Policy versus regulation in the Internet of Things

Author: Ricardo Tavares
Published: 2015-04-19

When it comes to the Internet of Things (IoT), we find policies generally focusing on incentives to accelerate the expansion of IoT and promoting investments to bring economic and social benefits. The goal is to promote IoT. Regulatory issues emerge in two ways. Firstly, how previous regulations are being affected by the growth of connected things (for example, numbering issues or how to register a machine on the national database of mobile users). Secondly, how this new wave of connected machines raises issues that may or may not require new regulation (privacy in the digital age, for instance).

We are witnessing conflicting trends in the policy and regulatory realms for IoT. On the one hand, an important new set of policies designed to deliver benefits to the public are encouraging IoT deployments. On the other, IoT challenges some pre-existing regulations which require adapting, especially in the heavily-regulated mobile telecoms industry. While the policy realm has been favorable to IoT take up, regulations have frequently caused delays.

Examples of policies which encourage IoT acceleration are the eCall schemes in the European Union and Russia. Their goal is to reduce deaths by preventing unnecessary car accidents, and expediting assistance from the emergency services when accidents do occur. These schemes mandate connectivity between individual vehicles and other elements of the transportation vertical by automatically sending accident notifications, and in the future allowing cars to “talk” to each other. eCall mandates are slow moving, but have great potential to accelerate “smart transport.”

Mandates establishing deadlines for services to be activated provide certainty and a focal point to engage all players in the ecosystem. They achieve policy goals faster than market forces could do on their own, given the inevitable delays in coordinating the activities of private companies in a climate of uncertainty. But bureaucratic feet dragging, and gaps of understanding between government and the private sector, can also cause delays.

Another stream of policies enhancing IoT adoption is in the Smart City arena, where policy makers are introducing new systems for urban management in transportation (V2V, V2P, smart parking), disaster prevention and public security.

In the regulatory realm, however, we have seen a number of telecom regulators and other government agencies making decisions resulting in delayed implementations or weakening the business case for IoT. Examples include numbering schemes, international roaming and SIM-card registration. Enforcing the same regulatory obligations on machines as on people subscribing to mobile services can delay the introduction of new services by months or even years.

Connected cars are a good example. Many cars leave the factory with SIM cards linked to car-monitoring platforms which only recognize numbering systems from the region of production. When exported, those cars face scrutiny from regulators who are over strict about enforcing national numbering systems. Projects are then delayed until over-the-air changes of numbers via soft SIMs can be done. Fortunately soft, embedded SIMs whose numbers can be changed remotely are becoming more common, so this issue will go away with technology patching regulatory gaps.

Policies are general, and set broad directions and incentives to achieve desired outcomes. Regulations define the terms of compliance in detail and are restrictive in nature, often outlining penalties for non-compliance. The key is for policies to rely on time-constrained, general-public frameworks supported by private-sector delivery, and for regulations to become more flexible to nurture new business models.

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