For telcos, capturing the smart city opportunity means retreating to old basics – but in new ways.
Smart city is an umbrella term that typically comprises IoT applications within ten different verticals: governance, economy, education, entrepreneurship, environment, health, mobility, security, technology and energy. Under the smart city aegis, those IoT applications are meant to improve the collective management of tasks which make urban community living more effective and desirable.
The dissemination of smarter cities contributes directly to at least four of the United Nations Sustainable Development Goals (SDGs). BCG estimates that an at-scale deployment of smart technology can generate more than €350 million per year of direct and indirect value for a city of 1.5 million people (GSMA Intelligence, 2019).
Telcos have long tried to occupy IoT-related spaces, to capture economic value beyond basic connectivity services. However, value chain fragmentation and sub-scale deployments within IoT ecosystems have proven tough for telcos to tame.
BCG analysis suggests that only 20% of smart city solutions have been deployed beyond 10% population coverage, even in the most developed cities (GSMA Intelligence, 2019). It is hard for big organisations like telcos to occupy and scale up new smart city spaces, especially when their boundaries are still crystallising. Unsurprisingly, of more than 1,900 investments made by nine leading tech and telecommunications companies since 2010, only 66 – about 3.5% – involved smart cities (Quid, BCG Analysis).
Each smart city sub-vertical has its own rules and, to the chagrin of municipality governments, follows its own developmental paths. Rare are the catalysts that can drive all sub-verticals forward in tandem. Telcos’ battles for smart city prominence often become, then, a hodgepodge of pulverised efforts carried out in glorious isolation.
“What advantages can telcos realistically leverage to build – and sustain – broader smart city presences?”
Module manufacturing, application software development and system integration are all common IoT requirements which telcos are usually ill-positioned to get into. Networks, on the other hand, are unique telco assets that are also indispensable to IoT deployments. However, due to their perceived commoditisation, networks have been deemed a weak beachhead for telcos to command greater IoT value capture. Or are they?
Perhaps not. Leveraging their networks may still be telcos’ best bet to gain more relevance in the IoT and smart city arenas. They can do that by focusing on delivering three critical propositions:
Value-added service assurance: an innovative utility company (or garbage collection firm, or police department using CCTV cameras etc.) will have embedded so much IoT-based intelligence into its activities that a sudden loss of it would be fatal. Bills would not be generated; trash would be left on the streets; criminals would run amok.
Closely monitoring the overall performance of any IoT device base will become mission critical. Telcos can use real-time network analytics to offer online services that allow their enterprise clients to track the precise status of all ‘smart things’ they have. With deeper intelligence on the connectivity serving their intelligent devices, enterprises will have the control – and the peace-of-mind – to rely even further on IoT technologies.
Comprehensive ecosystem protection: increasing societal dependencies on IoT create formidable vulnerabilities. Ill-intentioned actors have a growing list of targets to sow chaos from. Disrupted electricity grids, traffic lights, connected cars and remote e-health systems, to name a few, can quickly bring a city down to its knees if tampered with. With the greater rewards of digitised sensor intelligence will also come greater risks.
Through their networks, telcos can offer an overarching line of defence against cyber threats on smart cities. While different ecosystem players have their own localised means to fight off threats, telcos provide the only common resource that can guard everyone at once. High-performance network analytics can flag in real-time suspicious events that seem harmless when taken in isolation but that, when analysed alongside other data traffic patterns, indicate pernicious platform-wide attacks.
Smart city acceleration: smart cities arise from an amalgamation of distinct initiatives. And the main sponsors behind each initiative may not always be government entities. In fact, smart city use cases are commonly driven by private-sector firms that create silos of isolated automation often invisible to public agencies.
Having the full visibility on how distinct IoT applications trickle down regional markets can be hugely informative for governments. With that knowledge, they can drive better regulatory policies, track laggard verticals that need additional support and coordinate a more cohesive strategy to incentivise the larger IoT landscape.
Only telcos can deliver the three propositions above. The live and historical insights that can be gleaned from their networks glue those propositions together and make them unique. And, while insufficient to spur telcos to single-handedly dominate the emerging smart city opportunity, those capabilities can give them the necessary edge to carve out bigger roles – and bigger sources of value creation – for themselves.