What is the future for smart cities after Covid-19?


Economic News

16 Jun 2020
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Around the world, national and municipal governments have been deploying smart city technology in the fight against the coronavirus, using it to track the spread of the pandemic and support the implementation of medical strategies. As well as demonstrating the value of smart technologies, these new applications are helping shape the future of smart cities.

The pandemic led existing digital infrastructure to be deployed in innovative ways.

South Korea provided one of the most successful demonstrations of the power of smart city technologies. The country’s Smart City Data Hub system allowed the government to conduct advanced contact tracing, using data from cameras and other sensors. As a result, South Korea was one of only a handful of countries to rapidly reduce infection rates without a full lockdown.

The UAE has also deployed a wide array of smart technology applications in its containment efforts. Having previously used a system that tracks mobile phone pings to cell towers to monitor crowds during New Year’s Eve celebrations, the UAE adapted this to ensure social distancing and lockdown rules were obeyed. Parallel to this, an AI surveillance system in Dubai that reads licence plates – originally designed to reduce crime and traffic accidents – has been adapted to identify citizens leaving their homes without authorisation during lockdown.

Meanwhile, Masdar City – Abu Dhabi’s flagship sustainable smart city – was at the centre of the Emirate’s efforts to manage the pandemic. A high-volume secure testing facility was built there in just two weeks, with the capacity to complete thousands of daily diagnoses.

A number of cities across India have similarly used a smart city platform – specifically, heat maps, aerial surveillance and GPS systems – to monitor the movement of suspected Covid-19 cases and health personnel. Cities such as Pimpri-Chinchwad saw a significantly slower increase in the number of infections after deploying such tools.

Smaller cities spearhead spending

These and other creative solutions to unanticipated challenges – among them disinfectant-spraying drones and a robot dog that reminds people in Singapore to observe social distancing – are creating new investment opportunities in a sector that was already poised for significant growth before the pandemic.

According to a 2018 forecast from Grand View Research, the global market size of smart cities was set to rise to $2.57tn by 2025, up from $737bn in 2018.

Although the disruption of Covid-19 may temporarily curtail development plans, the long term trajectory is positive. 

In February – prior to the global lockdown – the International Data Corporation’s Worldwide Semiannual Smart Cities Spending Guide projected global expenditures of $124bn in 2020, up 18.9% on 2019.

While a number of ambitious projects with a spend of over $1bn were anticipated, the largest 100 smart cities only represent 30% of total investment, with the remainder to be spent in medium-sized and smaller cities. These include Algiers Smart City, a project that has been developed “as an answer to three fundamental challenges: a fairly isolated technology ecosystem, limited technology transfer and low confidence in growing tech giants,” Riad Hartani, strategic technology adviser to the Algiers Smart City project, told OBG.

Countercyclical growth opportunities

The global economic slowdown will impact smart cities both negatively and positively.

Some projects have already seen a slowdown, and Alphabet’s Sidewalk Labs cited the pandemic as the main reason for shelving their ambitious Toronto smart city plan. However, analysts have noted that the project faced considerable local opposition over privacy concerns.

Fears that smart cities could lead to unchecked surveillance by government and corporate actors can often slow or prevent the application of certain population monitoring technologies. It is conceivable that public concerns about data collection could be less pronounced following the current health crisis, providing more regulatory space for public and private actors to experiment with profitable smart city models that might have otherwise been considered too invasive.

Furthermore, experts in the field see parallels with the 2008 global financial crisis, which helped to propel the first global wave of smart city projects. The economic crash and resultant government budget shortfalls created an impetus for cities to collaborate with technology firms to address urban problems and generate new sources of revenue. 

A Covid-19 recession could result in similar dynamics, with more public-private partnerships or entirely private sector-driven initiatives entering the space.

No 5G slowdown

In many emerging markets, the government and the private sector are already working together to speed up development of 5G infrastructure in the wake of the pandemic. In Thailand, for example, telecom operators are joining forces to provide 5G networks to hospitals.

The country's Eastern Economic Corridor (EEC) – which is vital to attracting the necessary high-value investments in advanced manufacturing and services to achieve the government's Thailand 4.0 vision – is pressing ahead with its 5G plans despite the disruption.  

“The EEC mandates that 5G must cover at least 50% of the area in 2020, which means equipment installation must commence this year in industrial areas and some of the big cities like Pattaya," Kanit Sangsubhan, Secretary-General, EEC Office of Thailand, told OBG. 

"This means our commitment to upgrading the automation systems in Thailand’s industries will be realised. At the same time we are looking towards other developments related to 5G, including data storage facilities.”

The global rollout of 5G infrastructure is crucial to the growth of smart cities.

The faster, more reliable and higher-capacity fifth-generation network better facilitates internet of things connectivity, which is fundamental to many smart city features.

While Covid-19 initially threatened to delay the installation of 5G infrastructure in Europe and parts of China, its impact seems to have been limited. In some cases, the pandemic has even provided opportunities for accelerated roll-out. For instance, empty streets in many countries made it easier to install physical infrastructure such as antennae and fibre.

Indeed, Bob Everson, senior director for 5G architecture at technology multinational Cisco, told international media in June that demand for 5G was higher than ever. The outlook for smart city growth, particularly in emerging markets, is similarly positive.

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