As cities become the preeminent arena for economic growth and global problem-solving, we expect to see city-states lead to the development of digital infrastructure to support the Fourth Industrial Revolution.
By Vangelis Andrikopoulos and Lawrence Lundy-Bryan
This new infrastructure requires a host of technologies from the hardware to secure the data to the tools to distribute the data like distributed ledgers. It will also need new routing and authentication technologies, interfacing technologies to make it easier to build applications, and new services, marketplaces and applications for users to benefit from what we hope to be a more equitable digital infrastructure.
The free flow of data is imperative for collaboration, innovation, and fairer economic relationships. It comes in the form of strong cryptography, distributed ledgers, and crypto-tokens that provide the backbone for a secure, auditable and peer-to-peer digital infrastructure. Download the paper here to understand more.
Data at the heart of city renewal
The amount of data created annually will reach 180 zettabytes by 2025, up from 4.4 zettabytes in 2013. A zettabyte is approximately equal to a billion terabytes; this amount of data isn’t merely ‘big’, it is colossal. The average person will interact with connected devices every 18 seconds (nearly 4,800 times a day) in six years’ time. IoT devices surpassed the number of humans in 2017 and are expected to reach 20.4 billion by 2020. Data is the single most important resource for the economy of the future and to create a level playing field, we have to break current data silos that lead to an asymmetric advantage and stifle innovation.
Massive deployment of the IoT including chips, sensors and actuators in combination with the digitisation of services, results in the creation and collection of massive amounts of data. By processing and analysing data, we can transform data-driven value to data-driven business models and services. Numerous city governing bodies are opening up their data and are inviting corporations, citizens and entrepreneurs to utilise it, come up with innovative solutions and create digital wealth.
Aligning incentives, resolving conflict over data ownership and utilising security to unleash growth
A lack of solid business models and misaligned incentives have been slowing the development of smart city initiatives for a long time. Governments by their very nature do not have profit as a top priority but businesses, especially large businesses required for large scale city infrastructure programs, need to have clear return-on-investment numbers and a solid business model.
This is particularly challenging in the smart city space, as the buyers of city or public services typically indirectly purchase through local or national taxes. Buyers need to be constantly alert to the distortions created by focussing too keenly on reducing short-term costs rather than increasing service levels or long-term sustainability. Further challenges are presented by the lack of funding and expertise in many city governments to implement complex long-term smart city projects. This is exacerbated by the fact the technology is new and the skills in which to take advantage of the technology take longer to reach the public sector.
Confusing data ownership and data silos
The big challenge across an ever-increasing range of industries and value chains is ownership of data. Not just from a personal privacy perspective, but also between organisations. At the moment, private companies are controlling data in vast quantities, but as it slowly dawns on cities that this data is the lifeblood of public services, they are pressing for change. Transport for London has suggested it is considering forcing private hire operators like Uber to share data as part of new licensing regulations, while Airbnb is taking the City of New York to court so it doesn’t have to share hosts’ names and addresses.
It is not yet clear who owns the ever-increasing amount of data that is being created by and for the city. For example, in a drone delivery scenario: is it the user of a drone delivery service? The creator of the drone delivery service? The owner of the drone themselves? The owner of the spectrum? Or the city council? The same questions need to be answered for all public services and spaces, and increasingly private spaces like homes. Arriving at answers to questions like these will release full smart city development potential.
Data is the key ingredient that drives data-driven business models and decisions, unlocking new economic value
We are shifting from the current closed value chain towards an open value ecosystem. For example, energy production is undertaken by industrial and corporate energy vendors in a centralised manner, distributed to gas stations and then consumed in a rigid one-way transactional fashion. In the coming open value ecosystem, energy can be produced with solar panels, distributed on a transitive blockchain-based smart grid and consumed by the consumers (prosumers). Digitisation turns our passive tools active. As infrastructure and energy trend towards commoditisation, new economic value emerges from the production, collection, and analysis of data. This trend is reflected in all the other segments of smart cities.
Participants such as citizens, prosumers, software companies and local entrepreneurs who previously captured little to no value are now capturing more of that value. The success of this value-driven ecosystem depends on the premise that the right mechanisms are put in place to incentivise participants to share data and break current data silos.
Data is the core resource at the heart of smart cities. We only need to look at the big data factories such as Google, Facebook and Amazon to understand how much data is worth. It has granted these companies unprecedented network effects – the more data they control, the better their services are; the stronger the asymmetric advantage, the harder it is for new businesses to compete and deliver innovation. The free flow of data is necessary for open innovation, collaborative and fairer economic relationships. Distributed ledgers powered by strong cryptography and crypto-tokens can provide the foundations for a secure, transparent and peer-to-peer digital infrastructure of smart cities.
Download the paper here to understand more.