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Here’s how Outcomes-as-a-Service company Quantela helps cities build smart infrastructure despite tight budgets

By using outcome-based financing, Quantela along with funding partner Digital Alpha support the build-out of city digitization projects including one in Erie, Pennsylvania (USA)

A new approach to project financing by leading outcomes-as-a-service company – Quantela uses upfront investments to help city governments with improved liquidity and long-term revenue sharing to fund the set up of free public Wi-Fi, smart lighting, smart waste and safe city projects even when cities lack the funds to pay for this infrastructure upfront. 

Quantela looks for ways to help city governments become economically sustainable through cost savings and increased revenue from urban infrastructure digitization, which help paying off the investment over time.

Ed Olsen, vice president of outcomes-based funding for Quantela, said more cities are thinking about a comprehensive plan for smart cities technologies instead of a series of one-off projects. 

“They are creating much more inclusive plans to provide widespread value across multiple disciplines and return on data, automation, AI decision and revenue to pay for the tech,” he said.

Erie, Pennsylvania is using this approach to expand free public Wi-Fi around the city, install cameras to monitor public safety and modernize lighting. City leaders used an initial investment of $500,000 from Digital Alpha to secure a matching grant that doubled the budget for the project. 

Mayor Joe Schember worked for PNC Bank in Erie for 40 years before becoming mayor. He said building smart city infrastructure was one of his goals when he first took office.

The first phase of the project was to expand Wi-Fi access in several Opportunity Zone neighborhoods in Erie. Opportunity Zones are an economic development tool that allows people to invest in low-income neighborhoods in the U.S. The purpose is to spur economic growth and job creation in these communities while providing tax benefits to investors.

The city tested the new connectivity in a pilot project downtown that provided free internet access. In addition to this free internet access, the city plans to install cameras and upgrade lighting.

“The city’s electricity costs will go down $30,000 per year once the lights are installed,” he said.

Schember said the city will use the savings to pay for the Wi-Fi service. He said the city also will use the connectivity to measure attendance at city events. 

Schember said that he hopes to have this accomplished by the end of this year.

Enhanced and inclusive public services such as Free Public Wi-Fi is benefiting the city of Erie. Check out YourErie.com to know more

Digital Alpha, the funding partner of Quantela’s outcome-based financing, just closed a second operating fund with more than $1 billion to invest in companies and revenue share deals in three verticals: Next-gen networks in the form of 5G infrastructure investment and Wi-Fi 6 solutions, cloud computing and IoT-enabled smart city solutions.

According to a press release announcing the new fund, Digital Alpha invests in the infrastructure layer above the commodity layer of radio masts, fiber cables and data centers and supports the consumption layer, which is focused on digital content, apps and devices. The fund advisers will build a portfolio of “antifragile” investments with resilient business models in leading operating companies and related revenue share structures.

Outcome-based financing for cash-strapped city governments

For city and state governments, the fiscal shock from the pandemic is going to be similar to the 2008 recession, according to the Council on Foreign Relations. An analysis by the Washington Post found that the majority of states have seen tax revenue shrink with five states including Alaska and Florida reporting declines in the double digits.

The March 2021 COVID stimulus bill included $350 billion for state, city and local governments. Cities can use the money to cover public health expenses, offer additional pay for essential workers, replace lost tax revenue and invest in water and sewer or broadband infrastructure.  

Olsen of Quantela said that outcomes-based financing uses a revenue-sharing model to allow cities to launch smart infrastructure projects quickly.

Most of these projects are on hold or on the back burner due to lack of resources,” he said. “This is becoming a positive way for cities and customers to get tech done today.”

Olsen said that Quantela uses this approach to fund five types of projects that can save money or bring in revenue:

  1. Digital advertising
  2. Public Wi-Fi
  3. Smart lighting
  4. Smart parking
  5. Smart waste

“We are always looking for ways to monetize data or other elements that could become assets,” he said.

The city always owns the technology and the data, Olsen said.

He said city leaders and Quantela select the content that goes on the portals that connect users to public Wi-Fi. This can include a link to a city website, event information, links to local businesses and regional and national advertisers.

The city is using the data to understand how people use the city services such as parks, and infrastructure elements,” he said.

He said that the public Wi-Fi is one of the most common projects along with smart lighting.

“We help a city plan the project, minimize the risk of a particular solution and then set up a structure of revenue sharing to make sure the investment gets paid off,” he said. 

As Quantela maps out the revenue share timeline, the company looks for ways to combine several smart city projects to offset the cost of an effort like swapping out old city street lights with more efficient versions. 

Quantela’s calculations include data points such as the city’s monthly electricity bill for street lights, the number of information kiosks that a space could support and potential revenue from advertisers. The team puts together an initial plan and presents it to city leaders.

“If they want to go forward, we present the project to Digital Alpha, and if they give us an initial thumbs-up, we do a deeper dive to validate each cost and return,” he said. 

Olsen said that the payoff for these projects ranges from five to 10 years, depending on the mix of services and the size of the project.

Olsen said Quantela is working with Peachtree Corners in Georgia to launch a set of autonomous busses. 

Article credit: The article originally appeared on TechRepublic.com on May 19th, 2021. It has been modified to edit out factual errors.

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