Rise of the Modern Smart City

Just a few years ago the concept of a Smart City still felt like more a thought experiment than a ubiquitous aspect of daily life.

Why now?

Whispers of the modern smart city movement began as early was 2005, when CISCO accepted a challenge from the Clinton Foundation to apply its technological know-how to make cities more sustainable. Over the next five years, CISCO invested USD $25 million to research the topic, creating the Connected Urban Development Programme, and running pilot projects with San Francisco, Amsterdam and Seoul to prove their technologies potential to create positive environmental impact.

But those early whispers became a roar when, in 2008, the forces of society, technology and economy converged to push cities into a profoundly new direction. 

Force #1 — Society

For centuries, people have been moving to cities in search of new opportunities, enriched quality of life, deeper connections, increased stability and assured security. That growth has been accelerating: In 1900, just 200 million people lived in cities worldwide. Today, 200 million people live in only the world’s twelve most populous cities.  And in 2008, that global urbanisation surge reached a tipping point. 

In February 2008, UN demographers predicted that, within a year, the total population of city dwellers would equal the rural solution of the world, for the first time in recorded history. In 2009, the balance irrevocably switched. 

As of spring 2009, the balance had irrevocably switched: for the first time in recorded history, more people lived in urban centres than in rural areas.

Today, 54.5% of the world’s population lived in cities. And by 2030, urban areas will be home to 60% of people globally. By 2050, the UN predicts, urban populations will have expanded to nearly 6.5 billion. By 2100, global population could top 10 billion, and cities could be home to up to 8 billion people. 

With urban centres swelling, city planners began looking to new ways to manage and sustain burgeoning populations while continuing to provide the resources, opportunity and security that drew their new citizenry to urban centres in the first place. 

For the first time, technology offered a possible solution. 

Force #2 — Technology

For the  first 25 years of the internet, for most people, the freedom of the world wide web could only be experienced while chained by a telephone or ethernet cable. The rise of cable-free Palm Pilots, Blackberry’s and iPhones connected to the Internet over cellular signals in the 2000’s began slowly was slowly tipping the balance until, in 2008, for the first time, the number of Internet users accessing the internet over wireless mobile broadband networks surpassed those access the internet over traditional DSL, cable and Fibre Optic lines. 

More people were accessing the internet on-the-go: posting to social media from the concert venue; writing Yelp reviews as they sat in the restaurant; and sharing photos with their friends as they walked down the street. The simply mobility of the Internet forced everyone to re-think how   and when and where services could be delivered in the newly untethered internet landscape. 

But that wasn’t the only technology transformation of 2008. While more and more people were detaching themselves from cables, the Internet itself was getting more and more crowded. And not just with people. With things. For the first time, in 2008, the number of things connected to the Internet — load sensors, utility meters, taxi cabs, toaster ovens — surpassed the number of people connected to the Internet. By 2013, there were at least 2 things connected to the Internet for every one human’s personal device. Between 2016 and 2020, the number of things connected to the Internet is expected to grow more than 200%. Compare that with a stagnating 10% year on year growth-rate for human internet users in 2016. 

Untethered and outnumbered, the Internet of 2008 was fast taking on a whole new role in the city landscape. No longer an “extra channel” or a “nice to have,” the Internet began inserting itself in every aspect of city life: social engagement, service delivery and, increasingly, infrastructure management. 

The opportunity for city planners was there: but how to leverage it?

Force #3 — Economy

Most people won’t remember the social or technological milestones we surpassed in 2008. A different force was wreaking havoc on cities, industries, and in our daily lives: the 2008 financial crisis. With stocks tumbling and credit tightened across the board, multinational corporations slashed budgets, eliminating most non-essential functions. With credit tight or nonexistent, investment in new technology projects dried up. A mentality of “make due with what we’ve got, and squeeze it to the last drop” pervaded, and sales in the IT industry declined. Intel reported a 20% revenue drop in Q4 2008. By January 2009, IBM announced plans to lay off 4% of its workforce; Microsoft planned to let go of 17% of its employees. 

Even as the major tech giants tightened their belts, a new opportunity emerged. Their customer base, multinational corporations in need of enterprise technology solutions, was falling away. The industry took a bet on a new type of client: cities.

Responding the 2008 crisis, IBM began re-purposing its sales pitch from multinationals to government clients ready to reinvest their stimulus packages to boost local economies.  The same year, IBM launched its Smarter Planet initiative, to investigate the application of connected technologies and intelligence systems — sensors, networks and analytics — to some of the world’ most pressing issues. 

“Let’s seize this opportunity to create more and better jobs, cultivate valuable skills, and not simply repair but prepare our economy for the 21st century.”

— Sam Palmisano. IBM CEO and chairman, 2009

IBM pioneered its smart city program in Rio de Janeiro, where it set up an experimental emergency response centre that allowed authorise to view information collected from a variety of data sources — police, traffic, utilities, weather — to monitor the city in real-time. Using the system, Rio engineers were able to predict landslides as early as 24 hours in advance, and with emergency services data all represented through the centre, plan responses even faster.

Other tech giants — and cities — followed suit. And, driven by social need, technological readiness, and economic stimulus, the modern smart city movement was born. 

The Smart City Boom

The research group IHS identified 21 cities that met their ‘Smart City’ criteria in 2013, and predict that number will more than quadruple, to 88 smart cities, by 2025. But as cities of all sizes begin adapting smart technologies, more liberal estimates suggest the number of active smart city projects in 2017 approaches 10 times that number. In their 2017 Smart City Tracker report, Navigant Research identifies at least 250 smart city projects in  178 cities worldwide. The real number of smart city initiatives is likely higher still. 

In the first quarter of 2017, Navigant Research has identified at least 250 smart city projects in  178 cities worldwide.

In the United States, 77 mid-sized cities responded to a USD $50,000 Smart City Challenge issued by the Department of Transportation in partnership with Vulcan in February 2016, demonstrating plans to integrate data-driven processes into their infrastructure. The innovation hubs of New York, San Fransisco and Boston routinely rank in the Top 10 of global smart cities. And the Canadian cities of Toronto, Mississauga and Kitchener are also make international smart city headlines.

The smart city movement in Latin America is also picking up steam. Eight Latin America cities, Santiago, Mexico, Bogota, Buenos Aires, Rio de Janeiro, Curitiba, Medelin and Montevideo, have advanced smart city projects, according to the Fundacion Pais Digital, a Chilean-based institution for the advancement technology in the areas education, smart cites and digital development.

A study commissioned by the European Union in 2014 to map smart city projects in Europe identified 240 cities from 28 European countries who were implementing or had proposed smart city initiatives. Two years later, in 2016, 36 cities from 12 European countries applied for the 2016 European Capital of Innovation Award, part of Horizon 2020, the EU’s research and innovation programme. Amsterdam, Berlin, Eindhoven, Glasgow, Milan, Oxford, Paris, Turin and Vienna were shortlisted — Barcelona won in 2015. European cities have consistently been ranked among the smartest in the world.

Narendra Modi, Prime Minister of India, created a smart city tsunami when, in 2015, he announced the Smart Cities Mission to develop 100 smart cities in India. So far, 60 winning proposals have been selected, impacting a total urban population of 72.2 million people.

Elsewhere in Asia, the Economist Intelligence Unit has identified 18 additional Asian, South-east Asian and Asian-Pacific cities actively pursuing smart city projects. And in the Middle East and Africa,  research firm Navigate has identified 17 smart city leaders, contenders, challenges and other notable projects from Jordan to Pakistan, Saudi Arabia, the UAE, Qatar, Oman, Kuwait, and Bahrain.

And the market potential of the smart city boom is enormous. 

Alluring Market Potential

In 2011, in the early days of the boom, the Boulder, Colorado-based firm Pike Research predicted the smart city market would achieve a USD $100 billion value through 2020. Three years later, in 2014, the U.K.government released a its own forecast — for USD $400 billion by 2020. 

"Over the past decade digital technologies have begun to blanket our cities, forming the backbone of a large, intelligent infrastructure. Cities are quickly becoming like computers in open air.”  —Carlo Ratti. Director, MIT Senseable City Lab

A June 2015 report from Siemens raised the stakes even higher: the technology giant reported a USD $575 billion market size for smart cities in 2014, and predicted the market could grow as high as USD $1,240 billion by 2019, with a 19.9% growth rate. 

The potential profitability of smart cities is another draw. Navigant research predicts that the global income from smart technologies will triple between 2013 and 2023: growing from USD $8.8 billion to USD $27.5 billion in a ten-year period. 

Undoubtably, global cities and the global technology industry are keen to make smart cities a success. But closing in one one decade of smart cities, can anyone say what, exactly, makes a smart city?