All that glitters is not gold
While the allure of technology might be powerful, there are serious challenges to achieving Smart City status.
Legacy cities have significant hurdles as it is easier to start from a relatively blank slate than to upgrade antiquated infrastructure such as in New York and London. Newer cities in the Middle East and Asia are at a distinct advantage in this regard.
Very large populations are another burden and can make the adoption of some smart solutions more cumbersome. Smaller cities such as Helsinki (1.3 million people) or Zurich (400,000 people) can be more agile in the adoption of new technology. Globally, they ranked second and third, respectively, in the IMD Smart City Index in 2020.
Other challenges that are also major impediments include:
- Lack of interoperability: Bringing various systems together from different sectors to form a cohesive network is difficult, particularly if they are owned by different, at times competing, entities in the private sector
- Data breaches: High interconnectivity can make smart systems vulnerable to cyberattacks
- Mishandling of private data: Smart Cities collect data regarding resident location and lifestyle, so safeguarding privacy is critical; Sidewalk Labs, a subsidiary of Google’s parent Alphabet, had to pull the plug on its plans to build a Smart City on Toronto’s waterfront due to severe criticism from residents fearing “surveillance capitalism”
- Lack of long-term planning: Some cities are not taking into account the maintenance costs of smart solutions, nor are they anticipating how their needs may change over time
One eye on the future
We believe the recent embrace of the green economy by several governments and prospective new public investments in infrastructure in the U.S. and Europe in particular make this an opportune time for cities to invest in their future and for city planners to respond to the ongoing challenges of urbanization. Large Western legacy cities such as New York and London are under pressure to upgrade their often creaking infrastructure and are moving in that direction.
Smart Cities have the potential to enable us to live and work in a safer, faster, more convenient way. They will require greater interconnection between different forms of infrastructure. Buildings will need to be connected with the grid, and an ecosystem of communicating infrastructure stands to offer more efficient, sustainable, affordable services to citizens.
Yet given the many challenges that remain, in the West, sporadic implementations of smart solutions (rather than the highly developed Smart Cities of the East) are more likely in the foreseeable future. So initially, we’ll probably see Western cities becoming “smarter,” as opposed to becoming outright Smart Cities.
As noted for the other SusTech themes that we’ve delved into this year, we believe the industries and companies that can deliver Smart City solutions will benefit from long-term, secular growth.
