India, in the next 35 years, is poised to add 400 million people to its cities. As she continues to experience rapid urban expansion, a raft of challenges emerge, taking a major toll on scarce resources. A deep understanding and planning of the current level of deployed resources and the gaps in the deployment versus the required level of resources is required. This can be done only by running rigorous data analyses on current investments to identify ways of improving resource utilization.

The Indian government has zeroed in on 83 smart city initiatives, which will be implemented in 20 cities in an initial phase of the nationwide program. The selected cities are Bhuvaneshwar, Ludhiana, Pune, Jaipur, Surat, Kochi, Ahmedabad, Jabalpur, Visakhapatnam, Solapur, Dhavangiri, Indore, the New Delhi area, Coimbatore, Kakinada, Belgaum, Udaipur, Guwahati, Chennai, and Bhopal.

Indeed, the scope of India's Smart Cities effort is quite ambitious. Its initial five-year window is from 2015 to 2020 with a total budget of about
50,000 crore. The central government plans to invest 500 crore per city during this period, and respective governments, ULBs, and private investors are expected to raise a matching amount. While the Center would fund 200 crore per city in the first phase, it would subsequently pump in 100 crore a year for 3 years. The initiative focuses on creating new business incentives, pushing state governments and ULBs to create a more
business-friendly environment, and attract additional private capital for long-term infrastructure projects. Accordingly, 10 percent of the budget is reserved for incentive payments to respective state governments or union territories. Assistance of 3500 crore from the World Bank and of 6500 crore from the ADB in the five-year period has also been promised. The initial authorized corpus of National Investment and Infrastructure Fund would be 20,000 crore.

The total outlay over the next 20 years is of 98,000 crore to execute 100 smart cities mission and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for 500 towns and cities to promote smart solutions for the efficient use of available assets, offer economic activities, investment and employment opportunities, and improve the quality of life of a wide range of residents.

The main challenges underlying in the implementation of the smart city include the digital divide, that is, the social and economic inequalities which come about as a result of non-uniform access to communication technology, and the way of its application. Awareness about smart solutions will also play an integral part in developing smart citizens. Apart from substantial investments by local authorities in smart solutions, effort to raise citizen awareness on the efficient usage of these solutions and services is also a crucial step.

Role of Underlying Communication Technology

Telecom. Apart from all these factors, the prominent base to a smart city project will be the underlying communication technology. In spite of efficient communications networks existing in a city with its own fiber networks, or dense networks of sensors, connectivity is still posing a challenge for smart city innovation. The connections between sensors and the core communications infrastructure should be modified into application-specific basis, or on multiple application support basis.

Networking solutions. Numerous solutions suggested are low-power, wide-area network (LP-WAN) IoT network services, cellular operator's data network services, satellite data services, existing fixed network, new wireless mesh networks or narrow-band radio networks, or a new fixed network with wireless gateways. Mobile operators are using 2G and 3G cellular networks to support M2M connections, which were primarily designed to connect mobile phones; these existing networks are not well suited to serve the emerging IoT market, which increasingly requires dedicated networks.

If a smart city is implemented with collection of IoT applications, there will be a need for high-capacity communication networks to carry out the same. This will lead to an opening in opportunities for both network equipment manufacturers and telecommunications service providers, with several branches available to market for those companies. A cellular network may deliver appropriate connectivity for every smart city application on its own, alongside satisfying many requirements, especially for smaller smart cities that might not be able to contemplate building new infrastructure and will prefer managed service provision at the network layer.

Also emerging narrowband IoT (NB-IoT) networks and partnerships between competing IoT LP-WAN providers can enable a network in meeting the terms of smart city implementation.

NFV and SDN. Network function virtualization (NFV) and software-defined networking (SDN) have also brought the network operators to a better position due to which the networks can be capable of delivering network services which meet specific requirements. New commercial models for service delivery will be required for the same.

Vendor Initiatives

Many solution providers including Ericsson, Cisco, IBM, Huawei, Nokia, and ZTE are already paving the way to capture business opportunities in this field.

Last year, ZTEsoft, the software subsidiary of ZTE, signed a memorandum of understanding with Gujarat state to collaborate on the development of smart cities projects.

Under terms of the agreement, ZTEsoft and the Gujarat state plan to target locations to initially launch a trial. ZTEsoft also announced plans to invest around 500 crore in attendant projects in India between 2015 and 2020. The vendor has recently signed agreements with the governments of Haryana, Gujarat, and Andhra Pradesh.

Huawei works as an infrastructure provider for ICT solutions of smart cities, and it will offer an open platform which will hold all the applications in vertical layers. The vendor is also set to kick off a number of smart city projects in collaboration with partners. The vendor is looking to collaborate with system integrators, software developers, and other partners to form a smart cities platform, which can be deployed across the identified cities in the country.

Cisco is engaged with state governments at various levels to digitally transform 14 cities with help from its partners. It is currently focused on making a big foray into cloud, Internet of Things (IoT), and cyber security. It has launched its manufacturing operations in Pune and has already closed four project proposals in Navi Mumbai, Pune, Jaipur, and Lucknow offering collaborative networks and data analysis.

Ericsson expects that by the year 2020, 20 percent of India revenues will come from its Industry and Society unit, which focuses on smart cities. The company has also signed an agreement with Sterlite Technologies. The alliance will design, deploy, integrate, and manage solutions in areas such as communications, public safety, intelligent transport, and smart grid solutions, which will enable the establishment of sustainable smart cities in the country.

Nokia sees smart cities as a great opportunity, as every time the basic infrastructure needs to be built, it is a chance for them to come in. The vendor is betting on IoT. It expects a lot of man-to-machine and vice-versa type of technology coming in.

IDC adds that smart city projects offer significant partnering opportunities between technology vendors and the government across various initiatives. These include Integrators like IBM, Oracle, and Accenture, who provide unified integration of multiple components; network service providers such as Cisco and Verizon, who offer collaborative networks and data analysis; product vendors like Honeywell, Schneider Electric, and Siemens, who provide products that operate as main nodes of connectivity; and managed service providers like IBM and Infosys, who provide monitoring, management, and consulting.

Given the fact that the Indian economy is being increasingly driven by highly skilled services such as information technology, telecom, engineering, and knowledge services, there is tremendous potential to utilize and develop the available human capital and skills for incubating future innovations in ICT integration. In addition to this, the political will and commitment of the central government promises to bring in large-scale reforms to support the smart cities initiative.

ICT is the basic infrastructure for all smart cities. There is no limitation on collaborations and innovations that can be adopted across various departments and with multiple stakeholders. ICT enables the city and the governance to bring in participation from the citizens and integrate their inputs in the processes.

By extending community participation, it not only empowers the citizens, but also allows them to develop a sense of ownership of their cities. Thus, the smart cities initiative would result in sustainable and thriving Indian cities – new and old – if implemented properly with active involvement of all stakeholders.

Ganesh Ramamoorthy, Research Vice President, Gartner

"The lack of a holistic, framework-based approach and a viable revenue model are stalling large-scale smart city projects in India. As a result, many small pilot projects are underway, but no big citywide projects have been announced. Through 2020, it is expected that less than 10 percent of smart city projects implemented across India will be of a large-scale, city-wide nature.

"While many Indian cities have announced smart city projects, a structured approach in selecting these projects has thus far been missing from most city councils. To succeed, technology product management leaders of smart city products and services must focus on a long-term, consultative approach, and innovative revenue models.

"The good news is that India's central government has now appointed a CEO for every designated smart city to ensure long-term continuity and a more holistic approach to smart city development. The city CEO office will need time to establish the necessary protocols, policies, procedures, and mechanisms, as well as other modalities for interdepartmental communication, transaction, and functioning with respect to smart city projects.

"Funding for smart cites will also require serious consideration. Of the current funding, only about 20 percent will be used for IT-based smart city product, solution, and service implementation, while the remaining 80 percent will be used for physical infrastructure development.

"As a result, city officials will likely look to the service providers to fund initial projects. Product managers of smart city solutions, services, and products must, therefore, think carefully about the revenue model of the projects that they are targeting in order to ensure they get reasonable returns on their investments. They must take a long-term approach that mutually benefits all the stakeholders – the city council, commercial establishments in the city, the citizens and the service providers."

Ganesh Ramamoorthy
Research Vice President,
Gartner

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