AT&T to Announce a Major ‘Smart Cities’ Push at CES 2016

AT&T next week will reveal how it will work with cities to turn everyday objects like traffic lights and parking spots into tools to manage congestion and conserve energy.

The presentation is part of the telecommunications giant’s broader plan to diversify its business portfolio, a strategy that includes putting wireless access into all manner of devices as well as its expansion into Mexico and purchase of DirecTV. AT&T plans to announce the push at the annual CES tech expo in Las Vegas, where it will introduce partners in its “smart cities” initiative, AT&T Mobility CEO Glenn Lurie said in an interview with Re/code.

As a concept, “smart cities” is not brand-new. Broadly defined, a smart city uses technology to change how urban environments are designed and managed to reduce expenses and improve efficiency. Telecom companies are working with forward-thinking municipalities to make decisions based on data from sensors added to locations and objects throughout the city. Imagine your car alerting you to the location of an open parking spot based on data broadcast by the spaces themselves or not having to wait at red lights because the road knows you are the only car there.

Other cities have experimented with this idea. Barcelona, home to Mobile World Congress, has been touting itself as a model city with experiments in parking and lighting.

The smart cities sector, which includes everything from revamping the energy grid to digitizing government processes, is estimated to be a $1.5 trillion market by 2020, according to consulting firm Frost & Sullivan. AT&T will likely play in a few areas of the concept, including lighting, parking and transportation.

“We see this as a massive opportunity,” Lurie said.

Indeed, it’s far from being a vanity project. AT&T is eager to seek new businesses beyond the one it is currently leading — wireless phone services, where four major carriers are duking it out for the same customers. An endless price war from T-Mobile and Sprint, combined with the fact that most customers already have a smartphone, means that business is not as lucrative as it once was.

As for the smart cities push, AT&T plans to discuss details of its plan and announce some early cities it has been working with. Lurie acknowledges that to get cities to sign off on the expense of such projects, it will have to prove to municipalities that they can solve real problems and help save money in the long term.

“The economics of it have to make sense for the city,” Lurie said, while declining to say exactly which services meet that criteria.

Smart cities aren’t the only thing AT&T is likely to talk about at CES. Cars remain a big focus, Lurie said. Already the company is providing wireless connectivity for nine of the top 16 automakers, and the company plans to announce new deals and extensions of existing ones at CES.

Like cities, cars make for an attractive market because they can provide stable revenue without having to fight for the business every couple of years. Once someone buys a car with an AT&T cell service built-in, that’s the only company that is going to deliver wireless Internet to that car.

Wearables are another big area for Lurie, who has been saying for a while now that more smartwatches will come with cellular connectivity built in. Such connections will pave the way for devices that can do more than just serve up notifications from a nearby smartphone.

Lurie sees forthcoming smartwatches opening doors for AT&T and for those who own them.

“Why in the world would you need a set of keys if you have a wearable that knows it is you,” Lurie said.

This article originally appeared on Recode.net.