Digitalising infrastructure

In this special issue we focus on the digitalisation of infrastructure. Digitalisation is, of course, transforming all kinds of industries. Content industries (music, newspapers, the audiovisual sector and so on) were the first to be digitalised and then disrupted by digital platforms. Network industries are also now being digitalised, in distinctive ways.

Digitalisation can reduce the cost of the construction and the operation of infrastructure. As sensors are installed in infrastructure producing massive data, infrastructure managers can also reduce maintenance costs. Furthermore, big data can help infrastructure managers to better control traffic flow. Machine learning algorithms can be used to predict peaks in infrastructure use, and then different tools can be employed to manage demand (dynamic pricing) and even supply (software-defined networks). In this special issue, different infrastructure industries are analysed. Common challenges will be identified, as well as the specificities of each sector.

This special issue presents a set of four papers developed by members of the Digitalizing Infrastructure Group of Experts (DIGEX). DIGEX was founded in 2018, within the Florence School of Regulation, and is managed by Juan Montero and Matthias Finger

The first contribution, authored by Montero, identifies common themes across different types of infrastructure. It identifies how digitalisation can reduce design costs, and the construction and maintenance of infrastructure. Furthermore, it identifies how digitalisation enables infrastructure managers to reduce costs for the use of infrastructure and, more importantly, allows them to increase efficiency in capacity management by better controlling both capacity supply and demand.

Tsvetkova, Gustafsson and Wikström identify how digitalisation is transforming the infrastructure of ports and how, as a result, port managers are under growing pressure to provide prompt service.

Espinosa describes how the drinking water sector is using digital technologies to obtain better-quality information on the condition and the functioning of the infrastructure that they manage and the quality of the water that they supply.

Cruz and Sarmento explain how digital technologies are being deployed on road networks, reducing costs there.

Editor of this special issue is Juan Montero

Sector coupling: How to regulate convergence?

In this special issue we explore the links between infrastructure sectors, especially in terms of regulating interfaces between the different sectors and regulating more integrated and converging sectors.

Historically, most infrastructure has developed independently of other infrastructure and constitutes a self-contained socio-technical system. For example, this is the case of electricity, gas, telecommunications, air transport and railways. Consequently, regulation was also set up in a self-contained sector-specific manner.

However, this way of doing things cannot continue in the future as the different infrastructure sectors are converging. This is, first, because of technological and economic dynamics that have been triggered by liberalisation and which have led to new technologies often at the interface between different sectors (e.g. power-to-gas), along with corresponding cross-sectoral business strategies. Convergence also results from recent developments in digital networks (and in particular in the fifth generation of wireless technologies, 5G) which increasingly act as drivers of convergence between sectors, leading to cross-sectoral and much more integrated infrastructure services (e.g. ‘Mobility-as-aService,’ or MaaS). The take-off of the Internet of Things (IoT) based on 5G networks, which is considered the next industrial revolution, is expected to accelerate this trend. Finally, climate and other ecological challenges force a direct comparison among different sectors, as in the case of externalities caused by energy generation (by renewables or by fossil fuels) or by different transport models. For all three reasons, a more convergent view of the different network industries is rapidly emerging, but will it translate into converging regulation or even into the regulation of convergence?

This special issue of the Network Industries Quarterly is dedicated to some of the best papers presented at the 9th Conference on the Regulation of Infrastructures which was organised by the Florence School of Regulation in June 2020. The first contribution, authored by Nolden, explores powering trains with renewable energy. Exploiting this huge transport decarbonisation potential depends on changes to policy and regulation, and the interpretation thereof, to procure and value the multiple benefits of sector coupling.

Knieps discovers data-driven sector coupling within smart sustainable cities. Smart sustainable cities provide vast potential for data-driven sector coupling due to the variety of smart network infrastructure and services involved. Digital twin technologies support city planning and city operation activities. However, virtual replicas cannot replace entrepreneurial solutions to governance problems through the organisation of market-driven activities.

Hoffmann discusses three entitlement problems in digital markets and the distributive nature of antitrust. Many conflicts that competition law faces in the digital economy can not only be understood as problems of competitive harm but also as issues of appropriation. Reviewing recent European case law, he identifies three typical disputes over the exercise of property entitlements and explores how competition law shapes legal regimes of appropriation in digital markets.

Paniccia analyses the implications for regulatory policies at the European level of patterns of competition and/or integration between traditional public transport and platform-based forms of mobility that are occurring in urban contexts, also considering the social and economic effects following the Covid-19 pandemic.

Transport in the European Green Deal

This special issue of Network Industries Quarterly is dedicated to the European Green Deal and its implications for the transport sector. In its long-term decarbonisation strategy ‘A Clean Planet for All,’ the European Commission paints a clear picture of the vast transformations that will have to take place across all sectors of the economy for Europe to become climate neutral by 2050. In its subsequent European Green Deal, Commission President Ursula von der Leyen reinforces this ambition and pledges to enshrine the climate neutrality objective into legislation.

For transport, which accounts for a quarter of the EU’s total greenhouse gas emissions, achieving the climate neutrality objectives will require a 90% reduction of the sector’s emissions by 2050 compared to 1990 levels, with sizeable contributions across all modes. Our invited contributors take a closer look at the concrete examples of rail, aviation, intermodal transport and Mobility-as-a-Service solutions, as well as at the increasing coupling and interdependence between the transport and the energy sectors.

The first contribution, authored by van Baal and Finger, introduces the concept of the ‘energy-mobility system’, underpinned by the electrification of transport services, and discusses the need for an integrated approach to policy and governance, especially for successfully managing the sustainability transition.

Haunold emphasises the need for a level playing field between all modes of transport as a key precondition to the achievement of the European Green Deal objectives. She argues that rail transport ought to be placed at the core all of initiatives undertaken in the transport sector, including capital expenditure, financing, funding and subsidy systems, given that it represents the most climate-friendly mode of mass transport in the EU.

Arnold attempts to provide a legal basis and puts forward some ideas for advancing the propositions of von der Leyen’s European Green Deal in relation to the aviation sector. He argues that if there is leadership at the EU level, undisputed priorities and concepts based on the right legal basis and clear information, innovative policies may be developed to meet the challenges we are facing.

Serafimova discusses the current challenges to urban mobility and argues that the Covid-19 pandemic may, in fact, serve as an opportunity for the advancement of the Mobility-as-a-Service (MaaS) ecosystem and the demonstration of its true value in supporting the Commission’s Green Deal objectives.

Water Utilities – governance and performance

This issue of Network Industries Quarterly is devoted to water utilities, their governance and their performance. With growing urbanization, pollution and water stress, utilities are ever more challenged to provide safe and affordable drinking water in an ecologically sustainable manner. Are they and will they in the future be up to the task? What is and should be the right size to do this? What is and should be the best governance of them (ownership, legal structure, regulation) to make sure that they can deliver? What is and should be the most appropriate articulation between governance of the water resource and governance of the utility? These are some of the questions that the four papers seek to address. The examples the authors refer to pertain mainly to Latin America, namely Brazil, Mexico, and Argentina.

The first contribution authored by Klien makes the argument that water utility aggregations do not necessarily lead to cost savings. The author uses a global database of utilities to document how aggregations change utilities with respect to network density and cost structure. He argues that aggregations typically do not change utilities in a way suited to deliver performance improvements.

Smiderle, Capodeferro, Fernandes, Gonçalves and Dutra discuss the concentration of state-owned water-supply and sanitation service providers in Brazil. In particular, they look at the contracts between these companies and municipalities and critically examine the kinds of goals that are pursued by means of these contracts.

Aguilar-Barajas and Ramírez examine the contextual and jurisdictional framework for metropolitan water provision in Mexico, based on the Monterrey Metropolitan Area case. They argue that proper understanding of the supply of drinking water requires an urban region-system framework so that major interactions are recognised and analysed.

Akhmouch, Cañamas-Catala and Salvetti critically and very comprehensively analyse water and sanitation service regulation and regulatory functions in Argentina (including water resources). From their analysis, they derive suggestions on how to improve such regulations.