The major objective of this article is to analyze the potentials of information and communications technology (ICT) for the evolution of smart cities, with a particular focus on the challenges faced by traditional public utilities in the areas of public transportation, energy, water supply, and wastewater management due to the entry of new players originating from ICT organizations and industries. The character of virtual networks for smart cities is demonstrated based on three pillars: (1) All-IP–based real-time and adaptive broadband communication networks, (2) global navigation satellite systems and their overlay position correction networks, and (3) the interoperability of ubiquitous sensor network applications, as they form the ICT basis for a multitude of applications that are important in smart cities. The heterogeneity of virtual networks for different smart city physical network services is based on these pillars, taking into account the different requirements for the quality of service (QoS) of data packet transmission, geopositioning, and sensor networks. It can be expected that prosumer activities and resultant networked commons become increasingly relevant for the smart city of the future. However, the increasing role of prosumer activities cannot replace the role of markets in solving scarcity problems within ICT networks as well as physical networks. The role of congestion pricing and QoS differentiation for network capacities in transportation and electricity markets as well as ICT is indicated. If, due to non-rivalry in usage, efficient congestion prices are pointless, the future role of subsidies from the state is considered.
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