Cities of the future will be more intelligent. But until we reach that point, a lot still needs to happen. The success factors for the smart cities of the future are participation and competition.
What makes a city smart? “Investments are necessary in the infrastructure for transportation, information and communications, but also in human and social capital,” said Prof. Dr. Alkis Henri Otto from the Hamburg WeltWirtschaftsInstitut (HWWI) on Thursday during a speech at CeBIT. “Cities have to become more livable, but at the same time more efficient and dynamic.”
Every city has to develop its own smart-city strategy because the starting points in each place can differ so widely. “First there has to be a vision, as well as a prioritization of goals and measures,” he said.
The latest figures from Hamburg highlight why it’s so urgent to make cities smart in the future: approximately half of commuters go to work by car. The result: lot of traffic jams downtown. According to TomTom, traffic jams cause an average delay of 32 percent in the actual driving time; in rush hour, the delay rises to 50 percent.
A rough estimate shows that the cost of such delays on the way to work alone is equivalent to 125,000 hours in delays per day. If this time were invested in people actually working, Hamburg’s value creation would at the same rate of productivity increase by around 2 percent.
The reasons for the inefficient use of roads lie mainly in insufficient information and insufficient cooperation among drivers. City traffic managers have only a few instruments at their disposal with which to respond to local and temporary increases in traffic and intervene appropriately.
In a smart city, by contrast, traffic data would be available in real time – to both traffic management authorities and drivers. The data would be transformed into recommendations about which means of transportation at what time would be best to take for which route. There would also be information about where free parking spaces are available, which alternative routes are possible, etc. Car sharing would also play an important role here.
The demand for the services of the smart city is often driven by network effects because the value of a good or of a service increases the bigger the network gets. In a smart city, these network effects come about (among others) through improved interaction and a more efficient coordination of individually planned activities in the city. A simple example is pointing people to private parking spaces.
“Already today, companies have numerous data sets that can be used by cities for a smarter use of public space. The first thing the public sector should do is collect and process its existing data,” explained Otto. “In addition, common standards are necessary so that it’s possible to combine different data sets in the future.”
Companies’ proprietary data sets are rather suboptimal for cities to use for this purpose, continued Otto, because they prevent a market entry for new providers and would block competition among providers. “To ensure competition and a sustainable urban development, the data sets should be turned over to scientists and the private sector as open data.” In Otto’s opinion, this would be the ideal scenario. “Cities should be able to work toward common technology standards in order to quickly promote network effects and expand the size of the market,” added the representative from HWWI.
Otto cited electric mobility as an example of the problems a smart city can face. In Hamburg there are not enough charging stations for electric vehicles. And of the few that do exist, many are located on government premises or at private companies, putting them out of the reach of private individuals.
For the city’s inhabitants the message is: it is not attractive to buy an electric car since you can’t charge the battery, there are no parking lots nearby and most people don’t live near a charging station. And the message for companies is that it’s not profitable to invest in charging stations, as there is not enough critical mass for e-cars.
“This is a typical coordination problem,” said Otto. He called on the federal government to be active by intervening as an incubator. “A purely market-led development leads to silo solutions and then the smart city risks remaining a piecemeal project.”