Should cities turn to special utilities to manage data?

19th October 2018

By Bas Boorsma, Hock Yun Khoong, Teppo Rantanen, and Stefan Slembrouck*

Can data utilities provide an alternative to current private- and public-sector modes of handling privacy-sensitive data? What would the advantages be? Do broadband utilities such as Stockholm’s STOKAB or city-owned utility models such as Germany’s Stadtwerke serve as a precedent and example?

Communities and their local governments are faced with an increasingly large and complex set of questions on the future of data management. Concerns over privacy, data ownership as well as the accountability of those entities designated to handle smart city services, and the management of privacy-sensitive data, have become ever more pertinent. New regulatory environments that follow from Europe’s General Data Protection Regulation (GDPR), among others, produce immediate quests for new modes of data management that are safe and secure. At the same time, competing opinions exist as to whether big tech companies represent the preferred choice for storing and managing data, especially in Europe, where a push-back is on the rise against what are perceived by many as data monopolists.

At the same time, equally valid questions exist as to whether governmental entities can continue to operate as guardians of public data that is potentially privacy-sensitive and paid for by the taxpayer, and whether governments can pay back taxpayers’ money through the monetisation of data streams. No longer can data only be considered as static sets of information, safely stored in traditional governmental archives. The shape-shifting nature of data, the impact of platforms and the dynamics of algorithms have turned data management into an affair of data specialists.

A third option is being considered by some–the data utility. In its quintessential shape, such a data utility is a professionally managed company, yet could be 100 percent city owned–or cities could maintain a majority equity stake, structurally safeguarding the public nature and interest of the mission and data at hand. Such a data utility would itself not be a market player, yet would provide the platform for competing services that leverage the utility’s data under transparent conditions. The data utility proposition would provide an organisational response to concerns over data privacy without private sector infringements some communities may be eager to avoid.

Historically, the basic proposition has many precedents. Many ports and airports have been and continue to be (partially) owned by cities, operating as a neutral platform for competing shipping companies and airlines. The German city utility model, Stadtwerke–translated loosely as city works–has typically operated as a mandated (and trusted) caretaker of critical public services while being totally or partially owned by the city. Vertically unbundled business architectures have been proposed in the deployment of high-end broadband infrastructures. The City of Stockholm serves as an example: in the late 1990s the city founded STOKAB to deploy and manage the city’s dark fibre infrastructure, connecting all of its households.

In 2009, Singapore’s Next Generation National Broadband Network (Next Gen NBN) put in place a network company (NetCo) that is structurally separated from upstream broadband service providers. The NetCo, a facilities-based telecommunications licensee, provides full open access to passive infrastructure elements such as the ducts, manholes, central offices, and fibre-optic cables leading to homes and businesses. In both cases, broadband services are managed and provisioned by competing providers that leverage the same neutral infrastructure. Like Stockholm and Singapore, many other cities have over the past decades to a greater or lesser extent put in place and safeguarded market-neutral foundational infrastructure in order to foster a competitive digital services and/or digital-enabled market that leverages that infrastructure.

Especially in Europe, many city leaders, smart city and data management professionals now contemplate the notion of the data utility. It may prove to be one of the better ways to safeguard what has been coined as the basis for A New Digital Deal, involving better deals on data for citizens and public sector entities alike. It would help address the conditions governing storage and future use of citizen data. It may also help by creating an environment where clear conditions can be agreed upon to address the potentially preferred destruction of data once it has served its prime purpose – an option that generally remains under-addressed in most public data environments. It may also be one of the best models to guard the guardians of our data.

A data utility’s mandate may extend beyond data management to include basic smart city services and infrastructure, such as a base network of relevant sensors. Again, German Stadtwerke or energy infrastructure companies in the Netherlands come to mind as being well-positioned to take on such a role. As an example, Alliander manages energy infrastructures in large parts of the Netherlands. Independent from energy providers, it is directly owned by Dutch provinces and municipalities. Its rich experience in privacy-sensitive data management, smart metering, public lighting and telecom networks makes it well-positioned to expand its mission towards becoming a data utility.

Communities face several choices ahead. Regulatory environments differ from one jurisdiction to another, from one country to another, and from one continent to another. The leaders and citizens of different cultures and markets are predisposed differently on what course to take, and who to entrust. Next, once the notion of a data utility is on the table, new questions emerge as to who or what should build the data utility. Existing energy utilities may be burdened by legacy culture and regulation not befitting the task ahead. Data utilities may emerge as joint ventures between cities and private sector entities. The data utilities of the future may feature different levels of vertical unbundling and will certainly face different regulatory environments with differing mandates as a result. But the data utility proposition in general deserves urgent attention and may help us pave the way towards A New Digital Deal our citizens are entitled to.

 

*Bas Boorsma, author of A New Digital Deal, CEO of the academy for smarter communities (TASC), Director, Rainmaking Urban and Adjunct Professor, Arizona State University. Former DigitiSation Leader at Cisco (Northern Europe).

Hock Yun Khoong, Advisor in Tembusu Partners, a private equity firm, specialised in Blockchain investments. Former Chief Digital Evangelist in Singapore’s Infocomm Media Development Authority (IDA). Conceived Singapore’s Smart Nation initiative in 2014. Implemented Singapore’s 3-tier, open access, nation-wide broadband network from 2003 to 2013. Member of the TASC Expert Community.

Teppo Rantanen, Executive Director for growth, competitiveness and innovation, City of Tampere, Finland. Former senior partner and CEO for Deloitte Finland 2002-2016. Member of the TASC expert community.

Stefan Slembrouck, a graduate philosopher and economist, multinational business development manager in global companies, Germany Director for a large European energy utility. Leader for TASC (the academy for smarter communities) DACH region. Stefan’s core focus: digitalisation of critical infrastructures as the technical backbone of smarter communities in collaboration with municipal utilities and network companies.

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