Digital New Deal: Public-private relationships in smart cities The document discusses how public-private relationships must adapt to the digital era for smart cities. Historically, cities delegated public services through contracts like concessions and PPPs. For smart cities, contracts need to be more integrated, include stakeholders, and focus on usage and performance. New risk sharing, financing schemes, and socio-economic evaluations are also needed. Regulation must maximize benefits and reduce harms from new private services and actors. Cooperation between public and private entities in defining appropriate, incentive-based regulations can attract innovation while maintaining public priorities.

1. Digital New Deal : public-private relationships in the
smart cities
Carine Staropoli (PSE, Panthéon-Sorbonne University)
1st OECD Roundtable on Smart Cities and Inclusive Growth – 9th of july 2019 - Session III: Digital innovation and disruption to city governance: revisiting
business models and citizen engagement

2. As a starting point…
A new ecosystem
Historically Digital Era
Smart cities are at crossroadsHalf empty or half full record ?
The digital Show-Case The modern far-west fantasy

3. The answer: « smarter » public-private relationships
3
XVIth – XVIIthcent.: bridges, canals,
roads, etc.
XVIIIth-XXth cent.:
generalization of public service
delegation
XXIth cent. : new public
services
 Cities as buyers purchasing goods, services, works and
infrastructures to provide public services
 Make or buy?
 Different contractual arrangements: public contracts/
concessions/ PPPs
 Regulation
A classical equation...
... with new factors
 New services to be invented (based on new technology,
smart infrastructure and data)
 New players to be taken into account (pure players,
citizens...)
 New business models to be found

4. The triad of public action (in smart cities)
Photo à
changer
4
Publicaction
Make Public employment
Buy
Traditional procurement
PPP
Concession contract
Availability-based contract
Regulate
Norms
Contract

5. Need to adapt contractual practices to digital era
5
More global contracts Mastering the usages
News risks sharing / financing More innovative contracts
Systematic socio-
economic
evaluation

6. More global contracts
• Integrated & Transversal approach: from conception to maintenance (e.g. onDijon) – stop silo
organization with large scope contracts (Comprehensive Energy Management Contract of The
Ohio State University - Engie)
• Inclusion of stakeholders/ citizen into extended partnerships (e.g. Cordee, OptimodLyon)
Mastering the usages
• User centric contract based on service and multi-services (e.g. Maas Global mobility Contract
Grand Dijon)
• Performance contracts (e.g. extended EPC) + User satisfaction
Innovative contracting
• Specific contract: innovative partnership (e.g Pays Haut-Val d’Azette)
• Upstream: sourcing, competitive dialogue
• During the contract life: adaptation, renegociation, conditional phase to take into account innovation…
New risk sharing & financing schemes
• Better anticipate the evolution of infrastructure and services usages
• Use public lever to mobilize new private financing devices (e.g. France transition by Canfin
Zaouati (2018), sustainable finance, social impact finance)
Systematic socio-economic evaluation
•Currently: lack of visibility on collective value of Smart city projects
•Extand ex ante to on-going and ex-post evaluation
•Need to adapt existing BCA methods to take into account transversality, data, innovation

7. Need to adapt regulation
Who regulate?
• New services proposed directly
to citizen by new entrants
• New (unregulated) actors
(platforms, start-ups)
• Private services sometimes
complementary to public
services … but potentially in
conflict
Why regulate?
• Maximize positive externalities
and reduce negative
externalities
• Specific objectives:
• Increase acceptability
Harm reduction
• Induce coopetition
• Attract new services and
innovation
Which regulatory tools?
• Data regulation (e.g. Licence to
use data - « Licence engagée »
OptimodLyon)
• Use of public domain/ facilities
(e.g. free floating)
• Tariffs (waste, mobility)
• Nudges
Regulation type?
• Regulation – confrontation
• Regulation – cooperation
• Regulation – agregation
1. Cooperation instead of verticality: Partnering with private players to define appropriate regulations,
public entities still having the last word
2. Incentives instead of prohibition : Incentivizing private actors so that they comply with public
orientations → virtuous circle based on market forces
3. Control and sanction for credibility: Impose penalties in case of breach: no more incentives, stricter
obligations

8. Coming soon (september 2019)
http://tnova.fr/http://chaire-eppp.org
https://third.digital/
Related publications with Benoit Thirion (Altermind) - @bthirion
Contact: carine.staropoli@univ-paris1.fr