This is the third installment of a series in collaboration with the World Economic Forum’s Centre for the Fourth Industrial Revolution (C4IR) Japan, which will explore how the coronavirus pandemic has revealed the need for a reset of the world’s economic and social systems.

In May, the Diet passed a “super cities” bill designed to help cities and towns build digital infrastructure though partnerships with private-sector technology companies. Selected cities will apply artificial intelligence and big data to areas like transport, municipal administration, medical care, education, utilities and crime prevention, with the aim of making public services more efficient and user-friendly.

The initiative is part of a wave of revived interest worldwide in so-called smart cities. Chizuru Suga, head of the World Economic Forum Centre for the Fourth Industrial Revolution Japan, tells Jonathan Soble what the digital cities of the future have to offer — and what pitfalls need to be avoided to ensure they serve citizens’ interests first.

Smart cities is a buzzword that’s been around for a long time. What does it mean to call a place a smart city in 2020? And why has there been a revival of interest in the idea?

To answer the second point first, the technologies of the Fourth Industrial Revolution — artificial intelligence, big data, ubiquitous sensors and cameras — are already radically changing the way people interact with each other and their surroundings.

Your phone and the apps on it are a kind of personal “smart” environment, enabled by the collection and sharing of all sorts of data. It’s an environment that’s built and managed by private companies — the phone manufacturer, the app developers, the phone company, and so on.

At some point, this environment intersects with what we think of as traditional public services — things like traffic control, public transport, utilities and public safety — and it’s happening right now. Cities are now in a position to collect large amounts of data on these things and use that data to operate more efficiently. Or they can share the data with others who want to try their own innovations. All of which could be hugely beneficial, but it also raises questions about privacy, data ownership, who should pay for the necessary infrastructure and how they should be rewarded.

As for what smart cities look like, they’ll look like the cities we live in now. Or the small towns. We say “smart cities,” but the idea isn’t limited to major urban areas like Tokyo — “smart community” might be a better word for it. In any case, it’s not about building futuristic new physical environments; it’s about integrating digital technology into the environments we have.

The difference is that you’ll have access to a lot more information about that environment, delivered to you in real time — like having your own Tom Nook from Animal Crossing, but instead of providing a route map of public transport on paper, he’s sending you a map of the island and an alert on your phone telling you your bus is running late.

Advocates for smart cities talk a lot about resource management.

Smart cities are at the front-line of resource efficiency. Going digital opens up new avenues for the effective and efficient operation of society, since you can optimize energy, water, garbage collection, even health care delivery.

These efficiency gains can be shared by all of society, if the system is properly governed.

That doesn’t mean it’s easy. If it were simply a matter of increasing public investment in digital technology, that would be pretty simple. But it’s not just that one decision — it’s hundreds of decisions made by thousands of national and local governments in Japan and around the world. If we’re not careful, we could end up with a mishmash of incompatible systems. Or cities could end up giving away too much to technology companies with more resources and savvy than any individual local government.

Toronto recently ran into controversy over a proposal by a Google subsidiary, Sidewalk Labs, to install and operate the digital infrastructure for a new waterfront development. Residents didn’t like the idea that Google would own the data it collected from this public space.

Companies that invest in smart infrastructure think the data gathered by that infrastructure should be theirs, since they made the investment, but that’s not the way it should work.

If you’re going to collect data in public places, the starting point has to be that the data belongs to the public — that it’s a shared public good. From there, you can start to look for ways to reward the businesses that built the system. That could be through exclusive access to the data for a limited period, or the exclusive right to a certain level of granular detail.

It’s tempting for local governments to accept offers of low-cost technology from vendors who are interested primarily in collecting data. Financial sustainability is crucially important, both for the buyer and the seller — there needs to be some incentive for technology companies, or else no one will invest in infrastructure, and no one will maintain it. But that can’t mean the outright privatization of public information. We need a creative remuneration framework to achieve both financial sustainability and public benefit.

Recently there has been a lot of talk about digitalizing in Japan. Is it about becoming a leader in this area, or catching up with other countries?

It’s true that Japan hasn’t really felt the necessity to digitalize until recently.

Municipal governments, especially, have kind of muddled through. But some cities have become more ambitious, as a way of competing for talent and investment. Kaga, in Ishikawa Prefecture, and Fukuoka, for example, are emerging as leaders in smart city infrastructure.

One problem is the way cities undertake procurement, which is very out of date. They’ll ask a technology company to build, say, a database of nursing-care patients in the town. They want the system custom-made for them so the changes they need to make to their existing procedures are minimal. And they don’t want to pay huge prices. The only way to do that is to accept that the town will be stuck with that technology provider forever, since no other company will be able to work with the system it built.

That kind of deal might have been acceptable in the past, but when you’re talking about a much broader digital transformation of a city, locking yourself in like that would be disastrous.

Japan was a major promoter of a new global smart city alliance endorsed by the G20. The World Economic Forum is also involved. What is this all about?

There has been a kind of race among cities to partner with big tech companies on digital infrastructure.

It’s a huge emerging market from the companies’ point of view. But if local governments negotiate individually with global mega-vendors, there’s no way they’ll end up with good deals. Their knowledge of the technology and their bargaining power is simply too small.

There’s a need to educate and empower buyers, to get them to understand what they’re really getting and at what cost, and also how their own habits and demands might be hurting them — like with the issue of excessive customization.

To make digital investments financially sensible while avoiding vendor lock-in, cities need to decide in a strategic way what elements should be standardized and what elements should be left open to customization. The idea of the G20 Global Smart Cities Alliance for Technology Governance is to be a kind of knowledge bank where cities can share ideas, experiences and best practices.

One goal is to develop shared principles in five areas: privacy and transparency; security and resilience; openness and interoperability; equity, inclusivity and societal impact; and operational sustainability.

In the end, well informed and educated buyers would make the global smart city market healthier and more efficient.

A sort of global standards body for digital infrastructure?

Standards in the technological sense, to some degree, but even more in the sense of governance. What are the core principles that cities should abide by when they go “smart” and digital? Things like privacy protection, inclusivity and so on.

One watchword is “interoperability.” Standardization means everything is the same, which is great for efficiency but leaves no room for innovation. A lot of digital technology is still in an early phase of development, which means it’s too early for full standardization. So instead the idea is to create a kind of minimum set of rules that allows technologies adopted by City A to be adopted by City B with the least amount of hassle and additional investment.

This is especially important for Japan. The United States will always be a big enough market that it can set its own standards and still attract investment. China is becoming a market like that as well. But Japan, though it isn’t exactly small, doesn’t have that power. It’s ironic for a country that’s known for having adopted a lot of seemingly old-fashioned local standards in the past, but now our interest is clearly in promoting shared global rules.

Chizuru Suga is head of the World Economic Forum’s Centre for the Fourth Industrial Revolution Japan, and leads projects related to health care data policy, next-generation mobility, smart cities and other fields. Previously, Suga was an official at the Ministry of Economy, Trade and Industry. Jonathan Soble is the center’s editorial and communications lead.

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