Today, 55% of the world’s population lives in urban areas, and before COVID-19 hit, the United Nations expected that proportion to hit 68% by 2050. While it’s too early to know with any certainty, the pandemic may have a long-lasting impact on business and consumer attitudes toward densely packed cities. Regardless, we believe the “smart city” movement grows even more vital in the face of the coronavirus pandemic, as urban leaders will face demands to control movement, monitor myriad parameters, identify emerging hotspots, and allocate healthcare intelligently.
Smart-city technology has proved its mettle during the pandemic. Municipalities can use smart thermal sensors to identify existing hotspots, predict emerging ones, and take concerted action by orchestrating other agencies. Such tools have already helped the cause. For example, in the hard-hit city of Daegu in South Korea, a smart-city data hub helped epidemiological investigators “request, obtain and confirm data about coronavirus cases and people they have come into contact with, through a single platform.” And in Madrid and elsewhere, urban police forces have used drones to enforce quarantines.
The role of telecoms
It stands to reason that telecoms are a key enabler of the global smart cities market, which is expected to reach $237.6 billion by 2025, according to Grand View Research, expanding at a CAGR of 18.9% from 2019 to 2025. Building on existing infrastructure, telecoms can bring together myriad new solutions and services.
But — and in our opinion, this is a major “but” indeed — in order to seize this opportunity, telecoms will have to assert themselves and embrace a more powerful role.
Today, telecoms are reliable connectivity partners for the smart city infrastructure — connecting people and things, enabling industry solutions. But Ovum estimates that connectivity per se comprises only 5% to 10% of the smart-city value chain; for ambitious telecoms, the real opportunity is far greater. According to a GSMA report, only a quarter of investments from telecoms and tech companies concentrate on end-to-end solutions, and of more than 1,900 investments made by nine leading tech and telecommunications companies since 2010, only 66 involved smart-city ecosystems.
The challenge and the chance
We believe the smart-city movement in general, coupled with specific needs related to COVID-19, present a clear opportunity for telecoms to move up the value chain. Here are areas in which they should focus their decisions and investments in the near term: