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Who Will Own the Infrastructure in the Smart City?

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There is great enthusiasm for the smart city concept. Integration of autonomous vehicles, drones and networked communications are expected to manage congestion, lead to fewer accidents, reduce pollution and enhance quality of life.

The smart city was a major theme at the 2018 Consumer Electronics Show (#CES2018), hosted by the Consumer Technology Association.

Will smart cities be vibrant bastions of competitive private free enterprise and innovative new networks of communication that simultaneously respect individuals' privacy?

Or are planners on a path to setting up mega public utilities and administered cartelization, and compulsory information collection?

Will there be vibrant creative destruction?  Or instead lock-in of standards and technologies and exclusive franchises that benefit certain vendors and protect them from competition?

Policymakers used to talk about privatization of infrastructure (as well as lands and government labs).

Much of that withered, although efforts to liberalize telecommunications infrastructure and to free spectrum enjoy some love.

Some also worked to liberalize electricity grids, that is, to deregulate the infrastructure itself, not just the “flows” over it (the now semi-illusory competition of  “choosing your electricity provider"). In part because of that failure, cybersecurity and infrastructure vulnerabilities persist that we might not otherwise have.

In thinking about smart cities and the infrastructures that will compose them, it matters that we were incapable of liberalizing these predecessor infrastructures.

We should have long since removed inefficient regulatory barriers between infrastructure sectors that even today keep them siloed (electricity, telecom, water, sewer, roadways).

If smart cities start with buildout synergies untapped, they cannot become nearly as efficient and smart as they should. These predecessor infrastructures are part of the foundation of what comes next. If they've already got two left feet, so will the smart city.

It was not inevitable that past infrastructures became regulated monopolies against whom it was illegal to compete. The modern risk is that the same kind of rent-seeking and regulatory capture that set innovation back then, could do so now.

Some had been recently making the case against municipal broadband, in the sense that governments should not be competing with the private sector. Smart cities would go much farther than that trivial-by-comparison unwise model without the same scrutiny.

The actual privatization noted above matters even more. Governments own the roads on which driverless cars will travel. Drones will traverse FAA-allocated airspace.

The very locational technologies that now make a smart city something thinkable in the first place also make it possible to reconsider those legacy "pre-historic" modes of governmental rather than private control, ownership or divestible licensing. You may not be ready to sell off all the roads, but think about what is not yet built.

Another question is who’s going to pay for all the new? A CES 2018 panel on financing the smart city ecosystem discussed the strain for city budgets. If taxpayers, we’re talking purely public utility and public infrastructure.

Often excitement accompanies the groundbreaking and ribbon-cutting of grand projects. But in the future you wind up with sewers that can’t accommodate diaper wipes.

NPR on November 28th explored  the unreliable automatic operation of the metro trains; that the technology has existed since the 70s yet can't be used might or might not give pause to enthusiasts of government management.

New White House executive orders on infrastructure permitting on everything from pipelines to transportion to 5G broadband should encourage the private sector.

There are also important privacy concerns given that one driverless car can generate vast data, and reveal a lot about you to authorities alongside.  It would seem that smart roadways in which governments run the communications technologies and compel their interface with autonomous vehicles will be anything but private for the citizen. The federal government already sought to set its own standards for vehicle to vehicle (V2V) and even vehicle to infrastructure communication (V2I), but that process has fortunately slowed.

That data collection could even make you and your property subject to outside control; the federal government might remotely tune your air emissions from Washington in a cartoon extreme. We don't want the smart city to play nanny and spy. That's not quite representative government.

The bottom line is that in the discussions about the smart city, the ownership status of the elements of the increasingly integrated city are unclear. But liberal economic systems depend critically on the institutions of private property rights and contract. I haven't heard much discussion of either in the context of smart city infrastucture.

But we need that flexible entrepreneurship in determining how much intelligence will be in the road, how much in the car, how to make the road and car symbiotic. Entrepreneurs must govern the real-time choreography among smart (and dumb human-driven) vehicles with different degrees of autonomy discussed at CES. Given miniaturization, there may not even be smart cars, but instead husks or "sleds" into which you snap a handheld smart device. The point is that obsolete technology needs to be replaced fast, something hard to do in politically managed enterprises.

Not long ago, we were being told that we were all going to work from home and telecommute as technology made location irrelevant.

The promise of technology was to render the city obsolete. Now it seems we're all going to live in smart cities and ride in autonomous vehicles.

I'm more than OK with that. And with the proposed vertical cities and floating cities, if those are what folks want. But as one cynic I read in online comments said, maybe fix the potholes first.

Part of the answer may be that, just as cities have grown by leaps and bounds, the smartest cities, and the best testing grounds, may happen on the peripheries, where roads emerge with more proprietary ownership and tolling models. They in turn could become the growth areas, and inform the adjustments made in the core.

One often hears of public private partnerships, and even the acronym PPP, but here's hoping for greater emphasis on private-private partnerships, driven by private financing, and relaxation of antitrust so mega-deals and mega-scale infrastructure projects can happen, and novel concepts like user ownership of grids, and plenty more.

I’d like not just smart cities, but genius cities. For smarts, the principles of free enterprise should more explicitly frame the discussion.

Originally published to Forbes.