The Rise and Fall and Eventual Rise Again of the 'Smart City'
It would have been hard to miss the messaging over the last five years: Major global tech firms like IBM, Cisco, and Siemens seemingly all adopted the same "smart cities" mission at the same time. And they weren't alone. Across the globe, technology companies of all sizes have taken aim at the burgeoning smart city market, a nebulous term that can include anything from complex networks of government-controlled sensors and cameras to a parking meter that sends you a text message when you run out of time on the meter.
For Anthony Townsend, research director at the Palo Alto-based Institute for the Future and an adjunct assistant professor of planning at NYU Wagner, the rise of the "smart city" concept is both the result of global economic forces and the culmination of decades of technological progress. But with his new book Smart Cities, Townsend also sounds the alarm that the real "smart" city of the future can't and shouldn't merely be a reflection of what large technology companies would like to sell to local governments. Recently we chatted with Townsend about his research and current work on smart cities.
Atlantic Cities: We were originally supposed to do this interview back in November when we were both at the third annual Smart City Expo in Barcelona. I'd still love to sort of set that scene for our readers, which I suppose speaks to the overall emergence of this big new market. There's so many companies that are now trying to get a foothold in this space. How did that happen? Where did it begin and why is it getting so big?
Anthony Townsend: Well just to get a sense of how big the market is, in 2011 when I started writing Smart Cities, the best forecast of the smart city market, in terms of credibility and without being too, sort of, puffing it up, was this group called Pike Research based in Boulder, Colorado. And they tagged it at $100 billion through 2020. And recently, about a month ago, the U.K. released its own forecast, and they're saying $400 billion a year.
Yeah. So, part of it depends on where you draw the line, but pretty consistently, at any scale that you look at, whether it's a single building, or a large real estate development, or the global infrastructure market, the "smart" piece, the fiber, the chips and software, the sensors, is anywhere from 1 to 3 percent of the overall construction budget. So if you look at estimates of global infrastructure spending, it's something on the order $40 trillion through 2030, so you take 1, 2, 3 percent of that and you get a couple hundred billion dollars. The British definition also includes all the services and stuff. So it depends on how you look at it. And there are so many players now that are operating, but there's very few that are kind of comprehensively offering everything that you would think of as "smart city solutions." Most of them are cutting off little slices of it. And I think that's interesting because, again, that benchmark of 1 to 3 percent, compared to the overall project of city building that we're undergoing globally over the last couple of decades, it's not a big cost factor, but it adds tremendous value. I think that's what everyone's excited about, is it will actually be an easy sell, because the value of it will be so obvious.
That said, where the Smart City Expo and that whole group of companies that have played a big role there, that to me is the 2008 financial crisis. What happened when Lehmann Brothers blew up was that every corporate IT department in the Fortune 500 was given a directive from their CEOs that said: stop spending money, we have to hoard cash because we don't know what's going to happen. And if you're an IBM or a Cisco, and you're the sales manager, you're freaking out. And that freaking out went up to the highest levels of those companies. Basically their big enterprise customers stopped spending money on technology, so they had to find another market. And coincidentally that's when government started ramping up stimulus spending all around the world. So this idea of taking technology that had been built to run multinational corporations and grafting them on to local government, that was basically the whole "Smarter Planet" strategy that IBM came up with and that a lot of other companies followed.
And as you know, it hasn't been as successful as they thought, the market didn't coalesce as quickly as they thought. Cutting and pasting those solutions is a lot harder. Local governments in particular don't operate like enterprises, when they buy technology they buy it in a very different way. They don't always make the best decisions, they don't optimize on the same sort of performance indicators that companies do since it's not just about the bottom line. And then the stimulus funding dried up before any of it could really get up a head of steam.
Right, that's already gone. So, where does that leave the industry?
So basically the hunt is on now for business models that can scale, with public-private partnerships really being the only viable business model in a lot of situations. And for cities, as you know, those are, I don't want to say a devil's bargain, but they're loaded with a lot of issues, particularly when you have data being produced about cities and citizens. And potentially, that's where a lot of the value is for the private sector partner. So the question becomes, what precautions do cities need to take to protect themselves and their citizens from any misuse or redistribution of that data?
There are other promising financial models out there for smart solutions, like crowd-funded social impact bonds, and certainly there will be others to come. But there's not a lot of tools on the table right now. And cities all around the world, any country you look at, cities are in very difficult financial positions right now.
So if you're a taxpayer in a city, and you're looking at your local government making decisions about what kind of technology to spend taxpayer money on, what should you be worried about?
Healthcare.gov is kind of a harbinger, isn't it, with the kinds of challenges that any government, but particularly local government, is going to have in implementing very large, integrated service delivery platforms. And we've already got a couple of other high-profile failures, like in New York City there was CityTime. The California judiciary had a project called the Comprehensive Case Management System that was cancelled a year and half ago after spending half a billion dollars. The British National Health Service just cancelled an £11 billion project. So, the idea that we're going to be building these urban operating systems …
Yeah, there's this idea that there are going to be, like how it's been sold in Rio, these massive supercomputers and facilities that are just monitoring absolutely everything and making it all like a symphony of civic perfection.
Right, and I think that there are opportunities to do that in greenfield sites, like in Songdo, for the most part the infrastructure is there to have a sort of IT clearing house for the city that will do things like authenticate people when they're trying to get through buildings or process transactions or share data with utility networks. But the vast amount of people living in cities don't live in cities like that right now. And for the most part, the cities that we'll be building won't look like those places, either. It took 10 years to build Songdo and Masdar, which each house maybe 100,000 people, and in the same period, we've added hundreds of millions of people to the next big cities of the global south.
It does seem to ridiculous to talk about all this as though the perfect, "smart" city of the future will be everywhere.
Right. So my sense is that the smart city is really going to be put together in a much more incremental, ad-hoc fashion. That's why I use the analogy of a mainframe vs. the web. These model smart cities are like mainframes where everything's going to a central place. There's one suite of software that dictates how everything works and can be very carefully engineers. But our "smart" cities are going to look much more like the web, where there's going to be a lot of things deployed by individual decision, talking to each other through open standards in very ad hoc, loosely knit ways.
And what I like about that is that kind of architecture is actually what a good urbanist would tell you builds a good city. You build an open grid, you allow people to customize the pieces of it that they have jurisdiction over, and you get this fine-grained, resilient, vibrant kind of system with a lot of complexity, as opposed to a very controlled, hierarchical system that's actually fairly brittle when it comes under stress. That's the thing that, since I finished the book, I've been thinking most about.
In the book you do talk a lot about the sort of individual "makers" who are experimenting with DIY technologies like Arduino. Which seems like it's the completely other side of this, the opposite of the IBMs or Ciscos.
Yeah and I think we see that style of innovation all throughout that past few decades of the PC revolution and building the Internet, and now deploying the "Internet of Things." Actually if you go on Kickstarter and start poking around at some of the hardware projects that people are building, that's the internet of things, it's all these little widgets. There's like a half-dozen lo-jack devices now that you can put on your bicycle, so bicycles are turning about to be a really important platform for intelligent transportation systems. Who would have thought that? And if you look too at the prevailing style of urbanization, with people basically throwing together the city with the materials at hand, and doing so in a very quick, problem-solving, innovative way, then DIY urbanism is the prevailing form urbanism on the planet right now, and you can see how cities are slowly upgrading those structures over time as they move up the economic ladder. The point of view in urban studies over the decade has gone from seeing slums as problems to places where people are basically solving a lot of problems in the absence of government assistance, that there's actually a lot of vitality there.
There's certainly a lot of problems still that need more targeted interventions but, I think the key is understanding that an IBM is not the source of innovation. Their role is actually, and this is what I ended up coming to in the book, five years into this smart city movement which started in 2008, people have learned a lot. The corporate guys have learned what their limitations are and what the limits of pushing the market forward are, and people in city government I think have learned what both companies can deliver and what these grassroots innovators can deliver, and what both their limitations are and a better sense of what the problems that technology can solve really are. And where I think the big guys, the IBMs and Ciscos of the world, do have a role to play is taking those innovations that bubble up and scaling them, and making them secure, reliable, reconfigurable so that you can actually spread them city to city very quickly. And that's really the dilemma. The good ideas come from the grassroots, but they also have trouble getting to a finished, polished version that a city can use and they have a hard time cross-fertilizing between cities.
There does seem to be some tension between this idea of yours that grassroots tinkerers and web developers are and will be the source of our truly innovative smart technology, and the traditional role of government. You spend a lot of time in the book talking about the invention of Foursquare, which is certainly innovative, but doesn't exactly address the deeper sociological problems cities face.
Yeah, I call that out pretty clearly in the book. So, a couple of things. One is that the people who will carry the grassroots vision of smart cities forward are the social entrepreneurs. And Dennis Crowley is not a social entrepreneur. But there are millions of them out there and they are picking up these tools and using them to solve the social and economic and political problems that they care about. And that's very positive. These technologies are giving a big boost to social movement that's already pretty strong and coalescing prettying quickly. The other thing is that, 2010, I think, was the first Apps for Democracy contest in D.C.
I remember it well.
OK so you know, that was the model for how cities could catalyze some of this grassroots innovation. And it was a very simplistic model, just: Here's a bunch of data, what can you build with it? But a lot of other cities copied it.
But that was only a few years ago, and it's already gone out of fashion.
Yes well so what has happened, and I look at New York City's BigApps, New York has done this most consistently, you know other cities have gotten frustrated with it and abandoned apps contests, and New York has consistently refined it, and what they've done is put a lot more work up front into really engaging community stakeholders and defining problems that need to be worked on. And they've done this because, and you made the point very clearly, geeks will build apps for getting bicycle directions, they'll build apps for finding cocktail and coffee specials, not the kinds of things that working mothers need.
And not the kind of problems that government is supposed to solve.
Well, maybe not solve, but at least marshal resources to address needs. So what they did for the last BigApps is they engaged a couple of foundations that are involved in grant making to community service organizations, and defined the problems that the geeks should be working on. And you got a completely different and much more relevant set of projects coming out the other end. They were looking at things like unemployment and crime, education, things that have a direct impact on more marginalized people, and I think that's the right way to think about it.
If you look at transit, what's happened with transit, I think that's probably the best example of how providing open data, providing financial or prestige incentives for people to build applications around that infrastructure, that's an area that affects everybody and disproportionately benefits regular people. And I think there's a handful of areas like this, like certainly health and education, where cities can focus the geeks.
So do you see city governments as still quite motivated to adopt new technology?
Yeah, actually there's some really promising signs that, as opposed to just setting up a Twitter account or opening up some data in some rapidly organized press conference, that cities are actually starting to approach this stuff strategically. And so back to John Tolva, who just left as CTO of Chicago and was speaking recently, basically was saying is that what it takes for that to happen is a person at a high level in city government who is making policy around technology, not just operations or implementing, and we're starting to see mayors all throughout the U.S., starting these task forces, officers in their own offices, whose job it basically is to drive innovation and leverage technology wherever possible.
We're starting to see I think also in Europe and other parts of the world the idea of digital master planning being a part of a city's ongoing strategic planning. So Dublin released a really kind of visionary digital master plan, and London now is in the process where they have a big board of people from industry and government and academia, called the Smart Cities Forum, that's setting policy nationally for the U.K. but also the mayor's office there. And there are Scandinavian cities and Amsterdam has been doing this some time. Strategic thinking about information technology is now being institutionalized at a very high level. And i think that's going to mean that at some point it stops being an after thought or stops being a "cyber whatever" and starts being the way things are done, the same way you'd always do a environment impact assessment before a big public works project.
I'm curious what your sense is about the level of realism in this market at his point. You get the sense from reading your book that a number of cities, and probably this is still happening, may have wasted a bunch of resources buying up some of this early, out of the box technology from some of these big companies, which may or may not provide the value that they were promised.
Yeah I don't know, I think it's more that just the market just hasn't coalesced as quickly as people in the industry expected. A lot of what I was trying to do, you know the book is essentially the political economy of smart cities, and who all the stakeholders are and what they're doing and why. And what I was trying to call out was, a) the vision and the solutions that the big guys are offering weren't necessarily that relevant to the problems that cities face. There are people on the ground who have a much keener sense of what the problems are. And we finally now after five years of conferences and articles are starting to have a dialogue among all the stakeholders and that's getting us ready to finally start building all of the stuff.
IBM "Smarter Cities" ads in the JFK Airport.
So is this stuff that we're about to build qualitatively different than what's already out there?
Yes I think it is, because I think that the vision that the big companies were putting out, primarily because they're not consumer-facing companies — you know if it had been a Google or an Apple pushing smart cities on people, and those companies I think both are hedging their way into this marketplace, and I'm actually watching very closely to see how they do move into it — but city dwellers were not part of the picture of those corporate visions. It was basically, install this software, and it'll do a bunch of stuff in the background, and you can still turn the lights on and get in your car, and we're going to manage all the headaches those activities can cause. And you look at some of the ads that IBM was running and it was all about "invisible automation."
Right, I remember those.
And I don't think that was very compelling to anybody. It didn't stir men's souls, you know? When you look at something like Foursquare, it's so much more compelling to the average city dweller because it's about transforming their experience of the city into something much more exciting and sociable, and it does really speak to our needs as human beings. I mean, Foursquare's not going to solve any environmental problems, but it's an example of the way that you can engage people with these tools to live differently. We've seen these kinds of sociability layers embedded into energy systems and water systems and we're already seeing it in transportation with these kinds of peer to peer stuff, and it will change the way people behave and encourage more sustainable lifestyles. But overall this is a very difficult area to forecast because you're talking about thousands of technologies that can be combined in a limitless number of ways, you're talking about a huge variety of different kinds of communities and different built environments.
A big part of the sales pitch to cities on the part of these big companies seems to be, we'll get these systems in there now, and then eventually when something like, say, facial recognition technology is improved and refined, the police departments will have all these abilities. And because of that there are all these fears from privacy advocates, not just about but certainly including keeping individual privacy within the data that cities will be collecting, but also this kind of looming, ominous Big Brother presence coming down the road.
Hey, it's already here.
The second to last chapter in the book is a very ominous chapter about all the risks and negative, unintended consequences of all these technologies. And I wrestled for a while with putting it in there because I didn't want people to think I was being too reactionary or paranoid about the level of surveillance and the kind of haphazard safeguards that are in place to protect data that's being protected. And then Edward Snowden shows up and basically demonstrates that things are much, much worse than anyone feared. I don't think there's any level of alarm about this stuff that's unjustified.
So that comes down to transparency and accountability. The federal government has its own set of issues and it's unlikely that it would have come to light without a whistle blower. But it's not hard to imagine scenarios in local government where somebody's brother gets access to something that they're not supposed have access to because of a very cozy, sometimes corrupt relationship between people in local communities.
Right? That's the kind of the way local politics works, people are part of very closely knit communities and they have conflicts of interest and overlapping relationships and they exploit them. There are certainly ways to put in controls in government, to make people accountable, to track those kinds of activities, but it's something that's hard to remove completely, it'll always be a risk. And there's much less scrutiny on it at the local level.
But of course now I'm actually making the case for why IBM should handle the data instead of the city IT department.
But then in the book you also make the case that maybe it really should be local government doing it.
Yeah exactly, I mean I'm saying it's not clear what's the right way to architect these things. Even if IBM was handling it, it might be more secure, but I could still give my password to my cousin if he wanted to spy on his girlfriend or something.
Yet it seems like what you get to in the end is that it's almost a moral imperative that we have to explore how to harness all this technology to gain real efficiencies.
Yes, and not just efficiency. I think what I got to at the end is that the smart city vision of industry, and of grassroots, almost isn't visionary enough. It's only one piece of the picture. It's only by bringing together the visions from big industry, from grassroots technologists, from civic leaders, that you start to get a sense of the whole picture. I didn't want to come up with a design for a smart city utopia, but rather almost like a scorecard or a checklist of principles for how we go about building them, and the kinds of capacities that we create, in order to plan them and build them in the coming decades, that is more equitable, more sustainable, more sociable. It's not just a transformation of the physical, it's also about transforming the economy, transforming the way social interaction happens, both online and in the public space, it's about transforming governance, and it's about transforming the process of city planning and city building as well.
Top image: The showroom floor of 2012 Smart City Expo World Congress in Barcelona, where "smart city" tech companies hoping to connect with governments promote their services. (Image courtesy Fira/Smart City Expo)