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Updated: 7:52 p.m. Saturday, June 12, 2010 | Posted: 7:51 p.m. Saturday, June 12, 2010

Cisco planning 'cities in a box' across Asia

Soon-to-be-completed metropolis in South Korea to serve as prototype for building a wired community from the ground up.


Cisco planning 'cities in a box' across Asia photo
LiPo Ching
Cisco engineers demonstrate a city's nerve center at Shanghai World Expo.
Cisco planning 'cities in a box' across Asia photo
LiPo Ching
An iPhone app controls the lights in Gale International's First World residential unit.

By John Boudreau


INCHEON, South Korea —

It's a product like no other: a complete city for a million people.

As tens of millions of people across the developing world migrate from the countryside to new cities, Cisco Systems Inc. is helping build a prototype here for what one developer describes as an instant "city in a box." Cisco is wiring every tech nook and cranny of the new city, making it one of the most technologically sophisticated urban centers on the planet.

Delegations of Chinese government officials looking to purchase their own cities of the future are descending on New Songdo City, a soon-to-be-completed metropolis about the size of downtown Boston that serves as a showroom model for what is expected to be the first of many assembly-line cities. In addition to state-of-the-art information technology, Songdo will emit just one-third of the greenhouse gases of a typical city of similar size.

Cities with populations of more than a million people are popping up across the developing world, but the foremost market for the prototype here is China, where a massive demographic shift from rural to urban already is under way, requiring hundreds of new cities.

"They come in here and say, 'I'll take one of these,' " said Richard Warmington, the former head of Hewlett-Packard Co.'s Korea operation who is now president of Chadwick International School, which is setting up a campus in Songdo.

The potential is so big that executives at Cisco, the key tech partner for the development, get giddy talking about what could be a $30 billion business over coming years for the San Jose, Calif., networking giant.

It's easy to see why Cisco is excited by the possibilities: According to a study by investment bank CIBC World Markets, governments are expected to spend $35 trillion in public works projects during the next 20 years. In Songdo alone, Cisco sold 20,000 units of its advanced videoconferencing system called Telepresence — a billion-dollar order — almost before the ink had dried on the contract, said developer Stan Gale, the chief visionary of the project.

"Everything will be connected: buildings, cars, energy — everything," said Wim Elfrink, Cisco's Bangalore-based chief globalization officer. "This is the tipping point. When we start building cities with technology in the infrastructure, it's beyond my imagination what that will enable."

Networking technology everywhere

The audacious plan is rising up from former mud flats along the Yellow Sea. Cisco and New York-based Gale International hope the privately funded $35 billion Songdo project leads to at least 20 similar developments in China, India, Vietnam and other countries in coming years. Much of Songdo will be completed in 2014.

"Five hundred cities are needed in China; 300 are needed in India," said Gale, Gale International's managing partner and an exuberant developer who says Songdo will be his legacy.

The project calls for wired everything — an urban center where networking technology is embedded into buildings from the ground up and every home, school and government agency is equipped with sophisticated Telepresence video technology — what in Cisco mantra is called Smart and Connected Communities.

For Cisco, Songdo represents more than a chance to sell hardware. The company envisions its technology as the connector for all aspects of urban life — government services, utilities, entertainment, health care, education — with new business models built around its Telepresence technology — say, a yoga class beamed into living rooms or medical checkups done remotely. All of these would be managed through a single Internet network, and Cisco would collect a recurring fee for maintaining the services, almost like a utility.

"It will be like paying a maintenance fee once a month," said Christopher Khang, a Cisco vice president based in Singapore. "It's a radically new business model for the company."

Building this technology into new construction adds relatively little to the overall construction costs, Khang said. "But the benefits are going to be huge. I believe we are the only company that can provide this holistic (technology) environment."

Pitfalls of a grand master plan

It looks good on paper. But will Chinese officials buy into this vision of a tech utopia?

"It seems a little speculative," said Broadpoint AmTech analyst Mark McKechnie. Still, he added, "If you want to be around, you have to have a 10-year plan. If this doesn't develop, at least they'll learn something new they can apply to different businesses."

There's also a question of how many whistles and bells developing countries are willing to pay for, as Songdo features a 100-acre park and Jack Nicklaus golf course.

Even Gale, who hired premier American architects to design the master plan and buildings, admits there are risks.

"This could be an international travesty if it goes wrong," said Gale, whose project is funded by Korean investors.

When Gale first dialed up Cisco five years ago with his project, it wasn't ready for such grand plans, Elfrink admitted. When it was approached again three years later, Cisco was ready to go.

That was about the time Saudi Arabia handed San Jose, Calif.-based Cisco a contract to help create four new cities around the country, an overall $70 billion deal to jump-start a tech sector in a country awash in oil revenue.

Cisco, hoping to dominate in the new build-it-and-they-will-migrate business, has been enlarging its tech catalog in preparation.

It acquired Santa Barbara, Calif.-based Richards-Zeta Building Intelligence, whose software enables building systems, from lights to air conditioning, to be managed over the Internet, making them more energy efficient. Cisco invested in Australian startup Majitek to create a platform for delivering multiple services over a digital network. And Cisco's recently completed $3.4 billion deal to buy desktop videoconferencing company Tandberg adds to its Telepresence business.

Now Cisco is using its Shanghai World Expo pavilion, which displays a video detailing a totally linked city, to sell its technology.

"There will be at least 100 new cities with a minimum population of 1 million each being built in China in the next three years," said Anthony Elvey who, as director of Cisco's expo pavilion, gives tours to Chinese provincial officials, each hoping to out-do the other in creating an instant city that will attract job-creating investments.

To date, Cisco has signed deals with two Chinese municipalities. It will be the main networking infrastructure provider for Chong-

qing, which has a population of more than

31 million in southwestern China. And Cisco and Gale will provide a city-scale development in Changsha in Hunan province.

"These guys can snap their fingers and put all this infrastructure in place," Elvey said.

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