What Are the Challenges of the Smart City?

More than half of the world’s population lives in cities. And the importance of these large urban centres is even more significant in our country, where the percentage of people living in urban areas is over 80%.

In this context, there is no doubt about the relevance that the development of the Smart City will have. Especially if we take into account the impact that these population centres have in terms of energy consumption and carbon dioxide emissions in the current climate emergency scenario.

Thus, technology will be fundamental for cities to make a leap forward. ‘The incorporation of the Internet of Things (IoT) and artificial intelligence (AI)-driven data analytics are making cities more efficient and sustainable spaces. These smart cities use IoT to improve the quality of life, optimising aspects such as traffic, infrastructure, energy management, pollution and public safety,’ says Víctor Ruiz Ezpeleta, professor at OBS Business School, in his report “Smart Cities”.

In this study, he explains the advantages of Smart City development and specifies the different areas in which technology can be applied to make cities smarter, such as mobility (traffic management, smart parking, on-demand public transport, etc.), water management, smart buildings, etc.

‘The quintessential Smart City area is mobility. Much progress has been made in prioritising public transport, cycling and scooters. In addition, we are improving traffic control through trajectory algorithms that will allow us to optimise current infrastructures,’ Ruiz explains.

Likewise, Diego López Román, manager of Smart Services for Companies at Telefónica Spain, points out that ‘where most focus is being placed when digitising cities is on facilitating the day-to-day life of citizens, whether they are natives or tourists’, which is why he highlights the advances in smart mobility.

‘This is being done through the development of solutions that connect places to provide real-time information on public services, while at the same time improving their efficiency. For example, with screens that warn of the waiting time for the next municipal bus, optimising waiting times; or screens that provide information on vacant parking spaces,’ he explains.

He also points out that ‘the administration is being brought closer to citizens, personalising information and the experience through technology, which facilitates procedures and reduces bureaucracy’.

He also points out that ‘the digitisation of cities is contributing to their sustainability by facilitating better management of resources, such as water and electricity, with saving solutions and smart lighting; or optimising traffic and waste management, which helps to reduce greenhouse gas emissions’.

Finally, he remarks that ‘technology is helping to transform the different municipalities and cities into smart tourist destinations, where tourists have at the click of a button all the services that contribute to improving their experience; while other technological tools, such as sensorisation and IoT networks, collaborate in the maintenance and enjoyment of historical and cultural heritage’.

The Smart City in Spain…

Regarding the development of the Smart City in this country, the OBS Business School professor affirms that ‘Madrid and Barcelona have the highest positions in different Spanish and European Smart City rankings’. He also notes that the three most advanced Spanish cities in this field are Barcelona, Madrid and Valencia, according to the Smart Cities Index (ISCE).

‘Barcelona leads this ranking, with 80% compliance in the digitisation of services, according to the ISCE. Above all, in terms of sustainability, urban planning, mobility and policies to combat air pollution,’ he explains. For example, the city has IoT sensors to monitor the waste flow in real time, to optimise collection operations.

In addition, one of the city’s biggest urban development projects is the remodelling of FC Barcelona’s Camp Nou stadium area, which is being carried out according to criteria of smart mobility, sustainability and inclusivity.

In mobility, it highlights AI-equipped electric scooters, the expansion of bike lanes and the reduction of space for private vehicles. It also talks about the installation of modular cabins capable of creating workspaces in public areas, smart bins that sort waste on their own, autonomous buses for public transport, folding cars and drones ready to deliver goods and pharmaceutical supplies.

In order to centralise and manage the data that will be generated by all these elements, Barcelona is using a platform called Sentilo, an open-source system where data can be easily entered and viewed by both citizens and suppliers.

And not forgetting that the city hosts the Mare Nostrum 5 supercomputer, which will help study and deploy complex projects that until now could not be developed.

For his part, Ruiz points out that in Barcelona ‘the integrated management through IoT of various services, such as mobility and lighting, as well as a more specific social aspect for the city, is particularly relevant’.

In the case of Madrid, the report indicates that it is considered the ‘best European city’ in waste management, thanks to the use of information and communication technologies (ICT), with filling sensors that optimise the routes of collection trucks.

It also emphasises advances in mobility, both in the EMT bus fleet, with full electrification, and in the Bicimad system and its new MPass payment system. In fact, the study notes that Madrid is among the five cities in the world with exemplary transport systems, along with New York, London, Paris and Berlin.

It also highlights the technological transformation of the La Elipa Operations Centre and its photovoltaic installation, which is considered a world benchmark.

As for Valencia, the Telefónica spokesperson highlights that this city ‘was the first Spanish city to implement the Telefónica platform with Smart City technology (called the VLCi platform), to optimise urban management and municipal services, thanks to the intelligent use and sharing of data’.

But they are not the only Spanish cities that are taking important steps in this direction. Ruiz points out that Bilbao, Seville and Zaragoza are also developing interesting projects in different areas.

On the other hand, López stresses that ‘In Spain we are a benchmark in the creation of Smart Tourist Destinations’. ‘In 2019, the Network of Smart Tourist Destinations was created, which is coordinated by SEGITTUR and the Secretary of State for Tourism. It is a management model in municipalities and cities based on the use of innovation, technology, data governance, accessibility and sustainability, which is currently operating in more than 400 locations.’

…And in the world

Outside our country, López points out that the world ranking of smart cities is headed by Zurich (Switzerland), Oslo (Norway) and Canberra (Australia), according to the ‘Smart City Index 2024’ of the International Institute for Management Development (IMD). Rounding out the top 10 are Geneva (Switzerland), Singapore, Copenhagen (Denmark), Lausanne (Switzerland), London (United Kingdom), Helsinki (Finland) and Abu Dhabi (United Arab Emirates).

‘The reason is that they have a holistic approach to sustainability, technological innovation and the quality of life of their inhabitants. They do this by implementing effective measures in key areas of a city’s operations, such as transport, energy and waste management, which puts them at the forefront of smart urbanisation,’ he says.

‘They also stand out for their advanced infrastructure and investment in information and communication technologies (ICT), which facilitate more efficient urban administration and high-quality public services,’ he adds.

On his part, Ruiz highlights London’s international recognition. ‘With its citizen-focused missions and a clear commitment to digital technology, it has set out to improve the quality of life of its citizens. It also has mega-projects such as the London Tideway to clean up the River Thames, which proposes to recover a unique space for the city and its inhabitants,’ he says.

He also points out that Tokyo and New York are at a similar level, ‘with digitalisation and mobility as the main axes’.

The challenges of the Smart City

There is no doubt the development of the Smart City will bring numerous advantages, but there are also challenges to its progress and some risks in its deployment.

One of the biggest challenges is the management of the large amount of data that will be generated by all the connected systems that enable the development of the Smart City.

‘To facilitate the digital transformation of the management model from a digital city to a ‘smart’ one, it is necessary to have a platform that allows the incorporation and analysis of data and information from different sources and the application of its conclusions to the different services that depend on it in real time and through dashboards,’ specifies López.

For example, Telefónica has developed its own platform, under the name ‘Thinking City’, which is already being used by 46 entities, including cities, autonomous communities and provincial councils.

Privacy and security are also potential stumbling blocks that could hinder the progress of the Smart City. Ruiz’s study recognises that the massive implementation of cameras, sensors and data collection systems can lead to an invasion of privacy, so there is a risk that mass surveillance could be exploited by governments or companies to control or manipulate the population.

It therefore insists that clear and rigorous regulation will be essential to gain citizens’ trust in the management and security of their data, which will facilitate their participation.

On the other hand, the report takes into account that an excessive use of AI could lead to the dehumanisation of public services, a particularly critical aspect when it comes to healthcare or social services, where human contact is crucial.

Thus, he warns that the challenge will be to determine what AI should be taught to be able to make fair and egalitarian decisions, as ethics and feelings are complex aspects to be developed by technology.

The challenge of cybersecurity

Cybersecurity deserves a separate chapter, as the intensive use of technology entails the risk of cyber-attacks that could paralyse essential services, so contingency plans must be prepared, as Ruiz warns.

Raul Guillén, cybersecurity strategy evangelist at Trend Micro Iberia, outlines the main challenges in this area to which the Smart City is exposed.

Attacks on critical infrastructure ‘All essential services depend on technology and connected systems. Water supply, electricity, mobility, transport and communications are clear examples. A cyber-attack could paralyse these services, generating chaos and affecting the daily lives of citizens. Let’s remember the example of Colonial Pipeline, to name a few,’ he says.

IoT vulnerabilities. Guillén notes that devices are often not designed to high security standards and do not incorporate security by design. This makes them vulnerable to attacks that can expose sensitive data or allow unauthorised access to wider networks.

Privacy and data exposure. ‘The massive collection of citizen data – location, energy consumption, health, etc. – is fundamental to the functioning of smart cities. The citizen is at the centre of everything – the citizen centric concept – but mismanagement of this data carries privacy risks. If not properly protected, this data can be stolen or misused, compromising and exposing the privacy of the inhabitants,’ he warns.

Denial-of-service (DoS) attacks. The Trend Micro expert points out that these attacks can cripple key systems by saturating them with malicious traffic, paralysing services such as intelligent transportation, traffic management or emergency response.

‘We have many examples here. Perhaps the first of these was the NHS in the UK in May 2017, which paralysed healthcare activity by cancelling operations, consultations and primary care,’ he says.

Real-time data interception and manipulation. ‘Manipulation of data in transit, such as traffic data or emergency alerts, could mislead systems or citizens, creating panic or leading to wrong decisions,’ he says.

Impersonation. Guillén stresses that attackers can intercept communications and impersonate legitimate devices or users, allowing unauthorised access to critical systems or falsify data to manipulate decisions. ‘Remember that digital identity is the new technological perimeter,’ he says.

Attacks on monitoring and control (OT) systems. ‘OT environments have very high amortisation processes, so we find a lot of legacy equipment, especially critical in vulnerability management and mitigation. For example, SCADA systems, which control critical infrastructure, can be a target for attackers seeking to disable or take control of essential city services,’ he warns.

Lack of security standards and regulation. ‘Many smart city technologies still lack unified security standards. This lack of regulation makes it difficult to implement consistent and robust cybersecurity practices across the city,’ he says.

‘It is true that the EU has launched a battery of regulations to mitigate this point, directives such as the CRA, DSA or even DORA and NIS2, which put the focus on extended risk management, including the supply chain,’ he adds.

Are we prepared?

In the face of all these threats, the question is whether we are ready. ‘I think we are on the way, but there is a long way to go. There is an urgent need for holistic and global visibility of risk in any digital service, including all the elements involved in cities,’ says Guillén.

‘When we talk about risk management we must imperatively talk about time. Risk is changeable and we have to have solutions that provide global visibility and help us mitigate risk at an early stage. Time is the unit of measurement in incident management. Good time management allows us not only to be reactive, but also to be proactive and anticipate technology-related problems. Here, the concept of a unified cyber security platform is key to simplify management and operation,’ he says.

He also stresses that we must incorporate cybersecurity from the design phase of services, in line with the new European directives.

He also reminds us that people are key in this process. ‘The awareness of top management and business managers is a critical and crucial point in the war against cybercrime.

Willingness to change

In any case, the OBS Business School professor stresses that the development of the Smart City depends mainly on ‘the will of a clear commitment on the part of the administration-citizen-business triangle, which is moving too slowly for the possibilities that could be developed’.

Thus, although he recognises that cybersecurity and data processing is a challenge, he considers that the tools we have will improve substantially in a very short time, so that the development of the Smart City will be more conditioned by this will to advance.

Similarly, the manager of Smart Services for Companies at Telefónica Spain stresses the need to continue investing in the secure digitalisation of infrastructures. ‘For this, public-private collaboration is essential,’ he adds.

In line with this, Ruiz points out in his research that it is necessary for private companies and governments to work together. However, many business leaders are still reluctant to share data with external partners.