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Building Smart Cities: Integrated solutions key to creating a connected ecosystem

July 22, 2015
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About 26 smart cities and more than 90 sustainable cities are expected to be developed across the world by 2025, according to a Frost & Sullivan study titled “Strategic Opportunity Analysis of the Global Smart City Market”. Around 50 per cent of these smart cities will be located in North America and Europe. The study underlines that the need for complex and integrated citywide solutions is expected to drive and foster convergence in the smart city space. Convergence between pure-play product vendors, networking companies and system integrators will bring innovative smart solutions into the market.

Further, the research firm states that as cities evolve into clusters of smart communities, developers will focus on using telecom, and information and communications technology (ICT) in areas such as smart energy, industrial automation and building technology. Going forward, the smart en-ergy segment will witness the highest growth rate. With a compound annual growth rate of 25.2 per cent, the market is anticipated to be valued at $248.36 billion by 2020, constituting 15.8 per cent of the global smart city market. Smart mobility solutions are likely to be in high demand over the next 15 years. Latin America, the Middle East and Africa, and Central and Eastern Europe will drive the demand for mobility solutions over the next few years. Meanwhile, both developed and developing countries, including India, will focus on the provision of e-services to citizens. Solutions like e-payments, e-exchange and e-sharing will empower citizens with real-time access to personal data and related services. Globally, more than 60 per cent of citizens of smart cities are expected to have full access to e-services over the next 10 years.

With the government approving the 100 Smart Cities project in May 2015, India, like other countries, is on its way to embracing the all-encompassing concept of smart campuses, buildings and townships. The smart city vision is aimed at taking the pressure off Indian metros, which are becoming crowded and are therefore increasingly facing a resource crunch. Further, the focus on building smart buildings, campuses and cities comes from the government’s commitment to leverage the rapid developments being witnessed in the wireless technol-ogies and information technology (IT) spaces, in order to provide world-class living conditions to citizens, along with access to a host of utilities and e-citizen services at the click of a mouse, in a connected environment. The government’s focus on building smart cities also stems from the fact that worldwide, cities have been identified as the growth engines of economies, as urban areas are known to contribute a higher share of the GDP of a country. In India, the urban population currently constitutes 31 per cent of the total population and contributes over 60 per cent of the country’s GDP. It is projected that in the next 15 years, cities will contribute 75 per cent of the country’s GDP. Therefore, the government is focused on promoting the concept of smart cities, which are built using cutting-edge telecom and IT solutions to ensure that existing as well as upcoming urban areas are equipped to support large-scale urbanisation and efficient use of resources, and offer an enhanced life experience.

As part of the 100 Smart Cities project, the government has committed funds of Rs 480 billion. Under this project, each city that is to be developed as a smart city will receive central assistance of Rs 1 billion per year for five years.  The mission aims to ensure more efficient utilisation of available assets, resources and infrastructure to enhance the quality of urban life by providing a clean and sustainable environment. Further, the emphasis is on greater participation of citizens in prioritising and planning urban interventions. The government also plans to transform existing cities into smart cities through an area-based approach, which includes retrofitting and redevelopment. By undertaking retrofitting, deficiencies in an identified area will be addressed through necessary interventions, like in the case of the local area plan for downtown Ahmedabad. Further, redevelopment will enable reconstruction of an area that is already built but not suitable for any intervention. Such areas include Bhendi Bazaar in Mumbai and West Kidwai Nagar in New Delhi. Pan-city components of a smart city could be in the form of interventions like intelligent transport solutions, which benefits residents by reducing commute time. While developing 100 smart cities, the government’s focus will be on core infrastructure services like adequate and clean water supply, sanitation and solid waste management, efficient urban mobility and public transportation, affordable housing for the poor, power supply, robust IT connectivity, governance (particularly e-governance), and citizen participation.

According to Frost & Sullivan estimates, the overall global smart city market will be valued at $1.565 trillion by 2020. Further, of the total investments in smart city projects, 24.6 per cent are likely to be in the smart governance and smart education segments. India is at the forefront of leveraging ICT to deliver educational services to a large audience across the country.

Technology uptake

The government’s smart city vision is being supported by infrastructure and real estate developers who have taken the lead in leveraging telecom and IT solutions to build smart cities and townships. The already developed smart city Lavasa and the upcoming Gujarat International Fi-

nance Tec-City (GIFT) are two noteworthy smart cities that are going to serve as models for planning smart cities in other parts of the country. For example, GIFT, which is being developed as a world-class city, has incorporated a robust telecommunications and IT system to offer residents access to cutting-edge technologies. The city is being developed by Gujarat International Finance Tec-City Company Limited (GIFTCL), which has already laid around 40 km of high density polyethylene ducts to pave the way for more than 10 operators to provide optic fibre-based connectivity within GIFT. The fibre optic network, which is based on ring architecture, is capable of supporting fast and easy deployment of technologies such as a gigabit passive optical network, offering connectivity speeds in the range of 40G to 100G. Developers have also taken measures to adopt the Internet of Things and machine-to-machine communication. The first phase of the City Command and Control Centre (C-4) has also been commissioned. All utilities involved in power distribution, water management, waste collection, smart traffic management, etc. are monitored and managed from the C-4. The city will have two C-4s, which can also be used for citywide security and video surveillance. The access control system is installed at all critical locations to monitor entry and exit to and from the building and floors. Further, the building-level infrastructure will be monitored from a building management system control room. These control rooms, housed in each building, are connected to the C-4 and critical safety and surveillance equipment is also available at the C-4. Aside from developing smart cities, India is also leveraging ICT to deliver educational services. Leading educational campuses and institutions of higher studies have established wireless networks and are widely using VSAT networks to deliver lectures to students in remote areas.

Challenges and future outlook

In a joint study titled “100 Smart Cities in India Facilitating Implementation”, Del-oitte and the Indian Chambers of Commerce have identified the key challenges involved in the development of smart cities, as well as their solutions. The key challenges pertain to the following areas:


Developing a new or greenfield smart city with a target population of 0.5 million to 1 million is likely to require financial investments ranging from Rs 75 billion to Rs 1,500 billion, and 8-10 years for implementation. This challenge can be addressed by ensuring that a large part of the initial investments for new cities is recovered through sale of land or commercial and residential real estate. Suitable land pooling options and other related mechanisms (like higher floor area ratio/floor space index) also need to be considered for this purpose.

Another key financial challenge in developing smart cities is that most urban local bodies (ULBs) are not financially self-sustainable and tariff levels fixed by the ULBs for providing services often do not reflect the cost of supplying the same. Even if additional investments are recovered in a phased manner, inadequate cost recovery will lead to continued financial losses. Going forward, financing options like build-operate-transfer may be considered to stagger the initial requirement. In addition, tariff structures need to be redesigned to enable cost recovery through some level of cross-subsidisation. Further, the initial investment costs for ICT-related applications, which are generally significantly lower than for associated network-level infrastructure (pipeline extensions, for example), can be reduced and recovered in a phased manner by adopting a cloud-based scalable model, with cost recovery being transaction based.


Most ULBs have limited technical capacity to ensure timely and cost-effective implementation and subsequent operations and maintenance (O&M) due to limited recruitment over a number of years, along with the inability of ULBs to attract the best talent at market-competitive compensation rates.

To address challenges on the technology front, ULBs could look at leveraging private partnerships and outsourcing arrangements both for implementation as well as O&M with output-based contracts. Developers and implementing agencies could opt for a cloud-based model or architecture for the implementation of ICT, under which private vendors will be responsible for the O&M of the core telecom and IT infrastructure of a smart city.

Institutional capacity

For the successful implementation of smart city solutions, it is essential to have effective horizontal and vertical coordination between the various institutions engaged in the provision of various municipal amenities. It is also important to have effective coordination between central, state and local government agencies on issues related to financing, sharing of best practices and sharing of service delivery processes. A tripartite framework could be developed, through which local governments are given access to defined financial and technical support, in lieu of undertaking specific governance reforms and setting up requisite institutional mechanisms like a central control room with representation from all agencies, and a common database for sharing data, etc.

Going forward, the pace of smart city development will depend on how quickly companies converge and tap each other’s industry value chains. Frost & Sullivan emphasises that identifying the best partners and having the first-mover advantage in offering integrated solutions to city governments will become vital, as the cities will be focusing on centralised operation centres.

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