Challenges in Digitalizing Networks

However, digitalization not only brings benefits for infrastructure managers; it also creates new risks. To begin with, digitalization is a cost in itself and a burden if the wrong choices are made. Furthermore, digitalization is empowering not only infrastructure managers, but also infrastructure users, who can modify their usage patterns and find alternatives to reduce their expenditures. They can sometimes also compare. Finally, digitalization brings new security risks in the form of cybersecurity threats.

Investment in digital technologies will not automatically deliver results. Incompatible solutions might be deployed in such a way that efficiency is not created. Deployment of digital technologies may bring benefits, but these benefits will be limited as their lifecycle tends to be much shorter than that of traditional infrastructures. Constant investments and upgrades might become necessary. Furthermore, increases in productivity depend on managerial and technical skills, as well as on incentives, with strong complementarities between the two.20

Secondly, digital technologies not only empower infrastructure managers; they also empower users, giving them more information about alternatives, as well as the ability to switch to such alternatives. Infrastructure managers have traditionally operated with little or no competition, either from direct competitors or from other infrastructures. Digitalization is now offering such new alternatives.

Digitalization is not only enabling users to choose among different infrastructure-based services, but also enabling them to optimally combine infrastructures. This is particularly the case in transportation, as different infrastructure networks provide partial services and often lack a door-to-door service (for both passengers and goods). Digitalization and algorithms now allow users to identify the available options as well as the fastest/cheapest/ greenest combinations of transport modes. Therefore, users can migrate to new transport modes, as they have better information.

Not all infrastructures have the same potential to reduce costs or to reduce them at the same pace or in the same amount as a result of digitalization. Road transportation costs might be substantially reduced as automation (autonomous vehicles) is implemented for both freight and passengers. As a result, road transportation might gain a competitive advantage over railways, which do not appear to benefit from similar cost reductions caused by digitalization and automation. Such secondary effects are beyond the control of the infrastructure managers and they add uncertainty in the planning of investments.

Finally, cybersecurity is a new risk associated with the digitalization of infrastructure. Indeed, digital technologies create new vulnerabilities. Privacy must be guaranteed to users. Services can collapse in case of bugs in the software or attacks by hackers. Infrastructure managers must invest in technologies in order to solve the uncertain vulnerabilities created by digitalization.

Overall, digitalization is introducing more uncertainty in the management of infrastructure networks. Even if it is providing new instruments to predict and manage traffic flows, it is also empowering users to make a more effective use of the existing infrastructures and to introduce more competition among infrastructure providers.

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