Navigant Research Blog

Slower Networks May Be the Answer for Cities, Utilities, and Buildings

— May 29, 2015

A communications technology that promises lower bandwidth and higher latency seems an unlikely proposition in an age when the demands for speed and capacity are rising inexorably. However, low-power wide area networks (LPWANs) are set to play an important role in expanding the possibilities for the Internet of Things (IoT) in cities, buildings, and utility networks. LPWANs are targeted at applications that have low or infrequent data throughputs but which benefit from low-cost modems (less than $5), cheap connectivity (a service cost of a few dollars per year), long-range access, deep penetration, and an extended battery life for devices (around 10 years on a standard battery).

LPWANs come in a number of flavors. In February of this year, the LoRa Alliance was launched by a group of technology suppliers and telecoms operators that support the LoRaWAN specification by developed semiconductor company, Semtech. Initial supporters of the Alliance include Cisco, IBM, Sagemcom, and Semtech, alongside telecoms such as Bouygues Telecom, KPN, SingTel, and Swisscom. One of the first project announcements is partnership between French IoT supplier Actility and Swisscom to deploy a LPWAN around the cities of Geneva and Zurich.

Other players in the LPWAN space are focusing on the evolution of 4G LTE standards that will enable low-cost, low-power communications to support machine-to-machine applications. Several telecoms and equipment providers have announced what is referred to as LTE-M projects, including Nokia and Korea Telcom. Vodafone has also announced its own low-power IoT service, dubbed the Cellular Internet of Things, which it has developed in partnership with Huawei.

Another significant LWPAN initiative comes from French communications company SIGFOX, which is working globally with network system operators to deploy LWPANs using its ultra-narrowband technology. In the United Kingdom, for example, Arqiva is rolling out a SIGFOX-compatible network to 10 cities initially.

Do the Pros Outweigh the Cons?

LWPANs offer the prospect of sensors and other intelligent devices being able to connect instantly into a communications network at a cost of a few dollars a year. LPWANs are suitable for applications where high bandwidth and low latency are less important. LPWANs are not suited, for example, to applications requiring high bandwidth (such as video streaming), low latency, or the continuous tracking of moving objects. LPWANs are largely complementary to existing network technologies, but may present competition to radio frequency (RF) mesh technologies for applications such as smart street lighting and smart parking, and even some forms of smart metering.

LPWANs allow for low-cost piloting and easy scaling of innovative applications. A supplier developing a smart city solution, for example, could quickly demonstrate the benefits of an application for air quality monitoring. Similarly, a utility could use a sensor connected to a LPWAN to monitor assets that lack local power (such as gas and water pipelines) or where the business case does not justify a more expensive solution. A facility manager could use LPWANs to fill gaps in their existing building management system or to retrofit sensors to older buildings.

The LPWAN market is in the innovation phase, where an explosion of different approaches is to be expected and indeed welcomed. However, multiple versions and standards are likely to confuse potential adopters, and industry players need to push ahead on the development of open standards and interoperability models. Over the longer term we will see a growing focus on the so-called HetNet environments in cities, which will allow seamless integration across network protocols depending on location and requirement. In the meantime, low-power networks can be an important accelerator for smart cities and other IoT markets.


Warily, Utilities Go Digital

— December 10, 2014

Utility customers are changing their behavior rapidly, increasingly viewing the utility much in the same manner they would their bank, cellular provider, or – even worse – preferred online retailer.  J.D. Power affirmed this in July with the publication of its 2014 Electric Utility Residential Customer Satisfaction Study.  Consumer engagement technologies are also detailed in Navigant Research’s white paper, Smart Grid: 10 Trends to Watch in 2015 and Beyond.  These other types of providers, the banks and the cellular providers, have at least one thing in common: they’ve completely rearranged their strategy and operating model around a growing digital environment.  But utilities by and large are behind in developing effective and user-friendly digital presences, and I would argue that this is largely due to not having approached digitization as a firmwide strategy.

What is digitization?  It’s a broad topic, including everything from advanced gathering and analysis of data to social media.  The slowest movers have been government and public service organizations, such as utilities, simply because they’ve had more or less inelastic demand and monopoly status.  But now deregulation and growing expectations are forcing utilities to improve their public image and provide services in a more competitive manner by enhancing historically low/declining customer satisfaction.  These changes include the ability to easily monitor all activity and make services changes online, incorporate services such as prepay and prosumer options, and develop specific and targeted web/mobile-based marketing campaigns.

Resistance in the C-Suite

A couple of barriers are keeping utilities from becoming better digital organizations.  Probably the greatest barrier has been the resistance of utility executives.  It’s no longer possible to assign an intern to maintain a Facebook page and call that a digital strategy – digitization needs to involve all parts of the firm, and will probably change the business model altogether.  Utilities are not only characteristically slow adopters of change, but also traditionally siloed both functionally and informationally.

At the heart of a digital strategy is the information that is gathered to guide it.  The utility must consolidate comprehensive internal and external information from distributed sources like smart meters, customer information systems, intelligent electronic devices located on the grid, social media, and weather reports, just to name a few.   If this information is located within different parts of the utility and structured differently than other types of data, it can be nearly impossible to analyze in one place, and utilities will only see a half-formed image of demand patterns and customer preferences.

Beyond the Web Site

Once this information is in place, however, the utility still faces a second and even greater challenge of determining if and how to restructure its offerings in order to provide services in a different manner.  This can trigger investments in reorganization efforts, such as human capital investment, cross-functional collaboration, IT purchases, and outsourcing.

It comes as no surprise that many utilities are reluctant to consider these sorts of reorganizations, as they already operate with relatively low margins and typically have restricted investment budgets.  In those cases, managed services can ease the cost of digitization through highly focused products and outsourcing.

Managed services companies can assist utilities in developing firmwide digital strategies and provide resources that allow them to do so at a lower cost (with less risk of faulty investing) than integrating internally.  Until recently, the majority of these companies’ services have been adopted for very specific programs and needs, but more competitors are ramping up to offer enterprise service models where customer-facing digitization only scratches the surface.   In our report, Smart Grid as a Service, Navigant Research provides an in-depth assessment of the utility IT services market globally.  It will be worth watching how this market forms as more utilities ease, or are shoved, into the full transition to digital.


An Internet Protocol for Smart Cities

— August 30, 2012

The list of smart city initiatives continues to grow.  Recent examples include the new EU smart city project fund; almost 400 U.S. cities competing for $9 million in awards for city innovation as part of the Mayors Challenge launched by Bloomberg Philanthropies; a £25 million ($40 million) Future Cities Demonstrator competition for cities in the United Kingdom; and a new smart cities network formed by 24 Spanish cities.  One of the most interesting new programs was launched in Barcelona in July.  The first City Protocol workshop, co-hosted by the City of Barcelona, GDF Suez and Cisco, brought together a diverse group of stakeholders including city councils, academia, suppliers and interest groups, all committed to the development of a “more sustainable, efficient, cohesive, innovative and smart city.”  Over 30 cities from across the world were represented, as well as around 20 suppliers, including Accenture, IBM, Microsoft, Oracle, Schneider Electric, Siemens, Telefonica, and Philips.

The City Protocol aims to enable cities that are “adaptive, learning, evolving, robust, autonomous, self-repairing, and self-reproducing.” The Protocol spans the whole of the city ecosystem including water, waste, matter, energy and utilities, mobility, goods, people, and information.  Taking its inspiration from the way Internet and Web standards have been delivered, it fosters a similar process of open, transparent, and robust collaboration on an international basis.  Leadership will be provided by the City Protocol Society (CPS), which will loosely follow the model of the The Internet Society,  addressing specific issues and delivering formal agreements, recommendations, technology standards, reference projects, policies, and certification models.

Of course, there are already many collaborative efforts on city innovation that focus on developing innovative solutions to common challenges.  The danger is that the City Protocol will be just another talking-shop on the fascinating challenges of urban renewal and growth.  There are two critical areas where it could make a real difference.

‘Anything Connected to Anything’

First, a well-defined and shared process for the ratification, incorporation, and further development of technology standards that meet the needs of smart cities would be a major step forward.  The City Protocol could make a significant contribution to enabling better integration of information flows and communications networks across multiple domains such as transport, sustainability, and public safety, for example.  This would make analogies to the Internet Protocol or to concepts such as the Smart City Operating System more than just metaphors.  Vint Cerf, one of the founding fathers of the Internet, told delegates to the first City Protocol Workshop that one of the biggest insights of the Internet’s early development was that eventual applications were less important than simply creating a platform where an arbitrary collection of computers could communicate over an arbitrary collection of networks.  Tim Berners-Lee had a similar vision for the World Wide Web: “Anything being potentially connected to anything.”  If the City Protocol can help develop a similar approach to connectivity across the diversity and complexity of urban operations, then it will be a major achievement.

However, the need to address practical issues around specific application areas is where the City Protocol most clearly diverges from the Internet Protocol.  This is also where its second major contribution can be made.  Participants in the City Protocol workshop recognized the need for better cost-benefit analyses that can reduce the risk and improve the repeatability of new programs in areas such as energy efficiency.  If the public and private sector can develop models for delivering financial returns and public benefits on energy efficiency programs or better managed transportation systems, for example, then it will be much easier to implement such smart city projects at scale.


Iceland Bets on Green Data Centers

— April 12, 2012

It’s always interesting to see a project you’ve been tracking for some time come to fruition.  I’ve been following Verne Global, and its plans for a data center campus in Iceland, for almost two years, so it was rewarding to see its progress first-hand at the official launch event last month.

The Verne Global data center is based on a former NATO facility west of Reykjavik, near Keflavik International Airport.  Iceland’s advantages as a staging post between North America and Europe are important, but it’s the availability of a dual-sourced renewable energy supply that makes the project unique.  Iceland’s electricity is provided 100% by hydropower and geothermal energy.  In addition, Iceland’s temperate climate enables year round free air cooling without the need for chillers, helping the site to operate at a power usage effectiveness (PUE, a measure of how efficiently a data center uses energy) of around 1.2.

The data center’s location provides strong green credentials, but it also offers important commercial advantages.  Iceland’s renewable energy resources mean a stable and cheap source of electricity for data center operators and other businesses.  Landsvirkjun, the local utility, is able to offer up to 20-year terms for electricity rates and has, for example, been offering a public rate of $43 per megawatt for 12 years.  This allows Verne Global to claim that the total TCO for its customers could be 60% lower than a similar deployment in London.

The choice of location has been combined with an innovative approach to data center development through a close partnership with Colt.  I’ve written previously about Colt’s approach to modular data center design, and the Keflavik data center is its first public showcase, though it has since announced another data center customer in UK luxury car maker Jaguar Land Rover.  The partnership with Verne Global also involves Colt installing a new point-of-presence (POP) for its Pan-European communications network within the facility.  Having had a chance to see the actual data center and talk to Colt’s engineering and management team, I understand more clearly how far its offering differs from containerized approaches to modular design.  “Pre-fabricated data centers” is perhaps a better term for what Colt is doing, building the components at its factory in the north of England and shipping them for rapid installation on-site.  Colt’s approach is also modular in that it supports an incremental build-out of the data center in 500 square-meter units, which is also helping Verne Global manage its capital investment.

Another key stakeholder in this venture is the Icelandic government.  During the launch, the local mayor and an Icelandic government minister gave speeches that showed their clear enthusiasm for the project.  Iceland is keen to exploit its natural advantages to develop a large-scale data center industry and has been clearing away regulatory and tax issues that might hamper expansion of the sector.  Iceland, of course, was one of the countries most badly hit by the banking crisis and it is now betting on data centers as a more stable basis for the future growth.  The availability of the new Emerald Express Trans-Atlantic Cable System, a 5,200 km ultra-high bandwidth link between the United States, Canada, the United Kingdom and Iceland, planned for late 2012, will help Iceland and Verne Global better target U.S. data center business.

Today, Iceland’s energy surplus supports a power-hungry aluminum smelting industry.  The government hopes that in future, processing bits may be equally important to the island’s economy.


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