Page 23 - Enabling digital transformation in smart sustainable cities – Master plan

Enabling digital transformation in smart sustainable cities – Master plan

The first aspect is the deployment of the ICT and digital infrastructure itself, including the
formulation and implementation of related policies and strategies. It requires the involvement of
all the stakeholders previously identified. The second aspect refers to improving the infrastructure
deployed in order to reduce defects like perception (e.g., the infrastructure is not able to
automatically perceive itself running), cleverness (e.g., the operation and application of facilities
use a fixed configuration and it is unable to judge the situation automatically), lack of sharing
mechanisms (e.g., lack of horizontal integration that prevents synergies), and communication
restrictions (e.g., the bandwidth and reach of various branded communication facilities are
uneven).

Decision-makers must consider that during the implementation of ICT and digital infrastructure,
there is the risk of creating a polarization effect in zones that have more investment than others,
creating (or accentuating existing) digital divides in the city. Strategies aimed at addressing
these risks can include the use of public funds to invest in zones with the least development
infrastructure.

Municipalities can adopt different strategies for the development of the ICT and digital
infrastructure. These include the provision of supply incentives, using existing infrastructure
for the deployment of ICT and digital technologies, or the adoption of strategies to incentivize
demand (e.g., using ICT and digital technologies to improve local service management or to
improve the relationship with inhabitants). It must be noted that supply and demand stimulate
each other. An adequate supply will often push the demand, while the growth of demand can
increase and improve the supply, fostering a virtuous circle. With this in mind, local governments
should focus on both strategies.

All ICT and digital infrastructure implementations must fulfil the applicable laws and regulations.
In cases of municipal infrastructure and deployment of projects, financing strategies tend to
be very heterogeneous.

Certain funding mechanisms that can be used to support the activities involved in this stage
are summarized in Table 2.

Table 2: Digital infrastructure funding methods
Funding mechanism Description

Taxes Pay using taxes
Redemption from taxes Local government taxing rights are exchanged for infra-
(tax or rates) structure or services
Loans + free cash flow Initial capital comes from financial leverage from partners.
After that the project can try to sustain itself
Local government as a major Funds provided by city government
customer
Advertising Funds generated by advertising

Utilities allowance Funds collected from other public services used to main-
tain infrastructure. Some regulations do not permit this
system

Corporate donations Corporations can donate funds

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