Project Manager, IDATE DigiWorld
What belongs together, grows together
Converging markets provide a bright future in terms of market growth. Take Enterprise Cloud Computing, for instance: we sized the market – IaaS, PaaS and SaaS revenues altogether – at EUR 80.2bn in 2015, in 2020 we forecast that this number will more than double: EUR 192.4bn with SaaS still as strongest revenue segment, but IaaS coming close behind.
Why convergence matters
• The convergence of telecom and IT B2B markets consists in the development of services by IT players on telecom markets, and by telecom players on IT markets. It comes mainly from the development of the Internet, of Internet access for consumers and businesses, and of services over IP. Because of this, some telecom and IT services can be provided transparently by networks. Technologies such as voice-over-IP or cloud computing have thus emerged in recent years relying on broadband access, and commoditised IT systems. Our latest study has a focus –for IT markets– on cloud computing, big data, security (including management solutions known as Bring Your Own Device (BYOD) and IT consulting. For telecom markets, we focused on unified communications (including collaborative tools) and M2M (on the service stack only). These markets are those where both IT players and telecom players are providing services. However, not all these players are positioned on converging markets. Furthermore, businesses have invested heavily in IT systems and services and can be expected to continue to invest as their business issues can be answered by telecom and IT services. Among business needs, analytics and big data seems to be the most important, along with reducing costs and overheads as the first strategic business priority.
How telecom and IT services meet current business needs
* NB: Security does not fit the selected business needs in this table, but it does answer a major need for better security, in a context of important cybersecurity threats.
Source: IDATE, Telecom & IT Convergence, November 2015
• IT players are keeping a majority of market share on all converging markets: this is estimated by IDATE as between 60 and 75% on telecom converging markets, and between 90 and 99% on IT converging markets, where the IT players’ market share remain very important. In volume, the most important converging market is that of IT consulting services, reaching more than 700 billion EUR in 2015, with 95% market share held by IT players. Even if the overall convergence is leading to telcos and IT players competing on specific markets, their targets remain different. This distinction explains the asymmetry of market share between telcos and IT players on these markets. Large IT players mainly address large accounts, providing highly customised solutions and usually no ‘off-the-shelf’ or ‘turn-key’ solutions. Their solutions are especially designed to meet the needs of large accounts, each of which has a different IT systems configuration. For instance, on the cloud computing market, IT players mainly provide private-cloud services as well as hybrid cloud as it involves customised private-cloud services. Smaller IT players, and especially the pure ones, can address both large accounts and small and medium-sized enterprises (SMEs) as they can provide turn-key solutions, which is type usually chosen by SMEs.
• Telecom players (mainly telcos) have a role to play on all converging markets, but with other customer targets than IT players. Telcos have earned a strong degree of trust from their customers, both large accounts as well as SMEs. This long-term relationship allows them to provide and to sell additional services, complementary to their traditional communication services. Telcos therefore provide bundled services that include communication services (mobile and fixed), cloud storage, office suite in Software-as-a-Service (SaaS) (cloud) and a basic security suite (firewall, anti-virus and VPN). These services are especially appreciated by SMEs as they are looking for low-cost turn-key solutions. Telcos do not develop all of these bundled services, usually just reselling some of them, such as cloud SaaS products or security products. These bundled offers are, however, almost the only ones on the market: telcos thus have here a strong competitive position for this kind of business. In terms of investments, telcos mainly provide these services over their own infrastructure (without investing strongly in new capex), or resell products. In terms of revenues, these additional products do generate a measurable amount – estimated at between 5 and 10% of overall telco revenues.
Growth potential for telcos in the SaaS and IaaS markets
Source: IDATE, Telecom & IT Convergence, November 2015
Get more valuable insights about convergence enablers and business needs in our recently published market report
Published in DigiWorld Economic Journal DWEJ No. 100
Interview with Philippe AGHION
College de France, London School of Economics
Conducted by Gilbert CETTE & Yves GASSOT
C&S: Is more competition always favourable to boost innovation? Many representatives of the telecom industry are arguing that the innovation and investment in this sector is badly impacted by the intensity of competition, do you share this analysis?
Philippe AGHION: My work with Richard Blundell and co-authors shows that competition boosts innovation for firms that are close to the technological frontier (this is the escape competition effect) whereas it may discourage innovation in firms far below the technological frontier (this is the discouragement effect). Overall, the effect of competition on innovation is an inverted-U: innovation increases with competition at low levels of competition and it decreases with competition at high initial levels of competition.
Productivity has slowed down in the U.S. and in the main developed countries since the mid 2000s. How do you explain this slow-down when we consider the dramatic momentum we know in the digital economy? Are you optimistic about a new productivity surge in the near future?
Part of the slowdown in the U.S. may be due to the fact the fact that the ICT wave has partly run out of steam. But I also believe that innovation is not properly taken into account when measuring productivity growth, and this is particularly true in sectors that experience a high degree of firm turnover and where innovations are made by newcomers in the market. In the long run I am optimistic for at least two reasons. First, the ICT revolution has improved the technology for producing new ideas. Second, with the advent of globalization, the returns to innovation have greatly increased.
Are ICTs the main driver for innovation allowing for a productivity surge in the future?
I think that with the 3D printing and the clouds, the ICT sector still has glorious days ahead. But I also anticipate breakthroughs in other sectors, for example in the renewable energy and in the health/biotech sector.
Is according to you innovation a factor of inequality increase?
My recent work shows that innovation contributes to increasing the fraction of income earned by the top richest 1% or 0.1%. By this inequality is temporary as innovation rents are eroded by imitation and disappear when current innovations are eventually replaced by newer innovations (the Schumpeterian process of “creative destruction”). Moreover, my co-authors and I show that innovation does not increase overall inequality and that it enhances social mobility (again as a result of creative destruction).
Philippe AGHION is a Professor at the College de France and at the London School of Economics, and a fellow of the Econometric Society and of the American Academy of Arts and Sciences. His research focuses on the economics of growth. With Peter HOWITT, he pioneered the so-called Schumpeterian Growth paradigm which was subsequently used to analyze the design of growth policies and the role of the state in the growth process. Much of this work is summarized in their joint book Endogenous Growth Theory (MIT Press, 1998) and The Economics of Growth (MIT Press, 2009), in his book with Rachel GRIFFITH on Competition and Growth (MIT Press, 2006), and in his survey "What Do We Learn from Schumpeterian Growth Theory" (joint with U. AKCIGIT & P. HOWITT). In 2001, Philippe Aghion received the Yrjo Jahnsson Award of the best European economist under age 45, and in 2009 he received the John Von Neumann Award.
More information on DigiWorld Economic Journal No. 100 "Digital innovation vs. secular stagnation?" on our website :
CEO, IDATE DigiWorld
And what if Jean-Marie Messier was ahead of his time? This is a question that many market observers are asking themselves after the deals that took place in 2015. To wit: the largest telco in the United States taking control of the second largest pay-TV provider, while Verizon entered the mobile video market, Vivendi became Telecom Italia’s majority shareholder, the head of Altice and SFR acquired media and football rights, following in the footsteps of BT which had spent over a billion euros in February to secure the exclusive rights to Premier league matches for three years…
Disintermediation of programme access?
Beyond economists’ theoretical and already ancient arguments over the limitations of vertical integration strategies, we need to recognise a new and deeply rooted trend that appears to be going in the opposite direction of a return to convergence. In this era of increasingly ubiquitous high-speed and superfast access, increasingly effective competition between access providers, and of scrupulous attention being paid to net neutrality, even though applications and Internet users are extremely polarised between a handful of platforms, there is no telling whether telcos’ and cablecos’ assets have been strengthened in a way that will allow them to become the main providers of TV products. The trend is more towards globalisation and disintermediation.
It is only a slight exaggeration to say that, with a server and a few technical service providers, anyone can monetise their media rights internationally. Hollywood may have dominated the industry, but the major studios still needed cable networks and largely national TV channels around the world to distribute their wares. Today, they see what Netflix, Amazon and YouTube are doing, and Facebook’s ambitions in the realm of video, and are diving headlong into testing and investing in direct distribution strategies. So it is media rights that matter most and, behind that, being big enough to acquire these rights or be able to self-produce, and amortise the cost thanks to tens of millions of consumers. Telcos’ boldest and most ambitious media strategies must therefore be consistent with their size, or with expectations of their sector’s international consolidation.
Investing in programmes: will it drive telco consolidation?
If this summary argument sketches out the, in many ways new, backdrop to the relationship between container and content, it of course does not mean that all of telcos’ or cablecos’ TV initiatives are bound to fail, even for the smaller ones. They have a legitimate role to play in building an ecosystem around triple and quadruple play bundles, as a way to strengthen customer loyalty. Here, technological developments make it less costly to create a pay-TV plan that combines access to TV channels, and well-crafted indexing and marketing of OTT services. But none of this makes fixed and mobile high-speed access providers the natural choice for main providers of TV programming, and the ones that rights owners will turn to (and pay a hefty fee). The largest telcos can invest heavily in acquiring rights and even exclusive rights, with the hope that these investments will pay off. In many instances, these will be marketing investments, with the aim of increasing their share of the high-speed access market, and now accelerating the pace of customers’ upgrading to superfast (fibre, 4G/5G) plans. We should mention in passing that this belief does not cancel out the belief that mergers between telcos and (even more scattered) TV networks, and partnerships between the two, can be part of an industry-wide strategy that prevents Europe from being the mere victim of a new era of TV industry globalisation. Adhering to this analysis would lead us to conclude that perhaps Jean-Marie Messier was right… albeit too soon.
From a more general standpoint, the challenge for telecom carriers still lies in making profitable investments in the new generation networks that our economies need. From this perspective, video in particular and, beyond that, the whole range of cloud applications and services, are all very positive factors. Not only because they offer opportunities to diversify – operators can of course invest in OTT services or seek to monetise their data – but also and especially because they increase the value of having access to these networks, and open up arenas of differentiation by creating competition that is not based solely on prices.
This opinion piece was published in Les Echos on 11 January 2016
CEO, IDATE DigiWorld
What topics are likely to make headlines in 2016?
Looking at recent trends, and after having sadly dismissed topics such as – in no particular order – the onset of virtual reality, G-Fast and Docsis 3.1, 5G standardisation, IoT, AI, the introduction of E-SIM, verticals’ digital transformation… four topics in particular come to mind:
This encompasses an explosion in data traffic on all devices, fuelled by video traffic, the proliferation of video products and new pricing formats from cellular operators – in the vein of Verizon’s Go90 and T-Mobile’s Binge On – associated enhancements to LTE platforms (LTE-A/B/U), Netflix’s global strategy as it marches towards the 100 million subscriber mark by the end of 2016, the race to 4K and HDR TV, debates in Europe over harmonising copyrights, geoblocking limitations…
The increase in a wide range of dangers in digital ecosystems has given birth to a market that is expected to grow twice as fast as the IT market as a whole. By the end of the year, Europe is due to have passed a new data protection directive. Will it provide a new foundation for renegotiating the Safe Harbour agreement and making progress with the Transatlantic Trade and Investment Partnership (TTIP)? Will the ad-blocking phenomenon be made obsolete by the expected virtues of programmatic advertising?
In Europe, we will wonder just how far the consolidation trend can go as we question the hoped-for synergies, the attitude of the anti-trust authorities, the potential impact on prices, on fixed-mobile convergence, on ultrafast fixed and mobile network rollouts, etc.
Meanwhile, in the United States, we don’t yet know whether:
• A price war will break out in the mobile market?
• Cable’s dominance of the superfast access market could be threatened?
• A fixed-mobile convergence trend will take hold as it has in Europe?
These represent as much opportunity for innovation as threats to the banks which are involved in their own digital transformation, along with hopes for the creation of a large-scale mobile banking ecosystems with a strong competition between banks, Internet platforms, and telcos, plus concepts that are creating a lot of buzz such as crypto-currency, and more precisely, blockchain technology.
Here’s wishing you a very happy 2016 with IDATE DigiWorld, and we look forward to seeing you at DigiWorld Future and the DigiWorldSummit !
> Read also an opinion from Yves Gassot published in Les Echos «Media-Telecoms: convergence redux? »
Head of Media & Digital Content Business Unit, IDATE DigiWorld
Without any surprise OTT Video represents the top traffic on both fixed and mobile networks – telcos have been investing in infrastructures without payback for traffic. In our recent study we highlight the positioning of several key players from the telecom industry and stress out the pros and cons from two-sided business models
Initially, incumbent telcos launched video services for raising customer levels and ARPU gains. They were indeed keen to capture a share of the TV market. They then added features to enhance their value proposition, facing the competition of incumbent TV players and the threat of the over-the-top (OTT) world. Time shifting, multiscreen viewing, live streaming and video on demand, both transaction-based (TVOD) and subscription-based (SVOD), have been progressively adopted by telcos.
Examples of telcos broadcast broadband TV
Source: IDATE, in Telco Video Strategies, December 2015
The market at present is a two-sided one where incumbent telcos are targeting both high- and low-income households.
As a first step, this concretises new investments in premium video content, including some initial steps in UHDTV. This again is a must for incumbent telcos, in order to:
• Cross-sell: launch attractive video offerings to promote the sale of multiplay (triple- or quad-play) subscriptions
• Upsell: use video as a driver to gain higher-income subscribers and to migrate broadband subscribers to FTTH
Secondly, the will to address lower-income households and the ‘new generation’ of cord-cutters and
cord-nevers is leading incumbent telcos to deepen their segmentation of video services, with
• Skinny-TV bundles, generally providing a basic of TV channels bundled with Internet access for an entry-level subscription price
• SVOD services (including third-party, thanks to platform openness) in order to provide the ‘best of’ breed of services and more individual subscription options
Moreover, the development of programmatic advertising, based on their consumer data, is in development and could be a driver for revenues.
The search for operational flexibility and efficiency has also be permanent for incumbent telcos, in different ways:
• In order to shorten their ‘Time to video market’, operators should leverage hybrid TV broadcast-broadband solutions through DTT and satellite, to enter new markets, first with OTT-only TV delivery
• Telco CDN is must-have for telcos, to better manage OTT video traffic on their network than a revenue generator
• Cloud, centralised, solutions should develop step by step in order to easily integrate the unification of consumer interfaces, to create ‘super head-end’ for the rationalisation of OTT services and perhaps to develop future-proof solutions for their video service within, or eventually outside, their network and programmatic advertising services, to launch cloud-PVR services…
• Trade-offs can also occur around video hardware at home, including STB-less, skinny STBs or TV dongles around such issues as the ‘operator as an app’ model, including a balance between Smart TV sets and stand-alone streaming boxes.
At the end of the day, facing the competition of Internet giants, the benchmark will be the best possible user experience, to be gained through attractions such as very high-speed networks, flexible and user-friendly service platforms, innovation in services and top-quality content.
Change in IPTV’s share of TV households worldwide, 2012-2016 (million TV households)
Source: IDATE, in Telco Video Strategies, December 2015
Find out more details regarding market framework and players positioning for Telco Video Strategies in our dedicated market report
Director of Studies, IDATE DigiWorld
In developed countries, the broadband market’s evolution is being shaped by the transition to superfast broadband (SFB) and by fixed-mobile convergence. Telcos have to react – especially on the verge of continuous consolidation in the communications industry. In 2015 merger & acquisitions already shook up markets profoundly.
In both fixed and mobile access markets, the trend is one of increasing speeds, and especially the transition to superfast access (>30 Mbps) thanks to NGA network rollouts. But each is progressing at its own pace.
In the mobile sector, LTE rollouts are progressing rapidly, and subscription rates in Western countries are already high. It is safe to say that 80% of residents in Japan, South Korea, North America and the biggest European markets will be covered by LTE networks by the start of 2016, as will roughly 60% of the people in China. In addition to rapidly reaching 90+% coverage in the most advanced markets, LTE will steadily enable increasingly fast connection speeds: in excess of 30 Mbps thanks to frequency aggregation, more base stations in urban areas and the use of small cells combined with wide channels in high frequency bands. Starting in 2020, these developments will fold into 5G rollouts which are expected to deliver Gigabit-class datarates.
A comparison of fixed and mobile coverage in some of Europe’s largest markets (30 Mbps in LTE and FTTH/B), 2012-2020
Source: IDATE, LTE vs. fibre, December 2015
• Progress is slower in increasing fixed network coverage rates. It is also more complicated since it involves a mix of technologies that is specific to each national market. Schematically speaking:
- VDSL technology, which uses the legacy copper network’s local loop at least partially, makes it possible to achieve speeds of >30 Mbps, and even in excess of 50 Mbps, thanks in particular to developments such as vectoring and bonding;
- DOCSIS technologies, for cable companies that reuse the last mile of TV broadcasting networks’ coaxial cable. The vast majority of them are already selling plans with a speed of more than 100 Mbps and Gigabit-speed plans are soon to follow;
- FTTH technology which requires massive investments and a good deal of time to deploy fibre to customer premises. These systems deliver a headline speed of 100 Mbps and will be upgraded steadily to Gigabit-speed access.
• In advanced markets, fixed and mobile NGA rollouts will go hand in hand, even if preliminary observations and forecasts give superfast mobile a slight edge in terms of pace. The current situation is giving rise to fixed-mobile convergence strategies, which are clearly illustrated in Europe through the recent spate of merger and acquisition deals.
The impetus behind the convergence trend can be found in the resulting advantages:
bundles and cross-selling synergies in customer accounts, online and brick-and-mortar shops, applications and video content;
integrated approach to fixed and mobile infrastructure: sharing backboning, though Wi-Fi which is now an effective bridge between fixed and mobile and, more and more, the savings generated on backhauling with the increasing use of small cells in densely populated areas, and through sharing SDN/NFV software infrastructures. Eventually, mobile services will represent a significant percentage of fixed network revenue, while the latter will provide short-range wireless access.
• The countries where fixed-mobile convergence is the furthest along are Spain and France, where more than 40% of subscribers use the same operator for their fixed and mobile services. But there is also a general trend in Europe of markets being gradually structured around integrated fixed-mobile operators, as the result of an ongoing series of mergers and acquisitions.
• The trend is less prevalent in the United States due to the fragmentation of wireline telcos, cable companies and mobile operators which often have only regional or local footprints. But US cable companies are investing in Wi-Fi and showing an interest in mobile services (Comcast) while AT&T, by taking control of DirecTV, is integrating fixed and mobile products at the national level.
• As a small percentage of areas in advanced countries will probably still remain uncovered by operators’ FTTH/B networks in 2020, wireless access and especially LTE will likely be sold as a substitute, alongside satellite access plans and in some instances with hybrid LTE/DSL routers. This configuration is already being tested by several operators in the United States and in Europe. Added to this is the swath of customers in urban areas who have only a mobile subscription, even for their Internet access. The availability of additional spectrum resources, and notably in the 700 MHz band, often attached to obligations to cover more sparsely populated areas, should also facilitate this approach.
• In emerging economies and especially in Africa, Internet access – which today is still confined to a fraction of the population – will be delivered primarily through the expansion of 3G and the deployment of LTE networks. But the needs of businesses and city demographics will progressively generate investments in wireline fibre networks, and set off a fixed-mobile convergence trend.
Find out more on Fixed-Mobile Converges and the latest trends and figures for LTE and FTTx in our dedicated market report
Senior Consultant, IDATE DigiWorld
A Eur 30 billion worldwide market driven by automotive, consumer electronics & utilities
This IDATE DigiWorld report, published along a worldwide database, analyses the overriding trends and changes taking place in the M2M market around the globe. It explores the driving forces behind the market's growth and transformation, including an examination of major market trends, plus volume and value forecasts up to 2019 by geographical area and 25 countries.
Over the next few years, the M2M market will clearly be driven by three key verticals: automotive, consumer electronics and utilities.
• In recent years, the market has been driven by a few major verticals like Fleet management, Industrial asset management and Security. But the overall market in volume remains small, with potential for each market in tens of millions.
• In the upcoming years, there will be new major verticals (including Automotive, Connected consumer electronics and Utilities). Potential volume is definitely higher by expanding towards consumer objects (billions) rather than industrial objects only. Moreover, regulations will stimulate automotive in Europe and utilities though public policies in some regions worldwide. However, while they will theoretically drive the market, certain barriers could obstruct growth in these sectors. In the short term, some applications in these key verticals are recurrently delayed (as with the eCall regulation in Europe which is now expected to be rolled out from October 2018) and have a potential impact on the traditional M2M market. Moreover, the utilities market is seen as less attractive with business opportunity being somewhat limited for Telcos (concentrator will only be cellular connected). UK is a key exception as a cellular concentrator will be installed in almost all households (in two main regions out of the three).
• In the future, the market will be focused on emerging segments like healthcare with remote patient monitoring and smart homes.
The M2M market is still growing very fast
In 2014, the number of active M2M modules (all technologies included) reached 1.2 billion units. They will top over 4.1 billion by 2019 with a 29% CAGR.
• In 2015, the cellular market is expected to represent 290 million modules worldwide for a total market of 30 billion EUR. The annual growth of the M2M market is around 10% in value and 26% in volume, compared with 2014. Most revenues will come from software and IT services.
• Asia-Pacific will dominate Europe and North America in volume only. Europe will still lead in value, followed by Asia-Pacific. Since 2012, China has led the M2M world and has overtaken the USA in terms of cellular modules installed.
M2M players seeking business opportunities beyond their core expertise
M2M offers them attractive opportunities for Telcos, as, despite low and declining ARPU, projects offer high lifetime value, reduced churn rate and average deals representing thousands of SIM cards. Connectivity alone should represent more than 20% of total SIM cards for European telcos. Telcos are also trying to consolidate and reinforce their position on connectivity by looking at partnerships with LPWA providers, allowing them to address emerging applications.
Representing two thirds of the market, IT services are key in M2M and all players along the value chain are therefore attempting to position themselves by grabbing a piece of this lucrative market. Main players are looking at new services based on the cloud and Big Data (though analytics mainly), allowing them new business opportunities.
Finally, module providers are also challenged to break even in a market where unit prices are falling. In addition to services, they also attempt to offer connectivity services helping them provide end-to-end offering (MVNO acquisitions by Sierra and Neul purchased by Huawei).
Find out more details regarding market M2M in our dedicated market report
Emerging technologies expert, IDATE DigiWorld
3D printing market revenues will skyrocket from 3bn in 2013 to 21bn USD in 2020, representing an annual growth of 31.6%
Three-dimensional (3D) printing, included in the broader term of ‘Additive Manufacture’ (AM), refers to the various processes used in the manufacture of products which comprise the depositing or fusing of materials layer by layer. The 3D-printing process can, though, date back to the 1980s, when additive manufacturing (AM) was practised for rapid prototyping in industrial applications.
Today, 3D printing (3DP) has already been used across a wide range of verticals, spanning out from aerospace, automotive and medical industries to the consumer market. Rapid prototyping and tooling remain the most common applications, and SLS and FDM are still the dominant technologies for 3DP.
Regarding the landscape of 3D-printing ecosystems, 3D-printing systems are the largest value contributor, accounting for nearly 50% of total value and it will remain the same for the next five to ten years. 3D Systems and Stratasys, as market leaders, have a greater value chain integration and vertical coverage in an attempt to reinforce their leading position in the value chain.
Value chain positioning of manufacturers in 3D printing market
Source: IDATE in 3D Printing, December 2015
Since the process is still highly fragmented, software, marketplaces and service platforms, despite relatively lower value share, are very essential players to orchestrate the activities of designers, makers, distributors and customers across the whole value chain. Strengthened partnerships among those players has thus been observed: Autodesk and Dassault Systèmes, as software leaders, are working with, for example, Sculpteo and 3D Hubs to build a smoother 3D-printing experience.
On the market side, 3DP has been experiencing a strong uptrend since 2009 when key FDM patents expired - it took the AM industry only five years (2009-2014) to produce its second billion USD in revenue. The worldwide revenue, which comprises the printers, materials, software and associated services, is expected to grow at a CAGR of 31.6% on average between 2013 and 2020, from 3.07 billion USD in 2013 to 21 billion USD by 2020.
The industrial and enterprise markets (B2B) are the major targets for 3DP. On-demand manufacturing has become a ‘standard service’ for many established manufacturers, given its potential to disrupt the traditionally centralised production for industrial and enterprise customers. Meanwhile, IDATE sees the hybrid processes that additive manufacturing fits into existing production lines as being of high priority and having a high potential.
Consumer 3DP, where proliferating start-ups are active, is a reality today via service platforms. However, the opportunities in consumer 3DP (B2B2C, B2C) have no settled business norms yet - as more companies aggressively enter the playground; the rules of competition are constantly being re-written. Players would do well to consider their value chain coverage and business model for the next step, as well as their investment in printing capability.
Overall prices will continue to go down and standardisation and IP protection are underway, The pursuit of improved printing performance, ease of use, well-orchestrated processes and expanded global availability remain the centre of gravity for 3DP industry. However, IDATE expects that, the paradigm shift of 3D printing for mass manufacture of final parts is very unlikely to take place within the next decade – and neither is personal at-home printing – before there are breakthroughs in material availability, printing speeds and productivity levels.
Find out more on the outlook for additive manufacturing & 3D printing in our dedicated market report
IDATE Insights : Philippe BAUDOUIN, Head of digital plan practice
5th edition of the Smart City Forum. This year with a focus on territorial strategy, and a second focus on the predictive analysis for the development of Smart Cities.
- First challenge on climate change, especially with the COP21 conference organized in France.
Smart City could allow making savings in terms of gas emission, equivalent to India production.
- 5 years ago, Smart City was a hot topic for very few cities. In 2014, 50% of 100’000+ cities were involved in Smart City development. Besides, the Caisse des Dépôts launched an initiative to help smaller cities to develop Smart City initiatives as well.
- Various approaches of the smart city : the block, the vertical, the citizen, …
Round-table: From experiments to strategic visions: how cities are becoming smart cities?
- Norbert FRIANT, Responsable Service Aménagement et Usages du Numérique, Rennes Métropole
- Benjamin FAVRIAU, Chef de projet Smart City, Mairie de Paris
- Hélène ROUSSEL, Développement filière d’excellence, Montpellier Méditerranée Métropole
Flash-back regarding what have been done regarding smart cities in your city ?
Montpellier is working on smart city for 5 years, and is currently in the end of a learning phase. Legislative tools and synchronization are complex to develop such initiatives. In 2010, Montpellier has been involved in the label “Eco Cité” allowing the city to start a reflexion with IBM and local labs on Smart City. 4 fields investigated : mobility, floods prevention, risk management. Currently at the end of the trial phase.
Rennes has the moto “living smart” since 1983. The city is very involved in data use and management, thinking early of open data, big data. Worked with Dassault to develop projects around data and worked with Montpellier to co-create data-based services.
Paris started an initiative for Smart and Sustainable City since last elections. The idea was to provide tools to the city to achieve its main goal regarding mobility, wastes, … The city is therefore currently developing new tools around data, and try to federate an ecosystem around data.
The position of the local administration regarding the development of Smart City
In Rennes, the role of the city and the “Metropole” is to be a data “régie”. The aim is to gather data, and manage initiatives around data, stimulate an ecosystem, and provide a “citizen fabric”. One of the issues for a data-based application is to create an audience.
In Paris, the city managed to release data for now. The idea is to open a reflexion on data to all partners that could be interested in the use of data. The city try to develop a territorial sense to federate players around data.
In Montpellier, the city was involved on open data. The “metropole” was involved on its side on data already used. Montpellier is therefore between both initiatives.
There is beside a challenge on the Internet of Things and connected objects, and how to use and federate data generated by these objects placed on the city. Telcos are involved, software editors as well. In Rennes, they work with the development of open technical bricks. The role of the city is to stimulate the local ecosystem around smart city. Rennes worked with research labs around Lora and the Lora alliance.
It can be the charge of cities to define a de-facto standard, at the national level.
About the link between Smart City and the French tech ecosystem
In Montpellier, the dynamic have been lunched concretely in 2015, especially with the Big Data Challenge. The Smart City is an enabler of the French Tech initiative and ecosystem, and the development of start-up community.
Paris worked with Numa (start-up incubator), to develop applications around Big Data.
Rennes also worked on data-based applications, around geo-tourism, developing new services, tested by local citizens.
There is also a culture of “free of charge” services that is killing start-ups, living more or less on public subventions rather than on a sustainable business model. The other players that are correctly living on smart city are large players including SNCF, Google, Cisco, IBM. Some of them do not release their data and are blocking the development of big data, especially start-ups.
Rennes and Montpellier answered to a call for projects in 2014 and have been chosen : they have launched jointly 10 challenges on Big Data. 4 companies from Rennes and 4 from Montpellier are involved in these Challenges.
Keynote : Gabrielle GAUTHEY, Head of Investments, Caisse des Dépôts
The smart city can take profit from the legacy city. The smart city is involved in the territorial transition, in the climate transition, the digital transition and the demographic transition.
How can we see the intelligence of a city (for the Caisse des Dépôts) :
- More fluid
- More sustainable
- More sober
- More resilient
- More inclusive (social integration)
Some original example of mobility / smart city solutions provided in France :
- Nantes developed a “pay-as-you-use” model for transport, bus, tram and train.
- Lille developed the concept of shifting time mobility: you are paid to shift your working time to take the bus out of the peak hour.
Infrastructure is key for the development of Smart Cities, especially to gather and store the data.
There are also needs for fixed mutualized telecom networks that are neutral and provided by the city. “It is necessary to have an open infrastructure to avoid silos and to release innovation”.
Governance is necessary to manage initiatives (by the city especially), and the citizens have to be involved in the development of these initiatives and applications.
Roundtable - Are predictive technologies the next stage in the smart city’s development?
Moderated by : Albert ASSERAF, Directeur général stratégie, Etudes et Marketing France, J.C. Decaux
- Jean COLDEFY, Directeur, Service Mobilité Urbaine du Grand Lyon, Optimod Lyon
- Philippe SAJHAU, Vice President Smarter Cities France, IBM
- François STEPHAN, Directeur de Programme « Systèmes de Systèmes », SystemX
- Michel LIGNON, EMEA Telecom Sales Director, Ruckus Wireless
Presentation of round table members’ involvement in predictive analysis for Smart City:
SystemX: Research labs placed in the Paris-Saclay innovation cluster. Work especially on smart territories, and especially on predictive data analysis. To work on transportation systems, it is necessary to modelling transport networks in order to understand the how it works. It leads to understand how people flows are moving, by investigating at stations, analyzing location-based data from mobile operators, or location-based tweets.
IBM – Smarter Cities: Analytics is only one step among others on the “smart” aspect of the city. In 2020, there will be 1.7 Mbyte generated each second for each person around the world. It is therefore necessary to use these data to generate value, in order to improve living conditions in the city. IBM worked with the Chinese government to anticipate pollution levels 72 hours upstream. The territory have to stay at the center of the smart city initiative, and at the core of the governance.
Optimod – Lyon: technology is a mean and not a way to make investment. The main goal remains related to the city: mobility, environment, … Optimod deals with transportation in Lyon. The idea is to answer issues regarding environment: reducing gas emission, reducing transport costs (including cars and public transport). The first option is to change behaviors regarding cars, the other option is to change infrastructures. Digital can help changing things waiting for disruptive options in terms of transportation. Optimod works on predictive analysis especially for traffic lights optimization. Companies like Uber do not generate value, rather destroy value at the scale of the city. It is important to keep the value within the city and to preserve the economic ecosystem.
Ruckus Wireless: Californian company working on smart city communication infrastructures. Some developing countries are more advanced than developed countries in terms of Smart City initiative. In the US, Ruckus worked in San Francisco, Los Angeles and San Jose: developed services with real-time parking places available. Also analyzed data from SingTel in Singapore to know how long people are waiting for trains, by analyzing wifi connections density on the platform. In NYC, provide Wifi interactive hot-spots, to replace the existing phone booths, providing especially free calls over-wifi on these hot spots.
Published in DWEJ No. 100
Interview with Joel MOKYR
Professor of Arts and Sciences and Professor of Economics and History, Northwestern University, USA
Sackler Professor (by spec. appt.), Tel Aviv University, Israel
Conducted by Gilbert CETTE & Yves GASSOT
C&S: As a well-known economic historian, you have done extensive work and research on industrial revolutions and the conditions of emergence of British leadership in the 19th century. This could have led you, like your colleague and friend from Northwestern University - Robert Gordon - to relativizing digital innovation, with the fear that in the absence of breakthrough inventions, the world is returning to a long period of stagnation. But this isn't the case. And while some people recognize the power of the digital transformation yet tend to focus on the damage and suffering it can cause, in your own case, while you don't deny the short-term consequences, you see the typical characteristics of creative destruction so dear to Schumpeter.
How do you justify your optimism in regard to the digital revolution at a time when productivity has been slowing down in all developed countries since the early 2000s, and the pace of productivity growth is very low? To what extent can this slowdown be accounted for by the deficit of our statistical system (the limits of what is taken into account by GDP)? By the delay in spreading the digital innovation throughout the various sectors? By the delay in adapting and training the workforce? Or the fact that digital innovation potential (AI, 3D printing, ...) will essentially be realized in the future?
Joel MOKYR: To start off, I don't see the future of technological progress as merely defined by the "digital revolution." AI, robots, 3D printing and such will be an important part of our technological future, but I see progress on a much broader front. Technology will continue to develop at an ever faster rate. But much of that will be necessary to repair the damage that previous innovation has caused. Climate change is only the best known of a whole array of phenomena in which past advances have had unknown and hidden costs that now have to be paid. These costs will be lower if we get better technology, but then that technology will have unintended and unpredicted consequences. And so on. There is progress, of course, but it is not linear, it is not even monotonic. If we knew precisely in advance what every innovation implied, it would not be much of an innovation.
You have on occasion emphasized the interactions between the progress of instruments, breakthrough innovation in technology and scientific invention. How would you apply the analyses you developed for the 18th and 19th century to the components of the digital revolution today?
Compared to the tools we have today for scientific research, Galileo's and Pasteur's look like stone age tools. Yes, we build far better microscopes and telescopes and barometers today, but digitalization has penetrated every aspect of science. It has led to the re-invention of invention. It is not just "IT" or "communications." Huge searchable databanks, quantum chemistry simulation, and highly complex statistical analysis are only some of the tools that the digital age places at science's disposal. Vastly more sophisticated tools – just think of the Betzig-Hell nanoscopes for which the inventors earned a Nobel Prize last year – will allow us to work at smaller and smaller levels of both materials and living things.
Materials are the core of our production. The terms bronze and iron ages signify their importance; the great era of technological progress between 1870 and 1914 was wholly dependent on cheap and ever-better steel. But what is happening to materials now is nothing short of a sea change, with new resins, ceramics, and entirely new solids designed in silico, developed at the nano-technological level. These promise the development of materials nature never dreamed of and that deliver custom-ordered properties in terms of hardness, resilience, elasticity, and so on. New resins, advanced ceramics, carbon nanotubes and other new solids have all come on line. Graphene, the new super-thin wonder material is another substance that promises to revolutionize production in many lines. The new research tools in material science have revolutionized research.
Of perhaps even more revolutionary importance is the powerful technology developed by Stanley Cohen and Herbert Boyer in the early 1970s, in which they succeeded in creating transgenic organisms through the use of micro-organisms. Genetic selection is an old technology: nature never intended to create poodles. But genetic engineering is to artificial selection what a laser driven fine-tuned surgical instrument is to a meat-axe. The potential economic significance of genetic engineering is simply staggering, as it completely changes the relationship between humans and all other species on the planet. Ever since the emergence of agriculture and husbandry, people have "played God" and changed their biological and topographical environment, creating new phenotypes in plants and animals. Genetic engineering means we are just far better at it.
Do you think that in the long-term future, productivity gains will be mainly driven by breakthrough innovations like the creation of new microprocessors with enhanced performance or the implementation of existing innovations in several areas? And in the latter case, isn't there a risk that the induced productivity gains will gradually dwindle?
I don't believe they will ever dwindle. But I think that productivity growth as traditionally measured will become largely irrelevant in describing what is really going on. Such techniques were designed to measure process innovation, that allowed firms to produce wheat and steel with fewer inputs. It is much harder to use it to measure quality improvements, many of them subtle and often hard to quantify (e.g. the introduction of airbags into cars or more sophisticated diagnostic machinery). It is even harder for traditional NIPA to deal with entirely new products such as anesthesia or microwave ovens or online encyclopedias.
For some, the collaborative economy is one of the most fruitful products of the internet. Should we see this primarily as an illustration of the capacity of digital to reduce transaction costs or as the sign of a possible surpassing of the market economy?
Technology will change the market economy. The "share economy" (now already known to some as the "uber-economy") has transformed urban transportation, and airbnb is transforming tourism. But these will be dwarfed by the impact of digital technology on the labor market, as already illustrated by taskrabbit handimen, upcounsel on-demand attorneys, urbansitter for babysitting and healthtap for on-line doctors. But this is just scratching the surface. Digital technology will change the labor market as much as the factory did during the Industrial Revolution. The factory eventually replaced the home as the main location where production took place. That pendulum may swing back, especially if mass customization through home manufacturing (misnomered as 3D printing) starts spreading. If both Robert Reich and Jeremy Rifkin are panicking about this, it cannot be all bad.
Your work has been partly guided by the question as to why the industrial revolution primarily took place in the UK rather than in Germany or France? Can you draw a parallel with the North American domination that we are seeing today in microprocessors, software and the internet? What conditions have favored this supremacy? What factors could threaten it? What priority changes could enable Europe to acquire the necessary conditions to compete with the digital domination of the US?
I am not sure that I am still all that overawed by the question of "why Britain first". The parallel is the putative "domination" of Americans today in high-tech. Rather than seeing the leader as the locomotive that pulls the entire train forward, I think of this as an electric train, in which the motive power is external, and the lead car is there more or less by accident. Technology today is the result of a multinational effort in which boundaries mean less and less. Finland led in cellphones, Israel in flash storage, France in nuclear power – so what? Does that mean they alone can use it? Let's face it, in today's world, if an invention is made somewhere, it is made everywhere. Silicone valley is in the US, but half of the people working there are foreign-born. They could be anywhere (as long as they are together). Of course, if a country has really terrible institutions, such as Putin's Russia or Khamenei's Iran, they are not only not likely to generate new technology, but may even find it hard to absorb it. But nations such as Norway or Switzerland will always be at the frontier even if they are contributing relatively little to pushing it out.
Many observers agree that the 21st century will be marked by the emergence of China in the forefront of the global economy. Do you think this country has the necessary conditions or is developing the conditions to establish its supremacy with new leadership in digital technology sectors?
No. Their institutions are not quite as bad as Russia or Nigeria, which are corrupt to the core and where a small kleptocracy extinguishes entrepreneurship. But to have technological progress and not just a thriving and well-functioning market economy more is needed. What you need is not only the rule of law, respect for property and human rights, and the enforcement of contracts. What you need is pluralism, tolerance, and freedom of expression and association. You need political competition and decentralization, in which the ruling elite is held accountable and in which the government is constrained by what it can do to its citizens. We need to keep in mind that innovators were and are deviants, people who in some way are different and abnormal, eccentric perhaps, and in conformist societies such people in some way are suppressed. Europe's advances started in earnest when those who thought "outside the box" were no longer in fear of being accused of "black magic" or heresy. Chinese history is a fascinating story of how incredible creativity and sophistication were essentially wasted after the Song dynasty and China fell behind the West. Mutatis mutandis, the same is true for the Soviet Union. The potential of Soviet Russia was huge, but bad institutions channeled its creativity into Sputniks, MIG's and Katyushas and little else.
Joel MOKYR is the Robert H. Strotz Professor of Arts and Sciences and Professor of Economics and History at Northwestern University and Sackler Professor (by special appointment) at the Eitan Berglas School of Economics at the University of Tel Aviv. He specializes in economic history and the economics of technological change and population change. He is the author of Why Ireland Starved: An Analytical and Quantitative Study of the Irish Economy, The Lever of Riches: Technological Creativity and Economic Progress, The British Industrial Revolution: An Economic Perspective, The Gifts of Athena: Historical Origins of the Knowledge Economy, and The Enlightened Economy. His most recent book is A Culture of Growth, to be published by Princeton University Press in 2016. He serves as editor in chief of a book series, the Princeton University Press Economic History of the Western World. He serves as chair of the advisory committee of the Institutions, Organizations, and Growth program of the Canadian Institute of Advanced Research. Prof. Mokyr has an undergraduate degree from the Hebrew University of Jerusalem and a Ph.D. from Yale University. He has taught at Northwestern since 1974, and has been a visiting Professor at Harvard, the University of Chicago, Stanford, the Hebrew University of Jerusalem, the University of Tel Aviv, University College of Dublin, and the University of Manchester. He is a fellow of the American Academy of Arts and Sciences, a foreign fellow of the Royal Dutch Academy of Sciences, the Accademia Nazionale dei Lincei and a Fellow of the Econometric Society and the Cliometric Society. His books have won a number of important prizes, and in 2006 he was awarded the biennial Heineken Prize by the Royal Dutch Academy of Sciences for a lifetime achievement in historical science. In 2015 he was awarded the Balzan Prize for Economic History.