Cisco's Big Bet on New Songdo: Creating Cities From Scratch

February 1, 2010

Cisco's Wim Elfrink and developer Stan Gale plan to standardize many elements of New Songdo (rendering above) in other cities. | Photograph by James Whitlow Delano

BRAVING THE NEW WORLD: At last summer's Incheon Global Fair & Festival, New Songdo's ribbon-cutting ceremony, youngsters tried out 3-D technology and a businessman admired the art. | Photograph by James Whitlow Delano

Ten years ago, Gale was a builder and flipper of office parks who would eventually become known for knocking down the Boston landmark Filene's Basement and replacing it with a hole in the ground. But Gale's fate began to change in 2001 with a phone call from South Korea. The Korean government had found his firm on the Internet and made an offer everyone else had refused. The brief: Gale would borrow $35 billion from Korea's banks and its biggest steel company, and use the money to build from scratch a city the size of downtown Boston, only taller and denser, on a muddy man-made island in the Yellow Sea. When Gale arrived to see the site, it was miles of open water. He signed anyway.

New Songdo City won't be finished until 2015 at least, but in August, Gale cut the ribbon on the 100-acre "Central Park" modeled, like so much of the city, on Manhattan's. Climbing on all sides will be a mix of low-rises and sleek spires -- condos, offices, even South Korea's tallest building, the 1,001-foot Northeast Asia Trade Tower. Strolling along the park's canal, we hear cicadas buzzing, saws whining, and pile drivers pounding down to bedrock. I ask whether he's stocked the canal with fish yet. "It's four days old!" he splutters, forgetting he isn't supposed to rest until the seventh.

As far as playing God (or SimCity) goes, New Songdo is the most ambitious instant city since Brasília 50 years ago. Brasília, of course, was an instant disaster: grandiose, monstrously overscale, and immediately encircled by slums. New Songdo has to be better because there's a lot more riding on it than whether Gale can repay his loans. It has been hailed since conception as the experimental prototype community of tomorrow. A green city, it was LEED-certified from the get-go, designed to emit a third of the greenhouse gases of a typical metropolis its size (about 300,000 people during the day). It's an "international business district" and an "aerotropolis" -- a Western-oriented city more focused on the airport and China beyond than on Seoul. And it's supposed to be a "smart city," studded with chips talking to one another, designated as such years before IBM found its "Smarter Planet" religion.

Being seriously ahead of the curve explains why Gale had such a hard time finding a tech partner to bring this dream to fruition. First in line was LG, one of Korea's homegrown conglomerates. None of its ideas had made it past the prototype stage. Next up was Microsoft, which signed a deal giving it carte blanche to mold the city in its image. "Designing an entirely new city from the ground up provides a unique opportunity to create an ideal technological infrastructure," Bill Gates boasted. But before he could even measure for drapes, Gale decided a plumber would be a better fit and threw Microsoft over for Cisco.

Last spring, the networking giant became New Songdo's exclusive supplier of digital plumbing. More than simply installing routers and switches -- or even something so banal as citywide Wi-Fi -- Cisco is expected to wire every square inch of the city with synapses. From the trunk lines running beneath the streets to the filaments branching through every wall and fixture, it promises this city will "run on information." Cisco's control room will be New Songdo's brain stem.

And that's just the beginning. No longer content to sell just plumbing, the company is teaming up with Gale, 3M, United Technologies (UTC), and the architects of Kohn Pedersen Fox (KPF) to enter the instant-city business. At a Cisco event near New Songdo last summer, Gale stunned the room by announcing plans to eventually roll out 20 new cities across China and India, using New Songdo as a template. In the spirit of Moore's Law, he says, each will be done faster, better, cheaper, year after year.

Cisco calls this Smart+Connected Communities initiative a potential $30 billion opportunity, a number based not only on the revenues from installation of the basic infrastructure but also on selling the consumer-facing hardware as well as the services layered on top of that hardware. Picture a Cisco-built digital infrastructure wired to Cisco's TelePresence videoconferencing screens mounted in every home and office, with engineers listening, learning, and releasing new Cisco-branded bandwidth-hungry services in exchange for modest monthly fees. You've heard of software as a service? Well, Cisco intends to offer cities as a service, bundling urban necessities -- water, power, traffic, telephony -- into a single, Internet-enabled utility, taking a little extra off the top of every resident's bill.

"We have the hardware in place and what we need now is the software," Gale beseeched the Cisco execs in New Songdo. "It's going to be a cool city, a smart city. We start from here and then we are going to build 20 new cities like this one, using this blueprint. Green! Growth! Export!" Jaws dropped. "China alone needs 500 cities the size of New Songdo," Gale tells me. And he has already done the deal to build the next two.

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"Cities are becoming unsettled," warns Saskia Sassen, the Columbia University sociologist who's the leading expert on cities' collision with globalization. "They will be the sites of new wars -- wars for water, for a clean environment, and not to mention room for some 700 million people displaced by climate change." Sociologist Mike Davis prophesied in his apocalyptic Planet of Slums that "the cities of the future, rather than being made out of glass and steel ... [will be] instead largely constructed out of crude brick, straw, recycled plastic, cement blocks, and scrap wood." In many places, they already are.

It was this crushing demographic trend that drew Cisco into the instant-city business. Gale first approached Cisco CEO John Chambers five years ago, "but we weren't ready," says Wim Elfrink, Cisco's chief globalization officer. It wasn't until 2006, after former President Bill Clinton challenged the company to act on climate change, that it started thinking of building smarter cities. "Now," Elfrink says, "we're in catch-up mode." Two years ago, Saudi Arabia's King Abdullah bin Abdulaziz charged Cisco with helping to plan four new cities around the country, at a total cost of $70 billion. The aim was to establish a Saudi Silicon Valley, one designed to create a million-plus jobs and increase non-oil GDP by almost 50% in barely a decade. These "economic cities" were explicitly intended to house and employ nearly half of the 10 million Saudis under the age of 17 -- a largely uneducated workforce described as a "human time bomb." Cisco's job, improbable as it may seem, was to help defuse it. The first of these cities began opening last year, but none are as far along as New Songdo.

While the developing world wrestles with its impending population boom, the entire world is confronting an explosion of another sort: climate change. The battle against global warming will be fought in city streets. The world's 20 largest megacities consume a staggering 75% of its energy. Buildings alone contribute 15% of all greenhouse gases, more than all forms of transportation combined (13.5%). Barring simultaneous breakthroughs in a raft of clean technologies -- including solar cells, biofuels, and batteries -- the fastest way to shrink cities' carbon footprints is through conservation and efficiency. Unlike Walmart, which has a real-time glimpse into every store, truck, and warehouse in its system, cities are nearly impossible to parse. But hook them up to the right mix of sensors and software, the thinking goes, and who knows what efficiencies might suddenly be revealed? When buildings, power lines, gas lines, roadways, cell phones, residential systems, and so on are able to talk to one another, that information can expose patterns of waste and ways to avoid it. Just as wiring corporations made them leaner and meaner, wiring cities may be one way to tease efficiency out of dumb networks like the power grid.

For the last year, it's been impossible to watch a football game without being exhorted by IBM to "build a smarter planet." And it's true that even a relatively simple retrofit of existing cities can make a substantial dent in emissions. In Stockholm, a high-tech congestion-pricing scheme that IBM helped implement has increased tax revenue by $80 million while reducing traffic and CO₂ by 18%. An IBM smart-grid test in Washington State concluded peak loads might be trimmed enough nationwide to eliminate the need for 30 coal-fired power plants over 20 years.

"Everything can be connected and everything can be green," promises Elfrink, who calculates that in addition to creating millions of jobs, smartening up cities could reduce emissions worldwide by 15% over the next decade, saving a ton of CO₂ per person and nearly a trillion dollars. The smart-grid market alone "may be bigger than the whole Internet," Chambers has said.

While IBM has so far focused on the gnarly and necessary task of retrofitting existing cities, Cisco has taken the idea a monumental step further by building new ones from the mud up. Cisco has already demonstrated how its technology could be used to orchestrate the energy use in New Songdo's buildings, dialing up and down the heat, lights, and electricity. Its next step, Elfrink says, will be to create a sort of urban operating system, and then to identify and create services that try to streamline everything from health care to education to traffic to shopping. Cisco and Gale will take a slice of every transaction that runs through their software.

That Cisco is staking so much on a mudflat in the Yellow Sea is a reflection of Chambers's grand plan to move beyond the sale of routers and switches. His lieutenants are busy chasing as many as 30 different billion-dollar opportunities, or what he calls "adjacencies." New Songdo is where several of them intersect. "We used to be a plumber," Chambers tells me at Bill Clinton's latest confab in New York. "And we were proud to be a plumber. It's a very honorable profession and we made a lot of money doing it. But now we've moved from plumbing to being the platform for innovation. And instead of taking the typical approach that most high-tech companies do, which is to sell stand-alone products and maybe think about how they tie together," Cisco is "filling a void in the industry, where we're providing both the technology architecture" and the vision to governments for "how you use this technology to change societies."

"It's more pragmatic now, because the overriding agenda is sustainability," Elfrink insists over breakfast in New Songdo last August. Fluting in a pronounced Dutch accent, Elfrink, in town for the opening of the Incheon Global Fair & Festival, an ersatz expo held in New Songdo's honor, is comfortable switching from anthropology to technical minutiae in midsentence. He spearheads strategy for Cisco from the company's Bangalore campus and also runs its $7 billion services unit. "I was a keynote speaker at the United Nations Habitat conference in Delhi a few weeks ago," he says. "They fought urbanization for years, because they thought they should slow it down. But you can't stop it. It's not a curse -- it's an opportunity."

It certainly looks like an opportunity if you're a technology company. A flurry of white papers has been issued by the likes of HP, Autodesk, Oracle, and Cisco on topics including "Digital Cities," "City 2.0," "Intelligent Urbanisation," and even a "Central Nervous System for the Earth." The market is so new that no one can pinpoint the exact size of what's at stake. The best guess, offered by the research firm IDC, pegs the smart-infrastructure business at $122 billion over the next two years. A better answer may be: "How much have you got?" Governments are looking to cash $3 trillion in stimulus checks, and behind that comes an estimated $35 trillion in global infrastructure spending over the next two decades.

The near-term strategy of tech firms appears to be, Tap available pools of stimulus funds to pilot a smart grid here and a smart sewer there. Sooner or later, someone will need to pull it all together, and that means wiring cities from the ground up. IBM has chosen the unlikely venue of Dubuque, Iowa (population: 60,000), for its prototype, which is consistent with its more limited approach of retooling established cities, mostly in the West. Cisco is hoping to prove its model by embedding its technology in instant cities across the developing world. In addition to King Abdullah's, there is Qatar's Energy City and India's Gujarat International Finance Tec-City, known by the all-too-appropriate acronym, GIFT. Six others are already planned. Elfrink estimates that at least $500 billion will be earmarked for instant cities over the next decade, with $10 billion to $15 billion allotted for network plumbing alone. Cisco hopes to pocket another $15 billion from the services running atop these systems, marketed to residents and mayors alike, starting with smart grids and meters. "The first phase will be very simple," he says, "because people will spend money to save money."

Cisco itself has spent a great deal of money acquiring the tools it hopes will lock in first-mover advantage. What is now Smart+Connected Communities was announced a year ago following the purchase of Richards-Zeta Building Intelligence, whose software links buildings over the Internet, for an undisclosed sum. The cities-as-a-service piece was added through an investment in an Australian startup called Majitek. Together, they will integrate the babel of proprietary systems created by the likes of Honeywell, UTC, and Johnson Controls to heat, cool, and power modern office blocks. And if Cisco's $3.4 billion bid for Tandberg goes through, it will instantly propel Cisco to No. 1 in the videoconferencing market, pairing Tandberg's desktop screens with Cisco's room-size TelePresence models and possibly the set-top boxes from its $7 billion purchase of Scientific Atlanta. In the meantime, Elfrink and his deputies have wooed mayors, recruited experts, courted governments, and worked alongside KPF's architects, 3M's scientists, and UTC's engineers to marry new energy-efficient materials and technologies with the urban Internet he envisions.

In announcing Cisco's strategy, Chambers declared, "The network has become the next utility." The metaphor is telling. Utilities are often natural monopolies, profiting endlessly from captive markets. Smart cities hold a similar fascination for Cisco, as places where basic services such as water or power might be repackaged as value-added products, throwing off lucrative consulting contracts essentially forever.

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Elfrink and Cisco's official mission in New Songdo is sustainability -- "from a social, environmental, and business point of view." But on the ground last summer, Elfrink was audibly more excited by the prospect of a Boston-size sandbox for TelePresence, Cisco's fastest-growing business. On opening day of the Incheon fair, he cuts the ribbon on his company's pavilion with great fanfare, ushering guests inside for a glimpse of what's to come. Although a few demos dutifully depict turning down the entire city's thermostat, the two-way video screens are the stars of the show. In one scene, actors posing as doctor and patient conduct a dramatized remote checkup. "The killer app," Elfrink tells me, "will be TelePresence. If you want to talk to your neighbors or book a table at a restaurant, you can do it via TelePresence." Or you can attend class at New Songdo's International School. Or practice yoga with your yogi. Or work from home, as Elfrink often does in Bangalore.

It's hard to see what any of this has to do with sustainability, unless your plan to shrink your carbon footprint is to never leave your house. Seen from Cisco's perspective, however, it's all kinds of green. Installing screens and smart appliances in every home and office all but guarantees demand for the fattest pipes and biggest switches, and establishes Cisco as the gatekeeper between that underlying plumbing and every service built on top. Cisco and Gale will own the core of New Songdo's consumer and metropolitan services, inviting third-party developers to fill in the gaps in exchange for a slice of each transaction -- think Apple's App Store for homes and cities. Imagine a wall-mounted flat screen, crowded with TelePresence calls, smart-meter readouts, and whatever else Cisco has to offer. How does $5 a month for a daily consultation from your toilet sound? "I would love to have nutritional advice first thing in the morning," Elfrink says earnestly. "Is TelePresence going to be the next iPhone? I don't know, but you can dream that big."

In this way, Cisco seems to be moving beyond smart cities' sustainability mission and into something close to social engineering. Ironically, this souped-up vision is what a smart city used to mean -- and why no one wanted to live in one. People weren't interested in appliances talking amongst themselves, and they didn't want to run the risk of their houses needing a reboot. Tech executives called their disinterest a failure of "education" rather than a display of customers' common sense. Cisco hopes to get around this problem in New Songdo by eventually installing TelePresence in every apartment whether residents want it or not. The assumption is that folks will quickly learn to love it. Build it, apparently, and they will come.

"The money pumped into economies under the guise of recovery packages, that's the opportunity they're trying to seize," says Andrea Di Maio, a Gartner public-sector analyst. Di Maio skeptically notes that none of these would-be master builders have developed new technologies from scratch. Instead they're bolting together what they have on hand and calculating the carbon savings that result. "Scratch the surface, and you start to wonder just how coherent this strategy really is," he says.

"Cities are highly complex systems, and one of the elements of highly complex systems is that when you monkey around with them, their predictability goes to zero," says Pip Coburn, a technology analyst whose book The Change Function argues that the reason so many technologies fail is because the pain of changing old habits outweighs any benefits. And when it comes to something as complex as cities, he says forget it. "If you're trying in advance to define a future city, you're out of your mind. You'll spend years and money disrupting people's lives."

It would be one thing if New Songdo were a one-off experiment, but Gale has assembled his dream team of architects and technologists with an eye toward cracking the code of urbanism itself. "There's a pattern here, repeatable," he tells me. He won't be content until he can standardize and mass-produce his cities in half the time for China. Indeed, New Songdo's first clone will break ground this year on the outskirts of Changsha, a provincial capital larger than Singapore. The Meixi Lake District will be larger than New Songdo and just as dense, smart, and green -- and eerily familiar. This and every subsequent city will be standardized around Gale's partners' products: the same light fixtures, traffic signals, elevators, fuel cells, central air-conditioners -- and TelePresence screens. The scope of his ambitions dovetails neatly with Cisco's. "We're trying to replicate cities," Elfrink says bluntly, but "we have no standards. Every city is a new project, a new process, a new interface," he continues, marveling at the inefficiency. "You shouldn't spend time on an elevator. You shouldn't spend time on lighting."

Gale's timetable is, if anything, too slow for Elfrink, who expects to sign deals with an additional half-dozen municipalities this year. "We want to create an ecosystem of partners who standardize the things that can be standardized, and then spend their energy on customization. Because a city in Korea has a different social dynamic than a city in China, or a city in Brazil."

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"It's quality of life as a service," complains Adam Greenfield, the head of user-interface design for Nokia and the author of Everyware, a Ninety-Five Theses for ubiquitous computing. "Everything we think of as organic and emergent in cities is absent. In Korea, everything is just dropped onto a map. They clear out a rice paddy and suddenly it looks like the Upper West Side."

Take Tomorrow City, an $82 million showcase for the abandoned "U-Life" demos by Gale's original partner, LG. On my last day in New Songdo, I enter the place just as Elfrink is leaving with a pack of customers in tow. Tomorrow City is the Ghost of Smarter City Past -- the product of a vision in which the uses for a given technology are concocted in a lab or a marketing department and pushed down onto consumers. In this (now frozen) vision, our U-Lives will boast U-Galleries for our art collections and U-Libraries with wall-size screens; U-Health confirms we're getting fat and recommends a U-Workout on the treadmill; after a shower, U-Beauty grafts our faces onto the heads of Korean teenagers and suggests a new hairstyle for the day; our U-Closets propose outfits for the office.

Smarter-city flaneurs such as Nokia's Greenfield or Carlo Ratti, who directs MIT's Senseable City Lab, doubt anyone will ever be able to dictate a killer app for cities. Even in the incubators Cisco is building across the Arabian Peninsula and China, the inhabitants are likely to have their own ideas for the uses of things.