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The Internet of Things: answering the big questions

What is the IoT and what can it do?
The IoT is a network of everyday objects that are connected to the internet via telecoms and technology. It has the potential to touch almost everything in our personal and professional lives; how we live, work and play. Powered by machine to machine (M2M) technology, the basic building block that makes it work, IoT brings social and economic benefits and operational efficiencies across various aspects of society.

Doctors can proactively monitor patients’ illnesses remotely to ensure that treatment is given in time to avoid further deterioration in health.

If you are en route to an engagement, be it a meeting or a school pick-up, telematics information can automatically anticipate traffic problems and reroute you to avoid them.

Now that the technology is mainstream and consistency of standards a focus area for stakeholders and industry bodies, more providers are entering the market.

Product proliferation
Until recently, there was a lack of devices and infrastructure required to make the IoT a reality. Now, hardly a day goes by without a new IoT device being profiled. There are currently about 200 potentially connectable devices per person. By 2020, analysts expect that there will be 26bn connected objects around the world. Cisco predicts that the value of the ‘Internet of Everything’ (which brings together not just things but also people, processes and data) will be $14.4tn (£9trn) by 2022.

Why has IoT’s time come now?

We first spoke about convergence in the 1990s; now, it is finally happening. The technologies behind telecoms infrastructure and electronic devices are talking to each other.

Regulatory intervention has made it difficult for telecoms companies to sustain revenue. They need to innovate and grow into new areas of business. Their search has led them to the IoT, which works by transmitting small amounts of data. Opening up increasingly redundant 2G spectrum to IoT makes commercial and financial sense.

What are the big issues?

Data protection
Not all IoT applications have a privacy component but, where they do, the volume and detail of data collected can introduce new risks to privacy. Data encryption, device authentication and adequate protection against false requests for information become key. User profiling or targeting become even greater concerns.

Every IoT device is connected to the internet, making them vulnerable to hackers. As the IoT blurs the line between private and public, the possibility of someone hacking into your connected car or home becomes a more serious matter. How will the IoT be patrolled and protected? Will there be a consistent approach to security standards?

The IoT will transmit and generate currently unimaginable amounts of data. The sharing and combination of data through cloud services will increase, and with it the locations and jurisdictions where data resides. Is there enough bandwidth and storage capacity to handle this data explosion?

Are there specific laws in the pipeline?
Despite legal scrutiny, there is no tailormade legislation for the IoT (yet); it is mainly governed by existing law and regulation. However, there are more comprehensive measures under consideration.

‘Connected Continent’ is a package of proposals currently going through the European Parliament that is designed to create a single European market in electronic communications. While the draft regulations do not specifically mention the IoT, it is an influential driver behind the reform.

When the package passes into European Law - anticipated to be as soon as the end of 2014 - there will, in theory at least, be fewer barriers to entry combined with more efficient spectrum use. Significantly, the Connected Continent package will be passed as regulation, not as a directive; as such, it will be directly applicable in all of the EU’s member states as soon as it is adopted.

Reforms to the EU Data Protection Directive are also expected to be agreed in the next 12 months. The revised legislation, which is also likely to take the form of a directly applicable regulation, will deal with digital-era issues such as user-profiling.

In addition, the output of Ofcom’s call for inputs may lead to the implementation of specific legislation in the UK. Meanwhile, the IoT is mostly covered by the following existing laws:

Five EU directives
This package of EU directives governing electronic communications services and networks is the starting point. In the UK, this package is implemented via the Communications Act 2003.

EU Data Protection Directive
Adopted in 1995, this regulates the processing of personal data and is at the heart of EU privacy and human-rights law. It applies to all member states.

EU Consumer Rights Directive
A new EU Consumer Rights Directive that beefs up protection for consumers who buy products or services remotely came into force on 13 June 2014. In the UK, the directive will be implemented through the Consumer Contracts Regulations 2013, which will replace the Distance Selling Regulations.

How could IoT be regulated?
IoT has captured the attention of regulators and lawmakers across the world.

In January 2012, the OECD published a report called Machine-to-Machine Communications: Connecting Billions of Devices. The report considered what governments can do to promote the IoT as a new source of economic growth.

The US
In November 2013, the US Federal Trade Commission (FTC) looked at the IoT and put forward a case for targeted regulation to help the industry to develop.

BEREC, the European regulatory body for electronic communications, undertook a similar exercise to the FTC and came to similar conclusions.

In July 2014, Ofcom, the UK communications regulator, called for inputs on the promotion of investment and innovation in the IoT. The consultation followed an Ofcom-commissioned report on the future demand for IoT applications and their likely spectrum requirements.

What opportunities does IoT present?
The huge potential growth, combined with the lack of regulatory intervention, is an opportunity for every player in the IoT value chain.

You can structure your business model innovatively. Intellectual-property protection at the outset is paramount.

You can future-proof your contracts against upcoming regulation.

Liability chain
Liability across the IoT value chain can be complex. You can be smart about recognising and handling these issues head-on in commercial negotiations.

Source : The Guardian

24 October 2014

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