By this point, driverless car technology has few skeptics. Videos of Tesla cars zipping around in full auto mode and Waymo's public passenger pilot in Arizona quickly deflate the idea that the software powering driverless cars is not viable. But we're not quite ready for a more autonomous transit system just yet. While some of our cars are quite smart indeed, much of our infrastructure is stuck in the Stone Age.

The problem is that driverless cars don't have a great way to communicate with the physical environment right now. After all, autonomous driving is not just a question of geonavigating a vehicle from point A to point B. It's a dynamic feat where the decisions a car must make will constantly change depending on things like the weather, the actions of other cars, and unexpected roadway intruders.

How to give cars better vision

For a while, policymakers focused on what's called "vehicle-to-vehicle" (V2V) communications systems as a way to give autonomous vehicles sharper vision. V2V tech focuses on intercar sensing, which would allow autonomous vehicles to detect and avoid each other.

Engineers had already been working on these technologies by the late-1990s, but in true government fashion, regulators put most of their eggs and funding behind a single technology standard, Dedicated Short Range Communications (DSRC), which was far from comprehensive enough to do the trick. After all, the armadillos that scurry across desert highways will not have receptors on their shells.

Today, engineers complement V2V technologies with a broader suite of what's called "vehicle-to-infrastructure" (V2I) transmission mechanisms, which would allow vehicles to also communicate with the physical world around them—through antennas, sensors, and cameras affixed to things like utility poles.

Policymakers are slowly but surely coming around to the understanding that emerging technologies will need more of this kind of "street furniture" to navigate our more connected world. Smart cars, drones, 5G connectivity, and "smart city" applications all need physical networking in order to properly function.

So the question becomes: how can we make sure that our dumb infrastructure gets smart enough in time for these technologies to roll out?

This is the problem that Brent Skorup and Korok Ray considered in their recent Mercatus Center study, called "Smart Cities, Dumb Infrastructure: Policy-Induced Competition in Vehicle-to-Infrastructure Systems."

State and local governments are going to have to get smart about how they incentivize street furniture installation and monetization. Skorup and Ray suggest a public-private hybrid. Municipalities should tap private companies to install the equipment, with one catch: open access must be baked in, so that different applications and technologies can benefit from the same infrastructure.

What do we need, and why can't we get it?

Skorup and Ray outline three broad categories of street furniture that we'll need: 1) basic infrastructure, which includes "passive" structures like utility poles, cabinets, wiring, and the rights-of-way necessary to install such structures; 2) network infrastructure, which is long-lasting networking equipment like fiber cables and data networks; and 3) the devices themselves, like cameras and roadside sensors.

To provide autonomous vehicle coverage across the nation, we'll need a lot of those things. A survey by the American Association of State Highway and Transportation Officials (AASHTO) projects that some 250,000 traffic signal locations (around 80 percent) should be V2I-enabled by 2040, and another 25,000 non-signal roadside locations will also be online. Then we'll need "accurate, real-time, localized traveler information" on around 90 percent of our roadways, and ideally more.

That's a lot of smart lights. And they will necessitate competent planning from the hundreds or thousands of nested municipalities that fund, oversee, and install such infrastructure across the US. Needless to say, this is a rather tall order.

A Government Accountability Office (GAO) report from 2015 dives into exactly what barriers stand in the way of such installing connectivity from sea to shining sea. Setting aside the spectrum management issues, GAO points out that many states and local agencies simply lack the knowledge and resources to adequately deploy and manage the enormous amount of smart infrastructure needed to power these more autonomous roadways.

Okay, so why not let private businesses take the lead? State and local governments already routinely contract the installation and maintenance of old-school telecommunications infrastructure to private companies. Couldn't Uber or GM or Google just duke it out amongst each other to provide infrastructure services for different locales?

Well, they probably could, but it would almost certainly introduce inefficiencies. The GAO notes that a key factor to smart infrastructure success will be "interoperability." Much of the street furniture that can fuel better smart car coverage could also serve 5G coverage, or drone communications, or even better garbage truck management.

Even if the networking equipment itself is incompatible, the rights-of-way that a company gets to install, say, a utility pole could also hoist up a 5G antenna. Granting a little networking fiefdom to a single private company could deprive a community of the benefits of open access, which means our environments would be much dumber than they needed to be.

Enter "policy-induced competition"

If policymakers proceed thoughtfully now, we can spare ourselves an artificially dumber infrastructure future. Skorup and Ray outline a model that they call "policy-induced competition" to overcome the dual problems of municipal limitations and private street furniture-hoarding.

Under policy-induced competition, governments would solicit bids for companies to install, maintain, and profit from certain kinds of smart infrastructure, just like they do for other kinds of networking equipment. But the governments would require winning firms to build access into certain categories of equipment.

Here's a good example of policy-induced competition: gas pumps. When you go to fill up your car, you don't need to worry about finding a "Honda nozzle" or a "GM gas pump" that will be compatible with your car. You just pull up to any gas station and know that the equipment will be compatible with your car. This didn't happen on its own, but was the result of a government requirement that all gas nozzles are the same size.

With street furniture, contracts to install or manage basic infrastructure (like utility poles) would come with requirements that the equipment is accessible to other companies and uses so that the community reaps the full benefits of these installations. The devices themselves—things like 5G equipment and cameras—don't lend themselves to interoperability mandates, and would be almost totally left in the hands of the private sector. Networking equipment is probably too complex for interoperability, too, but the authors leave open the possibility that policy-induced competition may make sense for this category of equipment in some circumstances.

Right now, state and local governments don't have much of a plan at all for how their municipalities will roll out the ample amounts of infrastructure and equipment necessary for not only smart cars, but also super-fast wireless coverage and smart city technologies. But the longer they wait to get their ducks in a row, the farther away the future of driverless cars will be.

Let's not waste our super-smart transit technologies on a dumb and unworkable infrastructure. If municipal planners get serious about implementing policy-induced competition now, our streets just might get smart enough to meet the challenges of our networked future in time.