The power of fiber 

All hyperbole aside, communications infrastructure may well be the most critical asset of today’s modern cities. It is a key enabler of economic growth, social development and – increasingly – of government service delivery.

Most cities have recognized the competitive advantage that can be gained through improved communications connectivity. Indeed, most cities – both in the developed and the developing world – are now actively competing with each other to roll out ever faster and more secure communications infrastructure. According to the Master Plan on Asean Connectivity, a 10 percent increase in broadband penetration boosts GDP by an average of 1.3 percent; and a 10 percent increase in mobile teledensity increases the GDP by 0.7 percent.

The urbanization trend and resulting need for improved infrastructure service delivery is the defining theme for most cities today. An efficient communication infrastructure is increasingly being looked at as a tool to smooth the whole urbanization process while ensuring that the economy continues to be competitive. Improved ways of delivering services (such as e-learning, e-health, and telecommuting) over high speed broadband infrastructure will also make the urban infrastructure challenge less daunting.

In addition to easing the challenges of urbanization, strong communication infrastructure is now commonly seen as a tool to gain competitive advantage through better trade, efficient manufacturing and connected knowledge economies.

However, developing a robust communications network in the urban environment brings its own set of challenges that need to be addressed by urban policy makers and planners. Likely the most complex issue relates to linking together all of the nodes necessary for bringing communications infrastructure the ‘final mile’ into homes and businesses. Challenges here include not only the development of complex funding arrangements intended to stimulate private participation, but also more physical considerations such as the retrofitting of older buildings or the laying of miles of cable under existing city infrastructure. Many cities have tapped on existing utility infrastructure – old copper wire cable ducts, sewage tunnels, power cable ducts and other utility tunnels – to help roll out the fiber in the most resource-efficient way. Clearly, there is more than one way to characterize convergence.

Increasingly, mobile technology is complementing the physical rollout of optical fiber in the developing world. Given the increased penetration of smart phones, higher mobile bandwidth availability will necessarily require strong backbone infrastructure. The need for higher symmetric bandwidth (a trend of uploading information/data/videos started by the social media revolution) means that consumers are increasingly demanding high uplink speed as well, thereby underlying the importance of strong fiber-optic-based backbone communication infrastructure.

Encouraging social mobility

Many governments are also taking up the challenge of improving communications infrastructure to remove the digital divide that may be gravely damaging the social fabric. Initiatives include mandating universal service requirements, subsidizing costs to drive adoption, and empowering the citizens by helping harness the full potential of ICT.

While cities and urban zones will continue to have a demand-led development of communication infrastructure, the risk is that the digital divide will only increase if the communication infrastructure development is left to market economics. As a result, multiple governments are structuring intervention models to help take the communication infrastructure into rural areas. In fact, many now believe strong communications infrastructure provides a model for letting urban-led economic growth percolate to the lower rural segments of the economy in an effective manner.

This year, we have also seen the wide-scale emergence of so called ‘smart cities’ that leverage communications technologies to greatly enhance the efficiency and control of city administration. For example, Rio de Janeiro’s new operations center includes smart city technology that supports the coordination of everything from emergency response and street-level security to traffic control and operations management. Other systems, such as the one currently being rolled out in Barcelona, will include energy monitoring, ‘smart bus’ networks, and the management of waste collection.

One challenge that will urgently need to be addressed is the security of the information flowing through (or residing in) the communications infrastructure. A strong authentication mechanism would go a long way towards fully exploiting the power of strong ICT infrastructure in the urban economy. In this respect, the National Authentication Framework launched in Singapore may act as a pathfinder project for cities wanting to have a common security infrastructure across financial, health, governance and people-related services.

What remains to be seen, however, is how much government intervention will be required in order to stimulate some of the less commercially viable components (such as trunk infrastructure or submarine cabling) or the more innovative government-focused initiatives (such as smart cities, City Operating Systems or information security measures). Clearly, government will need to carefully consider how they might work with commercial and private organizations to develop the capabilities and infrastructure to turn these new opportunities into economic growth and development.

Way forward

This edition of Infrastructure 100 has not only identified multiple business models to effectively bring together public and private sector capabilities, but it has also shown how the potential of communications infrastructure could be effectively tapped in the urban context for the growth of the economy. Communications technology is rapidly becoming one of the most important assets in today’s urban environment. Looking ahead, it seems clear the sector will continue to rise in importance as more cities move towards the adoption of new technologies in their quest to be highly competitive economies offering a great work life environment to their people.

By Sharad Somani, KPMG in Singapore

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