Damien Conce, Doctor of Law, gives us his thoughts on the concept of Smart City.

In this article, which represents a true systemic analysis of Smart City, Damien Conce asks essential questions associated with the city’s conversion to digital, and the regulatory card needed to give birth to a real Digital metropolis.

Contemporary urban planning faces problems that are all opportunities for development: whether it is road clotting that imposes new mobility, the multiplication of sensors that make manifest, intelligible and details of urban activities or the development of e-administrations.

Among the immediate possible future, there are some in which the city becomes sustainable, respectful of the “rights of the digital personality” and creating a new digital metropolitan economy.

In this future, the digital metropolis will produce a continuous flow of data induced by the interactions of its users, captured by urban installations and fed by the IoT. It will authorize the use of anonymized data management technologies generating new services, which will allow, among other things:

  • To set up smart supply services;
  • To authorize the operation of predictive road management mechanisms that allow, in real time, to modify traffic flows taking into account ongoing incidents.
  • To consider new mobility based on the change in arrival and departure times of “pendulums” whose lag and smoothing over time would allow the decongestment of urban access.
  • To increase urban efficiency through the development of micro-grids for the production, exchange and resale of energy (photovoltaic, wind, thermal); the development of rentals to the actual time spent of public or private assets(parking, equipment)
  • To optimize the management of water, transport, lighting, utilities…

However, to achieve such a goal, it will not be enough to truffle the urban furniture with sensors and communication relays in order to make the most of ioT (physical infrastructure). Above all, a digital infrastructure and regulatory framework will have to be put in place.

Cité intelligente, Blockchain & RGDP

The flow of data already generated by connected objects has shown its vulnerability to cyber attacks that the use of the blockchain mechanism seems able to hinder. Also, this technology does not seem to be able to be excluded from a Smart City project. It remains to determine the most relevant type of blockchain.

Since managing a smart-city and related digital activity does not seem to require absolute decentralization, public blockchains are not a panacea. Moreover, the data security requirements are rather to limit this decentralization to secure entities representing, for various political reasons/governance,cohorts of separate users (public services, users, suppliers, consumers…).

It is therefore the “Blockchain permissioned Consortium” model that should be preferred to manage the dissemination and protection of personal data, which, moreover, constitutes a meeting point with the notion of digital sovereignty and the implementation GDPR principles.

Such structures consist of:

  • A database of all transactions replicated on the servers of the “validators”; These servers can then be located in places and belonging to institutions compatible with the requirements of digitalsovereignty.
  • Users: smart city users, institutions, service providers.
  • Smart contracts (smart contracts / chain code).
  • Controllers (endorsers): reliable entities representing distinct user cohorts.
  • Certificate authority administrators who assign users access rights verified by controllers. This role may, for reasons of governance, be divided or delegated. But it is above all predetermined to assume the function of “Data Protection Delegate” provided by the RGPD.

Thus, the blockchain can not only secure data against various malicious attacks but also respect the imperatives to protect the “digital personality rights” imposed RGPD provided that:

  • The self-executed contracts under the blockchain protocol, incorporate as a essential clause of the membership agreement they represent, standard mechanisms for explicit notification and validation regarding the use of data personal transactions.
  • The acquisition data incorporates the concept of “privacy by design” and that mechanisms private key signatures and digital time stamping ensure security and data privacy.
  • That the data encrypted by the key generated by the transaction is only accessible with the consent of the user concerned;

That encrypted data incorporate a mechanism to erase it, at the request of the user concerned or at the end of a period of time.

II. Economie Digitale Métropolitaine

Ⅱ. Smart City and Metropolitan Digital Economy
The conversion of the “Smart City” to the blockchain is therefore not only a security requirement but also a prerequisite for the development of a new “digital metropolitan economy”.

Thus the user of the smartcity by his activity in the city (movement, consumption,…) will produce a cloud of information recorded by different sensors. This information can be identified (subject, sensor…), anonymized and used.

Thanks to Blockchain’s mechanisms and self-executed contracts, the user/subject of the data will be able to (i) request the removal of it, (ii) if he accepts his retention, he may be paid for it but also be paid for each use that will be made of the anonymized data concerning him.

This implies putting the “territoriality” of the data ahead of its volatility and subjecting it to the legal corpus of the territory where it is produced (competence rationae loci). However, this would run counter to the current practice of “applications” that suck up data and the desire of Facebook-Google-Microsoft-Twitter to be able to allow its exchange in a cloud de-located, de-regulated or subject to US law alone (?).

Moreover, this anonymization of the data would not cause it to lose value because AI and Big Data are interested in the individual and not the person.

Similarly, “sensors” could be rewarded whenever the data they produced was used.
Metropolitan institutions, research centres, companies and startups could access and pay for this data. They could then use this digital material to create and execute new services and thus develop a new metropolitan economy.

For example, if we consider that in a city there are traffic jams at the time of entry and exit from the offices, because employees arrive and leave all at the same time, then a solution may be to spread these hours through a platform paying for virtuous behaviour and producing a stream of data that allows new services to be offered.

Assuming the agreement of all stakeholders, one could imagine that each employee has on his smartphone an application on which, the day before, he chooses a timetable of arrival and departure within a certain range, as well as a Itinerary. Depending on his choices he will receive a reward. When he moves, his smartphone connects to different terminals. If the connections are made at the terminals corresponding to the chosen route within the allotted time, the self-executed contract pays the agreed gratification to its account (wallet). If he defaults, his account will be automatically debited with a penalty.

The connection data from its smartphone to the terminals is anonymized and joins the global stream of data that is accessible for example to track services that know in real time the user flows and can check if this data is consistent. predictions generated by the application.
In the event of an incident, the authorities can send a message to each user, through the app to confuse them. This message will change the self-executed contract and the user will now receive the bonus if he complies with the instructions of the road authority.

In addition, additional rewards can be awarded to enhance virtuous behaviours (respect for speed limits, carpooling, etc.).
Finally, the user could use these gratuities to: pay the cost of public or private parking (airbnbization of private car parks…), pay fines, municipal taxes, benefit from vouchers in stores …
These rewards can take the form of tokens/tokens and integrate into the ecosystem, replacing fiduciary currencies, such as complementary local currencies.

The token can also participate in the creation of the smart city by being used to raise funds to finance its structure or development (through ICO?).
Finally, the token has not only a functional value, it also has a speculative value provided it can be freely negotiable on an Exchange (Secondary Market).
And this is how a tokeneconomy of the Digital Metropolis can develop.

In order to fully deploy, the concept of Smart City cannot be limited to that of “new city” or “enhanced city” generating an unsecured and collated data stream in a database.
To be an engine of economic development, Smart City must enhance and secure “data” through the use of Blockchain mechanisms specifically tailored to its needs. It must also, from the outset, assume its ambition as a World City. With its economy, its currency, its “political” guarantees.

Above all, it must offer safety to its users, as the first cities offered to their inhabitants by the construction of a fence. In this regard, we must distinguish between two types of protection: that of the rights of the digital personality, as the corollary of the recollection and exploitation of private data and that of digital sovereignty as a consequence of the use of a blockchain protocol, an associated crypto currency (token/token), and related institutions (Exchange, Custodian…). For can a territory base its development on protocols/currencies that it does not master?
Here too the answer may be to choose a blockchain protocol permissioned from Consortium, an exchange, a sovereign “custodian” regulated by a specific legal corpus.

And consider that it would be more secure to resort to a Sovereign Exchange that would assume control of users, or a Sovereign Custodian that would mobilize collective cyber security resources and allow the use of cold wallets on “sovereign” servers, does not mean that these entities must be public or “municipal”.
Partnerships, management and BOT systems (…) can offer relevant solutions.

However, embarking on this path requires giving a framework for all participants in this new ecosystem. This framework could be private – based on a comprehensive contractual architecture of private law and “pillar” institutions (data bases, controllers, messengers, administrators, exchange, custodian) incorporated into legal entities of private law – or mixes by bringing together private and public operators. But in both cases a regulatory framework for Distributed Register Technologies (DLT) will have to provide the predictability and security necessary for harmonious development.

III. Cadre social et Juridique du développement d’une Economie Digitale Métropolitaine

Ⅲ. Social and Legal Framework for the Development of a Metropolitan Digital Economy
Finally, the Smart City is not a technological mirage but an economic promise. That of better organisation of transport flows, optimization of urban assets, energy saving generation, reduction of emissions, enhancement of virtuous behaviours, increased productivity, development of trade, increased security of people. It is also a tool to build and strengthen the social bond, interact with e-administration, offer support for crisis communication.

The holistic and political dimension of the smart city project can be frightening by its complexity. However, this can be resolved by pointing out that the deployment of a digital metropolis takes place in successive phases: (1) installation of a connected infrastructure, (2) creation of a digital community and integration of data into a blockchain system allowed and protective, and finally (3) the deployment of the smart city and a Metropolitan Digital Economy.

However, if the sequencing of the implementation of such a project can be spread over time, it is nevertheless necessary, from the beginning of the project, to build its holistic representation, to place the technological cursor, that of its autonomy, its economic and model.

Then to aggregate throughout its implementation the broadest possible consensus (public actors, actors, intermediary bodies, technical operators, potential consumers/users).
It is also imperative, before the start of Phase 2, to have a state regulatory framework to provide a secure framework that organizes the relationships between the various players in the proposed ecosystem.
Indeed, for example, not granting a special legal regime to self-executed contracts means subjecting these accession contracts to general consumer law which would not be inconsequential on their self-performance and could block totally the smart city.

So at the beginning of the transformation of a connected city into a true Smart City, there is the Law. This regulation may be limited to offering a “Sand Box License” or to organize and regulate the entire biotope of Distributed Register Technologies (DLT).

However, it could be considered a function of the public authorities to enact a number of legal qualifications (DLT/Smart Contracts; Token/digital securitization/digital financial assets/digital financial instruments…), to create a supervisory authority, new regulated professions (Digital Confesses; Technical certificaters; Blockchain controllers courtesy of Consortium) and distinguish between regulated and free activities. But above all to open a space derogatory from the common law (consumer law, financial law, criminal law, civil law…) and to provide for a specific regime governed by the special and adaptive regulation of the supervisory authority embracing the law public procurement law, tax law, banking and insurance.

However, public authorities often feel that, as far as smart cities are concerned, they are faced with the paradox of the egg and the hen. In order to create a regulation, it is necessary to use cases, to develop cases of use, a special law is needed to protect the project from the application of the common law. And then the temptation is strong to wait for others to find the solution, launch blind experiments of economic and legal consequences.
This step is being passed. The excitement around cryptocurrencies, ICOs, experimentation around the appearance of the first comprehensive legislation on Distributed Register Technologies (DLT) now provide the elements to get out of this vicious circle.
So now is the time for Digital Metropolises!

Article: Damien Conce

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