Hutchison Management

This article originally appeared in Realcomm Edge Magazine, May 2010.

What’s in it for you? What are they? and How do you get there?

What’s in it for you? It could be higher prices and faster sales for buildings or new community economic development with $100 million in new salaries for every 1000 new jobs. More innovation and industrial “clustering” of companies, lower operating costs for buildings and lower carbon emissions for your community are other potential benefits. It depends on your point of view, competitive drive and interests.

The fact is that if you create one of the world’s leading intelligent communities, invariably the byproduct will be economic growth with increased land and real estate prices, and “new economy” job creation. The list could go on.

What Are They?
The Intelligent Community Forum (ICF ) annually selects the “Intelligent Community of the Year”. Its affiliation with the World Teleport Authority hints at the origins of intelligent communities. They evolved from districts around “teleports” that were ground stations providing the earthbound connections to satellite communications systems. Developers and real estate agents realized the business potential from the connections between a better communications infrastructure and superior opportunities when they found they could charge more for their properties and sell them faster. Entrepreneurs wired up the districts around these teleports with better than average communications facilities connected to the satellite ground stations, and this gave residential and business tenants in the district distinct advantages over other areas (higher speeds and lower communication costs).

Smart Valley in California’s Bay Area and Singapore’s Intelligent Island were important intelligent community pioneering initiatives in the early ‘90s, followed by Malaysia’s Multi Media Super Corridor and Hong Kong CyberPort in the late 90’s and early 2000s. Now the world is moving into “smart, intelligent or ubiquitous; s-, i- and u-cities” with increasing urgency. The equally increased momentum is being supported by initiatives around “Smarter Planet” (IBM), “Connected Living” and “Connected Real Estate”(Cisco) as well as other programs initiated by political leaders or private sector entrepreneurs like Richard Li, who promoted the concept for Hong Kong CyberPort. The success of earlier initiatives is also becoming better known and the entire concept has gained credibility.

When the Exceptions Become the Rule…
You would think that twenty years of historical evidence of the benefits of smart communities would cause developers, politicians and city economic development departments to fall over themselves to join the parade. This has not been the case until recently, with some notable exceptions. President Ma of Taiwan was Mayor of Taipei when his city won the Intelligent Community of the Year award in 2006. He was so impressed with the benefits to his city that, in 2008, after becoming president of Taiwan, he began an i-Taiwan initiative to make the entire country an intelligent nation. Singapore is now in its third multiyear intelligent community program with “IN2015: Intelligent Nation 2015”. This will ensure that it remains among the leaders of intelligent nations and communities.

Some municipal officials along with real estate, development and construction industry leaders are providing important leadership around the world, but many in the ecosystem are neither accepting nor promoting the benefits of investing in these new opportunities. On the other hand, Stockholm won the Intelligent Community of the Year award last year and South Korea has the massive Songdo and Incheon projects shown in Figure 1.

Figure 1

Abu Dhabi has Masdar and a number of other initiatives on the drawing board. The state of Ohio began with an advanced network originally called Cleveland One that is evolving across the state as the foundation for its intelligent community initiatives. Toronto has i-Waterfront, the largest intelligent revitalization in North America. Kentucky is promoting the first u-city in the United States – the Manhattan Harbor project in Dayton (KY).

It is generally accepted that buildings and their operations create 50% of the world’s carbon footprint. Yet the industry was not represented as a distinct sector in the Copenhagen climate discussions. Coordinated leadership is lacking. For new construction, creative new models are needed to encourage up-front investment in the intelligence of its buildings so society can reap the subsequent downstream benefits of emissions reduction. When and how do we get the industry to invest? The slow pace at which many city governments are moving to introduce new building codes and grant permit approvals, and the snail-like acceptance of new criteria for those permits are problems around the world. Even in the new well-publicized Middle Eastern cities and communities, “city hall” approvals often follow the same slow bureaucratic processes that plague many cities in the western world.

New investment models will have to allow developers to reap some of the downstream benefits of the additional front-end investments required for intelligent buildings. Some innovative new models have been introduced in Songdo, South Korea and other concepts are being explored in the Waterfront Toronto revitalization initiative, Figure 2.

Figure 2

How Do We Get There?
A model helps to understand the requirements for and elements of creating an intelligent community; there are many pieces to the puzzle. The five layer Intelligent Community Open Architecture “i-COA”® model in Figure 3 illustrates the main pieces of the puzzle along with the elements in each layer.

Figure 3

The advantage of this model is that the activities and elements within each layer can be described, as can the relationships between layers. Some notable communities, particularly new ones, are focused on Layer 1:Place. They promote iconic buildings and other structures designed to entice the public. Dubai is an example of where Place has a high priority. Other communities have promoted high-speed ultra broadband in Layer 2; but these have been weak in their support for new applications or content that capitalizes on the potential of ultra broadband. The Utopia network of communities in the US exemplified where weak support for applications and content resulted in low consumer acceptance of the network, until it increased emphasis on content, applications and customer support.

In her seminal 1961 book, The Death and Life of Great American Cities, Jane Jacobs argued that, “It is futile to plan a city’s appearance, or speculate on how to endow it with a pleasing appearance of order, without knowing what sort of innate functional order it has. To seek for the look of things as a primary purpose or as the main drama is apt to make nothing but trouble.” She would certainly have endorsed the i-COA model, with its concept of looking at all of the elements together when planning new communities or improving on existing ones.

Layer 1 is one consideration when creating great cities, but cities have won the Intelligent Community of the Year award without making significant improvements in their physical dimension. What they have done is add some very substantial new communications infrastructures in Layer 2, and then they have focused on Layers 3 & 4 to improve their collaboration ecosystems and create new content and application opportunities enabled by their new communications infrastructures. Layer 3 became a new “Collaboration Ecosystem” in the i-COA model. These new initiatives in innovation and business clustering supported creation of the new e-applications shown in Layer 4. It was this combination that won them global recognition as Intelligent Communities of the Year.

Sometimes these new e-applications provided new support for logistics services, as was the case in Singapore. In others (as well as in Singapore), it has been health care, business collaboration, education, government services, and community convenience services such as current information for transit. The question, ‘When will the next bus arrive?’ can be answered on your mobile phone – a good example of a “convenience” application. Glasgow, Scotland, and Fredericton and Moncton in New Brunswick, Canada each installed new advanced communications infrastructures to attract new industry and support the growth of existing ones. Fredericton and Moncton subsequently invested in new models for e-health, e-business and other applications and both cities were among the final seven intelligent communities in the 2009 awards from the Intelligent Community Forum. Glasgow won the award in 2004 after creating 60,000 new jobs while transforming its economy from shipbuilding and heavy industry to new knowledge-industry jobs.

The importance of a community’s collaboration ecosystem is demonstrated by the contrast between the Boston area and Silicon Valley in California from the ‘60s into the ‘90s. Both regions had excellent academic institutions and both were home to large IT companies. What Boston lacked was a collaboration ecosystem. Companies that were located along Route 128 around Boston did not collaborate or create collaboration ecosystems with the same energy as those in Silicon Valley. Collaboration over breakfasts, dinners and evenings in the pubs in Palo Alto, San Mateo, Menlo Park and San Jose are legendary. They provided the timely exchange of ideas between venture capitalists, company executives, technology leaders and academics. As a result, Silicon Valley outstripped the economic growth of the Boston area by a large margin.

Opportunities provided by today’s new fiber optic and advanced wireless ultra broadband networks will allow innovative communities to create new collaboration ecosystems. It will be interesting to see which communities identify the opportunities and aggressively move forward. Singapore is already laying the foundation, as are Taipei, Seoul and other cities and communities in Asia, Europe and the Middle East. Google’s recent announcement of ten one- gigabit-per-second communities of 50,000 people each across the US and the major fiber optic investment by Verizon provide impressive opportunities for new collaboration ecosystems.

Don’t Forget The Plan!
It is not only the speed of the network that is important; the model matters a lot! Will it be a closed access network or will it be open access (similar to a city street where anyone can use it subject only to some “rules of the road”)?

In 2009, two very credible reports were published. One was in the US, financed by the Federal Communication Commission (FCC), in response to a request from the Obama administration for background on the best communications infrastructure strategy for investing stimulus funds. The other was by the Organization for Economic Cooperation and Development (OECD). It produced a communications background report for its 30 member countries in response to a request from country leaders who met in Seoul in 2008. Both studies ranked the US and Canada in the bottom half of the world’s top 30 countries, and both strongly promoted the benefits of open access public networks as providing important strategic advantages.

The Door to the Future is ‘Open’
Telcos and cable companies have previously created closed access networks and engaged in “facilities based competition”. When the cable companies were able to get cable into homes, they had won the “competition”; they determined what content was and would be available to consumers. There was very little open innovation with respect to content in the home or for community development. Today, an increasing number of communities and governments (including the national government of Australia) are embracing the concept of open access networks. This is because they recognize that open access networks will provide the consumer with a wider choice of content in the home, including virtual tours of local and distant museums, a library channel, opportunities to watch local kids playing soccer, or whatever the local community activity happens to be. Local interactive health services are already available in communities with open access networks and their residents benefit from new cultural and business opportunities for community innovation and job growth.

New open access ultra broadband infrastructures with the next generation of collaboration ecosystems will support the rise of new Silicon Valleys. Unfortunately, political and business leaders in many cities and countries around the world seem oblivious to their potential. Their communities are falling behind while other leaders are creating important competitive foundations with open access very high bandwidth networks that will win the future as surely as digital cameras replaced film and the PC replaced the mini computer.

Now is the time for leaders in the property development, construction and real estate industry to lead once again, as they did when they actively promoted and led the creation of the original smart districts around early teleports. They pioneered the early intelligent districts. The opportunity now is to facilitate community transformation, economic development, social innovation and new jobs while showing environmental leadership with new concepts in intelligent buildings. Vast profits and new opportunities will go to those who lead the way.