06 Jun

Smart City: from cost reduction to revenue generation with the IoT

We all know what a Smart City is, or how it should look like. It’s an urban community where, thanks to a far-sighted governance and a strategic use of technology, assets and resources are managed more efficiently, proving quality services to citizens and businesses. It isn’t just a theoretical model, but it has already been implemented in lots of Cities around the world, from New York to Barcelona, from Copenhagen to Singapore, with interesting experiences and projects even in smaller conglomerates.

The idea behind most Smart Cities is the Internet of Things (IoT), as the improvement of urban services is primarily linked to the possibility of collecting data from field devices – could be meters, streetlights, bus shelters, waste bins, video surveillance cameras, etc. –, analyze and correlate them, and take evidence-based decisions on single or multiple services. That’s the ‘senseable City’ described by prof. Carlo Ratti at the Massachusetts Institute of Technology, where street lamps switch on upon vehicle or pedestrian passage, trucks are sent to collect waste only when bins are full, public transportation routes are adjusted in real time according to people gathering in a certain area.

It might sound futuristic, but all this is enabled by a reliable, citywide network infrastructure connecting all IoT devices. This allows City managers and operators to monitor urban services and manage them from remote, with proven benefits in terms of efficiency and effectiveness. Cost reduction is usually the most immediate goal of Smart Cities: if we turn the existing public lighting network to a LED-based, smart architecture, we will reduce power consumption up to 70%, with significant savings on energy bills, as well as on maintenance and support costs. Related benefits deal with carbon footprint (less power means less GHG emissions) and citizen satisfaction, as better streetlighting contributes to make Cities safer and more livable.

But saving money might not be the best achievement. Reports by McKinsey Global Institute highlights that the IoT enables a number of urban applications which may generate new revenue streams for City managers. Nowadays, most services are licensed to utilities and private companies through specific partnership agreements. What if Cities could leverage their IoT investments to stimulate local businesses in designing and implementing new applications?

Shops may want to offer parking coupons and valet services based on the public parking management system, brands may want to spread engaging marketing contents using the public Wi-Fi network, utilities may want to develop innovative billing models for energy-savvy users. We could add more and more examples – the message is clear: IoT technologies are not only supporting Smart Cities’ cost reduction strategies, but have the potential to drive City revenues.

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