SMART SOLUTIONS FOR SMARTER AND BETTER CONNECTED

CITIES- A case study by Cisco

The Need for Smart Cities

Urbanization is one of the most defining paradigms of the twenty-first century, which opens
a new wave of opportunities for promoting just, equal and sustainable development. Metros,
cities and towns are becoming the growth centres of countrys economic progress, the cities
are excelling on economic front and are now being recognized as the engines of growth. They
are genuine platforms where people live, where companies have their business and in which
numerous services are provided. However, they are major centres of consumption of
resources.

Currently, cities consume 75% of the worlds resources and energy and generate 80% of
greenhouse gases, occupying only 2% of the worlds territory, and by 2050, nearly 70% of the
world's population will live in cities. With such unprecedented urbanization, various
challenges have manifested in the form of high levels of pollution, traffic congestion,
increasing crime, poor water supply, waste mismanagement, unaffordable housing and
education etc.

Against the background of economic and technological changes caused by the globalization
and the integration process, cities in the world now face the challenge of combining
competitiveness and sustainable urban development simultaneously. This means how we
build, manage and run cities will be key to our country's (and other nations) future.

These urban issues, and others, can be mitigated through the adoption of scalable solutions
that take advantage of Information and Communications Technology (ICT) to increase
efficiencies, reduce costs, and enhance quality of life. Cities that take this approach are
commonly referred to as Smart Cities, or Smart+Connected Communities (S+CC). ICT has the
potential to act as a facilitator in realizing the objectives of smart cities and can effectively be
utilized by optimizing the resources, integrating the mediums of mobility, synchronizing the
information flow, and streamlining the urban services for meeting between expectations and
delivering outcomes. Thus, the idea of smart cities has come to prominence as a means of
ensuring the smooth operation of urban areas.

Successfully implemented Smart Cities across the world have witnessed the positive impact
of use of smart solutions in improving the quality of life and services. The success has become
an inspiration for others, pushed by the ever-increasing need to solve various challenges of
urbanization.

1
The Indian Context

India is the second most populous country in the world and with the increasing population,
the country faces a huge challenge of providing quality urban spaces to accommodate the
rising population. Infrastructure and services are two driving forces in cities growth and
development, and the capacity to harness these would determine the success of countries in
the current century.

Cities in India contribute to approximately 2/3rd of the countrys Gross Domestic Production
(GDP) which clearly reflect the dominance of cities in a predominantly rural-agrarian country
like India, and this contribution is expected to rise to 75% by 2030. 32% of the population that
resides in urban areas of India is expected to increase to around 40% by 2030 while the current
33 cities with >1million population will shoot up to 69 cities in less than 15 years.

With the aim to transform Urban India, Prime Minister Shri Narendra Modi launched the
Smart City Mission in 2015 shaped around the objective of promoting cities that provide core
infrastructure and give a decent quality of life to its citizens, a clean and sustainable
environment, better housing, quality health, IT connectivity, urban mobility and application
of Smart Solutions with the competitive element between the cities for development. The
focus is on sustainable and inclusive development and the idea is to look at compact areas,
create a replicable model which will act like a light house to other aspiring cities.

Indias Urban Awakening, a report published by McKinsey Global Institute, calls for $1.2
trillion of investment in urban infrastructure by 2030, to be financed by monetizing land
assets, leveraging debt and public-private partnerships (PPPs), and accessing private finance.
In this context, the Smart City missions financial outlay of INR 1 lakh crore (approx. US $16
Billion) involving both centre and states on equal basis over a period of 5yrs (2015-2020) for
100 identified cities is quite meagre.

The contribution of public funding is just a fraction of the same and the rest of the funding is
to come from various other sources as given in the smart city mission of the government.
However, given the condition of financial mismanagement of urban local bodies, attracting
the investment through floating municipal bonds seems quite unlikely. Therefore, for
executing the smart city mission, the government is largely banking upon PPP to attract
private investment, technological inputs and managerial practices.

Although Public Private Partnership (PPP) model based projects have scripted limited success
in India so far, the reasons are plenty such as poor regulatory framework and many more the
detailed discussion in this regard is out of purview of this paper. Predominance of PPP would
necessitate the creation of an investor friendly business environment for smart cities to attract
the investment. This would also entail the focus to be shifted on revenue generating methods
in order to maximise the profit. It is also necessary to realize that the massive funding
requirement for creating smart city infrastructure makes it imperative to find sustainable
sources of revenue. Further, there are several complexities in the smart city construct such as
involvement of multiple parties, diverse stakeholders, lack of funding etc. But increased
attention is required to deliberate upon how smart cities are going to be established and
made operational.

2
Smart solutions & City data

1. Smart parking:

Effective parking management is an essential tool to facilitate the efficient use of road space
and to ensure free passage for pedestrians, cyclists, public transport, and motorists. In
addition, appropriate parking fees can ensure that personal motor vehicle users compensate
the city for the use of valuable land on which they park their vehicles. The City council seeks
to implement a modern Parking System to improve parking operations, optimise usage of the
available parking supply, and enhance the overall functioning of streets in the city.

The duration of the contract would be 7 years. The solution might contain the following:

1. Phase 1:
a. Citizen app that provides real-time information from all the parking lots on a
map
b. Parking management system that prints tickets, integrated with boom barriers
& sensors, provides accurate in/out count; real-time & historic revenue
management
c. Central command centre- Central server to store all the data, relay information
between parking lots, citizen apps, LED displays and for analytics.
2. Phase 2 (20% of the total parking lots must include phase-2 solution):
a. LED displays- LED boards for real-time availability displayed wirelessly
outside the parking
3. Phase 3: (10% of the total parking lots must include phase-3 solution)
a. Wireless sensor: Real-time slot availability using in-ground or mounted
sensors
b. Red/Green light indicators on top of each bay for easier navigation

Figure 1 Plan of Parking in Smart Cities

3
Table 1

Solution Index Value Unit

Smart Total number of parking lot (On-street) 5 Nos.
Parking Total number of parking lot (Off-street) 5 Nos.
Total number of parking bays per parking lot (cars) 50 Nos.
Total number of parking bays per parking lot 100 Nos.
(bikes)
Total operational hours per day 12 Hours
Car park utilization 50% %
Total duration of the contract 5-8 years

2. Smart Lighting:

As a part of this project, the city also aims to help build a Smart lighting system. LED
luminaires linked together in a network must be individually controllable to enable the
illumination of various urban areas according to needs and in a concerted way city centres,
main thoroughfares, residential streets, tunnels or parks. This solution must also include
Environmental sensors for air quality monitoring and CCTV cameras for public safety and
surveillance. The duration of the contract would be 10 years.

Figure 2 Virtual Operation of Smart Cities

Table 2

Solution Index Value Unit

Smart Total number of street lights in the city 10,000 Nos.
Lighting Total usage hours per day 11 Hours
Wattage of existing lamps 250 Watt
Electricity tariff per unit 10 INR
Electricity price escalation y-o-y 10% %
Wattage of LED lights that must replace existing 150 Watt
lights

4
 Total no. of street lights to be converted to LED 100% %
Total no. of poles to have environmental sensors 1% %
Total no. of poles to have CCTV cameras 10% %

3. City Wi-Fi:

In line with the Digital India initiative of the Government of India, the City Corporation
would like to create Wi-Fi hotspots in the city to transform it into a Wi-Fi city. The Wi-Fi
hotspots are aimed at providing the Internet access to citizens and tourists in the city. The
duration of the contract would be for 5 years.

The successful bidder will supply, install, commission, run and maintain entire Wi-Fi
infrastructure. The proposed hotspots must drop-free in key areas of the city, details of which
are provided below:

Table 3

Solution Index Value Unit

Wi-Fi Total number hotspots to be deployed 50 Nos.
Total access points per hotspot 15 Nos.
Capex and opex costs To be assumed

Revenue streams that may be explored:

a. Charging local coffee shops / retail outlets / malls for access to hotspots. They can in-
turn provide free Wi-Fi to their customers to enhance experience
b. SSID sharing by telecom providers (for 3g/4g offload)
c. Advertisements on the landing page, and charging for per-clicks on the ad.
d. Other innovative ideas for revenue generation

Case Solution

There are 3 models prevalent in the market:

1. BoT Model- All investments are made by the implementing agency. The private
agency earns revenue through transactions or other monetization ways, and operates
for period (5 to 10yrs) till the investment is recovered. Meanwhile, the agency also
shares the earned revenues with the Govt. Entity.
2. EPC / Capex Model- Govt. entity buys the assets from MSI. MSI or other MSP manage
and maintain the same network. Govt. entity would pay for O&M.
3. Viability Gap Funding Model- Some part of the CAPEX is made by the government
(20-40%) and the revenue is earned by the implementing agency on each transaction
for O&M and some part is shared with the Government.

Using the city data provided in the previous section, please suggest a suitable Business Model
for each smart solution. The proposed smart solution must be viable for both the System
Integrator and the Municipal Corporation. Please explore innovative revenue generating
methods in order to maximise the profit and keep the model sustainable.

5
Assumptions

Adequate primary / secondary research must be conducted in order to arrive at the

requirements for a Smart City, relevant assumptions including those below, and utilizing case
data to build the solution.

1. Capital expenditure for the solution

2. Operational expenditure for running the solution
3. Other related costs, example- IT cost, storage and server costs, manpower cost,
installation cost etc.
4. Duration of contract for each solution (maximum 10 years)
5. Assumptions can be made wherever specific information is not available

Please note:

1. Rationale behind all assumptions must be clearly stated

2. Assumptions made must be realistic and as close as possible to realistic market data since this
will impact the final case study evaluation / grading process.

The solution document has to be in word/pdf within 1000 words (excluding exhibits and
excel sheets) in Book Antiqua font 11.