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Open standards in IoT deployments would accelerate growth by 27% and reduce deployment costs by 30%
White Paper / May 2016 / IoT, oneM2M, standards, oneTRANSPORT

Discover how using non-standardized versus standards-based solutions for IoT will increase the cost of deployment, hinder mass scale and adoption, and stifle technology innovation for smart city initiatives worldwide in this Machina Research white paper. 

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? Machina Research White Paper May 2016 1 1. Scope Machina Research forecasts that the growth of the Internet of Things (IoT) will be substan- tial, but standardization could lead to even more rapid growth. This White Paper exam- ines the impact of a fragmented versus a standards-based approach to the IoT as it re- lates to the emergence of smart cities. Smart cities were selected specifically because they are a microcosm of the IoT; deployments in- evitably touch several separate vertical do- mains, and involve multiple parties, and diverse IT systems. They are therefore a good illustration of the effects of fragmentation and of the relative merits of various means of addressing it. The White Paper is aimed at city authorities as well as their technology partners, since the development of smart cities is usually based on a hybrid approach of public-private part- nering and planning1. InterDigital, the sponsor 1 See for example the TM Forum Report ?7 steps to a successful smart city public-private partnership? 2/open-digital/2015/10/7-steps-to-a-successful-smart-city-public-private- partnership/ and also The Brookings Institute report ?Getting Smarter About Smart Cities? ( puentes-tomer) of this White Paper, supports and promotes open standards through an open platform for IoT interconnectivity and the controlled shar- ing of data and analysis. This White Paper addresses the following questions: ? What is the opportunity cost, or difference, between standard-based and non-standard- ised environments, as it relates to smart cit- ies? ? What is the cost impact to city managers of ongoing inefficiencies that non-standards- based approaches are causing? ? What impact will the use of non-standards- based approaches cause in terms of not achieving the potential of mass scale for IoT interoperability? ? How are operators affected by not achieving the potential of standardization of IoT in smart cities, as greater IoT revenues depend on increasing volumes of IoT traffic to carry and process? The smart cities domain illustrates the impor- tance of standards in enabling deployment Open standards in IoT deploy- ments would accelerate growth by 27% and reduce deployment costs by 30% White Paper sponsored by InterDigital ? Machina Research White Paper May 2016 2 and ensuring best practice; but as a complex and multi-dimensional vertical that crosses boundaries between public and private sec- tors it also shows the challenges inherent in moving towards standards in an environment characterised by multiple systems, vendors, verticals and stakeholders. For this reason we have chosen to use it to demonstrate in a quantitative way the impact of a standards- based approach. 2. Background on IoT standards The world of the Internet of Things (IoT) is currently characterised by multiple competing technologies and platforms across most of the vertical and horizontal segments of its mar- ketplace. Machina Research has argued that the resulting 'Subnets of Things', or 'Internet of Silos' is delaying the widespread deploy- ment of IoT solutions. The emergence of a small number of leading solutions in the vari- ous spaces of local connectivity, wide area connectivity and service or application layer would simplify application development and allow industry to coalesce around a few global standards. Standards bodies come in many forms, from formal standards development organisations (SDOs) such as the European Telecommunica- tions Standards Institute (ETSI), through infor- mal bodies that manage multiple standards such as the Institute of Electrical and Electron- ics Engineers (IEEE), to entities established to manage a single solution such as the Blue- tooth SIG. In recent years, bodies set up to manage a single standard have tended to pro- liferate as the larger standards-making organi- sations have become increasingly bureaucratic and hampered by the tactics of members seeking to maximise their Intellec- tual Property Rights (IPR) advantage. Standards for the IoT fall broadly into two are- as: ? Downward-facing standards that establish connectivity with devices. These include standards such as Bluetooth LE. ? Upward-facing standards that provide com- mon application interfaces up to end users and application developers. These include standards such as oneM2MTM2. Underlying all of these there are often widely- used protocols such as IPv6 and RESTful pro- gramming principles. In some cases, there are variants of these for the IoT such as 6LowPAN (simplified IPv6) and CoAP (simplified TCP/IP connectivity). In addition, there are standards for specific verticals such as the Continua standard for healthcare which seeks to simpli- fy the connectivity of healthcare devices and the management of information from them. At the service layer there is a single standard: oneM2MTM. With a published specification and the support of the world's major SDOs this should become the de facto solution for interfacing with multiple different communi- cations networks. The standard also interfac- es to LightweightM2M, which is being standardised by the Open Mobile Alliance (OMA), has the support of a number of relat- ed standards entities in both vertical and hori- zontal markets, and provides device management functionality. Both LWM2M and oneM2MTM use CoAP as an underlying trans- port protocol. The key attributes of an open standard are typically: ? The specification for the interface is availa- ble to all members of the standards body and is sufficiently detailed that a company 2 oneM2M is a trademark of the Partners Type 1 of oneM2M ? Machina Research White Paper May 2016 3 3 Standardisation in smart cities 3.1 A definition of a smart city There is no generally accepted definition of a smart city. The various standards bodies that are working on this area have each created their own. Sometimes these emphasise the role of technology in delivering benefits, as in that developed by SAC, the general working group of Chinese national smart cities stand- ardization, which refers to "a new concept and a new model, which applies the new gen- eration of information technologies, such as the internet of things, cloud computing, big data and space/geographical information in- tegration, to facilitate the planning, construc- tion, management and smart services of cities." By way of contrast the definition of- fered by the UK's BSI PAS 180 barely makes reference to technology at all: "?a term de- noting the effective integration of physical, digital and human systems in the built envi- ronment to deliver a sustainable, prosperous and inclusive future for its citizens." The ITU-T Focus Group on Smart Sustainable Cities found almost 100 definitions, and then proceeded to add to this number by creating its own. The exercise does seem to have been worthwhile, though, because the resultant definition seems to us to be a good one: "A smart sustainable city is an innovative city that uses information and communication technologies (ICTs) and other means to im- prove quality of life, efficiency of urban opera- tion and services, and competitiveness, while ensuring that it meets the needs of present and future generations with respect to eco- nomic, social and environmental aspects." could make a fully inter-operable device purely from the specification. ? There is fair and reasonable access to any IPR that are needed to implement the tech- nology. ? There is a testing and certification regime that ensures that devices that carry the logo of the standard can inter-operate with all other certified devices. The net result is that a standard technology can be delivered by multiple different compa- nies in competition with each other. By com- parison, a proprietary technology is delivered by a single company with no direct competi- tion. As the telecoms industry exemplifies, stand- ardised solutions bring many benefits to us- ers, including: ? A competitive, multi-sourced environment that helps prevent a single company charg- ing high "monopolistic" prices. ? Often a technically superior solution as a re- sult of the many different companies and individuals that work on its development. ? The ability for all interested parties to influ- ence the future direction of the technology through working within the standards body. ? The ability for devices from many different manufacturers to interwork with networks delivered by others. ? Economies of scale from global deployment. ? International roaming facilities if the stand- ard is widely deployed. ? Machina Research White Paper May 2016 4 ? Standards allow the exchange of data with external entities (such as third party applica- tion developers), which in turn can support the creation of innovative business and fi- nancing models such as data marketplaces and even 'urban apps stores'. This is particu- larly important in terms of third party apps and services that don't yet exist but may be developed in the future. It is far more likely that these will be able to make use of data that is in a standards-based format. ? Standards consolidate and shape the market for third party developers by ensuring that there is a sustainable market for their activi- ties. Cities which use a standards-based plat- form can use the same air pollution notification application, for example, rather than having to develop a new one for their own bespoke implementation. It bears saying that many of the same factors that act as drivers for standardisation also may be seen as barriers to standardisation. For example, the fact that the smart city do- main touches so many different verticals, and the prevalence of legacy systems in specific aspects of urban infrastructure such as street lighting or traffic signalling, make standardisa- tion more valuable and important, but also makes it more difficult. 3.3 The road to a mature standards- based environment for smart cities There is a cynical but popular perspective on standardisation that includes the quotation, "the nice thing about standards is that you have so many to choose from.3" This view is seductive, but it is based on a misunderstand- ing about the role, meaning and status of 3 This quotation has an actual author, the computer scientist Andrew Tanenbaum, though it is often attributed to 'Anon'. 3.2 Drivers for standardisation in smart cities Many of the generic drivers for the adoption of standards in IoT apply to smart cities. How- ever there are some factors that are either specific to cities, or are more keenly felt there. These include: ? Standards allow data to be shared between departments and systems which may have developed in isolation from each other. This is of course a problem for all organisations, but may be particularly pronounced in pub- lic sector organisations where the systems in question are more likely to be bespoke, anti- quated or both. ? Standards allow software and tools that have been developed in other cities to be used without the need for redevelopment. All cities have some unique characteristics, but they have much in common and don't need to reinvent everything. ? Standards allow cities to use their data in conjunction with off-the-shelf components, including those developed for other kinds of organisation. City organisations are different from other kinds of entity, but many IT func- tions are common, including payment proc- esses, registration, data management and storage - and many concerns such as pro- tecting private data and overall IT security are common too. ? Standards allow cities to benchmark and compare themselves to other cities and or- ganisation, in terms of processes and out- comes. This is particularly important for public sector organisations where financial metrics and comparisons might not be ap- propriate or applicable. ? Machina Research White Paper May 2016 5 standards, and a lack of knowledge about the standards-setting process. There are indeed lots of standards for smart cities, and there are even more standards-set- ting efforts in progress. Not all of these stand- ards cover the same areas, so they are not all competing standards from which it is possible to choose one. Rather, they have been devel- oped 'bottom-up' by companies and projects that see a need to work together. Inevitably, this means that there are both areas of over- lap between standards and gaps between them where the standards say nothing. The world would be a tidier place if standards were developed 'top-down', so that the indi- vidual standards and defined interfaces fitted into a clear overall framework, that was itself defined prior to the creation of these lower- level standards. This happens rarely. Most of the time practical standards emerge from the needs of industry players to work together, and of customers to maintain some degree of procurement freedom. De facto standards are worked out by industry groupings and allianc- es. The over-arching frameworks and refer- ence models come later, and evolve through liaison between the lower level industry groups and formal standards bodies. There are some promising signs that this is begin- ning to happen in the smart cities and do- main, particularly in terms of the practical liaison between the emerging lower-level de facto standards groupings. For the moment the more abstract higher-lev- el standards development organisation activi- ty seems detached from practical use. The emphasis seems to be on process and seman- tics; outside of the context of IT, ontology is usually regarded as a branch of metaphysics. In the longer term, though, they are more likely to prove useful, as part of the overall cultural environment in which the building of useful APIs and other interfaces can develop. After all, that is exactly what happened with the OSI Reference Model, which emerged out of a merger of parallel activity by the ISO and the predecessor of the ITU. 3.4 Top-down standards initiatives Exactly this kind of process is now taking place in the smart cities domain. There are a consid- erable number of top-down activities involv- ing global standards bodies, most of which are aimed at developing reference architectures and standards frameworks. ? In June 2015 the ITU established "ITU-T Study Group 20: IoT and its applications, in- cluding smart cities and communities", re- sponsible for international standards to enable the coordinated development of IoT technologies, including machine-to-machine (M2M) communications and ubiquitous sen- sor networks. There is a specific focus on gathering use cases for smart city deploy- ments. This follows on from the ITU's earlier "Smart and Sustainable Cities Focus group of ITU Study Group 5", which concluded its work in May 2015 having produced some 21 technical reports and technical specifica- tions. However, Study Groups (unlike Focus Groups) are able to define standards within the ITU. ? The International Standards Organisation (ISO) and the International Electrotechnical Commission (IEC), through a Joint Technical Committee (JTC) is working on a program intended to establish a reference framework for smart cities. There are three main com- ponents to this work: one on business driv- ers, with input from city CIOs; on data perspectives, including security, privacy and ? Machina Research White Paper May 2016 6 storage requirements; and one on engineer- ing perspectives. There is also a proposal that the program includes "an upper level ontology", standards for city-specific common/shared services, and guidance doc- uments on the use of ICT for city leaders on citizen-centric services, adding location and other city-specific contexts to existing serv- ices, and ensuring ICT service resilience in the face of environmental events. ? The IEC's System Evaluation Group (SEG) on smart cities concluded its own work in Octo- ber 2015 with a call to establish Systems Committee (SyC) on Electrotechnical aspects of smart cities, with a scope including foster- ing "the development of standards in the field of electrotechnologies to help with the integration, interoperability and effective- ness of city Systems", and "the development of a reference architecture". ? In parallel to the activities of JTC 1 there is now an 'International Technical Working Group on IoT-Enabled Smart City Frame- work' being led by the US National Institute of Standards and Technology (NIST), with support from the American National Stand- ards Institute (ANSI), Italy's Agenzia nazion- ale per le nuove tecnologie, l'energia e lo sviluppo economico sostenibile (ENEA - the National Agency for New Technologies, En- ergy and Sustainable Economic Develop- ment), South Korea's Ministry of Science, ICT and Future Planning (MSIP), ETSI and the EU-backed FIWARE initiative. It would be fair to say that this work is not thus far well co- ordinated with the ISO program; indeed, with remarkable candour, the group's initial statement says: "A number of architectural design efforts are currently underway (e.g. ISO/IEC JTC1, IEC, IEEE, ITU and consortia) but have not yet converged, creating uncer- tainty among stakeholders" and then goes on to propose a further such effort to pre- vent the advent of contradictory or conflict- ing proposals. In some cases national standards bodies have defined standards which they are seeking to have ratified as, or adopted into, international standards. For example, the UK British Stand- ards Institute (BSI) created PAS 182 (Smart city concept model. Guide to establishing a model for data), defining relationships be- tween data formats to enable sharing be- tween organisations and systems. This standard has now been passed to Working Group 11 of the ISO-IET Joint Technical Com- mittee, with the aim of adopting it as an inter- national standard - in effect the 'upper level ontology' described above. 3.5 Bottom-up industry initiatives There are also several bottom-up industry group activities in progress. Few are formal standards in the sense that a Standards Devel- opment Organisation would recognise. Some are best characterised as a open 'platforms'; others are common testbeds, SDKs, APIs or development environments. Not all of these are only about smart cities, though they have applicability in that domain among others. Al- though they are not standards, it is to be hoped that these efforts will intersect with the top-down standardisation activity, so that they can go beyond piecemeal coordination and become fully aligned with each other along the lines set out in the proposed refer- ence models. ? FIWARE is an EU initiative to promote an open, royalty-free architecture and set of specifications, APIs and interfaces for 'future internet' projects, including smart cities. ? Machina Research White Paper May 2016 7 Some 50 cities4, organised as the Open and Agile Cities Initiative5, have declared their intention to base their smart city architec- tures on FIWARE. The European Commission has backed a EUR80 million FIWARE acceler- ator program aimed at start-ups. ? FIWARE is also being combined with the TM Forum's Open Digital APIs to derive a con- solidated FIWARE NGSI Framework. There is some support for the idea of using the TM Forum's eTOM framework, originally devel- oped to represent business processes in tel- ecoms service providers, as a way of defining processes within smart cities within the ISO IEC JTC business drivers work package6. The eTOM framework is itself now an ITU standard. ? oneM2MTM is another global standards initi- ative for M2M and IoT covering that require- ments, architecture, API specifications, security solutions and interoperability. Formed in 2012, it includes a number of na- tional and regional standards organisations, including ARIB (Japan), ATIS (U.S.), CCSA (China), ETSI (Europe), TIA (U.S.), TSDSI (In- dia), TTA (Korea), and TTC (Japan), and six industry consortia (Broadband Forum, Con- tinua Alliance, GlobalPlatform, HGI, Next Generation M2M Consortium and OMA). ? CitySDK is a European project aiming to cre- ate a 'service development kit' for applica- tions in the domains of Mobility, Tourism and Participation. CitySDK is supported un- der the ICT Policy Support Programme (ICT PSP) as part of the Competitiveness and In- novation Framework Programme by the Eu- 4 open-agile-smart-cities-oasc-initiative/ 5 6 See ISO/IEC JTC 1/SG 1 Study Group on Smart Cities presentation JTC 1, October 2015, Beijing by Yuan Yuan, SG 1 Convenor and Tangli Liu, SG 1 Secretary ropean Community. The project includes a toolkit for the development of digital servic- es for cities, which comprises digital service interfaces as well as processes, guidelines and usability standards. ? Project Haystack is an open source initiative to streamline working with data from the Internet of Things, focusing on standardize semantic data models and web services for data being generated by the smart devices in homes, buildings, factories, and cities. Ap- plications include automation, control, ener- gy, HVAC, lighting, and other environmental systems. ? HyperCat is a consortium, and an open source specification, designed to enable the discovery of IoT assets using web-like proto- cols. It is maintained by the HyperCat Foun- dation and is in the process of being ratified as a standard by the UK's BSI. Top-down reference frameworks, and de fac- to standards based on around interfaces be- tween emerging technologies, must also take account of existing standards for systems. There is already a large family of standards, definitions and performance benchmarks for cities, many of which predate or are not spe- cific to IoT implementations. Some technical standards may have been defined a long time ago and developed for a very specific pur- pose, unmindful of the future possibility that they might one day fit into a larger whole. The standards for road traffic safety management systems, ISO/TC241, and the performance measurement standard ISO39001 is an exam- ple of this. Similarly there is an ISO standard for city performance indicators, ISO 37/120:2014, ISO TC 268, which is being pilot- ed by a number of cities and championed by the World Council on City Data7. 7 ? Machina Research White Paper May 2016 8 4 Case studies 4.1 The oneTRANSPORT Open Marketplace for Data oneTRANSPORT is an in-field trial in the UK to enable the smart application of transportation data by using IoT technology in an open and transparent manner . Based on the oneM2M standard, and partially sponsored by Innovate UK, oneTRANSPORT aims to create technical integration among diverse transport informa- tion systems across multiple counties, and to also enable a marketplace for the data that this will create. This in turn is intended to pro- vide a financially sustainable business model that will provide incentives for local authori- ties to open up their data assets in a more controlled way to others. The beneficiaries will be end-users, who will be provided with a multi-modal transport information system that enables them to plan and execute their journeys, and also transport planners and sys- tem operators, who will have access to real- time information that will allow them to oper- ate their networks more efficiently and sus- tainably. The IoT platform developed as part of the on- eTRANSPORT initiative is currently in a field trial with four UK local authorities in the south-eastern UK; Buckinghamshire, Hertford- shire, Northamptonshire and Oxfordshire. All are local authorities in the shadow of London, facing the same transport and traffic conges- tion issues as their more urban counterparts, and similar budget constraints. The increasing cost of living in London is pushing many resi- dents further from the centre, adding to this pressure. There are some issues which are specific to the urban-rural boundary context, such as the difficulties of integrating transport solutions across very different fabrics. Moreover, these rural authorities face many of the same technical challenges, with a pleth- ora of different legacy IT systems that were developed to support a single purpose such as traffic light operations, roadworks scheduling or public transport 'command and control'. In principle these systems contain valuable in- formation that could be used for real-time transport management and end-user informa- tion systems, but in practice the data is diffi- cult to extract and share across organisational and administrative boundaries. For these smaller rural authorities it is hard to com- mand the attention of suppliers (particularly mobile app developers) who face a small tar- get market; and small suppliers also find it harder to sustain the sales effort needed to address many smaller customers. The one- TRANSPORT platform hopes to address this by aggregating demand, for transferable and ex- pansible solutions, across multiple counties. As well as the four local authorities and the UK Highways Agency as use-case owners and partners, the initiative also includes InterDigit- al as platform provider, Arup as transport ex- pert, Imperial College and Scottish start-up Traak Systems as providers of IoT and intelli- gent transport analytics, and Clearview Traffic Group and Worldsensing as sensor suppliers. The 11 partners in the project form an ecosys- tem where discoverable data assets from ex- istent systems are integrated with raw data from new sensor deployments, and premium data from analytics and other data services. At the centre of oneTRANSPORT is a platform with a multi-layered architecture which func- tionally separates out interfaces to sensors and static datasets, external servers and third parties such as developers, with the latter served via a dedicated portal which supports data discovery and account management. ? Machina Research White Paper May 2016 9 There is a transport IoT broker which provides authentication, service support and billing, and a oneM2MTM common service entity that includes service management functions in- cluding subscription, security, data manage- ment and message handling. The latter is particularly important because the aim of the oneTRANSPORT initiative is to create more than a technical solution to data diversity and integration. Fundamental to its vision is the creation of a marketplace that will provide the data providers - primarily the local authorities - with incentives to process and publish their data, and enables others to subscribe to this data on a flexible and con- trollable pricing model. To this end the broker includes not only storage, publishing and dis- covery, but also ownership and rights protec- tion, and usage-based charging capabilities. A feasibility study phase of the oneTRANS- PORT initiative, which aimed to demonstrate a credible business case was successfully com- pleted in 2014, and the deployment in the four counties, which began in 2015, consti- tutes an operational field trial to demonstrate multi-modal, multi-system and geographic in- teroperability, financial viability and opera- tional benefits. This is intended to prove the case for wider national/international take-up, so that other interested authorities can ex- plore the benefits of this initiative by attend- ing local authority fora . It is expected that the oneM2M standards bodies and companies will use the trial to show the potential of oneM2M in other countries and continents. Figure 4-1: oneTRANSPORT architecture [Source: InterDigital, 2016] ? Machina Research White Paper May 2016 10 ment more expensive conventional noise sen- sors. The sensor network and data repository also provide data for third party developers via a Future Internet Open Innovation Lab, who can then create innovative uses for the data sets. For example, a researcher used data on wind speed to analyse suitable sites for micro-gen- eration wind turbines. The sensor network is the largest physical ele- ment in the deployment, with new sensors being installed all the time. In fact, it is quite literally a moveable feast, in that around 2,000 of the sensors are mobile, mounted on the tops of city buses, garbage trucks and oth- er city-owned vehicles. Magnetic resonance sensors used for parked vehicle detection, to support a 'smart parking' application, are bur- ied in the road surface and connected back to the platform via a Zigbee short range commu- nications and a network of repeaters and gateways using both fixed and mobile for backhaul. Citizens can use their smartphones to partici- pate in supplying information to the various smart city applications via a "Pulse of the City" app. This includes the more obvious cases, such as reporting traffic and potholes, and fil- ing accident and incident reports. The app al- so makes use of other sensor data from smartphones, including accelerometer meas- urements, light levels, noise levels and baro- metric air pressure measurements (depending on device). There is also an online platform for commenting on planning proposals, voting on proposals, and submitting ideas for im- provements. The data from participatory sensing is anonymized, and registration is not needed. QR codes and NFC points on private facilities such as shops (there are 1,100 of these), and public facilities such as bus stops, 4.2 Smart Santander A city of around 180,000 inhabitants, Santander is the provincial capital of Cantab- ria with an economy mainly based on services including tourism. The city, like the rest of the Spanish public sector, has been hit hard by the financial crisis. 'Smart Santander' is a project of the EU's Fu- ture Internet initiative, run by a consortium led by Telefonica, including the University of Cantabria, the Santander city government, several telecoms equipment suppliers and other educational and research institutes. It is part of a network of related initiatives, includ- ing the EU Future Internet Research and Ex- perimentation program and RECI, a network of smart city projects in Spain and Portugal. Santander is something of a poster child for FI-Ware, of which the Fireball Living Labs project is an associated element. The smart city platform consists of: a 'city brain' layer, which includes a data visualiza- tion element for management, a data reposi- tory, and a horizontal services management layer common to all underlying services; a vertical services layer, which includes the spe- cific APIs and interfaces for the individual ur- ban services like traffic management and smart waste collection; and an infrastructure layer, incorporating the sensors, the M2M communications network, and the physical repository for the collected data. Managers within the city government have access to a dashboard which allows the gener- ation of maps from sensor data, including an air quality map from ozone, particle density and pollution sensors around the city and on city-owned vehicles, and a noise map from low cost sensors (around ?4-10) which detect noise above 50dB. These are used to comple- ? Machina Research White Paper May 2016 11 add a further dimension of information on to elements within the city. The static sensors are deployed in Santander's downtown, an area of approximately 8km2. The density of the deployment makes it possi- ble to deploy new urban services, such as 'full- ness detectors' on street bins and recycling containers. Applications and services deployed include: ? Smart Parking - Santander has implemented parking information and management serv- ices in the downtown area. The 600 road- embedded sensors, which detect the pres- ence of a vehicle using magnetic field varia- tion, are key to making this work. This incorporates a 'control panel' to enable city managers to see parking availability and per- formance in real time, and public displays at entry points providing on-street real time information to drivers about the availability of parking within specific zones of the moni- tored area. ? Building service management - used in the city's own buildings to remotely manage and monitor energy consumption. The project claims a 30% reduction in building energy consumption. ? Lighting management - Street lights are dimmed when the street or public area is empty or when background light is good (for example from a full moon). New bulbs are ordered automatically. ? City waste management - the "Burba" project installed a series of sensors provid- ing information on the level of waste filling of public containers. The data collected helps establish an efficient itinerary for waste collection needs. ? Smart water management - deployed within part of the city where around 15,000 people live, this provides information about water consumption and controls irrigation sprin- klers so that they are not activated unneces- sarily. ? Traffic monitoring - Sensors deployed at main access roads monitor traffic density and vehicle movement patterns and apply traffic control mechanisms in the different areas of the city. The system is also used for controls during special events and to priori- tize ambulances, police and fire service vehi- cles. ? Environmental monitoring - sensors on 150 vehicles monitor environmental parameters, air quality and pollution levels to improve citizens' quality of life, warning them when there is a health risk (e.g. to avoid asthma attacks), and to develop models helping to manage traffic so as to reduce pollution lev- els. Santander's mayor is upbeat about the future of the project. He believes that the city gov- ernment's ability to secure funding for smart city projects despite the squeeze on public spending is an indication that it is heading in the right direction. The budget for the various 'laboratory' projects is not seen as particularly big, and it holds out the possibility of efficien- cy savings without reductions in service levels. One of the key take-aways for the city govern- ment was the unsuitability of the current reg- ulatory and institutional frameworks for smart city projects. For example, it has been difficult for the city to enter to the kinds of public-pri- vate partnerships which are necessary. There are no legal frameworks which make it possi- ble to involve private sector companies to manage publicly owned platforms and facili- ? Machina Research White Paper May 2016 12 ties. The city would like to develop a frame- work similar to the ESCO (energy services company) model, in which both provider and customer can benefit from efficiency savings, but this is simply not possible at present. 5 Market impact In this section we examine the impact that the adoption of standardisation might have ver- sus the more fragmented approach that large- ly dominates today. To achieve this we have imagined a hypothetical scenario in which from the end of 2016 every application in the Smart Cities segment is deployed based on the standards discussed in the sections above. We then look at what smart cities deploy- ments would look like in 2025, comparing a base case modelled on Machina Research's existing forecasts for the market with this new standards-based scenario. The first thing we look at is the impact that standardisation might have on the speed and extent of adoption of smart cities applica- tions. When considering this impact, we then have to give significant consideration to the diversity of applications that constitute smart cities. Some applications are naturally bound- ed by the number of potential devices to be connected. For instance, we anticipate rela- tively rapid adoption of connected street lighting, which is bounded by the number of streetlights. Regardless of the benefits of IoT connectivity we don't anticipate that stand- ards will drive any increase in the final de- ployed estate of devices. What it might do, however, is encourage more rapid adoption. As a result, the number of connected street- lights in the medium term may be higher than otherwise anticipated. The simple reason is that municipalities that might otherwise have adopted a wait-and-see approach will be more able to replicate schemes deployed in other municipalities. Many public authorities simply won't deploy anything based on pro- prietary technology, due to the personal com- mitments of their IT professionals to a standards-based approach, but also as a re- sult of public procurement rules. As a result standards act to overcome market inertia. Other applications are less bounded, or not bounded at all. Take car parking spaces, for instance; monitoring high usage parking spac- es in urban areas to ensure optimum occu- pancy is an increasingly well-established business case. But there is a 'long tail' of sub- urban and rural parking spaces where the benefit of remote monitoring may be margin- al and the cost reduction coming from the use of standards may make them viable where they would not otherwise be. In terms of un- bounded applications, the most obvious is en- vironmental monitoring, where a network of sensors can be expanded in an almost unlimit- ed manner to get greater and greater granu- larity of information. There is ultimately some natural limit, of course, but the link between cost and viability is quite linear. Standards also reduce the need for the busi- ness case associated with each specific appli- cation to stand on its own. Applications built on standards-based platform allow both infra- structure and data, and thus costs, to be shared across more than one application. In Figure 5-1 we show on the left side the number of wide area IoT connections that Machina Research expects to see in the Smart Cities segment in 2025 . On the right side we show our expectations for what connections would look like in 2025 in a scenario where a fully standards-based environment were adopted from now on. According to our esti- mates, the latter scenario would see a 27% ? Machina Research White Paper May 2016 13 uplift in the number of connected devices in 2025. Closely linked to the growth of deployed smart city applications is the other major im- pact on standards: cost. As noted above, the introduction of standards is likely to reduce cost of deployment, courtesy of factors such as the interoperability of devices, lack of lock in, and reduced systems integration cost. In Figure 5-2 we have modelled the likely cost reduction associated with the use of stand- ards-based solutions, again from the end of 2016 through to 2025. The chart illustrates the savings in each of the major categories of IoT revenue. The potential savings are sub- stantial, generated in a few ways. In terms of devices, the use of standards-based hardware will help with the scale of procurement, and installation costs will also potentially be re- duced due to a lack of fragmentation. In terms of pure connectivity, the default for most applications is to make use of standards. As a result the potential savings here are rela- tively modest, although there will be some savings from the elimination of some of the fragmentation of the use of non-standards- based technologies. In terms of the revenue from the specific application that the connec- tivity is intended to support (i.e. the "Service Wrap"), we expect a reasonable saving cour- tesy of greater competition. With no proprie- tary technologies and applications, the market for interchangeable applications will be increased and potential savings for cities will be quite significant. We then move on to the more 'IoT' focused revenue elements, i.e. Applications, Data Monetisation, Platforms & Middleware and Project Work. Working on the assumption that standardisation will permeate through all aspects of the application development envi- ronment, we can anticipate a much simpler process for building new applications, reduc- ing application development costs, making data monetisation easier and increasing the reusability of different features, substantially Figure 5-1: Global Wide Area IoT Smart City Connections in 2025 [Source: Machina Research, 2016] ? Machina Research White Paper May 2016 14 reducing development costs, for instance as- sociated with systems integration. Overall we estimate that the cost saving asso- ciated with fully standards-based solutions to smart cities deployments over the period 2017-2025, i.e. assuming complete standardi- sation from the end of 2016 and for two typi- cal four-year electoral cycles, would be USD341 billion worldwide on a like-for-like basis , 30% of the total cost. Putting a figure on cost savings is slightly com- plicated by the fact that the additional bene- fits of standardisation will often be translated rather into additional functionality. Standard- ised ways of exchanging data will allow for more and better applications to be devel- oped. Being able to do so more cheaply is per- haps only a marginal benefit. This leads us to the third pillar of the impact of standardisa- tion in IoT, and which is particularly true in smart cities, is the soft benefits such as allow- ing the provision of better services, making cities more attractive, creating opportunities for applications developers, accelerating tech- nology innovation which has knock on effects to the tech sector. Standards introduce a mas- sive network effect allowing new technology to be introduced in a relatively painless man- ner. 6 Conclusions and recommendations Machina Research makes the following con- clusions and recommendations on the use of standards in smart cities and the wider Inter- net of Things: ? Standards are vital for the success of smart cities. The benefits of interoperability, repli- cability, re-use and a more competitive mar- ket outweigh any 'first mover advantage' that might be enjoyed by a city that de- Figure 5-2: Cost savings in smart cities deployments in 2017-2025 associated with fully standard- ised solutions [Source: Machina Research, 2016] ? Machina Research White Paper May 2016 15 ployed solutions based on proprietary tech- nologies. There is a sense in which cities compete with each other for citizens and businesses, but this competition is not a strong enough reason for most of them to seek such first mover advantage at the ex- pense of on-going lock-in to a closed ecosys- tem. Cities need to work together to enjoy the full benefits of smartness; they cannot and should not develop solutions in isola- tion. ? A rapid move to a standards-based ap- proach for developing smart cities would lead to a 27% uplift in the number of con- nected devices deployed in 21 smart city ap- plications. This compares to a 'business as usual' scenario in which standards evolve more slowly. ? The cost to cities of deploying these 21 ap- plications would be reduced by 30% com- pared to the business-as-usual scenario, as a result of increased competition, interopera- bility and reduced systems integration and application development costs. ? The specifics of the smart cities domain illus- trate a more general finding about the role of standards in enabling the IoT. There are first mover advantages to be gained from early deployments of IoT technology, but these must be offset against the wider bene- fits from using a standards-based approach. This is particularly the case where the de- ployment touches more than one entity, or system, or vertical industry sector - for ex- ample, along a value or delivery chain. ? The formal top-down standards-setting methodology pursued by global standards development organisations is too slow for the ferment of activity around smart cities. But the standards developed there will ulti- mately be useful in consolidating and ratify- ing the standardised interfaces developed at lower levels by industry bodies and allianc- es, and in ensuring that these latter fit to- gether in a coordinated way with minimal gaps and overlaps. ? In the interim these industry bodies and alli- ances must redouble their coordination ef- forts so as to ensure that the de facto standards, APIs and SDKs that they create complement each other and can be used to- gether. As a minimum requirement it is in- cumbent on them to determine whether there is an existing and practicable standard in existence before creating another one. ? Machina Research White Paper May 2016 16 About Machina Research Machina Research is the world?s leading provider of market intelligence and strategic insight on the rapid- ly emerging Machine-to-Machine (M2M), Internet of Things and Big Data opportunities. We provide mar- ket intelligence and strategic insight to help our clients maximise opportunities from these rapidly emerging markets. If your company is a mobile network operator, device vendor, infrastructure vendor, service provider or potential end user in the M2M, IoT, or Big Data space, we can help. We work in two ways: ? Our Advisory Service consists of a set of Research Streams covering all aspects of M2M and IoT. Sub- scriptions to these multi-client services comprise Reports, Research Notes, Forecasts, Strategy Briefings and Analyst Enquiry. ? Our Custom Research and Consulting team is available to meet your specific research requirements. This might include business case analysis, go-to-market strategies, sales support or marketing/white papers. Machina Research?s Advisory Service provides comprehensive support for any organisation interested in the Internet of Things (IoT) or Machine-to-Machine (M2M) market opportunity. The Advisory Service con- sists of thirteen Research Streams (as illustrated in the graphic below), each focused on a different aspect of IoT or M2M. They each provide a mixture of quantitative and qualitative research targeted at that spe- cific sector and supported by leading industry analysts. Machina Research?s analysts also have a wealth of experience in client-specific consultancy and custom research. Typical work for clients may involve custom market sizing, competitor benchmarking, advice on market entry strategy, sales support, marketing/promotional activity, and white papers. For more information, refer to our website at Machina Research Advisory Service Research Streams [Source: Machina Research, 2016]