The challenges to becoming a smart city

Published in MEED, 24 August 2015

In the Spanish city of Barcelona, the traffic lights turn green as the red lights of fire engines approach. In Amsterdam, the authorities are testing a system that lets people transfer energy generated from solar panels on their homes to their electric cars’ batteries. On the other side of the world, in the new Songdo business district near Seoul in South Korea, a centralised pneumatic waste collection system is being installed to eliminate the need for garbage trucks.

Such is the world of the ‘smart city’, where previously standalone devices talk ever more frequently to other machines. The definition of a smart city can be hard to pin down. As well as the examples above, it could contain car park monitors to alert drivers of free spaces or sensors to detect leaks in a water network. But a common thread is the collection and sharing of data.

This era of the ‘internet of things’ and machine-to-machine communication should, claim its advocates, make our lives easier, make us less wasteful and make cities more sustainable. But making that a reality is not straightforward. It requires heavy investment in information technology (IT) networks, monitors, ‘smart meters’ and the like. It also requires government bodies to collaborate and be more open to the public, in ways they may find uncomfortable.

The amount of money being spent is already starting to add up. US consultancy Deloitte predicts that 1 billion wireless internet-of-things devices will be sold around the world this year, worth a total of some $10bn. The value of the associated services that go with these devices could be $70bn. The Middle East will account for about 25 million of those devices, worth a total of $250m, along with $1.7bn in services.

Most of the regional activity is in the Gulf, which has the money and the inclination to adopt the technology. “A necessary requirement for smart cities is the availability of a highly developed infrastructure,” says Mohammad al-Shawwa, research manager for Arab Advisors Group, a Jordanian research firm. “In our region, the GCC countries remain ahead of the pack when it comes to both the level of deployment and the adoption of high-tech infrastructure, so they are in a better position.”

One of the earliest projects was Masdar City in Abu Dhabi, which was launched in March 2006 with the aim of creating a zero-carbon city. Construction began in 2008, using 90 per cent recycled aluminium, low-carbon cement and other sustainable materials. Masdar is really a suburb of Abu Dhabi rather than a city in its own right, but such greenfield sites represent a relatively easy way to test new technologies and create more sustainable developments. Authorities elsewhere have taken a similar view.

Saudi Arabia, for example, has launched several developments in and around the capital, such as the King Abdullah Financial Centre and the Information Technology & Communications Complex, where technology infrastructure can be up to date. At the same time, the government has also been pushing forward with entire new cities such as the King Abdullah Economic City on the west coast, where public transport, cycling and walking will be prioritised over cars.

But if a country is to make the most of the opportunities, it also has to modernise its existing infrastructure. That is what is happening at the kingdom’s Yanbu Smart City Project, under a 20-year deal between the Royal Commission for Jubail & Yanbu and local telecoms firm Mobily, signed in September 2013. The first phase covers the development of the telecoms infrastructure. Subsequent phases will include smart electricity grids and solar panels.

In Qatar, the authorities are also pushing ahead with new developments such as Lusail to the north of Doha and the remodelling of existing areas. The local Msheireb Properties is redeveloping the old centre of Doha in what it labels the world’s first sustainable downtown regeneration project. Under the Msheireb Downtown Doha scheme, heavy goods vehicles will be pushed underground to make the area pedestrian-friendly, and buildings are designed to use less energy and water.

On a nationwide basis, the Qatari authorities are rolling out a new high-speed broadband network, under a five-year programme that began in March 2011. It is being implemented by the local Ooredoo, using technology from China’s Huawei.

However, among all the Gulf cities, it is probably Dubai that is best placed to develop as a smart city, according to analysts.

“Dubai presents the most likely candidate for developing a smart city, given the government’s current focus on digitising services and fostering entrepreneurship and innovation, as well as its relatively developed IT infrastructure,” says Michael Romkey, director of Deloitte Middle East.

Smart Dubai

The push is coming from the top. In 2013, Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai, launched the Smart Dubai initiative, based around areas such as transport, communications and urban planning. It aims to deliver higher-speed internet access and put more government services online, ranging from traffic information to emergency services.

Several developments in Dubai already encompass some of the principles of a smart city, including Dubai Design District and Silicon Park at Dubai Silicon Oasis.

The latter is due to be completed by the end of 2017. It will include electric cars and bikes, street-side charging docks for phones and smart lighting systems that respond to traffic and pedestrians.

Expo 2020 offers another opportunity. “I believe the best opportunity within the Middle East to achieve a smart city is in Dubai, and Expo 2020 is the great opportunity for Dubai,” says Sameer Daoud, managing director for the UAE at Arcadis, a Dutch design consultancy. “A lot of things are linked to the Expo, including the extension of metro lines, the expansion of the airport, utilities, and commercial and residential buildings.”

More projects are bound to emerge in the future. Deloitte reckons the number of new smart city developments in the GCC will double within the next two to three years.

The cost of all this is hard to quantify, but the IT requirements are substantial. Alex Chau, the Hong Kong-based research director for UK-based Machina Research, says cities need to lay down a fibre-optic backbone and link that with wi-fi and low power wide area (LPWA) networks, the latter for use with smart metering systems.

The networks will also need enough capacity to deal with the ever-growing amount of data. The Middle East and Africa region generated more than 30 exabytes (30 billion gigabytes) of cloud data traffic in 2013, according to Deloitte, and it could reach more than 260 exabytes by 2018.

Ultimately, the price will come down to how ambitious a city chooses to be. “The cost of developing a smart city depends entirely on the depth and breadth of the projects,” says Romkey. “Songdo is estimated to have cost $40bn. On the other hand, Citizens Connect, an iPhone application used in Boston that allows citizens to place complaints about problems around the city, had an initial development cost of only $25,000.”

As the demand for services proliferates, so have deals between telecoms companies and technology firms. In December 2013, for example, Vodafone Qatar and Australia’s NetComm Wireless signed a strategic partnership to work on smart city applications such as intelligent transport and smart medical devices.

In March this year, Ooredoo announced it was working with Sweden’s Ericsson to launch a cloud-based machine-to-machine platform in Indonesia, with Qatar, Algeria and other markets to follow in the future. Meanwhile, Saudi Telecom Company is working with the likes of the US’ Cisco and SK Telecom of South Korea to develop cloud, mobility and security services. Etisalat is working with Ericsson and Huawei among others, and Du is working with Hong Kong-based PCCW Global.

It is not simply a matter of telecoms firms and equipment manufacturers teaming up. Utility firms are also exploring the potential of smart metering systems to reduce energy and water use. Among the most active is Dubai Water & Electricity Authority (Dewa).

There are plenty of other possible applications that have yet to be fully exploited, from insurance companies using sensors to monitor driving standards and reward better drivers, to logistics firms using enhanced vehicle tracking systems, and remote patient monitoring by health services.

Privacy issues

If it is done well, all this could lead to more economic growth, with new business sectors emerging and existing sectors being more efficient. But hardware and software can be installed without a city really becoming smart. To make the most of the potential, different systems and service providers will need to interact. Convincing bureaucrats used to working in discreet silos that they must collaborate will not be easy. The process will also throw up security and privacy issues.

“The biggest challenge is having to connect multiple systems into one system,” says Daoud. “It creates risks for the government because there are security aspects. If someone can hack into the system, they can control the infrastructure of the city. For individuals, the most worrying aspect is privacy.”

Some other cultural differences will have to be overcome. Governments will need to be more open with their data, which may not come easily to authoritarian rulers in the region. Also, consumers need to be convinced to use the technology. In some instances, that may be harder in the Gulf than in other parts of the world. Utility bills are heavily subsidised in the region so there is not the same incentive for consumers to use smart meters to keep bills down.

“One of the challenges faced by smart cities is changing the mindset of the people,” says Al-Shawwa. “The normal citizen will not adopt new services unless they are more efficient and easier to use than their alternative.”

And when it comes to technology, there is of course always the risk of obsolescence. Whatever systems are put in place today will probably have to be replaced in 10 or 15 years. If a city opts for technology that is superseded more quickly, or if a developer goes out of business, that time frame could be far shorter.

“If a city chooses wrongly and the technology provider goes bust then in a few years they’ll need to purchase a new solution. That’s why there is a lot of caution right now,” says Chau.

It is one thing to become smart. Staying smart will require just as much effort.