A robust communication infrastructure will form the backbone of the 100 smart cities that the government is planning to build under its Smart Cities Mission. As such, the programme promises to throw open a window of opportunity for the telecom industry. Sector experts discuss the smart city concept and the role of telecom in its implementation…
What are the key communication requirements of a smart city? Are service providers in India equipped to address these?
The service providers in India, whether domestic or multinational, are well-equipped to address the communication-related aspects of a smart city. The communications network is the backbone of a smart city and is fundamental to its development. A smart city essentially takes an integrated view of all the technology-related interventions in every possible aspect of a city. A smart city is also very data-intensive. Data is generated from almost every aspect of a city’s operation, and the ability to collect and analyse it to generate insights will enable a city administration to explore newer and better ways of serving the city. Thus, having a communication backbone is imperative to operationalise a smart city.
The most fundamental requirement of a smart city is providing Wi-Fi connectivity at all prominent spots in the city. If you look at the plans submitted by various cities, you will see that they have one common feature – providing intelligent government services. Municipal services like trade licences, birth certificates, death certificates, and tax assessment and payments will be provided as per the convenience of citizens, without them having to visit the municipality offices. This would require people to be able to access the internet or go to a public kiosk or use a smartphone. Thus, the municipalities need to make these services accessible online to citizens, which, in turn, will require free Wi-Fi to be provided. This is the single largest communication infrastructure required for smart cities.
While this is not a challenge technologically, it does pose challenges from a financing perspective. Assuming that telecom companies were to do this, it still needs to be seen how they would be able to recover their costs and make a reasonable return. Not all categories of citizens would be prepared to bear the normal data charges that telecom companies levy because they are fairly expensive. Other revenue models, such as cross-subsidisation, need to be evaluated.
The provision of ubiquitous broadband infrastructure via wired and wireless networks creates a platform for fixed and mobile telecom, internet connectivity and integrated systems in all spheres of a city’s activity. This is often seen as an infrastructure prerequisite for a digitally enabled city.
Urban infrastructure is made up of elements (basic units) capable of operating independently. For instance, roads with an integrated transport infrastructure, water, sewage treatment plants, network of distribution lines, storage, etc. Each of these components represents a function and would need to be monitored. Technologies such as sensor web, internet of things (IoT), power on ethernet (PoE), digital meters with radio frequency identification tags, and supervisory control and data acquisition sensors play a vital role in communications.
The major service providers are equipped with technologies that are required for smart cities. The challenge, however, is to leverage these technologies for municipal services, derive revenues and provide a better quality of life for citizens at an affordable price.
What opportunities do smart cities present for the telecom industry?
Each of the cities has earmarked a certain percentage of their budget for spending on information and communication technology (ICT) requirement in their respective smart city plans. While this percentage varies from city to city, on an overall basis it hovers around 15 per cent. The smart cities initiative in India is targeting to create 100 smart cities over a period of time. Each city will be provided Rs 1 billion per year for five years by the centre. This will be matched by the urban local bodies and the state government in equal measure. This translates into an investment of Rs 10 billion per city over a period of five years. Taking all the 100 cities into account will yield a figure of Rs 1 trillion. Apart from the government commitment, there are other sources of revenue mobilisation which the cities have proposed in their Smart Cities Proposal. Assuming an average budget size of around Rs 30 billion per city (based on their submitted proposals), this initiative will entail an investment of over Rs 3 trillion over a period of time, out of which, approximately Rs 450 billion-Rs 500 billion is estimated to be spent on various elements of ICT including building a strong data transport layer.
Given the fact that smart city projects are complex and require expertise in many different fields, a suitable model of engagement with the municipalities and the SPV to monetise the potential opportunities would be through a network of specialist partners.
“Data generated from almost every aspect of a city’s operation, and the ability to collect and analyse it to generate insights will enable a city administration to explore newer and better ways of serving the city.” Manojit Bose
A good way of estimating the opportunities for the telecom industry is to look at the potential subscriber base. Today, most telecom companies have a fair bit of penetration as far as mobile connectivity is concerned. However, the data penetration levels are still low. With smart cities delivering services online, the demand for data connectivity will grow manyfold. This will be a source of immense opportunities for the telecom sector.
“With smart cities delivering services online, the demand for data connectivity will grow manyfold. This will be a source of immense opportunities for the telecom sector.” Arindam Guha
We are standing on the brink of the third digital communication age. The first was the telecom age, which enabled global voice communication anywhere, anytime. The second is the age of the internet where information has become readily available. The proliferation of both telecommunications and the internet occurred due to the combination of technology availability and affordability, which lowered the entry barrier. The third digital communication age will bridge the last physical gap between things (inanimate objects, physical assets) and the existing global communication infrastructure.
A few opportunities cited are as follows:
- Telecom will be able to perform one or multiple vertical functions which is context-driven and location-based
- City assets will be able to communicate through multiple devices within the same function. The interesting part is that the devices will be cloud-based and simple to deploy.
- Management of applications on devices becomes easier by sharing a large amount of information and data.
- It will ensure security and privacy guarantee, based on the user preference
“With this momentum, about 843 million people are expected to live in urban areas by 2050. There will be a paradigm shift from traditional cities to new cities in the next two decades.” Sameer Jain
What business models are being explored in India for developing smart cities? Which of these is best suited for the country?
There are various ways in which the cities are going about mobilising funds for their smart city projects. An important thing in this regard (as suggested by the MoUD) is to look for convergence with other missions. It is quite possible that some of the projects proposed under the smart city programme overlap with some of the existing missions which are either being funded by the state or the central government. Wherever there is such a convergence, it becomes a source of funding for the smart city initiative.
The government has also suggested the public private partnership (PPP) model. However, the response to PPP experience in India has been mixed and a number of issues will need to be sorted in order to attract the private sector. Another avenue that some municipal corporations are exploring is raising money through bonds.
Thus a number of business models are being experimented with. However, there is no one model that can be replicated across all cities. India’s smart city journey will be an experiment because there are no readymade solutions or industry best practices that are available that can be simply applied. The most critical factor here will be getting the right institutional structure in place to drive the implementation of the programme. One key lesson that India can derive from the cities in the West is having enough responsibility and accountability at the city level, supported by suitable empowerment. The special purpose vehicle (SPV) being constituted to drive the Smart City implementation seems to be a step in the right direction. However, over and above the appointment of CEO, CFO and other experts, Indian cities should consider having a chief information officer in the SPV as well, with a charter which is both strategic as well as tactical from a technology perspective.
The main challenge in India today is that very few municipalities or corporations are financially sustainable. About 60-70 per cent of the total revenue of any corporation comes from property tax. Total revenues are in most cases inadequate to cover the expenses, so the balance is met through support from the state and the central government. The fundamental issue with smart cities currently is that the business models and operating models being proposed may not be financially viable.
Some cities have come up with the build-operate-transfer model for various kinds of infrastructure, including telecom infrastructure. But we are yet to see a sustainable public private partnership, which is based on that model in a city’s context. Some cities have come up with various technology pilots. In Bengaluru, for example, we have a smart water project which has been implemented by IBM. Indore has implemented an online real-time traffic surveillance system, which monitors traffic offenders, generates challans and sends them to the offenders for payment. In Jaipur, a project called smart mile has been implemented, where they have put up sensors on lights or lamp posts to monitor various parameters like flow of traffic and pollution levels in the air. While various kinds of technology pilots are being tried out, the basic concern is that the financial sustainability is yet to be demonstrated.
The other monetisation avenue that some smart cities are trying is ‘value capture financing’, where essentially they are trying to leverage the appreciation in land prices which occurs when development takes place. There are limited avenues for mobilising funds and that is where the city administrations need to get their act together.
Smart cities are a combination of ICT and non-ICT projects. There are various models being worked out for different functions of smart cities. For instance, an infrastructure project such as metro rail, heritage and conservation can consider the PPP model, whereas a command and control centre with data centre operation can explore the pay per use model as on day one it is difficult to assess the future storage requirements.
What are the key issues and challenges with respect to the development of smart cities in the country?
Challenges can arise from the financing point of view. For instance, a city might require funds in excess of what the government has committed. How will it be able to fill the gap in financing in such a scenario? A clear roadmap, therefore, should be laid out for raising funds to fill this gap between what has been proposed and what is committed by the government.
The second challenge is the city’s ability to come up with bankable projects. Unless the project is bankable, it will be difficult to attract investors to invest in those projects. Another issue that I want to highlight is the empowerment of people responsible for executing the project. It is essential that all people in key positions are suitably empowered. Moreover, it is important that each and every stakeholder is completely on board and he continues to remain associated with the project till it reaches a critical shape. In addition, there is an urgent need to build capacity in the urban local bodies so that they are well-versed with the technology required to run a smart city.
Over the next five to eight years, of the 100 cities, some progressive cities will emerge as lighthouses showing a beacon to other cities that will try to emulate them in terms of industry best practices and business models. There may be successes and failures on this journey but the country must carry on with perseverance. Smart city development is not like a sprint, but is more like a marathon and needs serious commitment from all stakeholders.
Apart from the financial challenge, the other major challenge is in terms of operations and maintenance of the technology infrastructure. One can implement state-of-the-art IT solutions but then, the government has to attract the right kind of resources for managing that infrastructure once the contract expires. That is a major bottleneck. One model that some administrations are exploring is signing long-term operations and maintenance contracts. However, this will be hindered by the corporations’ ability to pay the private contractors without levying additional charges on the citizens.
The concept of liveability, which is associated with smart cities, is a relatively new subject of study in India. Cities in the western world compete to provide the highest standard of living to its people. But in developing India, the degree of living standards offered may not be of the same grade and may stand in sharp contrast. According to the Institute of Competitiveness Report 2014, there are 10 liveable cities including Mumbai, Chennai, Hyderabad, Bengaluru, Delhi, Kolkata, Noida, Gurgaon, Chandigarh and Madurai.
A few of the challenges are mentioned below:
- We urgently need benchmarking of city services. Without city-to-city benchmarks, it will be challenging to measure the outcome of infrastructure and the ICT initiatives.
- “You cannot manage what you cannot measure” is a well-known adage for business, and the phrase is increasingly relevant for cities. In the past decade, many cities have started measuring their natural resource inventories with the intention of building low-wastage, recycling strategies, low-carbon strategies, tracking resource depletion and greenhouse gas emissions reduction. Some cities also believe that tracking resource depletion and emissions can eventually conserve financial and other resources.
- Currently, there are no defined city codes available in India. We are evaluating the different city codes and standards that are being implemented worldwide.
- At present, there are more than 4,000 statutory towns in India and each year, the number is increasing. With the potential to apply modern technologies to infrastructure, and promoting better use of scarce resources, the cities are estimated to generate 80 per cent of the economic growth. As per estimates, about 25–30 people will migrate every minute to major Indian cities from rural areas in search of a better livelihood and improved lifestyles. With this momentum, about 843 million people are expected to live in urban areas by 2050. There will be a paradigm shift from the traditional cities to the new cities in the next two decades
As the new business and technology models evolve under the Smart Cities Mission, it will be important to build the urban local bodies’ (ULBs’) capacity to effectively manage these advancements and citizen-centric delivery, without which these investments will fail to provide any financial or social return in the medium to long term. Hence, new forms of capacity building interventions need to be planned for ULBs.
What are some of the global smart city success stories? What lessons can India draw from them?
A key example of a successful smart city model is the European Platform for Intelligent Cities. The project was undertaken by the European Commission, which invited many large IT solution companies to work with them for setting up a virtual or a cloud-based infrastructure that could support smart cities. It was a set of applications that could be used by all cities. The best part of the model is that every city does not need to develop applications separately. It was developed centrally and the city could subscribe to different applications. Moreover, various application developers hosted their applications on the platforms and a whole host of private companies willing to advertise on the platform were brought on board. This, in effect, created a shared infrastructure where the private sector also partly funded the infrastructure along with the public sector. The citizens avail those services on a pay-per-use basis, leading to a collaborative mechanism. Such a model can be adopted in India to address the financial challenge.
The other advantage that this model provides is the ease of maintenance of infrastructure. Since the platform is centrally developed, the city administration need not bother about its maintenance because it is happening centrally on the cloud infrastructure.
A similar model can be adopted in India with the MoUD collaborating with the IT ministry to come up with such a platform. It can help in cutting down not only the implementation time, but also the costs. Alternatively, some proactive states can develop such a platform and provide a subscription option to their cities.
Indian cities are a palette of different cultures, religions and traditions, nurturing various forms of art and architectural styles. In order to make our cities vibrant, competitive and signature-centric, and to address some of the stated challenges, a planned approach is necessary for tapping their unlimited potential in infrastructure development, tourism and heritage sectors, keeping in mind environmental sustenance. Superb engineering skills are required for urban planning. This will also enable smooth dovetailing of the modern concept of local economic development with locally available knowledge, resources and skills.
- In Copenhagen for instance, people use bikes because it is fast and easy (61 per cent), healthy (19 per cent), cheaper (6 per cent), and it saves the environment (only 1 per cent). These “cities of dreams” were once in the same situation as developing cities. In the 60s and 70s, cars and highways started to invade them. But there was a group of citizens that started a revolution to give back to people their bike space.
- Those who undergo medical care may have their vital signs monitored remotely – applications have been developed for smart clothing solutions for this specific purpose. The replenishment and transport of critical resources can be quickly and seamlessly handled even if supplies or laboratories are in remote sites.
- ULBs’ initiatives in adopting to “digitalise” its own disparate payment mechanisms into an integrated whole (property tax, water, electricity payments, transit payments, parking meters, etc.) will provide security, finality, interoperability, speediness and convenience
- Situational awareness to inform planning and execution – the base map can include zoning and city destinations, environment protection areas, aerial photos, and topographic and soil conditions. Overlays of relevant data such as population growth, commercial activity and traffic flow combine to paint a meaningful picture of a site’s opportunities and constraints.