US carrier Verizon discovered the secret to smart-city building in Sacramento, in California, it says. “We tried it there first, and we’re now replicating it with a lot of cities,” explains Lani Ingram, the company’s vice president for smart communities.
The revelation for Verizon, as for the smart city industry at large, is that large-scale city projects can, indeed, be funded through ‘public-private partnership’, declined alternatively as 3P and PPP in North America and Europe, respectively. The rollout of 5G in cities in the US has focused minds on the commercial upside of partnership around a variety of related services.
“The goal is a give-get between the city and Verizon. We are investing heavily to deploy our connectivity infrastructure across the US anyway – sometimes 5G, sometimes 4G, sometimes fibre. And as we do that, there are economic benefits to see if we can do more from smart city point of view,” says Ingram.
“Because we are climbing the same light-poles, digging the same streets, and going through same permitting processes. It is a very physical industry.”
Verizon’s Sacramento adventure has been building for 18 months, at least. It announced pre-commercial 5G trials in 11 cities, including the Californian state capital, in February last year. The Mayor of Sacramento, Darrell Steinberg, confirmed last summer Verizon had signed a $100 million deal to build the infrastructure to bridge its digital divide and support its tech sector.
“He wants to make Sacramento the ‘capital of technology, art and food’. It’s a nice approach, with a human element. It describes the culture he wants to build. He wants the city to attract talent from Bay Area and San Francisco – for people to build jobs, businesses and lives there. He needed to transform the whole environment. The smart-city effort has been a key part of that.”
Towards the end of last year, Verizon outlined its new 5G roadmap. Again, Sacramento was at the heart of the action, as its first ‘5G city’, and one of just four venues pegged for early Verizon-style 5G services, alongside Houston, Indianapolis, and Los Angeles. Rollout of fixed-wireless access (FWA) services in the millimetre wave (mmWave) band is under way.
Its partners in Sacramento have variously included Ericsson, Cisco, Samsung, Intel, LG, Nokia, and Qualcomm. Its developing workload in the city has been rolled into a single PPP / P3 arrangement. The synergies were quickly apparent, observes Ingram.
“We stepped back, and said ‘If we can deploy in a quicker way, at better sites, in a more affordable manner – if the city can help with those things – then we can do more for the city around inclusion, traffic, safety. It is a trade. That’s the way the maths works,” she explains.
The Sacramento P3 / PPP framework informs its every move in US cities, whether 5G is part of the immediate discussion or not.
“It is very effective because the costs are very real, and the benefits are very real. It becomes scalable and tangible. It is not a pilot you can’t replicate, and it’s not a large-scale project in search of funds, which is hard to get off the ground. It is a very natural win-win for both sides.”
Verizon’s 5G work in cities – the very sweetest spot between its 5G work and its smart-city commission – focuses on certain use cases, whether horizontal technologies or vertical disciplines. Notably, 5G lends itself to the low-latency, high-bandwidth video applications, relevant in a range of scenarios, including autonomous vehicles, transportation and public safety.
“Those are the use cases most applicable to that type of connectivity solution,” she says.
Cities will adopt 5G technologies for the same kinds of things, invariably. The difference will only be the breadth and depth of their vision. There are two ways for cities to expand their view: with a narrow focus that moves outwards, or a wide focus that goes further. Sacramento takes the second view, she says.
“Sacramento is doing everything from inclusion and education to public safety, transportation, and a little bit of autonomous driving. It is trying to create a more rounded view. Other cities will be more targeted, and go after energy management in more depth, or go deeper with autonomous vehicles.”
There are multiple ways for cities to fund technology deployments. But most of them, seeking public sponsorship for new projects, go down only two routes: by a traditional request-for-proposal pageant, or else by modish Sacramento-style P3 / PPP deals. The former tends to suit well-defined projects, and one-shot point solutions; the latter works with rangier initiatives.
“Both approaches are viable; we like the variety. It depends on the city,” says Ingram, making clear as well that narrower RFP deals do not preclude more expansive works, at least when they cover open solutions like Verizon’s own smart city hub.
“Once the city has our technology – like our smart city hub – as part of the framework for the city, it is pretty easy to add solutions in a cost effective way because you just have to plug in,” she says.
At the same time, the P3 / PPP arrangement allows for the scope of work to mutate and change, as the deployment takes shape, the technology develops, and the use cases emerge. It also allows the private partner to more easily engage with multiple departments within the city at once.
“With a traditional RFP, the two pieces of work are separate. We might tie the initiatives together, but they are really distinct efforts in terms of funding. But P3s are different, with a single combined profit-and-loss (P&L) [account]. The positives are we get to work closer with the city, and we might get easier access and lower tax rates, for example.”
The 3P / PPP deal with Sacramento has allowed Verizon to think about network densification and digital operations at the same time, says Ingram. “We will often engage in the same activities for small cells, say, as we do for smart-city sensors. Combining these sorts of activities means fewer truck-rolls, less disruption to city, and a lower cost of deployment.”
She explains: “It is a law of large numbers when you’re putting in the kinds of funds we are – and we will spend billions and billions in cities across the country over the next several years.
“This kind of trade at that kind of scale means we are faster to market and business is simpler – which means financial savings. The P&L is pretty solid; it’s not fluffy at all.”
