By Don Clark
China plans to spend heavily on technology to help cities cope
with headaches such as air pollution and traffic jams -- and
perhaps unruly mobs and outlaws. Silicon Valley companies are
teaming up to seize the opportunity despite civil liberties issues,
a trend that could raise the profile of players like Sensity
Systems Inc.
The closely held company, whose investors include Cisco Systems
Inc. and General Electric Co., on Friday is expected to announce a
joint venture with a spinoff from China's Academy of Sciences to
help build new-wave data networks with such features as video
surveillance and sensors to monitor traffic and air quality.
Sensity and its new partner, as well some of their competitors,
have backed the idea of packing sensors, wireless communications
and computing technology on light poles. They want to exploit
conversions some cities are making to adopt light-emitting diode
technology, which can generate energy savings to help pay for
networks that could provide benefits beyond lighting.
Such networks are part of a broader movement to create what
backers call smart cities, long seen as a potential gold mine for
technology suppliers.
Navigant Research estimates $174.4 billion will be spent on
smart-city projects between 2014 and 2023, with China accounting
for a major share.
More than 500 Chinese cities are considering building
urban-sensor networks, estimated Feng Yuan, director of CAS Smart
City, the Chinese company forming the venture with Sensity.
China's efforts are likely to be scrutinized for potential
threats to privacy. Data collected by city officials for
legitimate-sounding purposes could theoretically be shared with
other agencies with more repressive intentions, said Sophia Cope, a
staff attorney with the Electronic Frontier Foundation, a civil
liberties group.
"The devil is in the details," she said. Unless U.S. companies
can assure themselves about how their technology should be used,
"they should probably think twice."
Hugh Martin, Sensity's chief executive, said conversations with
Chinese officials have convinced him that the overriding issue in
most cities is combating traffic and pollution. "Getting more
information is going to help make it a better place to live," he
said.
Mr. Yuan acknowledged than any data gathered has to be managed
carefully, stressing the need to balance the desire for privacy
with benefits such technologies can provide to citizens. "I think
there should be a tradeoff," he said.
Another issue is China's willingness to let foreign vendors
supply sensitive components of the country's technology
infrastructure.
Sensity ordinarily operates cloud-based services to manage data
gathered by networks it has established. As part of the Chinese
venture, however, the company agreed that information gathered by
sensors and applications must be stored and processed on domestic
server systems, preferably government owned, Mr. Martin said.
An agreement cementing the venture is expected to be signed on
Friday at a New York event hosted by Hu Chunhua, Communist Party
secretary of China's Guangdong province, who is leading a trade
delegation to the U.S.
The partners will face plenty of competition from large and
small companies working on their own and with others.
One example is Silver Spring Networks Inc., a Silicon Valley
company that in March announced a joint venture with the Chinese
LED lighting specialist Guangdong Rongwen Energy Science and
Technology Group.
Sensity, founded in 2010 under the name Xeralux, builds networks
using a combination of commercially available components and
internally developed technology. One particular selling point, Mr.
Martin said, is the way it handles data from video cameras.
Instead of streaming images from cameras to central collection
points, Sensity networks typically store data and analyze it at
each light pole, sending only selected data -- say, an alert about
a package detected in suspicious circumstances, Mr. Martin said.
The approach can save on data-storage costs and can be more
accurate than other approaches, he said.
Sensity has offered sensors for purposes such as detecting
temperature, vibration, motion, ambient light and gunshots. Mr.
Yuan said many cities in China already have networks of video
cameras, so the most likely initial applications for the joint
venture's technology include lighting control, public Wi-Fi and
charging electric vehicles.
CAS Smart City will own 51% of the new joint venture, with
Sensity holding the remaining 49%.
The partners hope to attract software developers to create
add-on programs that could be marketed both inside and outside
China.
Sensity's financial backers, which have pumped $74 million into
the company, said it has a solid chance to carve out a niche in
China.
"The ball has started to roll," said Munish Khetrapal, managing
director for Cisco's smart cities efforts and a Sensity board
member. "We have to see that converted into business."
Write to Don Clark at don.clark@wsj.com
(END) Dow Jones Newswires
May 13, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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