Cities spearhead transformation

Cities are more and more taking the place of the nation or a state in the sense that cities, more than countries, are shaping the future. When we have asked young people where they might want to live when they grow up, they don’t answer with a country. They answer with a city.

As many of you already know, people are moving to cities at an astonishing rate. Already today more than 50% of world's population lives in cities. By 2050, that number is expected to be 70%1. These same cities account for 75% of the energy consumption and 75% of global CO2 emissions2, but they only take up 2% of earth's surface3.

The Information and Communications Technology (ICT) sector, which contributes about 2% of global CO2 emissions, can make significant contributions to working with other industries to reduce the other 98 percent and to reduce its own emissions. A new industry report confirms that ICT can cut global greenhouse gas emissions by 16.5%, saving up to $1.9 trillion annually.

Better yet, the ICT industry can be the foundation for innovative ideas for better living everywhere: creating solutions in smart grids, production, distribution, transportation and dematerialization in general.

In order to cope with this population explosion, cities must start growing in an intelligent, sustainable way. I live in Stockholm, Sweden, and I see this city growing before my very eyes. Stockholm is one of the many cities around the world that is actually building a progressively planned and designed community, The Stockholm Royal Seaport, where solutions for public transportation, waste management, and balancing supply and demand of electricity are essential ingredients to residents’ daily lives. ICT is at the foundation of many of these solutions.

Generally we believe that ICT can contribute to improvements in many dimensions and that in the future, everything that will benefit from being connected, will be connected. What that means for people like us at Ericsson, building and servicing communications networks around the world, is that we also have to re-invent ourselves. We started building networks for one service: voice. Nowadays, a network must be more intelligent, agile and non-intrusive, yet connecting anything and all the time.

Let’s look at the city environment. Last year, Ericsson’s ConsumerLab, which conducts interviews around the world that statistically represent the views of more than a billion people, asked people in its City Life report what made them most satisfied. At the bottom of the list? Traffic. At the top? Mobile coverage and internet connection speeds.

Traffic congestion and commuting inefficiencies are big problems in most large cities. It not only increases pollution, damaging the environment, but also leads to loss of resources, time and productivity. In addition it is one of the largest sources of frustration and stress for people living in cities.

But, when we bring in connectivity, and factor in one of the many wonderful things about cities – that diversity and creativity thrive there, you fundamentally change the way new ideas are generated and evolve into solutions that benefit society. Unlike the old inventors who were geniuses making masterpieces alone in a flash of inspiration, the new inventors are collaborative, bringing ideas into a mix of other ideas.

Traffic apps like Waze, and Roadify, are fantastic examples that fit into the category of innovation made possible on the foundation of connectivity and mobile networking. In a recent report on Connected Commuting in San Jose, California, published by the New Cities Foundation, apps like Waze and Roadify are found to enhance the overall commuting experience through a new level of networking. For example, connecting commuters improves the commute by allowing users to share or receive real-time information on traffic issues. In addition, connected car commuters tended to be happier than unconnected car commuters as a result of being able to predict their commute conditions, which resulted in less stress. On top of that, this data provides valuable insights to local authorities, which could potentially be used to improve transport infrastructure. Evidently, smartphones promotes smarter citizens.

An alternative to getting in the car or bus, and risking getting stuck in traffic is telecommuting. In another report that we published along with GeSI, the Global e-Sustainability Initiative, Verizon, Deutsche Telekom, BT and research and analysis firm Yankee Group, we found that telecommuting services in the US alone save about 215 million barrels of oil each year. That is roughly the same amount of energy consumed annually in all of Switzerland. Similarly, in a Smart Work study we conducted with TeliaSonera in Sweden, we found that ICT-based work initiatives reduced CO2 emissions as well as other greenhouse gases by 40 percent per employee between 2001 and 2007. That is about the same as 2.8 tons of emissions per employee per year. Scaled up on a national level, smarter work services could reduce Sweden’s CO2 emissions by 2-4 percent.

Staying in traffic, we know that modern cars have hundreds of on-board sensors and gauges which measure everything from fuel usage, tire pressure to oil levels. Imagine if we gathered and analyzed that information and then connected it to relevant people and devices? This type of connected car services is now a reality. Through our innovation in collaboration with Volvo Car Group, drivers and passengers will now be able to access cloud-enabled applications for information, navigation, and entertainment from a screen in the car.

Throughout the ages, cities have forged paths into the future. From Rome to Milan to Singapore, cities host thriving businesses with creative ideas that can transform whole economies. In a series of City Index reports, Ericsson has been measuring the ICT maturity for 25 megacities in combination with the triple-bottom line (social, economic and environmental) leverage from ICT investments.

There is a strong connection between ICT maturity in cities and their triple bottom line development – especially from economic and social development. The potential leverage from ICT investments is linear and does not decline with increased ICT maturity. Cities at different stages of ICT maturity should apply different strategies in order to maximize ICT-driven advancement.

In our latest report, focusing on business life in cities, we noted that one percentage point increase in broadband penetration increases new business registration by 3.8 percent. If you look at Estonia, a country with a national broadband plan, the president told us that online tax filings in the late 1990s were so successful, and compliance was so high, that the country’s coffers filled up and parliament could reduce taxes the following year. And an entrepreneur in Estonia needs just 18 minutes online to start his or her own business.

A high quantity of today’s mobile data traffic is already being generated in metro areas. People in cities are set to generate around 60 percent of mobile traffic by 2016. However, it is worth noting that by 2018 the amount of mobile data traffic is forecasted to grow twelve times its 2012 level.

Globally, we see that total mobile subscriptions are up at 6.3 billion (adjusted for dual subscriptions, we estimate 4.4 billion actual subscribers). These people have simple communications available to them wherever they are. Now, add higher speeds and capacity to that, and we at Ericsson have measured around 1.5 billion mobile broadband subscriptions. Along with applications that are in the cloud, we now have a powerful combination that enables transformation anywhere: mobility, broadband and cloud.

In all of my conversations with customers and city government officials, I am seeing and hearing requests to help with ICT strategy. One question, for example, is how can one common infrastructure deliver different functions in the city. Where should it split into education, energy, and so on? These are exciting questions that deserve time and attention in the near future, so we can all grasp the challenges and opportunities for a smart, sustainable city life.

Ericsson is a company that does business with customers who are in 180 countries around the world. We have a 42 percent market share in the 100 largest cities, weighted and ranked by GDP. This gives us insight into seeing how development is happening, and how we can be part of shaping it positively and we look forward to doing that.

Hans Vestberg,
President and CEO