More than 100 cities across the world are currently in the process of implementing Smart city initiatives. With Europe, North America, and Asia playing pioneering roles, the majority of Smart city investments are flowing into Smart Grids, reduction of carbon emissions, building automation, and free public Wi-Fi.
As the focus of investment shifts in the coming years to Smart Health, Smart Governance, and Smart Transportation systems, the global Smart city market will see rapid growth
This boom in Smart city development presents an enormous opportunity for telcos. However, before they can claim their share of new revenue, they must adopt new business models that move them from being mere connectivity providers to full partners in the Smart city revolution.
Smart city Enablers & Key Success Factors
Without the intentional comprehensive aggregation of programs on a centralized platform, smart cities develop through an evolutionary approach that results in a vertically driven, non-integrated service concept that reduced the effectiveness of the smart city concept. To unleash the full potential of the Smart city, resulting in up to 15% GDP contribution, Arthur D. Little recommends that cities adopt a more strategic approach from the outset.
Here are six smart city enablers and their key success factors:
- Comprehensive smart city strategy & vision – With a comprehensive strategy and vision in place, cities have a clear guiding force that eliminates unaligned silos and drives multiple initiatives in the direction of a common goal.
- Smart city push & governance – Empowered by legislative authority, effective smart city strategies follow a clear governance model that coordinates multiple parallel initiatives rather than attempting to integrate silos in the future.
- Consistent, Fully Integrated Platform – Build all smart city initiatives on a single platform layer. This enables data extraction, aggregation, and management while also making it easier to perform comprehensive analytics.
- Phased Implementation – The smart city action plan should be driven by a clear business case prioritization exercise that identifies the most critical initiatives. Once ranked, the initiatives should be implemented in a staged approach.
- Partnering – Smart city initiatives typically require a collection of expertise and capabilities beyond the core competencies of governments, telcos, and other stakeholders. It is essential that partnerships are formed to acquire or aggregate the needed competencies.
- Citizen awareness – The success of any smart city initiative depends on how well information about the initiative is communicated to users. Therefore, it is crucial that leaders formulate an effective communications plan designed to create awareness and educate users.
How Telcos Can Best Benefit from smart city initiatives
Unfortunately, the involvement of telcos in most smart city initiatives around the world can be characterized as them serving as mere connectivity providers. To achieve the greatest benefit from their involvement in such initiatives, telcos must begin to position themselves as partners that function significant drivers of the initiative. By focusing more on managed services rather than just connectivity provisioning, telcos can experience greater market penetration and higher ongoing revenues.
While it is easy for operators to see quick profits in less complex vertical activities, a better strategy is to focus on horizontal service enablement. For example, taking a partnership role in developing smart metering solutions creates future opportunities in the smart building space.
When telcos focus primarily on providing broadband Wi-Fi services in a smart city environment, they are limiting themselves to the smallest part of the overall revenue that smart cities create. Instead, telcos must consider adopting new business models that transform their role from passive operators into active platform operators of managed services capable of offering their own horizontal services to the many vertical segments of smart city initiatives. This movement up the value chain to serve as a hub for the smart city can only be accomplished through a clear mandate from the governing entity.
Telcos that decide to offer solution-oriented services can implement several revenue generation models. They can monetize the data aggregated through the smart city platform. They can sell smart applications or dashboards to help users access smart city services. And, they can provide integrated control center services to municipalities and public entities.
By taking a holistic approach to their involvement in smart city environments, telcos can expand their market penetration by establishing themselves as trusted partners that serve as a much needed technology hub.