The Internet of Things: Challenges and Opportunities

The Internet of Things (IoT) is a fast emerging technology which will impact the lives of people everywhere.

The IoT can be broadly defined as a network of physical devices such as thermostats, cars, and pacemakers that benefit from data sharing. Although initially IoT technologies catered to tightly defined applications, like a network of environmental sensors tracking the air quality of cities, today developers are creating applications with broader impact on human life. For example, flood maps can be fused with data about vulnerable populations such as pregnant women, the mobility impaired, etc., enabling first responders to target their resources and plan their rescue operations for the most vulnerable during natural disasters.

The data on the resulting economic benefits of this kind of IoT collaborations are clear and compelling. Cisco forecasts over 24 billion internet-connected devices by 2019. Consumer and industrial opportunities are expected to range between $4 and $7 trillion by 2025. Therefore, it is imperative to understand the challenges and opportunities of the IoT and what it will mean for industry, citizens, consumers, and policymakers both at home and abroad.

A key feature of IoT applications is the significant amount of data that will be generated and shared across the Internet by these devices. As I mentioned in my November 1 keynote address at the fifth Winnik International Telecoms and Internet Forum, that kind of information flow points to the potential privacy challenges of allowing technology to evolve while protecting personal information.

The United States believes strongly and has a deep commitment in law and practice to the idea that people should not be subject to arbitrary or unlawful interference with their privacy. Therefore, it is important to ensure that our policies allow for entrepreneurs and inventors to find new uses for data and develop new applications that improve quality of life and catalyze the growth of the economy. The balance lies in constructing legal and regulatory policies and fostering cooperation that enables the flow of data across jurisdictions while respecting human rights and fundamental freedoms. Two examples jump immediately to mind, the APEC Cross Border Privacy Rules system and the Privacy Shield arrangement between the United States and the European Union.

Another challenge is ensuring inter-operability across IoT devices and data, where appropriate. Technologists tell us that the IoT must retain the ability to respond to new technology, business opportunities, and social factors while at the same time maintaining this inter-operability. However, government activities like proposals for regulations that mandate technologies or impose design and operational restrictions on firms and people, could slow this process. Also of concern are data localization laws that require data to be kept in certain physical places. These laws and regulations can and often do hinder the growth of IoT.

Although it is the role of governments to regulate commerce within and across borders, we have urged restraint in this space. In particular, we work to ensure that there isn’t centralized global regulation of the IoT or any other Internet-based activity. We have urged other governments to take great care when regulating Internet-based commerce or communications domestically. The goal is to promote “regulatory humility” -- application of nimble and transparent tools to prevent practices that have caused harm to consumers, while resisting the urge to oversimplify markets, which are in reality astoundingly complex  -- while taking care to recognize that consumer protection and the protection of the public interest remain critical functions of government.

We often ask our counterparts abroad to ensure that all interested parties -- companies, users, civil society, and academia -- have meaningful opportunities to engage policymakers during the regulatory process to discuss potential costs and/or benefits of a given regulatory proposal.

Finally, one of the central questions asked about the IoT and its future is how the ecosystem will provide for security. It is important to remember that IoT security also impacts the security of the entire Internet. A case in point is the distributed denial-of-service attack in October that brought down several popular sites, including Twitter, Spotify, and others. A virus that infected IoT devices was used to launch this attack. As several studies have shown, social media sites are a common rallying mechanism during disaster situations. An attack of this nature at a critical time can render this very crucial mechanism ineffective.

As we think about how to tackle that challenge, again, at home and abroad, the principles remain the same -- work with experts, minimize the amount of disruption to innovation, and try to reach consensus based, collaborative solutions wherever possible.


About the Author: Daniel Sepulveda, U.S. Coordinator for International Communications and Information Policy in the State Department’s Bureau of Economic and Business Affairs. 

Editor's Note: This entry also appeared on Foggy Bottom, the State Department's digital publication.

For more information:

  • Read other DipNote blogs from Ambassador Sepulveda on internet freedom and the digital economy. 
  • For more information on the Digital Economic Officer initiative, tweet the Office of International Communications and Information Policy at @StateCIP
  • Follow the Bureau of Economic Affairs on Facebook to learn more about the State Department’s efforts to advance economic diplomacy, including communications and information policy issues.



Internet of Things thermostat is on display following a news conference as an example of yet another thing that can be controlled and tracked over the Internet.
Posted by Daniel Sepulveda
November 2, 2016


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