Smart Communities embrace technology as the key to their economic future. The first step in building a smart community is defining the elements of a smart community and what the economic benefits are from achieving that status.
The economic benefits of becoming a smart community are substantial. Successful technology based economic development is a well-established, five drivers of regional economic success—along with advanced manufacturing, global trade, advanced services and energy. Successful regional technology economies are built on Science, Technology, Engineering and Mathematics occupations. STEM occupations consist of nearly 100 specific occupations consisting of 6 percent of U.S. employment counting nearly 8,000,000 jobs. STEM jobs are high-wage positions paying on average $77,880 and only 4 of the 97 STEM occupations had mean wages below the U.S. average of $43,460. The creation of smart community operating systems for cities also suggests substantial economic gain. According to a study by Accenture, Smart City solutions applied to the management of vehicle traffic and electrical grids could produce $160 billion benefits and savings through reductions in energy usage, traffic congestion and fuel costs.
Beyond the benefits of pervasive Smart City technology, the potential gains from the deployment process for such technology are also significant since telecom operators are expected to invest approximately $275 billion in infrastructure, which could create up to 3 million jobs and boost GDP by $500 billion.
The debate is over—high technology regions produce communities with high income jobs. Developing the high-tech region is the goal for most communities and getting there involves three clear steps: build a Smart City wireless network to transform local government services; create a STEM workforce; and develop capital access sources for high-tech start-ups.
Building and recruiting technology companies is more credible if the local government embraces technology. On the backs of state of the art 5G wireless technology, the development of wireless, small cell networks are creating economic and public service benefits for taxpayers across the nation. Smart Community networks flow over a 5G wireless telecommunications system built on a series of small cell sites and the network serves a range of government and utility services typically through sensors built on streetlight or utility poles throughout a community. This wireless network provides real time public safety and traffic data that helps big and small communities create safer streets and better flows of traffic. Accenture again notes substantial traffic benefits from smart community networks—that includes reducing traffic congestion by 40% saving drivers and operators in medium-sized cities approximately $100 million annually. Traffic management systems can help deliver these benefits and, thanks to 5G’s ultra-fast speeds, cars will be able to “convoy” or “platoon” in groups, increasing road vehicle capacity, while providing substantial energy savings for vehicle owners. And if autonomous cars are supported by Smart Traffic Management systems, congestion could decrease and deliver additional productivity and quality-of-life improvements to residents. Parking applications and energy savings through smart meters through this network offer substantial public benefit as does public safety. Chicago currently uses its 4G network to provide real time video which allows first responders to assess a scene before arriving. Deployment of 5G in a Smart City will enable the integration of all video surveillance, with access to specific locations, pole by pole, in ultrahigh definition. This capability would allow responders to use facial recognition to identify known criminals or spot missing persons before arriving on the scene. More importantly, the collection of this new data source provides a potential private sector revenue model that makes its deployment financially possible for most communities. Communities seeking to develop smart community networks need to embrace the location of private telecommunications company’s smart networks, adopt right of way ordinances supportive of this smart network and permit and encourage the building of a sensor network throughout the city that enables the community to run a smart community network.
STEM workers constitute about 5 percent of the U.S. workforce but accounts for more than 50 percent of the nation’s sustained economic growth. STEM workforce strategies start early in the educational process and increase the number, rate, and diversity of undergraduates in STEM disciplines and align undergraduate education with STEM industry workforce in targeted areas. They also build STEM alliances among business, education and government. Colorado’s STEM strategy is a national model. STEM-EC is a Colorado based coalition of business and education leaders connecting industry and the K-16 academic community to graduate more STEM students. Industry partners include Qwest, Lockheed Martin Space Systems, BB2e.com, Sun Microsystems, Hewlett Packard and CH2M HILL. Colorado’s STEM effort illustrates that it starts with the leadership of the business and education community. The link to industry is an essential element as the academic community needs assistance in identify specific STEM fields in which jobs are available and what specific training and curriculum structure prepare students for STEM jobs.
Finally, developing regional capital access funds is another important step in building a smart community. No one is Silicon Valley—who has half the venture capital in the United States. That being said, even small communities can build a regional capital access fund by leveraging local business, government and bank assets to spur innovation and the creation of start-up companies. Start-up, technology oriented companies struggle to gain financing from typical sources. Small and large communities alike bring government, not for profit, foundations and financial institutions together to develop regional community capital access funds. A Regional Community Investment Fund provides capital to small business and entrepreneurs and encourage investment and development of underutilized and underused assets in the community, including downtown revitalization by providing gap financing for small business and entrepreneurs, and redevelopment project investments. National models for regional Community Investment Funds are based upon the success of the Nebraska Community Foundation and its Hometown Competitiveness Network, West Carrollton, Ohio’s Community Investment Fund and the Community Capital Fund in the Pioneer Valley of Western Massachusetts. The goal will be to raise funds over a 2-year timeframe and should tap into local wealth to make investments in the fund, and those individual’s needs and desires to give back to the community. These regional investors should be approached to bring value and protection to their investment. Investors should be given options of expected return: 1% annual return for a one-year commitment, 2% annual return for a three-year commitment, and 3% annual return for a five-year commitment. There should be no “promise” of return as risk is inherent in these investments but investors should be given some expectation about the potential return on their investment. To ensure proper operation of the community investment fund, an outside financial advisor should be hired to help it attract investments into the fund as well as manage the fund, the investment, and the assets moving forward. Investments should focus on local companies considering company creation or new real estate development projects by providing unsecured loans, subordinated loans, convertible debt, royalty finance, and the right to purchase stock at a specified price.
Building a smart community has big economic and public benefits. The economic reality of technology and innovation is driving economic success to regions embracing this change and will likely leave behind communities that fail to succeed in this new world.