The Bridge Builders

Cities have mostly been left to their own devices in their smart city initiatives – until now. This is set to change with United Smart Cities: on this global platform, stakeholders in urban planning are being networked.

Kari Aina Eik is very familiar with the structures and procedures within the United Nations (UN). She knows the project’s stakeholders, their interests, and what is needed for implementation. For more than 15 years, the Norwegian worked for various UN agencies, such as the United Nations Development Program (UNDP). But there has always been one issue on which she made no headway: public-private partnership projects (PPPs). “The United Nations is not designed for PPPs. The system just isn’t based on taking money from companies. This has to change, as PPP projects are the future of urban areas.” The advantages are obvious: companies get more access to capital and business opportunities, while cities benefit from the use of new innovations and technologies. Eik’s passion was awakened.

Then, in 2013, in Vienna, she happened to meet Ullrich Granser, a board member of OiER – Organization for International Economic Relations. Eik had been completely unaware of the organization’s very existence – until that moment. But the match seemed perfect right from the start: the NGO had always understood itself as a bridge builder between the public and private sectors, and has access to a well-established international network across the board (business, industry, politics and international organizations). That’s exactly what Eik had been looking for. “We had to think about where we could bridge the gap between the public and private – and we came to the subject of cities. In 2050, 70 percent of the world’s population will live in cities, which is of course a huge market for the private sector.”

While saying this, Eik leans over the table. She goes on to share that in many African cities, there is a lack of basic infrastructure, and that water is going to be the number one issue regarding resources in the future. Next to her, Ullrich Granser smiles. It’s easy to see that cities are Eik’s passion. As soon as you ask her a question, the words come gushing out. And she makes good use of her energy, too: In 2014, together with the United Nations Economic Commission for Europe (UNECE), Eik initiated the United Smart Cities (USC) platform. “I met up with Gulnara Roll from the UNECE (Head of Housing and Land Management Unit) at a café in Vienna and said to her: 'smart cities – that’s the issue of the future. You (the UNECE, note) give us access to the cities – and we (OiER, note) bring you the companies and the investors, and coordinate the program.” With this new direction, the OiER experienced a significant boost.

But first things first. With USC, the two organizations wanted to fill a couple of gaps at once. There have been many smart city programs all over the world. Still, there is neither a uniform definition of the term “smart city”, nor are there guidelines on how these cities' success can be measured. In addition, cities are usually left on their own, and are not connected with one another on a global level.

United Smart Cities is the first ever bundled, global, multi-stakeholder platform for urban development: cities, governments, companies, investors, sustainability experts, international organizations and civil society – all of them should be brought together at an early stage to collaborate on innovative solutions and strategies in cities. The aim is to equip cities with the right information and communication strategies in technologies (ICT) – which form the basis of smart cities – in order to make them sustainable. The (virtual) heart of the whole thing is the United Smart Cities Marketplace: here, cities, industrial companies and financial stakeholders can exchange ideas and coordinate projects and financing models. An (extremely simplified) example: City X needs smart traffic management, Company Y can implement such a technology, while Investor Z comes up with sufficient funds.

The cities are either selected by the UNECE or they themselves apply to the program. “We’re now reaching 1,000 cities across our network. Not all of them are being evaluated, but they can also benefit from other parts of the program, such as the USC lab (the first lab recently opened in Vienna, where companies, startups and organizations can work on innovative solutions, note),” Eik explains. Thus, USC is much more than simply a networking platform. The participating cities must go through a standardized process that has never before existed. UNECE is mainly concerned with creating the key performance indicators (KPI’s) and city profiles that serve as a guide for cities to learn where they still lack sustainability. OiER brings in the companies to implement the projects and coordinates them with the financial sector.

Kari Aina Eik
…worked for the United Nations for many years. In 2013, she was elected Secretary General of the OiER – Organization for International Economic Relations. In 2014, together with UNECE, she initiated the global platform United Smart Cities (USC).

But how do cities tangibly benefit from the program United Smart Cities? First of all, it’s certain there is a need for action. The proportion of people living in cities is rising rapidly worldwide. In 2016, the number was at 54.4 percent; according to the UN, this will increase to more than two thirds by 2050. Housing, transport, energy systems, urban planning and city management require a fundamenally new way of thinking. Furthermore, cities are already responsible for 75 percent of the world’s current CO2 emissions caused by the combustion of fossil fuels. Three quarters of all energy is consumed in cities.

This importance and potential of cities is highlighted by the Director-General of the United Nations Office at Geneva, Michael Møller: “It’s particularly important that cities become partners in our search for a better world and ensure that the UN Sustainable Development Goals (SDGs) are being implemented. Most people on this planet live in cities. Cities provide us with services; cities are where we’ll nurse our children, and all aspects of human life.”

The 17 SDGs were adopted by the UN General Assembly in 2015 as part of the 2030 Agenda for Sustainable Development, whose targets include fighting poverty and hunger. SDG 11 addresses cities: “Make cities and human settlements inclusive, safe, resilient and sustainable”. The SDGs in turn form the reference for the KPIs in the USC framework. These indicators represent a global standard for evaluating the potential and progress of ICT implementation in cities. The KPIs were initially developed by the Environment Agency Austria, then by a working group from the International Telecommunication Union (ITU). In 2017, the ITU and UNECE, as well as other partners within the global platform “United for Smart Sustainable Cities” (U4SSC), established 92 indicators. The examined areas are for example divided into infrastructure, transport, productivity and air quality. Cities receive ten recommendations for action in the form of city profiles, and implementation of these is supported by international and local experts. “We want to integrate our partners into each of these ten projects,” says USC initiator and co-chair of U4SCC, Kari Alina Eik.

Ullrich Granser
… became a board member of the OiER – Organization for International Economic Relations, based in Vienna, about ten years ago. In the context of United Smart Cities, he is responsible for the industrial and financial divisions in particular.

Within the USC framework, UNECE has so far examined fairly unknown cities such as Goris (Armenia), Bursa (Turkey) and Astana (Kazakhstan). The concrete projects are still being implemented, for example in Bursa, where the South Tyrolean company Leitner Ropeways (part of the Leitner Group) is integrating a cable car into the city. A total of 50 cities were on the evaluation list, 18 of which have already been measured either by the ITU or USC, according to Eik. Consequently, it can be seen that United Smart Cities is open to cities of all sizes and development levels – not only in industrialized countries, but also in developing countries, emerging markets and transition countries.

“At the moment, 70 percent of the cities come to the program due to the financing models,” Eik reveals. She goes on to explain that sustainability plays an important role for the larger cities, but for cities in less developed countries, what draws them is the financing models, the integration of technologies and the efficient data management.

Michael Møller
…is Director-General of the United Nations Office at Geneva. He has more than 38 years of experience as an international official in the United Nations system, in various roles in New York, Iran, Mexico, Haiti and Geneva.

However, many urban development projects have not actually been completed yet. According to Granser, one in waste logistics has been finished in Africa, and one in urban infrastructure in South America. But the current „Solar Light for All” project in Accra illustrates the distribution of roles well. The capital of Ghana is receiving support in providing solar energy systems to improve the population’s access to electricity; OiER is coordinating the project together with the United Nations Industrial Development Organization (UNIDO), whose main contribution is know-how; the OPEC Fund for International Development (OFID) is investing US $800,000 in the project; finally, the African industrial partner PEGAfrica is providing the solar systems for households. According to an official USC document, PEGAfrica’s initial investment is $25,000, and its (expected) revenue is $650,000. The project is to be implemented in September 2018.

On this basis, it can be assumed that a high total value is accruing on the USC marketplace – but how much exactly? “It’s certainly in the seven-digit region, in euros. This is because the demand is currently very high – and we’re only in the development stages. With a financing project in the infrastructure sector, you soon end up in the double-digit millions,” remarks OiER board member Granser. He adds that in the future, there will also be a function on the marketplace to be able to ascertain the total volume generated by industry, cities and finance.

Eik, too, is already thinking beyond USC, as only recently the SDG Cities Leadership Platform was launched in New York, led by the OiER and the Global Sustainability Index Institute (UNGSII), among others. Designed to span seven years, 25 selected cities and five indigenous regions will be monitored in five categories, according to their size. They are to be provided with more resources than through USC, especially in terms of data collection. “It would be a resounding success if these cities fully achieved their development goals,” says Eik.

USC has taken her organization, OiER, to a new level. Eik remarks that she herself never expected such a rush. The Norwegian speaks of countless emails and calls from politicians and city officials. “I hardly ever meet a mayor who isn’t interested in having their city participate,” says Eik. Resources had to be increased, and a total of 50 employees are currently working on the program, many of them in foreign countries. OiER’s core team consists of ten employees. In total, the organization has 300 members and partners, most of whom come from industry and the transport sector, and most recently from the ICT sector.

More and more companies are joining USC, including some from South America and Africa. These include multinationals as well as local companies and startups. For the USC program, however, potential candidates must fulfil certain requirements: to become a member and use the marketplace, they must pay an annual membership fee to OiER. “These fees are graduated, and are a part of our financing structure. The funds that we raise through OiER (and USC) in turn flow entirely into our operating costs,” says Granser. But he does not reveal the amount of these contributions. In return, members can obtain concrete services from the USC marketplace, such as supplying company experts for it themselves or implementing projects with cities. In addition, companies must undergo a company rating, which has been drawn up by OiER together with the Vienna-based company Triple-A AG.

“This is very important because we are recommending companies at a top level (to cities, governments, etc.). We don’t tolerate or accept violations,” Eik states. There have already been companies whose contracts were not renewed. “Because some of them, in my opinion, follow too rigid a business model.” If a collaboration works, the contracts between the partners and OiER will be concluded for at least two years in order to guarantee a level of continuity.

Right from the start, DigitalGlobe has been one of these USC partner companies. The US company provides spatial empirical data for the evaluation of cities. “Nowadays, cities have to be measured in one way – that’s why the KPIs have been established,” says Alberto Lopez, Global Business Development Director at DigitalGlobe, where one of his responsibilities is smart city analysis. DigitalGlobe has a broad knowledge base to fall back on.

High-resolution satellite images from space and local data processing can be used to capture the entire surface of the earth and detect changes, for example in urban infrastructure. According to its own statements, the US-American company, founded in 1992, is the global market leader in this segment. The cloud archive, which stores data of the earth’s surface that is up to 18 years old, amounts to a huge 100 petabytes (one petabyte is 1,000 terabytes, note).  Forty governments worldwide, US federal agencies and companies such as Google (with Google Earth, note) rely on their services. DigitalGlobe puts a strong emphasis on cities: “With our Metro programme, we’re continuously capturing 6,500 cities worldwide and will increase that number as soon as our capacities permit. This allows us to see how a city changes and what happens within it. By combining this with our geospatial big data platform, we can extract a lot of information on a large scale,” Lopez says.

According to the Spaniard, the DigitalGlobe method can be used worldwide and conserves resources. The company’s largest markets have traditionally been the USA and Europe, but fast-growing markets such as China, India and Russia are also developing well. In fact, DigitalGlobe could close gaps in cities and enable faster responses to problems, because until now cities have encountered problems with information collection and processing: “In all cities, there is traditionally a lack of structured and continuously recorded geodata. All previously collected data was obtained using traditional methods. It was very expensive and difficult to keep it up to date.” This is also due to the fact that the performance of technologies and the cities’ know-how differ greatly, the Business Development Director continued. The information generated by the company can be used in a variety of sectors such as infrastructure, communications, mobility and the environment. “Cities need better services and information and – let’s put it this way – they need to be connected with each other in real time, at all times.”

With these thematic areas, DigitalGlobe seems to be seamlessly integrated with USC:  the platform enables members to take action in twelve different areas within the framework of urban development programmes. These include sectors such as energy efficiency, urban mobility, security, recycling, water management and infrastructure.  In the area of mobility in particular, cities are facing major challenges: self-driving vehicles, car-sharing and alternative drives are disrupting the (automotive) industry. Companies therefore increasingly see themselves as holistic mobility providers.

But for companies to understand the added value of participating in USC in principle, a degree of tact is needed. “You have to make clear to the companies what the programme’s benefits are for them. Getting involved means that they get an additional source of income, they can do something good in cities, create added value, and implement concrete projects. In the end, of course, the citizens and the city must always benefit as well,” says OiER board member Granser.

Cities could also benefit from DigitalGlobe, especially in the development of information and communication networks such as the Internet of Things (IoT).  This requires very precise data, which is constantly updated. IoT systems form the heart of smart cities, because sensors need to be distributed across various areas in the cities, networked via the IoT and thereby used to optimise processes.

The smart city solutions of the French electronics group Schneider Electric are mainly based on the IoT – and, just like DigitalGlobe, the company is a partner of USC. “Schneider Electric focuses on various projects in the private sector and works closely with private property developers all over the world. For example, we work very closely with companies in the water and energy sectors,” explains Gordon Falconer, Global Director of Smart Cities at Schneider Electric. By appointing him, the USC initiators have brought a seasoned expert on board. Falconer has been active in the smart city sector for more than a decade and is currently based in Singapore with Schneider Electric. Like Lopez, he is part of the USC’s Global Industry Advisory Board, which advises cities, governments and UN agencies.

Alberto Lopez
… is Global Business Development Director of the US company DigitalGlobe. Born in Spain, he joined the company in 2010, having previously worked for companies including Tekel Network and Genasys.

Now, the question arises - what does it take to make a city “smart”? "For this to be possible, it’s essential to improve the existing infrastructure. You can’t make a road ‘intelligent’ if there isn’t one there. A large amount of energy is lost in the electricity grid as well as in water and energy networks. Many cities are trying to find ways to rectify this,” says Falconer. The city expert clarifies that the industrialized countries have a much more established infrastructure than, for example, Asia, but at the same time this existing infrastructure is ageing, which in turn leads to challenges. One of the key points here is how much cities can save on costs by using smart technologies. Falconer can’t give any concrete figures. Generally speaking, obtaining them doesn’t seem to be an easy undertaking, as there is a lack of valid verifiability. The example of Copenhagen demonstrates the ambitious goals: in 2015, the Danish capital announced that it would save €600 million a year through its smart city strategy. The Danish capital is expected to be carbon-free by 2025. By then, at the latest, the numbers will have been brought back down to reality.

On the topic of cost reduction, Falconer nevertheless returns to the energy sector: “There are many solutions to reduce energy consumption, for example in transport, buildings and water distribution systems. It’s generally acknowledged that energy consumption is reduced by 15 percent when an intelligent energy management system is installed.” One example of this is the “most energy efficient office building in the world,” as Schneider Electric puts it. “The Edge“ in Amsterdam relies to a great extent on the company’s smart technologies. Various building management and energy solutions, as well as IoT infrastructure, are integrated into the building.

Markus Keller
… is head of Deutsche Telekom’s Group-wide Smart City Programme. Prior to that, he worked for Deutsche Bank and the Bavarian Ministry of Economic Affairs. He then moved to Deutsche Telekom as an assistant to the management board.

Schneider Electric is part of the movement that has seen tech companies focus on cities for several years now. Large electronics companies have long since recognized that this is a strategic step into the future – and offers an attractive business model, too. There is an incredible market potential of around $2 trillion in the smart city business by 2050, according to a study by Frost & Sullivan. However, the Global Director has no fears about the number of competitors: “All technology companies that operate in cities have different technologies – and they all have their own place. Schneider Electric focuses on operational technologies for the essential parts of a city. For example, Schneider cooperates with IBM and Cisco and many other partners – it’s part of an ecosystem.”

Falconer expects a lot from USC as an ecosystem: “Everyone agrees that things have to happen faster in cities if the SDGs are to be achieved. A lot still remains to be done in the cooperation between companies and the UN. However, the USC approach is crucial as a holistic framework for supporting the UN in creating smart, sustainable cities.” And the network continues to grow. USC welcomed its latest addition very recently (in mid-July, note). Deutsche Telekom, i.e. Europe’s leading telecommunications provider, which operates globally through its T-Systems ICT division, is now a USC partner. According to Markus Keller, Head of the group wide Smart City Program, the Group currently combines all the smart city activities of its various national companies and corporate divisions in one business unit. “We see information and telecommunications technology (ICT) as the fundamental prerequisite for smart cities. By combining USC’s network, our own experience and a comprehensive partner ecosystem, we can set the pace for smart cities worldwide.” Deutsche Telekom board member and CEO of T-Systems, Adel Al-Saleh, is also convinced of this: “We’re shaping the future of digitization, and with it, life in smart cities.”

Sounds promising. Yet, as far as USC is concerned, what will be decisive above all is the extent to which the companies’ varied expertise can be coordinated within the context of urban development projects. At any rate, the possibility of two companies from the same sector working on the same project in one city is not excluded, according to Granser.

In the end, it will be a few years before we know the extent of USC’s success. This depends in particular on which projects are completed worldwide and whether the platform can (continue to) gain innovative partners. If the network carries on its strong growth, OiER will also have to equip itself for the future. But it seems that both Eik and Granser are approaching said future with cool composure.

The article was published in our summer issue 2018 „Stadt – Land – Berg“.

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Editorial Team

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