By Peter Bullock, Neil Carabine, Urszula McCormack and Donovan Ferguson. King & Wood Mallesons’ Hong Kong office.
We gathered senior legal, IT and infrastructure professionals representing transport, TMT, energy and consulting businesses for a roundtable discussion in Hong Kong (on an unattributable basis) around the opportunities for, and blockers to, Smart City development. We found reasons for optimism that Smart City technology would win through, along with frustration at the pace of progress.
The role of Governments
A small number of governments and municipalities have shown significant leadership in promoting themselves as Smart Cities. Obvious examples are Singapore, New York, Melbourne, Vienna and, to a lesser extent, London. Evolving city-wide systems (usually based on technology, but sometimes based on rules) requires an understanding of complex adaptive systems. Smart Cities require a level of collaboration not seen before. To achieve such collaboration there needs to be a central arbitrator for crossdepartmental decisions. Highly controlled economies are at an advantage (so long as those controlling them are pushing a Smart City agenda). Green-field sites, such as Malaysia’s Putrajaya and elements of the Tianjin new city experiments, can also be created along lines most susceptible to smart usage. Some Indian municipalities have even been corporatised, operating through SPVs.
Singapore’s Smart Nation programme is a huge top down effort through which the Singapore Government has brought all stakeholders under one umbrella. It is essentially a privately run city. More than US$70 million has been spent to digitise the entire Singapore city state, to provide a resource for TMT vendors, entrepreneurs and government departments to use to promote Smart City projects.
Hong Kong’s traditionally laissez-faire approach is poles apart from Singapore’s example. Geospatial data is the backbone to area-wide collaborative services and transportation adopting IoT (Internet of Things) technologies. Whilst all Hong Kong Government departments now apply the same standardised mapping system and data, there is little cross-departmental liaison. Whilst the Water Supply Department may be concentrating on a system for detection of pipe leakage, it will not be joined up with a Traffic Department initiative to improve traffic flows. Data collected is jealously guarded. This may be grounded in an historic trend of upholding privacy, explaining this in part.
The leading Smart Cities have all inculcated a culture of opening up all their data. New York has opened up the most data, and Transport for London (TfL) has also made strides in this area. This has fuelled Hackathons, where developers try out Smart City concepts using real life pools of data. In Hong Kong we would be struggling to find such available data upon which to experiment.
There is a view that cities lacking a beautiful topography need to try harder to make themselves attractive to today’s knowledge workers (Melbourne compared to Sydney; Singapore compared to Hong Kong). However, there is a significant push in the opposite direction now that Hong Kong is suffering outflows of talent owing to liveability issues such as air pollution and a crisis in affordable housing. Hong Kong’s Government CIO recently lamented in a public forum that it would take “years rather than months” for each new (Smart City specific) regulation to be included in the Buildings Ordinance. Further, he said that although Government may use open source products to encourage third party usage of Smart City systems, Government will not prescribe the format or interoperability of any non-government related systems. That would be up to the private sector. It seems that in Hong Kong, where there are so many powerful business interests at play, it is easy to say ‘No’.
Despite this apparent pessimism, there was a body of opinion that Government could not be expected to command a Smart city, that smart city evolution would inevitably come to Hong Kong, and that the city’s existing planning advantages (of high density living and mixed residential, retail and transport hubs) would prove an advantage.
“MUCH OF SMART CITIES RELATES TO LIVEABILITY AND SUSTAINABILITY RATHER THAN THE DEVELOPMENT OF IT AND TELECOMMUNICATIONS.”
What about SMEs?
Whilst a lot of the infrastructure underpinning Smart City concepts requires the deployment of very significant capital (Internet backbone; 5G networks; residential battery storage, etc.), many of the disruptive technologies and ideas for Smart Cities are coming from IoT startups. Examples can be seen in such diverse areas such as: waste collection optimisation; parking solutions; Airbnb for commercial spaces (PopUp Immo – Hong Kong) and education. The ideas often respond to peculiarly local needs (Bynd offers commuting car sharing in traffic-bound Sao Paolo; Flattire a bike fixing platform, comes from bike-friendly Amsterdam). These can improve life for the many who use them.
However, SMEs are generally unable to offer leadership within a city, or to set standards which will be followed by others. In the rush to get to market, and perhaps lacking the self-belief that they will succeed, many SME solutions are marred by a lack of foresight in the areas of scaleability and cybersecurity. SMEs may be amongst the first on the block in terms of Smart City development. However, they are unlikely to lead cross sector development.
Where do Corporates rank in Smart City enlightenment?
A new generation of corporate leaders (still often family controlled in Asia) are talking of the need to re-wire their enterprises, even at the expense of short term profits. What opportunities that will unlock remain to be seen. An early example is Li & Fung’s pledge to invest US$150 million over the next three years in its supply chain, primarily on digitisation and data analysis.
Even substantial corporates, who should be in a position to control the actions of their managers and employees, are finding that the degree of coordination and collaboration (between technology, training, knowhow, data base management and user groups) is so great on Big Data related change projects that even the most promising are shelved at the pilot stage.
Those projects that are pushed through require incremental steps. Smart metering was first piloted with 4,000 customers from small, medium and residential users. It will next be rolled out to several tens of thousands users before considering network-wide adoption.
What makes a City smart?
It is hoped that Smart Cities will not be seen as the latest hype by technology vendors to sell more kit and ‘solutions’. Indeed, much of Smart Cities relates to liveability and sustainability rather than the development of IT and telecommunications. Much could be done in terms of transport policy (exhaust reduction, pedestrianisation), greening (whether preserving trees or City Tree air-purifying systems), energy usage (double glazing) and sustainability (regulations restricting unnecessary residential unit refurbishment) which does not involve computers.
“WHILST A LOT OF THE INFRASTRUCTURE UNDERPINNING SMART CITY CONCEPTS REQUIRES THE DEPLOYMENT OF VERY SIGNIFICANT CAPITAL, MANY OF THE DISRUPTIVE TECHNOLOGIES AND IDEAS FOR SMART CITIES ARE COMING FROM IOT STARTUPS.”
Perhaps Hong Kong’s biggest shortcoming is its lack of provision of suitable and affordable housing. Solutions will likely inflame vested interests across those who develop or have profited through ownership of Hong Kong’s residential housing stock. But, once again, answers are unlikely to rely on computer technology.
The construction sector (described as a “shambling giant”) has been a slow and poor adopter of technology. Building information modelling (BIM) offers huge advantages both in terms of cost and time saving and avoiding rework. This is a major focus in the architectural services sector.
Simulation technology (Virtual Reality) can be used in safety critical systems for training, and can also be undertaken online, with attendant saving on travel.
Operational efficiencies can be gained using IoT based systems for maintenance of safety systems (whether lighting systems on runways, or checks of a rail system) within the limited two hour per night maintenance window.
As it has been reportedly found that nursing staff spend 20% of their time searching for equipment in large hospital buildings – using a simple RFID based tagging system would considerably enhance efficiency.
Looking slightly further into the future, power generation companies may find novel ways to deal with occasional spikes in demand. Faced with six or seven hours a year of system peak demand, rather than build another stand-alone power plant (at huge financial and environmental cost) the power company might offer the owners of electric vehicles a financial incentive occasionally to make available 20% of their accumulated charge to cover the shortfall. This use of flexible capacity is being trialled in other countries such as the Netherlands and Germany, using blockchain technology. Implementing distributed energy technology solutions (such as peer-to-peer transfers) are tougher, given that the potential for renewables is limited in Hong Kong (estimated at a maximum of only 10% to 20%).
It is practical solutions such as these, rather perhaps than refrigerators which automatically reorder cartons of milk, which will herald the onset of truly Smart Cities.