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13 March 2020

New York’s smart city project sees CityBridge in lawsuit firing line

The LinkNYC project, run by the CityBridge consortium, was meant to provide New York with the fastest municipal WiFi network in the world, and serve as the basis for smart city services. Now, the city’s Department of IT and Telecommunications (DoITT) Commissioner is getting ready to sue the group, claiming that it has not paid the city some $30mn.

The DoITT notes that CityBridge reported millions in advertising revenue, generated by its digital signage kiosks, despite being well behind on deployment targets. To this end, the city wants to be paid, desiring compensation for these missed goals, as well as for its share of the advertising.

New York didn’t want to burden itself with the cost of building such a network, funding it via tax revenue, and so entered into the partnership with CityBridge – a group consisting of Qualcomm, CIVIW Smartscapes, and Intersection, a company that counts the Alphabet-owned Sidewalk Labs as a major investor. Alphabet’s Sidewalk is not to be confused with Amazon’s new SideWalk LoRa shenanigans, and Alphabet’s Sidewalk has recently been knocked down a few pegs in Toronto.

Collectively, $30mn is pocket-change for CityBridge, so, what went wrong? Announced in 2014, LinkNYC aimed to install 10,000 of these kiosks, with a target of 4,500 by mid-2019. To date, only 1,770 have been installed, of a revised-down 7,500 kiosk target, and DoITT commissioner Jessica Tisch, speaking in testimony to the city’s Committee on Land Use and Technology, said that there had been no new installations since the latter part of 2018.

Commissioner Tisch also complained that the kiosks are not being targeted at underserved regions of the city, with Manhattan apparently holding most of the installed footprint. Tisch added that of the $32.3mn owed to the city by Citybridge in 2019, it had only paid $2.6mn. Of the $43.7mn expected in 2020, CityBridge has apparently paid nothing. This is what has prompted the threat of legal action.

Back in 2017, when CityBridge announced it had passed 1mn registered users, we asked the question of whether cities should trust corporations to build the foundations of a smart city. Given the performance since then, it seems that New York might be a use case in how not to deploy a city-wide WiFi network that might evolve into a smart city platform.

At the time of the 2017 announcement, CityBridge had deployed 547 kiosks, which averaged out to 1,828 users per kiosk. It claimed that there were over 4mn weekly sessions across these units, meaning there were 208mn sessions per year – and therefore 208 sessions per user per year, which looked pretty tepid in terms of adoption. What was worse was that there appeared to be significant imbalances in usage, with the most popular kiosk, 1313 Broadway in Herald Square, accounting for 600,000 of the weekly sessions.

So then, in three years CityBridge has managed to roughly double the number of installations, but has deployed only around a quarter of its 2019 target. Perhaps unsurprisingly, CityBridge is very defensive about this performance. Speaking to the New York Post, the firm said that Tisch’s claims were “a fictional narrative that ignores the city’s responsibility for the current state of affairs.”

“While the public’s use of LinkNYC’s free services has far exceeded expectations, installing Links has proven more difficult and costly than expected – largely due to the city’s own rules and bureaucracy. For nearly two years, CityBridge has tried to work with the city to solve these problems, but we have been consistently met with silence and delay. CityBridge has maintained LinkNYC’s free services for the public – across all five boroughs – at no cost to users or taxpayers and is committed to the continued success and expansion of the program.”

This might well be the city attempting to force CityBridge to meet the contracts, turning the public against the consortium and taking full advantage of the current public sentiment towards the big tech firms. It is, after all, expecting LinkNYC to generate around $550mn in revenue for the city, as well as providing all the social benefits of a municipal WiFi network, improved public safety through the police service integrations with the kiosks, and boosts to local city services.

However, this episode might also serve as a warning to firms that are viewing cities as lucrative business opportunities. They are very complex operating environments, and come with a lot of managerial baggage that a corporation can’t just brush aside. Politics enter the fray, and if a business isn’t careful, it could become a pawn or scapegoat for the next election cycle, as cities and politicians look for whipping boys.

Sure, CityBridge could have a whip-round and pay up, or it could risk the courts and hope that the judge and/or jury will be sympathetic. Given that the city has started trying to influence the public narrative, that should be a risk taken only as a last resort. There have also been a few PR incidents that many in the city will recall, such as a vigilante vandalizing a number of them in protest of their cameras and perceived data collection, as well as the inevitable use of the keyboard interface to browse pornography.

New York wants to ensure that it doesn’t get accused of fostering a digital divide between the affluent and poorer neighborhoods, and so it wants to force CityBridge’s hand. As New York Times reporter Annie Correal put it, “I watched ads for ‘Frozen 2’ and Dagne Dover handbags playing to empty streets in wealthy neighborhoods where the kiosks were barely noticed.”