Arnaud Garrigues, Sabine Blanc, « La smart city à la recherche de modèle économique », La Gazette des Communes, 13 May 2016, accessible on http://www.lagazettedescommunes.com/441803/la-smart-city-a-la-recherche-de-modeles-economiques/, last accessed 2 February 2017

[15] Interview with François Pitti, DG Foresight, Bouygues Construction , 26 September2016