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Smart City Projects: 3 Tech and Telecom Companies Building the Future of Connected Cities

By Chris Neiger – Jan 22, 2016 at 3:00PM

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With the help of AT&T, Verizon, and Microsoft, smart city projects are starting to take off.

Image source: Verizon.

As sensor technologies have become cheaper and analytics software has become more detailed, cites around the world are looking to smart city projects that can help them update waste and water management, energy, transportation, and host of other systems.

Smart cities are a smaller part of the growing Internet of Things, in which billions of things will be connected to the Internet over the next few years. These "things" can be anything from buildings, to water mains, to street lamps -- and they'll all bring increased levels of both automation and cost savings for cities across the globe. Internet of Things technologies are expected to generate $421 billion in economic value for cities by 2019, according to BI Intelligence.

There are many companies implementing their own smart city projects, but let's take a look how AT&T (T -1.42%), Verizon Communications (VZ -2.91%), and Microsoft (MSFT -1.89%) are bringing smart cities online.

AT&T's grand connectivity plan 
At the 2016 Consumer Electronics Show (CES), the telecomm giant announced a new framework to increase its involvement in smart city projects. 

The company already help connects utility meters, street lights, and water systems to the Internet, but the new framework adds the ability for cities to add remote monitoring of roads, bridges, buildings, transportation, and public safety.

AT&T's new framework will be rolled out in Atlanta, Chicago, and Dallas and will allow the cities to keep track of bridges that need repair, alert citizens of traffic lights that are out through a mobile app, track when and where gun shots are detected, and update bus and train route signs in real-time to let passengers know about delays. 

Image source: AT&T.

The company also introduced a new citywide Smart City Network Operation Center dashboard that will let city officials view traffic congestion, water main breaks, and power outages all from one location.   

AT&T's smart city projects is the next step for the company's growing IoT ambitions. AT&T already connects more than 6 million cars to the Internet, and it added 1.6 million connected devices in Q3 2015 alone.

Verizon's smart city strategy 
Verizon says smart city solutions will grow 20% annually from 2015 to 2020, and the company is already riding that wave of growth. Verizon currently provides embedded sensors, digital signs, smart parking, energy analytics, and other services for connected cities.

Those technologies allow cities to manage energy usage, carbon emissions, and water systems, and reduce traffic. But Verizon's not stopping there. 

Verizon also focuses a lot of its attention on making the electrical grid smarter. The company uses technology like remote electricity monitoring, and it helps cities connect and disconnect home electricity without having to send a person out to a house. The company also helps cities notify citizens when they've exceed predetermined energy usage levels.

One the company's most recent smart city projects is in Savannah, Georgia. Last year, Verizon CFO Fran Shammo said, "Municipalities like Savannah are looking to take advantage of our intelligent solutions to integrate disparate systems, monitor traffic and safety conditions in real-time to improve efficiency and public safety."

Verizon earned just $690 million from its Internet of Things business last year. But as the company continues to build out its connected city solutions, Verizon believes it can tap more of the smart city market. 

Despite its effort, Verizon is getting slower in smart city advancements, and in the greater IoT market, than AT&T. Verizon earned $690 million from its Internet of Things business in 2015.

Microsoft's cloud initiatives
Smart city projects need more than just sensors and cellular connections -- and that's where Microsoft's ambitions come in. The company is using its server experience to help bring cities into the 21st century through cloud-based transportation, building management, and public safety services. 

The company is currently working with Envision America, a nonprofit that helps American cities increase innovation. Microsoft is giving 10 U.S. cities a free year of the company's Azure Government cloud platform to help them build out smart energy, water, waste management, and air pollution solutions.

Image source: Microsoft.

But the U.S. isn't Microsoft's only focus. The company recently started an initiative for Indian start-ups that are looking to help cities build smart city projects. Microsoft offers the start-ups up to $120,000 worth of free Azure cloud-computing services and then helps connect them with cities that need smart city solutions.

While the project is still in the early stages, Microsoft expects this initiative to spur smart city projects in about 50 cities throughout India.

Why more companies are pursuing smart cities
AT&T, Verizon, and Microsoft are just a handful of technology companies that are diving into smart cities, of course. But each is betting on the growing connected cities trend that's is expected to become a $1.1 trillion market by 2019, according to Markets and Markets. You can bet more companies will step up to additional cities online, as companies begin realizing the massive revenue potential that comes with smart city projects. 

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Verizon Communications. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

AT&T Stock Quote
$18.75 (-1.42%) $0.27
Microsoft Stock Quote
$250.20 (-1.89%) $-4.82
Verizon Communications Stock Quote
Verizon Communications
$37.07 (-2.91%) $-1.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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