When the concept of “smart cities” first emerged in the industry over a decade ago, definitions of the term were nebulous at best.
The massive uptake of the internet of things (IoT) has helped give greater structure to the vision of smart cities.
Frost & Sullivan research estimates a $1.5 trillion market potential in smart cities by 2020 with opportunities in infrastructure development, technology integration, energy management and security services.
Against the myriad of opportunities, various telecoms operators are making their moves to secure their positions in a space which has primarily been driven by vendors, governments and municipalities.
Over 100 cities across the world are presently deploying some kind of smart service within their ecosystem. As initiatives continue to be rolled out and existing cities pushed to be ‘smarter’, the way in which telcos engage within the smart city context too will need to evolve as its development continues to unfold.
“A few years ago, the estimated data about IoT or M2M did not attract attention,” says Marieta del Rivero, deputy general director to the chief commercial digital officer at Telefonica. “It was as much a challenge brought to us by governments as it was our opportunity to transition from providers to partners, accompanying them and involving ourselves in this process of transformation, understanding the needs and requirements of each city, adapting our services and technologies, and offering the best reliability and safety in network and platforms management.”
The obvious role for operators is that of connectivity – to provide and connect the infrastructure required to enable the services envisioned by stakeholders. Operators can then easily scale up their services to achieve economies of scale. However, in doing so, they run the risk of being relegated to commodity suppliers of data and connectivity, rather than significant drivers of impactful change.
Historically, vendors such as Huawei, IBM, Cisco and Siemens have dominated the space, presenting their offerings through appealing marketing concepts, while operators have lagged behind in terms of what they can bring to the market.
“Vendors are working with municipalities to push for their own standards and services,” observes Karim Yaici, lead analyst at Analysys Mason. “Startups and smaller vendors have unique technologies that are suited to particular application areas. Innovations have come from the people who really understood a particular vertical, so vendors have been ahead of the curve in what they can provide.”
However, a gamut of opportunities await operators beyond connectivity – telcos are uniquely placed to facilitate data aggregation and storage, deliver real-time information to provide analytics and insights and manage billing systems.
“We see our role far beyond providing connectivity,” says Craig Price, senior vice president of international projects at PCCW Global. “Telecoms is a core delivery of IP connection but more importantly, it needs to support the vision of what a smart city could be, along with the implementation of services and applications.”
Operators are well-positioned to manage devices and applications because of the visibility they have across all devices on their network. “Telcos are a trusted supplier. Therefore if we put a device into a home or a commercial building, we are trusted to deliver and manage that,” Price adds.
PCCW Global signed a strategic collaboration agreement with urban developer Shanghai Zendai in 2014 to provide telecoms and technology services for the $7.95 billion development of a smart city in Modderfontein, close to Johannesburg, in South Africa. Prior to that, the company had already been developing services for IoT and saw its progression into smart cities as a “natural progression”.
As the venture’s strategic technology partner, PCCW Global is providing Zendai with a range of services, including systems development and solutions integration, application development and management as well as cloud computing services and e-commerce solutions.
As technologies relating to smart implementation and IoT continue to develop at a feverish pace, PCCW Global’s deployment of services in smart cities initiatives will be market driven and tailored to the specific needs and demands of its clients, says Price.
“We are very technology independent in supplying services to smart cities and developers internationally. We want to ensure that the services we deploy are suited for the city, and is what a developer wants. Unlike a vendor approach, we don’t sell pieces of kit,” says Price.
PCCW Global has identified 15 function areas – ranging from residential to parking to warehousing – in which smart technologies could be implemented in the city of Modderfontein, as well as developed the technical specifications of technologies for tender.
Construction has already begun on the 1,600-hectare city which will house approximately 30,000 families and create about 200,000 fixed jobs for the local community.
According to Price, Zendai’s wish list for the smart city consisted of “the latest in terms of telecoms and technology”. The aim, is for Modderfontein to be the first city in South Africa to provide fibre broadband speeds of up to 1Gbps, deploy LTE and Wifi everywhere, as well as enable the easy integration of security applications into the infrastructure of the city. “Essentially we see a combination of technologies being deployed, from Wifi – both outdoors and indoors – to the best LTE speeds to breaking high-speed services,” claims Price.
First mover advantage?
SK Telecom was one of the earliest movers in the Smart City space. The South Korean operator launched its first M2M platform in the country in 2008, with the introduction of business-to-government (B2G) services such as remote metering, which led to the launch of an open M2M platform in 2012.
In June 2015, the Korean operator signed a memorandum of understanding with Busan Metropolitan City and Cisco to build an open IoT platform named ThingPlug, with the aim to bolster its IoT ecosystem. The system is based on oneM2M standards, which provides developers with a scalable and interoperable standard for the communication of devices used in M2M and IoT applications.
More importantly, the ThingPlug platform will form the basis of the operator’s smart city development in Busan. SK Telecom is presently in talks with the Busan Metropolitan City to lay out the first phase of the project in 2016, with plans to begin construction in the second half of next year. The operator will also upgrade a range of public services in the city, such as parking, energy management and smart IoT services.
“Our goal is to strengthen the competitiveness of our IoT platform by applying it to smart cities,” says Kim Eun-Kwang, manager of the SK Telecom’s IoT solution business team.
The operator is making a push into the smart city market by developing innovative services and platforms, as part of a concerted drive to create additional revenue streams.
For SK Telecom, smart cities also serve as a test bed for developing technologies services of scale. Kim admits that while the operator’s previous smart city initiatives such as U-City – a mobile technology network consultancy it created to serve municipal governments – fell short of producing meaningful success, it was able to gain much needed experience and expertise for future projects.
SK Telecom is presently piloting services such smart parking, smart street lighting and smart crosswalk in parts of Haeundae, Busan, and plans to complete the first stage of tests by the end of the year. In addition it is also testing a wearable global positioning system (GPS) and near-field communication (NFC) safety device, aimed at tracking the location of wearers in the city – primarily children or the elderly – by utilising low power wide area (LPWA) network technology.
Understanding such business opportunities, as well as the value chains associated with IoT, is what Paul Gardner, head of future business technology research practice at BT Technology, Service & Operations, is is focussed on.
“We believe there are opportunities for companies like BT to offer new services and acquire value,” he says.
In 2013, BT and IoT/M2M specialist Neul joined forces with The Open University, Connected Digital Economy Catapult, Future Cities Catapult and Milton Keynes Council to form a Smart City collaboration named MK:Smart for Milton Keynes, one of the fastest growing cities in the UK. All parties will collaborate to build an open access network for M2M communications and IoT, with BT and Neul as the technology suppliers.
In collaboration with Milton Keynes Council and Neul, BT will deploy a network of weightless base stations across the city to provide coverage for lower power, connected sensors which it claims will be the first of its kind in the country.
Big data for a smarter city
Perhaps what is BT’s most significant contribution to the project, says Gardner, is the creation of the MK Data Hub which acquires and manages vast amounts of data aggregated from the city’s systems.
Information from the MK Data Hub is said to enable Milton Keynes Council to more efficiently manage the supply and demand across the city’s transport, water and energy supplies, as well as create opportunities for local enterprises to develop products and services.
“The purpose of future cities is to use technology to optimise services and to deploy resources more effectively, using retrospective planning in a smarter way, based on insights,” notes Gardner.
Its deployment in Milton Keynes has provided the company with a “real life, living lab” to test technologies. “It also gives us and our partners the opportunity to understand which business models make sense, produce value and more importantly, will be sustainable business models going forward,” explains Gardner.
“What we’re really interested in are the new business benefits that will arise through the sharing of information across applications and already, there are some clear and early business benefits.”
One such IoT project to have yielded results for BT is its smart parking service, designed to manage the use of short-term parking spaces.
Through detecting the arrival and departure of vehicles, the sensors send information wirelessly to lamppost mounted solar-powered repeaters. The data is then transmitted via the internet to the MK Data Hub which processes the information and displays the bay status as red (occupied) or green (free) on the Milton Keynes Council public information dashboard.
“The first benefit is that it provided the council with real-time insight on parking habits. With having that real-time data – as opposed to survey data – the council was able to change their charging regime,” says Gardner.
The deployment of the smart parking service has already produced significant cost savings, according to Gardner, who reveals a car parking space costs approximately £15,000 to build. “By using real-time information which provided more insights, the council can avoid building new car parking spaces. There was a view at one point to build 7,000 more car parking spaces. The Council has saved an estimated £105 million without building them. That is a cost saving business case,” he says.
Another promising business case is BT’s refuse management service in which sensors are placed in recycling bins to monitor refuse levels. Again, the data is transmitted to the MK Data Hub, which enables the council’s waste collection team to schedule collection according to the volume of waste in the bins. Gardner claims that the intelligent scheduling has led to more efficient use of resources, reducing the need to expand the waste collection fleet, thereby saving Milton Keynes Council as much as £250,000 a year.
“We are interested in the value of providing a platform and essentially, an information exchange that allows data to be shared in a controlled way. We believe there will be new value created by bringing together disparate data sets which, at the moment, are locked into specific application silos,” observes Gardner.
Moving towards interoperable services
Interoperability will be key to success for telcos in Smart City projects.
“The biggest opportunity is not so much in providing services but really providing a digital platform whereby you can enable vendors, utilities, financial and banking institutions to provide M2M/IoT services on your platform,” says Yaici.
“For example, an enterprise can sign up to a smart lighting IoT service through the operator’s infrastructure. This way, as a telco, you are providing not just networking, but also becoming a digital provider in the market,” he explains.
Telefonica’s Del Rivero believes that carriers are uniquely positioned to drive the development of smart cities, with their ability to apply intelligence on information amassed from the myriad of sensors and devices. “Connecting information is one thing but applying it will achieve goals for governments and citizens. In this sense, open management, development standards and business intelligence play a key role in Telefonica’s approach to smart cities,” she adds.
To succeed in the smart city market, operators must focus on their key strengths. “It is important that operators choose a specific target area among the many areas of the smart city space and position themselves as the strong service or solution provider in the area,” notes Kim.
Telco investment in IoT will also be a critical driver for their leadership in the field. “Operators will need to secure leadership in the area of IoT by building an ecosystem that fosters the development and application of diverse new services based on dedicated IoT networks such as low-powered wide area (LPWA) and long range (LoRa) networks.”
As is always the case, the future belongs to the early investors and innovators. PCCW Global’s Price warns that operators could find themselves reduced to a wholesale provider position should they fail to innovate in the market.
“I think telcos are biting the bullet on this. The ones that are more innovative will find opportunities in IoT. From my perspective, there is a very strong interest,” he says.
He issues a piece of cautionary advice for telcos who want to optimise the smart city opportunity: “Stay relevant to your customers. Introduce more applications and allow them to interact with you as a business. Unless you are part of the solution, you are going to end up marginalised.”
