AIHP: The Internet of Things (IoT) takes on various names. How can we make sense of it?
HRS: The IoT is a topic that is of huge interest to everyone; from companies to government and individual consumers. The various terms and phrases that have come to be associated with it are testament to this, demonstrating that everyone wants a piece of the pie.
At its core, the IoT builds out from today’s Internet and is composed of sensors and interacting autonomous systems that connect through wired and wireless networks. At RAND Europe, we define the IoT as including these characteristics, and emphasize the pervasive and self-actuating nature of sensor-enabled devices to form networks across a range of sectors.
It is clear that as the IoT continues to evolve so too will its definition. The IoT has provoked an infectious chatter around the world, and it will be interesting to see how this human-machine interaction and narrative takes shape.
AIHP: Significant benefits arise from the IoT and some governments have been quite forward in their strategic positioning of the technology. Where is the value in the IoT?
HRS: The European Commission sees the IoT as a way of lifting innovation, directing growth, and propelling economies out of the remnants of financial downturn.
Many governments see the proliferation of Machine-to-Machine (M2M) and sensor-based technologies as a tool to boost the industrial backbone of their economies while yielding efficiency and productivity gains.
The ability for the IoT to facilitate the sharing of information also enhances public and private services such as healthcare. However with these benefits also comes wide ranging issues. From a policy perspective, many governments understand the IoT as a new unregulated technology frontier.
AIHP: What are these big problems— what should we be aware of?
HRS: At RAND Europe, we convened a group of key IoT experts to explore these issues. The main themes that emerged during our conversations included safety and security, data and privacy, information asymmetry, accountability and trust. While these are all concerns in their own right, the fundamental barrier related to the IoT is interoperability.
Suppose I employ a productive and intelligent workforce composed of individuals who speak different languages, with none of them sharing a common language.
Surely based on the power of the human condition they could accomplish their work, yet not as effectively or efficiently as if they all spoke and communicated with a shared language. While anecdotal, this same narrative holds with the IoT. The possibility of smart goods all speaking, yet speaking different languages, creates barriers in the IoT limiting its scope and creating fragmentation and patchy uptake.
It’s important to remember that with the prevalence of any new innovation time is needed to iron out its imperfections—it is only through continuous engagement that we can ensure a positive outcome.
AIHP: Is interoperability of the IoT the solution we’ve been looking for?
HRS: Not entirely. Yes, some proponents believe interoperability is the key to an effective IoT, yet many governments also view this as political tactic. There is a race to establish domestic privacy and interoperability standards in the ecosystem, with the capability to leverage these laws globally, thus creating a new international benchmark.
Some emerging economies for example perceive the IoT as a gateway; an opportunity to showcase and cement their innovation prowess on the world stage. The warning I would have regarding this model is that given the IoT is still in early stages of development, it may be too early to establish universal standards that satisfy all potential applications. Too much standardization or the wrong kind of interoperability may be anticompetitive, and can result in overly complicated programming for innovators and unintuitive interfaces for users.
But similar to other technology revolutions, one country or one standard may prevail—it is only through collective learning that the IoT can take off. It should be interesting to see the outcome of what will surely be a competitive race in the unfolding story of the IoT.
AIHP: The issue of privacy standards and data ownership seem to be a question on everybody’s mind. A precondition for the IoT to work effectively is the accumulation of large amounts of personal data. Who owns all this new data?
HRS: You’re right—a major challenge facing the uptake of the IoT in the EU are the gaps in the legal framework governing consumer protection and data. The regulation covering the IoT has not kept up with the speed at which the technology is developing.
The IoT builds on our contemporary Internet, so naturally it follows that existing technology-based laws are founded on present internet regulation, which are in turn—thanks to inevitable delays in recognizing problems and crafting legislative responses—based on yesterday’s technologies and applications. A caveat exists however because of the gaps in EU laws regarding violations of data privacy and protection.
In consultation with experts in this field, RAND Europe identified two fundamental issues with The European Data Protection Directive in its current state.
First, while this Directive is being used as a common standard by Member States, many of them find difficulty in enforcing these laws at a national level. The second, and perhaps more contentious, is that companies who violate data protection laws often reside in different jurisdictions than the victim, making it difficult to apply these laws.
What’s more, these new laws raise other fundamental questions, such as who controls and owns data.
The European Union is in the process of drafting a revised body of laws intended to fill in these gaps, leading to a more complete and transparent body of policies.
AIHP: Given these systemic and regulatory issues, how can governments respond proactively to the IoT—what policies should be crafted?
HRS: At RAND Europe we’ve drilled down into the complexities associated with the IoT and we’ve developed best practice policy recommendations based on soft laws—codes of practice and principles that ought to be adapted to ensure a successful adoption and functioning of the IoT.
Primarily, governments should be looking to foster an inclusive environment where industries can develop IoT technologies. Next, governments should seek to fill gaps in the existing regulatory system, rectifying the unhelpful and inefficient asymmetries and incompatibilities in data and privacy regulation, both as regards to other regulations and across Member States. As a final step, governments should establish new legal structures to support the IoT.
Once these building blocks are in place, other soft law policies can follow. These include supporting research and development of the IoT, establishing a culture of trust between human and machine, and providing technology educational programming to increase meaningful data literacy. We’ve even seen some governments fund IoT-related competitions and issue grants in the aim of creating a competitive IoT domestic marketplace.
Most importantly, policy makers need to examine the IoT through an ethical lens and create a charter to support its safe and morally grounded growth and expansion. This holistic approach should produce adaptable policies needed to support an ever expanding IoT.
AIHP: There certainly is global excitement and enthusiasm surrounding this innovation. How do you see differences in culture affecting the development of the IoT?
HRS: There is something to be said for countries who proactively embrace technology. Take the early adoption of RFIDs by Japan as example. In 2004, The Ministry of Internal Affairs and Communications (MIC) developed the u-Japan Policy, legislation to fund the creation of RFID networks across the country. The Japanese government injected millions of dollars to develop RFID projects and to kick-start innovations by companies.
In contrast, the European Union initiated the development of RFID infrastructure in mid-2005, taking a longer time for this technology to permeate society.
Countries will adopt the IoT in areas where they see it as adding the most value, whether consumer-led, or in the political or industrial sphere. What is for sure is that countries will pull on different levers to harness the IoT, and cultural diversity may play a role in this.
AIHP: Rebecca, thank you for your insight into the fascinating and dynamic world of the IoT. We’re looking forward to seeing how this technology and its corresponding policies play out.
HRS: Thank you. I think the best way of ensuring a safe and functional IoT is through societal awareness and healthy debate, and I encourage everyone to get involved.
For the full report and other resources: see www.randeurope.org/iot
RAND Europe is a not-for-profit research institute whose mission is to help improve policy and decision making through research and analysis.
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