And why we should embrace that.

The “smart city” vision may sound futuristic, but it is based on the legacy urban planning ideals. Emerging technologies are overexposed to a status quo urban governance system that evolved over last century.

The early versions of “smart city” concepts propose centralized infrastructure governed by local authorities. It is ultimately the manifestation of a top-down urban governance approach.

The Internet, in particular mobile, created an environment that challenges the basic premise of top-down urban governance. The ability to directly connect people or devices stimulates new behaviors that no longer require government as the sole coordinator.

As new distributed systems and behaviors gain strength and scale, the original concept of “smart cities” may soon be regarded as a paleofuture.

Smart City Origins: Follow The Money

To understand the congenital flows of “smart city”, we must examine the origins of the concept and the key stakeholders involved.

The original vision for a “smart city” was infrastructure based. It proposed the installation of a myriad of devices throughout the city that would be hooked up into a central urban mission control.

No wonder large IT and hardware providers promoted this vision. They aspired to sell, install and maintain that infrastructure. At some point there wasn’t a consensus about the term, “smart city.” You’d hear about “smarter cities,” “connected cities,” “digital cities” — most of them copyrighted by corporations like HP, CISCO, IBM. What was positioned as a scientific vision of the future was, in fact, just marketing and branding.

For that centralized infrastructure to work, it required major purchases by local budgets. That vision was only achievable under top-down urban governance.

The stakes for large corporations were extremely high. One contract had potential to incorporate a whole city into a proprietary hardware solution for a lifetime.

The central mission control vision was embraced by urban bureaucrats. The system promises expansion of their powers. It’s tempting to preserve a monopoly on intermediation between residents.

City of Neighbors

By default, we are used to top-down planning of urban infrastructure. That’s the legacy of the XXth century, but it wasn’t always this way.

Prior to industrialization, the population of most American and European cities hardly exceeded 30,000 people. Urban territory was bound by a 30-minute walk or horse ride distance. All residents could literally fit into a central square. Citizens knew all parts of the city well and were connected in one way or another to other residents. In a general sense, it was a city of neighbors.

Canaletto, St.Marks square, Venice image source: BBC

That scale of cities made private infrastructure ventures feasible. Most infrastructure projects were initiated by private enterprises, cooperatives. The Brooklyn Bridge, the New York subway lines, electric grids — all were privately funded ventures.


Waves of industrialization led to unprecedented population growth and urban land area expansion. This boom caused a shift in urban culture from a city of neighbors to a city of strangers.

The larger the population, the weaker communication ties between residents. Absence of a direct means of communication created a need for a coordinator. Urban authorities filled that communication vacuum and took on the role of the intermediary between citizens.

Over time, the power of urban administration and the scope of its actions grew out of proportion. As a result, for generations cities were governed as top-down systems.


The emergence of the Internet, in particular mobile devices, provided infrastructure for the communication vacuum between residents of a metropolitan center. This is exactly what the vision of a “smart city” got wrong. It was never anticipated that the Internet would challenge the default role of local authorities as the intermediary between residents.

The Internet makes it possible to create independent platforms for coordination between residents regardless of a city’s size. Local authorities no longer hold a monopoly on mediation between residents.

The mobile Internet is particularly important. It’s the first technology that both:

  • continuously links the changing location of users (or objects);
  • allows direct communication to anyone (or anything) else in the city from anywhere;

Individuals, companies, nonprofits, and research universities suddenly have the tools to create platforms for coordination among any number of urban residents.

New Power Brokers: Private Platforms

Mobile technology is shifting the distribution of power in modern cities. Who can create the most impact on a city? It used to be the mayor and his or her officers. Today, tech organizations increasingly become new agents of change.

New technological capabilities led to a wave of private urban experiments (aka, “startups”).

So far, most successful experiments originated in the transportation industry. Local governments acted as the intermediary regulating supply in the taxi industry. Several startups challenge this approach by providing private platforms that directly link transportation suppliers with customers. Moving beyond the common taxi service, these platforms allow for shared rides, a previously impossible coordination between users. Lyft Line shared ride service now accounts for up to 50% of the total Lyft ride requests in San Francisco.

Other experiments challenge top-down public transit route planning: Chariot is crowdfunding custom routes. Bridj has no fixed route.

Parking is another example of local authorities acting as an intermediary. The department calculates the demand for parking and supply of available lots and sets an average price. In theory, that helps establish equilibrium, but in practice demand for parking is highly volatile in both time and space. The mobile Internet allows for the creation of similar platforms to dynamically reflect the actual demand for parking. A number of startups are trying to do exactly that: MonkeyParking (banned in SF), JustPark (rent own driveway).

A crucial differentiator is in the power of scalability. Local authorities are bound by the geography of a particular city. Internet platforms are scalable across dozens of cities. This is a mindblowing factor that has yet to be fully embraced by academia and urban planning students. Do you want to improve one city or hundreds of cities?

Recycling Data Byproducts

The original vision of the “smart city” required centralized installation of a myriads of sensors, cameras, and transmitters to collect data about a city.

As it turns out, it’s possible to collect most of the needed data without major budget expenditure on centralized smart city infrastructure. An increasing amount of data is aggregated by businesses and non-governmental organizations as a byproduct to their core operation.

Moscow Mobility analysis based on aggregated cellphone usage data by Habidatum International in partnership with Mathrioshka, MegaFon, Thomson Reuters for MUF

Cellphone carriers, banks, delivery companies, and logistics companies all have vast amounts of data that could be recycled for urban analytics and planning. A lot of this data is proprietary or difficult to aggregate, but that’s a challenge that can be solved without government being the sole integrator.


The early “smart city” vision empowered top-down urban governance. The vision was promoted by IT and hardware providers. They could benefit from a centralized infrastructure that would lock cities in their standards for lifetime.

The Internet, in particular mobile, is the shifting power in modern cities. It provides infrastructure for the communication vacuum between residents of a metropolitan center. This in turn challenges top-down urban governance. Local administration no longer holds a monopoly on mediation between citizens. Private intermediaries and peer-to-peer platforms increasingly become the new power brokers.

We’re witnessing just the beginning of shift in urban governance towards increasing direct citizen coordination.

Co-founder Apt Buildings, Inc., previously Airbnb Samara and Asmbld

Co-founder Apt Buildings, Inc., previously Airbnb Samara and Asmbld