INTERNET OF THINGS: A Framework for the Next Administration November 2016 Internet of Things: A Framework for the Next Administration The members of the Consumer Technology Association (CTA)™ Executive Summary include more than 2,200 companies in the consumer technology As an internet-based thread of connectivity among everyday industry, many of whom are leading advancements in IoT appli- objects, the Internet of Things (IoT) is changing how the world cations and offering products and services that largely comprise works. Soon, virtually everything will be connected, and devices IoT devices and infrastructure. CTA projections show that in 2016 from a tiny thermostat to large factory equipment will harness this alone, IoT applications will help drive 30 percent of the consumer 1 power to create huge benefits for individuals, the economy and technology industry’s overall $287 billion in retail revenues. our society. Through products and services in the areas of audio/ More specifically, the IoT is a critical catalyst for industry growth in visual, smart home, wearables, transportation and others, the IoT several areas, as shown below: will save consumers time and money, drive economic growth and enhance our nation’s role as a global tech leader. Consumer IoT Technologies, Unit Sales to U.S. Dealers (Thousands) In this paper prepared by the Consumer Technology Association Audio and Video Smart Home Wearables Connected Smart TV Streaming Media Wireless Smart Home Fitness Activity Smartwatches (CTA)™ – the trade association representing the $287 billion U.S. Speakers Players Headphones Trackers consumer technology industry – we consider the opportunities 35,092 and challenges of IoT consumer applications and address the 35,000 30,000 ways policymakers can encourage and support their growth. We 27,912 28,073 25,324 also look at IoT success stories, such as how IoT technologies 25,000 can help aging individuals and persons with disabilities to live 20,041 20,000 16,984 independently. 15,683 16,153 15,000 Units (Thousands) 12,796 11,451 12,187 The important efforts of the bipartisan, congressional Internet 10,000 9,502 of Things Working Group and the Department of Commerce 5,000 3,891 2,926 underscore that policymakers must approach the IoT with the 0 twin goals of promoting consumer confidence and trust and 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 Growth in Unit Sales 2016-2017, U.S. preserving maximum flexibility to innovate. Government should Audio and Video Connected Speakers 18% Smart TV 10% accelerate its positive steps to promote the IoT by making more Streaming Media Players 3% Wireless Headphones 33% spectrum available, facilitating the ubiquitous deployment of Smart Home Smart Home 21% Wearables Fitness Activity Trackers 25% broadband services, harmonizing federal agency interaction and Smart Watches 5% providing clarity to citizens that the government will serve as an Source: Consumer Technology Association (CTA)™, U.S. Consumer enforcement backstop if necessary to ensure public safety, privacy Technology Sales and Forecasts, 2012-2017. and other consumer protections. Meanwhile, policymakers should refrain from broad, proscriptive Nowhere are the opportunities and promise of the IoT more clear regulatory action that could derail or delay new IoT applications. than at the CES®, the world’s gathering place for all who thrive on Instead, self-regulatory and other consensus-driven industry the business of consumer technologies. From around the globe, efforts will allow stakeholders to address discrete, specialized more than 3,800 companies display an awe-inspiring vision of our issues in a practical and flexible manner – what should be the connected future.2 CTA members and CES exhibitors are innova- default institutional mechanism for the IoT. tors who envision our tomorrow and provide solutions to prob- lems we did not even know we had. These same tech companies The Internet of Things is already changing our lives for the better, manufacture the products and provide the services that comprise with an exponential array of benefits still to come. CTA welcomes the IoT. the opportunity to work with policymakers and other stakeholders to ensure we leverage the IoT’s maximum potential today and in Each year, CES showcases the latest advancements in IoT technol- the future. ogies. Walking the CES show floor, attendees see a vision of the connected world that is jaw-dropping in its expanse and potential: I. Introduction multitudes of devices communicating with each other to improve quality of life across many metrics. The IoT’s seamless connectivity, Whether you call it the “Internet of Things,” the “Internet of made possible by increased processing power and tiny sensors, Everything,” the “Connected World,” “IoT” or just plain amazing, will enable machines and devices to respond to conditions and the rapidly expanding thread of connectivity among everyday situations pursuant to parameters dictated by a consumer – for objects via the internet is changing how the world works. The IoT example, increasing power to the freezer at a time of day when connects everyday objects to the internet, saving consumers time energy costs are low. Consumers and public officials can use the and money, driving economic growth and enhancing the United connected world to improve energy conservation, efficiency, States’ role as a global leader in technology. productivity, public safety, health, education and more. Homes, 1 Internet of Things: A Framework for the Next Administration cars, appliances and devices will evolve to have capabilities we formation directly into the rider’s field of view, increasing cannot imagine today. The connected devices and applications motorcycle safety.15 that consumers choose to adopt will make their lives easier, safer, • A connected car that offers enhanced safety capabilities, healthier, less expensive and more productive. such as vehicle-to-vehicle sensors and automated vehicle response features.16 In 2016, a major development in the IoT was the expansion beyond individual devices to the rollout of IoT services – for example, Proctor & Gamble, Whirlpool, Nest and IBM’s Watson all share Industry constantly is innovating. And consumers are driving information and/or partner services with Amazon. 2016 also saw innovation with their own ideas for certain outcomes that IoT and a myriad of partnership announcements for collaborative IoT big data can facilitate – with consumers and companies working projects, such as Samsung and Microsoft working together on together, there is no telling what the future holds. Windows 10. Just a few examples of the IoT technologies displayed Exponential gains in IoT connectivity and the lightning-fast speed and/or announced at CES include those that will: of innovation are driving strong growth across countless tech Modernize our homes: categories, especially as highly sophisticated technology becomes more affordable and accessible, improving our safety, productivity • Monitoring patterns in your home through various sen- sors, one system can notify you when something is awry, and entertainment. The next evolution of the IoT will build on con- such as an escape of a family pet, a child not back from nections already in place – as more products connect, consumers school on time, or a door left open.3 will manage their lives in ways that were impossible only a decade ago. This technological evolution and revolution will make con- • Appliances with the built-in ability to order more deter- sumers’ lives exponentially safer, healthier and more convenient.17 gent online and, interacting with other connected devic- es, switch to energy-saving or wrinkle-prevention modes The value of connected devices necessarily is tied to data analyt- when you’re not home.4 ics – big data and data management policies are what make them “smart.”18 When it comes to big data, policymakers must recognize An app – designed with veterans in mind – to track the • that consumer data can provide broader public interest benefits, symptoms of users with post-traumatic stress disorder e.g., using data from smart thermostats for grid management and (PTSD) during sleep, using the technology of the smart- traffic data from mobile phones for smart city development. watch to gently wake PTSD sufferers out of their night 5 terrors. The IoT and big data also bring challenges. Some are artificial (and Improve our health and life expectancy: to some extent self-inflicted), such as a confusing and conflicting • Remote health monitoring devices, such as diabetes and regulatory paradigm. Another is technological, such as interopera- heart monitors, that reduce the need for doctor visits.6 bility. And yet others involve how consumers can use powerful IoT applications, while ensuring their information is treated appropri- Connected wheelchairs and other devices that expand • ately and remains secure. accessibility.7 • Sunglasses with a built-in running and exercise coach and These challenges are not lost on IoT innovators and players – from tracking capabilities.8 startups designing first-of-their-type products through crowd- funding or technology giants investing in the development of new, • A shirt that can measure heart rate9 and another garment incredible technologies. CTA urges policymakers to work with that can measure adrenaline levels and react accordingly.10 industry to ensure that any actions taken in the name of consumer • A sock that captures a baby’s heart rate and oxygen level11 protection do not inadvertently hamstring consumer-friendly IoT and a tag that tracks the number of words a baby is ex- innovations. posed to, regardless of who is talking.12 In this paper, CTA expands on the clear opportunities and chal- • A connected blood glucose meter that uploads readings in real time to the cloud and provides the patient an in- lenges of the IoT, focusing on consumer-facing applications stant feedback message and tailored educational messag- (the “Consumer IoT”) as distinct from industrial, commercial or es from the American Association of Diabetes Educators enterprise applications.