How Cities Lost Control of the Urban Tech Revolution - Governing

For many years we've been promised that the marriage of technology and the city, the "smart city," would revolutionize urban life. But for a long time the term has essentially been a buzzword attached to different concepts over three distinct generations, accompanied by generous measures of hype and, lately, some serious questions about who's in the driver's seat.

Major technology purveyors who hoped to sell enterprise-level solutions for things like managing water and sewer systems or automating transit operations backed the first major wave of smart cities. Companies like Cisco, Schneider Electric, IBM and Bombardier sponsored conferences and touted their solutions. And they delivered some impressive showpieces, such as the command center IBM built for Rio de Janeiro, which was featured in a TED talk by then-Mayor Eduardo Paes. Songdo in South Korea was an entirely new urban business district built around this type of technology vision.

This generation of smart cities was the product of companies that had a long history of focusing on client needs. As a result, their solutions were about empowering their government clients. Rio's command center enabled the city to better manage its operations, for example. But it turned out that there weren't that many cities willing or able to purchase this kind of very expensive solution. This generation of smart cities continues on: The new fare system being installed by the New York City region's transit network is an example. But it didn't revolutionize city life.

A second generation of American smart cities came in the form of the open-data movement. Governments at all levels decided to post their data online or even make it available in real time through application program interfaces allowing the public, software developers and others to use it for their own purposes. As with the Rio command center, this form of smart cities had an immediate big win: transit tracker apps. All of a sudden it was possible to see when the next bus was coming right on your phone. This was a game changer for riders in cities like Chicago.

But this also failed to deliver much in the way of fundamental urban transformation. For one thing, the data was often poorly organized. The federal data.gov website was just page after page of file listings with little order. A lot of open data needed cleaning up, coding and cross-referencing. Ultimately, plenty of fancy data visualizations were created, but few killer apps.

Unlike the first-generation wave of smart cities, which was about technology vendors empowering city governments, the open-data wave was about cities empowering citizens. But the city was still the key driver. (As it turned out, some of the best uses of open data turned out not to require openness to the public at all. It was government agencies themselves becoming more sophisticated about using data analytics to guide their actions.)

Today's third generation of smart cities is something completely different. For one thing, it really is transforming city life. But in many cases, it didn't involve the government at all, at least initially. This generation is the wave of smart-city technology coming from private-sector actors interfacing directly with citizens as their customers.

The best known of these are Uber, Lyft and Airbnb. These companies started offering services in areas that were traditionally heavily regulated, and they usually bypassed the traditional regulatory process. When cities and states cried foul, the companies responded with massive lobbying and PR campaigns to steamroll opposition, and that conflict continues to play out in city after city.

But these headline-grabbing companies are just the surface. For consumers, the smartphone became the new way that people interfaced with the city far beyond the regulated sector. Waze has changed how people drive in the city, and waves of delivery apps allow people to order food or anything else for immediate gratification. Similarly, a wave of "proptech" (property technology) applications is changing real estate, doing everything from managing your home's temperature (Nest) to managing commercial leasing (VTS).

Compare how a 25-year-old lives in the city today to how one would have lived in 2000, and much of the difference is in these and the many other innovative applications and systems coming out of the private, not the public, sector.

These applications pose a big challenge for cities. Waze is routing traffic down once-quiet residential drives. Delivery vehicles are clogging city streets. Much of the data about what's happening in cities now resides not in city hall but in the cloud storage of companies like Amazon and Google, and cities can't even access much of it.

Even more challenging, these new companies are in many cases rival governments — privately owned governments. Uber isn't just a company linking drivers and riders. It and its competitors are the government — effectively the Taxi and Limousine Commission — of that marketplace as well. They set the terms and fares, license participants, and even have a judicial system that can impose the "death penalty" on users by banning them. This isn't necessarily good or bad; it's something that just happened without anyone thinking much about it from a public-policy perspective.

It turns out the smart-city revolution came after all, but it didn't come through the city government. Those governments have in fact lost control of the urban tech revolution. They thought, for example, that they would be using technology to improve traffic operations, but Waze had its own ideas about how traffic should flow. In many cases cities are struggling to catch up, sometimes not even knowing what's happening under their noses. This will be a profound challenge not just for governments, but also to our idea of the urban social contract and the division of functions between the public and private sectors.

Nothing is set in stone saying that the way things worked in the past is the way they must continue in the future. The opportunity and the challenge is to make sure this ends up enhancing the public interest, with the risk of getting it wrong. How this plays out will determine not just how police are deployed or garbage is picked up, but also how we will live in the future urban world.