Future Urban Mobility
The case for autonomous vehicle operation platforms
With the advent of mobile technologies that allow people to work from anywhere and work at any time, one could easily have believed that cities would become a leftover of the industrial age. It hasn’t turned out that way. In fact, rather than suffering a geographical death, future mobility innovations will seek to further intensify this focus on urban hubs.
Currently, cities are home to over half of the world’s population and by 2030, an additional 1bn people will live in cities. Online commerce continues to grow fast, with freight volumes expected to double in the next 20 years. Additionally, consumers will come to expect same-day delivery, or even instant delivery. Accommodating the rapidly increasing number of transport vehicles in the city (land and air) will be essential to meet this demand and to deliver a high quality of life for people living in these urban centers. Autonomous ground vehicles, delivery drones and sidewalk robots will play an important role in reducing the burden of commercial traffic in cities.
All of these autonomous devices will require control systems to coordinate and regulate their every move, whether on public roads or sidewalks, taking-off, in-transit, landing, refueling or undergoing maintenance. But while there is hype around the use of these autonomous devices, there has been a significant lack of focus on how these autonomous vehicles and drones will co-exist in this future cityscape, how they will be controlled and more importantly, how the development of the necessary control infrastructure will be accomplished.
The most important piece of infrastructure needed is an autonomous vehicle operating platform (AVOP) for urban areas. This platform consists of sensors for tracking, mini-datacenters for local computing, radio modules for real-time communication at key locations around the city which serve as hubs for dispatching these devices, pick-up places as part of the X2C delivery model, and a software layer which can be used for operations.
For participants planning on capturing a segment of this market for autonomous device control, the planning must start now. Unlike other pieces of infrastructure which take a significant amount of time to construct, the infrastructure platform is highly scalable – it can be built and monetized in pieces and the returns are substantial. Any corporate which can establish itself as the dominant operator in a city can also leverage this infrastructure as a platform for future growth.
We expect the economics to favor one dominant AVOP operator for each city which co-ordinates delivery services. However, it is unlikely that a single player will provide all the services necessary to run the AVOP. A significant number of players will compete to provide the actual fleet operation and smart delivery, eliminating the dominance of the parcel and express delivery giants over the last mile. The realization of this platform will result in individual rides and transits being completed by thousands of third party devices. The driver of financial returns for the dominant AVOP provider will be from exceptional yield management of the devices on its network.
Managing autonomous vehicles and drones will require a city-wide sensor network with complete coverage in high device intensity transit areas – a hardware enabled business with physical devices in the streets, on cellphone towers and on top of buildings. This enables new entrants with network operator and edge computing skills to enter the AVOP market and therefore does not limit the AVOP players to just firms which already possess software engineering skill sets. In addition to the provision of hardware, there are other opportunities for firms to participate in the AVOP market – metro areas will require a device agnostic centralized platform which control all land and airborne autonomous devices and firms will be able to participate in providing services on the platform.
The company that secures this necessary hardware access and provides the controlling platform will receive access to the revenue from a number of business models for local urban transport and delivery. Airspace will also be leased for exclusive use by various companies who want to expedite the transfer of people and goods, and the AVOP system will likely develop processes for prioritizing certain autonomous traffic to ensure that it directly routed to its destination and high value items can be tracked in real time for the customer while in transit. All devices operating on the network will also need to be registered to ensure that they meet minimum safety requirements and there will need to be an entity ultimately responsible for their operation.
The beauty of this operating platform is that it can be rolled out city-by-city, with each city added generating its own revenue for the platform operator. The platform operator will seek to lock in its market power in a given city by requiring autonomous airborne and land vehicle to register on their operating platform and sensor network in order to utilize the processing power embedded in the sensor network to guide the autonomous vehicles/ drones to their final destination. The payoff for doing this is significant – when combining all business models that could be leveraged by the AVOP, the total revenue potential of one city with 1m people is over $1.9bn, and $3.7bn (including revenue from refueling and maintenance) for a period of 10-year operation.
While the ground based market will be a key area of focus for some years, the battlefield will be for domination of the skies, where there needs to be a centralized method of communication and control in high traffic areas as device to device (AI supported) operation will not produce the optimal routing for traffic (it will only achieve local optimization at the expense of overall system optimization). The true source of competitive advantage in urban delivery will not be the actual delivery but rather the operation of a platform which controls all forms of autonomous delivery vehicles. The ultimate winner will be the platform which is able the scale the best, winning the race to be the dominant operator in as many city as possible.