Intelligent Utilities: The Missing Link to Smart Cities
In fall 2018, we convened a panel at the Smart Cities Connect conference in Tampa called “Intelligent Utilities: The Missing Link to Smart Cities.”
Panelists discussed how the smart city vision requires an engagement platform that connects people and dynamic, personalized information. Trusted utility providers can be the bridge between millions of households and businesses and their local governments. While people may engage with their cities once or twice a year, they engage with their utility companies monthly or more. Utility companies hold established community networks, data-rich infrastructure, and the means to innovate quickly and scale new tech — all crucial to a meaningful smart city movement.
Below is an edited transcript of their discussion.
Panelists:
- Mike Duffy, CEO and Founder, CityBase
- Lora McClendon, Vice President for Strategic Initiatives and Federal Affairs, Montgomery Area Chamber of Commerce
- John Smola, Director of Marketing and Business Development, Alabama Power
- Moderator: Liz Fischer, Chief Marketing Officer, CityBase
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Liz Fischer, Moderator: I’d like our panelists to weigh in on how they define “smart cities,” so that as we use the term throughout the discussion, we have a shared definition.
Mike Duffy: Sometimes I like to joke that a smart city is one where you can pull a freaking permit online. A smart city is one that provides a differentiated and specific service across data infrastructure.
John Smola: It is the convergence of data and infrastructure. You have multiple layers and silos and data and multiple different layers and silos of infrastructure. How do you break those down? How do you leverage multiple, distinct infrastructure and data sets to support whatever the goal of the smart city initiative is for that city or entity?
For instance, how do you combine operational data with public safety data with permit data? What insights can you gain from that? Same thing on the infrastructure side: Are you leveraging infrastructure and different ways of breaking down the barriers between all the various infrastructure elements of your city? Or for us, what we call the grid.
Lora McClendon: You have the infrastructure component, you have the technical component. The real question for us is: How do you then do purposeful things for your citizens, your government entities, your business community — based on that data collection, or those efficiencies you’re creating, the connectivity you’re able to provide?
It’s not just about the tools you use. You’ve got to actually create the programs and do something with the information that you’re gleaning and do something purposeful. That’s our angle: OK we’re going to work with these partners on this initiative but, what are we doing it for? What are our outcomes? How do we define success?
Moderator: What do you consider to be the key similarities between government and utilities?
John: I think the biggest similarities are that they are massive institutions, with multiple procedures and policies. Both cities and utilities are aligned on the community development goals of a city, the growth goals of a city, the business attraction of a city.
Lora: They’re a different funding model and financial model. There’s a little bit of flexibility in what utilities can do versus what the government can do, but there’s a lot of public scrutiny with both, which is a good thing. They bring different things to the table, but they have to operate within similar constraints.
Mike: Utilities and local governments have a common constituency. There’s only one of them in your life, and so their presence is ubiquitous. Where the utility breaks from the local government is that it crosses jurisdictions. And it has publicly-regulated private sector access to capital, and a mandate to provide a common level of infrastructure for the entire coverage area. And so it’s a very interesting partnership and a very progressive funding model. And it’s a regulatory structure that operates in the best interest of the constituents.
Moderator: We’ve seen a trend toward utilities getting more involved in what we commonly define as smart city initiatives. And so I think we wanted to start by asking John specifically, from the perspective of Alabama Power, what’s motivating that type of involvement, and where do you see Alabama Power kind of fitting into what we’ve defined as that smart city initiative?
John: Alabama Power is trying to be really proactive in this space. We are very intimately ingrained in the growth of the state of Alabama. Our focus is on the economic development of our communities and municipalities in those communities. And thus, the growth of the state of Alabama. We believe that, so goes those communities, so goes Alabama Power. And we’re in it for the service of those communities.
Getting more specific in the smart cities component of it: you look at the economic development landscape in the country, there’s a shift from the traditional economic development model of heavy manufacturing and industrial type recruitment to one that’s technology-based.
So if you think about the shift from large-size, heavy manufacturing right off the interstate — which we’re still active in and it is still going on across the country. But to compete with cities like San Francisco, New York, Boston, Chicago, our cities need to help nurture technology-based companies. To recruit and grow those companies, they want different infrastructure. And we define that infrastructure as smart city infrastructure. They want more connectivity, a better sense of place, a better quality of life, all of which a smart city supports. And that’s different than that traditional model.
Moderator: Lora, from the perspective of the Chamber of Commerce, from the city, how do you see the role of Alabama Power specifically or utilities in general in your vision for a smart city? And what distinguishes them as a partner?
Lora: In Montgomery, we [the Chamber of Commerce] are the economic development authority for the region, and then we obviously also represent the business community as a Chamber of Commerce. When we’re recruiting industry — whether that be in corporate and manufacturing or whether that’s through our small business and incubator programs — we’re not in the business of laying fiber or providing power or water. As we’re recruiting new business to the area and considering an evolving economy, we’re looking ahead and figuring out what our strategy needs to be to meet growing workforce demand and meet the connectivity needs.
As we look at how technology is disrupting status quo across the board, we naturally want to partner with somebody like Alabama Power who we have traditionally worked with as we’ve done the business of economic development for over 100 years now, in both of our cases. Alabama Power is at this inflection point where they’re pivoting and looking forward. We as a community are at this point where we’re very tied to what the demand is. So it’s this natural give and take of, “Let me give you feedback on what we’re hearing, and then let me leverage your resources and your infrastructure to bring some solutions to the table and compete as a community.”
John: I mentioned we’re proactive in supporting the economic development efforts of our communities. What we’re trying to get more creative and more innovative with is how do we leverage that same infrastructure that we’re using for reliability, security, resiliency, the grid, in ways that can support smart city initiatives?
How do we leverage any capacity that is on a certain network that can support some bandwidth for some public safety pilot? How do we leverage additional kiosks that we’re using in partnership with CityBase that allow customers to take payments? Are there ways to leverage that infrastructure that we’re using for the new customer engagement model to leverage some other initiative that the city or the county wants to have?
All those wires, building systems, networks that we’re using to operate the grid to support some smart city initiative that the city wants to engage in, whether that’s public safety, whether that’s public transportation, whether that’s data collection or municipal process. So that’s what we mean specifically about leveraging resources that we have that we’re using for core internal purposes that then go above and beyond to support some other initiative.
Moderator: Some common areas of focus between government and utilities are infrastructure and customer engagement. And I would love you, Mike, to talk about what that looks like at the customer engagement level. And again, the earlier question was what are the similarities and differences between utilities and municipalities? And you also talked about utilities crossing jurisdictions. So what can that look like in practice, and how can those complementarities be leveraged?
Mike: How many of you have downloaded a mobile app to interact with street signs or a data sensor? I’ve yet to get a hand on this one.
The cost of getting engagement to any initiative is the traditional marketing cost of it. How do you build awareness for a thing? A utility is the only ubiquitous entity that crosses jurisdictions in a state, and already has a relationship with the vast majority of households and businesses in that state.
So let’s say for example that if you’re in a given city, your water department is a good proxy, it interacts with the constituents on a monthly basis, and no matter where you are in the country, your water department will likely have the largest number of households sign-up for electronic communication. Your animal care and control agency will not ever have that same level of digital engagement, in any part of the country. It’s too infrequent an interaction. We find it takes three to six interactions to change someone’s behavior. An annual event like a dog tag will never happen; an annual vehicle registration, very difficult.
So you have to pay to market. Let’s say it costs a dollar to send a piece of mail or costs some lesser equivalent per person to advertise on the side of a bus. The point is that there are 63 counties in Alabama, hundreds of cities. Let’s just assume for the sake of conversation that we’ve got 25 agencies per each of those entities. You have thousands of entities that are, in effect, duplicating their cost to try to engage people for any kind of initiative. As we experiment into the future, we don’t know what those new initiatives will be, but we know they’ll all have a cost to gain engagement and adoption.
And so, there are opportunities in how technology brings these together to leverage and create a common engagement layer. There’s a massive arbitrage of cost, and there’s a massive efficacy that can be captured by creating a sense of a single persona from a data standpoint, to usher in this world of proactive interaction. That’s the technology piece.
Moderator: On the flip side of what Mike is saying, on the constituents’ side, they’re already bearing the cost to engage to, for example, drive to a payment center to pay in cash. And so how can we increase the value of that investment of theirs to give them access to not only, for example, to be up-to-date with the utility, but also to pay their water bill at the same time as their electric bill, or to check on the status of a city service that they’ve applied to? Leveraging technology that essentially combines and adds utilities to all of those interactions by stacking those jurisdictions.
And so having talked about what some of these partnerships look like, both at the infrastructure level, on the customer engagement level, what are some of the barriers to utilities and cities working together or leveraging each other’s strengths?
John: It’s not easy. We can talk about all these projects and cool things and leveraging kiosks, and technology, and data. I think the biggest barrier for us, from a utility perspective, is policies. We are obviously under a very heavy regulatory construct and a lot of policies have to respond to that construct. What we do with all of our infrastructures is guided by policies and procedures.
So how do we look at those policies and procedures? How do we adapt, tweak, potentially change some of those policies and procedures to allow some of these initiatives to take place? You can get very specific on that, whether it’s pole attachment type policies and procedures. Anybody who’s following, Small Cell and 5G know that’s a heavily conversed topic right now, but that’s just one of example.
How do you have a policy that then allows you to potentially leverage that piece of infrastructure, whether it’s a pole or a wireless network that you can’t touch and feel, for the purpose of something that’s adjacent, but not specific to its core purpose. So, for us, what I’ve seen is the biggest barrier is just understanding those policies and understanding how you potentially adapt and change or tweak those without impacting any of the initial reasoning for those policies surrounding safety and reliability, but then allows you to support the initiative of a city, a chamber, or a county.
The second thing is to really think about scope. There’s so much you can go after in the smart city space. So, you have to have a very defined scope and be very intentional, in my opinion, on not allowing too much scope creep in that or scope expansion.
So, understand, yes, a city’s going to have multiple focus areas, whether it’s sustainability, public safety, digital inclusion, whatever it might be, and those are all fair and legitimate. Just because you choose one focus area to start with and keep your scope doesn’t mean you’re not going to get to the other ones. But you have to have a very defined scope. It doesn’t have to be a limited scope, but just defined, and stick with that with your partners. Because if not, you’re going to chase so many rabbits, and that’s when it opens your initiative up to more risk.
Lora: For a lot of organizations like cities, counties, states, even chambers, I think one of the challenges is figuring out how to not box yourself in. So, when you’re making contractual agreements, part of the challenge — and I think part of what takes so long — is getting everybody around the table comfortable with how it sets them up to move forward.
Mike: Not knowing what the future’s going to be like in a year or two, and not getting boxed into a platform: that is very poignant.
All you can do is focus on the things that happen regularly: death, taxes, paying your electricity bill, interacting with your government. What we can do is create a platform that makes experimentation low cost. And then let the good times roll, let the innovation happen on its own. Let a kid five years from now figure out what the future of smart cities looks like.
