Why might a smart city’s spirit be key to monetization?

There’s a lot of talk about investment in smart cities, with purposes that range from saving energy to generating happiness – but the returns aren’t always so clear.

By 2020, the smart cities industry is predicted to be worth $400bn globally. Many countries are talking about making investments in smart cities, some with quite ambitious visions. India, for example, has pledged a huge investment in 100 smart city projects by the end of 2020. China is exploring how to make skyscrapers better connected with workspaces and the workers inside them. And Dubai has recently outlined its ambition to be the smartest and happiest city in the world.

In the US, there is a big problem with infrastructure investment – around $3tn is needed (the equivalent of the entire federal budget) to repair roads, bridges and city infrastructure. For those tasked with delivering it, there are questions around whether they can make the infrastructure smarter; what’s less clear is how governments will get a return on all their investment.

On the face of it, the fundamental connectivity of smart cities alone just won’t pay: yes, you can now get fast WiFi on your smartphone with New York Link, but no one will want to pay for it in the future.

I believe we need to stop thinking short-term about how to monetize smart city investments, and focus on how IoT within smart cities can generate additional value that people will want to pay for.

Smart measurement

In the steps towards generating value, first come KPIs. For example, some cities are already very advanced at measuring how clean they are, flagged by KPIs such as pollution levels or the efficiency of waste collection processes. In other very busy cities, critical KPIs might relate to the punctuality of trains or the free flow of traffic.

As IoT infrastructure becomes more advanced, smart cities can more and more track “digital echoes” – the traces of devices that have temporarily connected to, but are not a part of, a smart city’s IoT framework – and learn from the interactions that initiated them. As this data grows, driven by more granular (and increasingly bespoke and private) IoT-based tracking, so governments and businesses can work together to generate value – driven and enhanced by the particular spirit of the city.

Echoes in the spirt of the city

To illustrate what I mean by this, let’s imagine Las Vegas as a city that embodies the spirit of games. In this scenario, each casino could build its  own IoT infrastructure (cameras, sensors) to digitally track customers’ movements, simultaneously with city-wide public IoT infrastructure. Using these casino-based digital echoes to feed into one central application with information about events and attractions that are going on across the city, an AI implementation could prepare a profile for individual visitors, sent direct to their smartphones, recommending things that they would be interested in – even in real-time. The incentive for individual businesses to share their digital echo data would, of course, be to participate in the listings and offers, promoted in a highly targeted way. And naturally,this opens the door to additional revenue for all the organizations involved.

The potential for this concept could be unlocked globally, based on a city’s awareness of its own spirit and values, and the investment it is prepared to make in building the IoT infrastructure. Telcos are keenly looking for new revenues right now, so cities should have little trouble finding willing partners to build the infrastructure.

After that, the future is wide open for cities to jump into the sharing economy and initiate a fourth industrial revolution of their very own – to better serve citizens and have more influence over the quality and price of the services and partners they engage.