What do we mean by a smart city?
Smart cities use technology to connect and inform their citizens and to deliver critical services in a way that is eco-friendly and operationally efficient. These cities are radically transforming the relationship between citizens, municipalities and service providers with a digital-first approach to delivering everyday services. These smart city ecosystems bring together a wide variety of players: public sector, communications service providers, Internet of Things (IoT)-enabled device and service providers, property developers, systems integrators, software and system vendors and more.
Smart city services can include smart transportation, smart utilities, smart learning, health and safety, and connectivity. Let’s look at a few examples that are in force around the world today, and the flexible pricing models that are employed to monetize these services:
- Connectivity: Smart city citizens or visiting tourists subscribe to city-provided Wi-Fi access at central locations such as airports, train stations, or stadiums. Pricing variants include free spots, paid spots, and freemium/premium programs. Family members can share a monthly allowance of X gigabytes or maintain individual balances, and they can use digital tools to track their balances in real time.
- Public safety: Service providers contract with smart city public safety organizations to deploy IoT-enabled sensors in buildings. The service provider assesses a monthly charge to monitor for early signs of fire or gas leaks, and then charges based on event for notifications and interventions.
- Parking: A monthly subscription includes an allowance of parking hours in predefined locations. Pricing is determined by the number of vehicles in the family or commercial fleet; different plans can be defined to allow for individual quotas in the allowance, and to roll over unused portions of the quota to other members or to the next month. In-vehicle sensors communicate with sensors in parking locations to recommend open spots. Discounts at offsite parking locations are offered during city events and other special occasions to reduce congestion in the busiest areas.
- Recycling and waste: Residential and commercial recycle bins, equipped with weight and chemical sensors, send data to a monetization system to award loyalty points per kilogram of recycling material and penalty points for spillage. Waste bin sensors track volume and charge based on usage.
- Tolls: In-vehicle IoT sensors track movement past toll points on highways and over bridges. That data is sent to the city authority’s monetization software, which charges the driver based on factors such as time of day, direction of travel and occupancy.
- Digital university: Residents pay based on consumption for individual classes or subscribe to access e-books and other online resources.
Smart cities are already an area of enormous global investment that is only projected to increase in the coming years. Smart city investments worldwide exceeded $80 billion in 2018 and will rise to $158 billion in 2022, research firm IDC estimates.
5G is expected to be a significant accelerator for smart city services. Extremely high speeds and low latency will enable everything from autonomous vehicles on smart city roads to remote surgery in smart city hospitals.
I checked in with an industry expert, David Cook, Member of the Board of Directors at Aarav Solutions to get his perspective on current and emerging smart city services who said, “There are so many promising smart city services. Two that are particularly near and dear to my heart are utilities and traffic. Let’s think about smart utilities in a scenario like California with wildfires or really anywhere with heat spikes that represent a significant load on the utility grid.
“A smart city utility provider can be connected to appliances in the home and communicate that a brownout is in effect for a given time period. And that feedback loop between the utility and appliance can, for example, use smart meters to change an air conditioning setting from 68 degrees to 72 degrees during a peak period. Turning to traffic, we see smart cities optimizing routes to recommend paths around congestion which has huge benefits in terms of both driver experience and reducing emissions.”
Cook also noted that having the right tools to monetize these services can generate revenue for the service provider as well as deliver a better customer experience. Back to the utility example, he said, “An important part of smart utilities is smart monetization. So you need the ability to charge more during a brownout period, and it’s very important that you have the intelligence and capability to communicate that with the end user to avoid sticker shock or avoid missing an opportunity for the end user to know how to save money. Homeowners should understand the price implications during a brownout of adjusting their air conditioning temperatures and should be able to see how that impacts their balances. And to take the monetization one step farther in sophistication, smart appliances working with smart city utilities should be able to charge different rates even during a brownout, so perhaps air conditioning would be charged at a peak premium rate whereas an oxygen machine would not.”
As 5G continues to enable new and innovative smart city services, smart monetization will increasingly drive success. Smart cities are changing very quickly and the most forward-thinking players are planning a few steps ahead and laying the groundwork with a monetization solution that can scale to high volumes and support whatever pricing metrics, bundling, discounting and charging strategies they may conceive in the future.
This article was provided by a contributing writer to TM Forum.
TM Forum is a global industry association for service providers and their suppliers in the telecommunications industry.