Infrastructure has a shelf-life. Countries like the United States that invested in an extraordinary infrastructure expansion in the early part of the 20th century are now struggling to maintain and replace all those bridges, pipes and tunnels. As we march toward the first quarter mark of the 21st century some are proposing new ways to finance these massive projects – by harvesting and monetizing their data. The idea is that this will not only provide some of the trillions of dollars needed but also that it will make a more flexible and dynamic infrastructure for the future.
For the most part, due to the longevity and static nature of infrastructure, they have been financed by public-private partnerships. But it seems doubtful that this model can keep up with the demand for the mounting infrastructure costs. By embedding sensors in our infrastructure, not only may this unlock new potential revenue streams and financing models, but it could also reduce the cost of maintenance and improve safety.
“Sensors can pull data on water flow, traffic congestion, air pollution and more – all of which can be processed to illuminate how to deliver services more efficiently and cost-effectively. The data are attractive to insurance companies because they help to hedge risk, and to investors because the information can give rise to new revenue streams, or create value well beyond the infrastructure itself.” – Peter Adriaens, director of the Center for Smart Infrastructure Finance.
By embedding these sensors in the infrastructure, a market can be opened for providing data to material supply companies, construction companies, and even to automotive companies that are keen to understand the real-world impact and functioning of fleets. As Adriaens further puts it, “just like data from smartphone apps create value, the data from physical infrastructure will lead to a new marketplace in which public infrastructure is a lot more attractive to private capital than it is right now.”
This can be understood as but just one tool out of the broader toolkit of value capture mechanisms, which is an umbrella of ways to recoup some of the value that is quite literally built into infrastructure. The Australian government, for example, has been exploring ways to capture value through taxing increases in land prices that come about as a result of new infrastructure. For example, in its proposed east coast high-speed rail megaproject.
Gathering data from infrastructure can lead to significant improvements, ranging from a more detailed understanding of transportation flows and wear-and-tear, to preempting disasters such as bridge collapses. Smart, focused, and dynamic maintenance can reduce the cost to cities and governments while providing cleaner and better infrastructure to citizens. Replacing pipes, fixing leaks, finding flow bottlenecks quickly, and repairing roads, buildings, bridges, and other parts of the built environment on time and as efficiently as possible is certainly a good thing. But like the data generated by apps on your smartphone, there are, as always, potential downsides.
There is no question that this data, what some have called data exhaust, can unlock value. Some of the revenue generated by data is churned back into improvements of services for the user. But that’s only part of the story. That data can also be used, not to improve a service, but to more effectively leverage the service for harvesting more data (or revenue) from the user, a process that has been called surveillance capitalism. Data generated from embedded sensors in infrastructure could be used in similar ways, whether that is targeted ads to drivers of certain vehicles, or signs that change according to who is walking by on the sidewalk. But is this what we really want? And whereas this kind of data-driven business model can be sufficient to finance digital services (which can be scaled up at very low marginal cost), will it possibly amount to more than just a drop in the ocean when it comes the funding of mega infrastructure in the physical world?
Infrastructure can last a long time, as anyone who has seen Roman roads, or the pyramids can attest to. By comparison, the apps on our smartphones last but a fraction of this time. We ought to be careful, then, that we ensure the overlapping digital infrastructure is designed to improve infrastructure, our cities, and our lives and not the other way around. Otherwise, the saying that is commonly invoked to describe social media services (“If you’re not paying for it, you become the product…”) may also start applying to everything around us as well.
Written by Joshua Bronson,
RISE Mobility & Systems (Människa-autonomi)