The last few years have seen a flurry of activity around the “Smart City” concept, despite the lack of a standard global definition of what the term means. Over the past several months I’ve started to see some subtle shifts in approach.  Some organizations have begun replacing the term “Smart City” with “Smart Community”.  Singapore has taken a step further by introducing the concept of “Smart Country”. 

I’ve also noticed a slight expansion of “smart” initiatives beyond just one or two key government functions such as Transportation or Energy.  A number of projects combine elements within the same functions like roadside video cameras sending road and weather condition data to adaptive traffic signals.

But beyond these subtle shifts, I believe the changes we're seeing in the political landscape has the most immediate potential to fundamentally reshape the direction of the Smart City concept.

It is difficult to envision a smart city program in this new environment that won’t feature job creation as a higher priority. Given the fact that a lot of technology actually is meant to replace more manual functions, it will be interesting to see how cities and vendors respond.

Political Environment Driving Change

The one common factor shared by all the 500+ Smart City projects across the world is that they rely heavily upon government funding.  This usually takes the form of national government funding, and in the case of Europe, a number of cities tapped into European Union programs to fund their smart city projects.  With BREXIT looming, elections in France coming soon, and anti-E.U. sentiment in other countries, a number of European municipalities are beginning to wonder what impacts this may have on their access to E.U. funds for their smart city projects.  

In the U.S., the new administration appears to be focused more on physical infrastructure like roads and bridges, and job creation, than on smarter technology.  Across the E.U., employment is also increasingly a political issue – especially for young people.

Improving physical infrastructure does align with most smart city objectives, at least according to a 2016 Smart City Survey prepared by the United States Conference of Mayors.  But that same survey listed job creation as the lowest priority for smart city projects.  It is difficult to envision a smart city program in this new environment that won’t feature job creation as a higher priority.  Given the fact that a lot of technology actually is meant to replace more manual functions, it will be interesting to see how cities and vendors respond.  This will probably spur more focus on “technology incubators” with start-ups that can add jobs as they grow within a smart city project. 

I believe that these combined pressures will focus smart city projects on applications that can deliver a short term, tangible return on investment. I also expect to see more smart city projects for small and mid-size cities, where tangible results may be more immediate and quantifiable.

Solving Financial Challenges

The new political landscape may also take a closer look at financial sustainability.  In fact, the Smart City Survey revealed that the two biggest challenges are securing funding to start the project and ensuring the city will have the financial resources to sustain the project over time. Survey respondents also agreed that relying upon government funding is not a viable strategy, that they need to find additional ways to fund their projects. 

Some are experimenting with various approaches to monetize their smart city applications, such as selling advertising space over their free-Wi-Fi networks or generating marketing lists from their analytics data bases.  But these approaches may alienate residents and businesses already inundated with advertisements.  Any commercialization of citizen data likely raises privacy issues. 

I believe that these combined pressures will focus smart city projects on applications that can deliver a short term, tangible return on investment.  Projects in this category include smart street lighting (reduces electricity cost) and resource management (reduces waste and associated expense).  I also expect to see more smart city projects for small and mid-size cities, where tangible results may be more immediate and quantifiable.

In fact, the 2016 Smart Cities Survey indicated that municipalities with 150,000 to one million residents had the highest volume of planned smart city projects, followed by cities with less than 150,000 residents.  This trend may shift the market away from centralized, integrated projects across the entire city, to initiatives focused on one or two specific areas such as video surveillance or intelligent transportation systems.  This will likely require that vendors also modify their approach to more gradual, modular systems rather than comprehensive solutions that are installed at the same time. 

Connecting the Smart City

Another area of potential shift is in the underlying Information and Communications Technology platform that is so critical to all smart city projects.  In some cases, these projects will require new networks to be deployed.  Other projects will involve consolidation and convergence of multiple disparate networks to eliminate redundancies and reduce cost.   This also creates questions on which agency will drive the network strategy decisions – including whether to build a private network or lease the network from service providers. 

Outside of North America, the majority of municipalities lease network services or manage a hybrid public/private network.  In North America many of the smart city projects appear to be private networks.  The 2016 Smart Cities Survey reveals that nearly 30% of projects involved a private network operated and maintained exclusively by the city, followed by a hybrid network operated and maintained by the city at 15%. Changes in leadership at the FCC in the U.S. could impact the ability of municipalities to offer residential and business services, which in turn could impact the project’s financial sustainability.