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Internet of Things – A Fast Forward to the Future

On Monday, April 29th 2019, policy makers and industry representatives from different IoT ‘verticals’ (agriculture, automotive, health, energy, aerospace) gathered in Brussels at the initiative of Vodafone to launch a conversation about the future policies applicable to the Internet of Things (IoT) in Europe.

Global Players Require Global Regulation     

The debate emphasized how global any approach to IoT regulation should be. All participants agreed that Europe should and must be competitive on the IoT market globally. One aspect of such competitiveness may reside in the interoperability of IoT within Europe, which is in the interest of all governments.

The EU Needs to Improve Its Own Global Competitiveness

The first panel, comprised of representatives from BEREC, the OECD, Vodafone and Hogan Lovells, discussed concerns that Europe may be falling behind the United States and Asia both in terms of adoption and sophistication of IoT.

To support this point, Vodafone presented findings from the comparative study of legal requirements applicable to IoT in Europe, the US and China that it commissioned from Hogan Lovells. The study showed that less than half of the regulatory requirements applicable to IoT in Europe would apply in the US. Winston Maxwell, partner at Hogan Lovells and co-head of the global TMT industry sector group (now professor at Telecom ParisTech), explained that this is because when it comes to regulating new Internet-based technologies, the US Federal Communications Commission generally starts from a deregulatory perspective, as is evidenced by the debate about Title I and Title II classification of internet services and the FCC’s new approach to net neutrality. The FCC also applies a “forbearance” principle which permits the FCC to forbear from applying existing regulation when it is not necessary.

IoT Regulation Should Be Built upon EU Law Horizontal Legislation Principles

A number of speakers suggested that there is room for improvement in the EU in terms of streamlining regulatory processes for IoT services, particularly pan-European ones.

To this date:

  • Most existing constraints – including those applicable to electronic communications providers under the recently adopted European Electronic Communications Code –  are based largely on person-to-person communications and are not fit for purpose for machine-to-machine communications (e.g. data retention obligations, restrictions on extraterritorial use of numbering);
  • The IoT market in Europe is fragmented across different regulations and 28 different member states;
  • Many of the requirements apply to cellular connectivity only, whereas IoT regulation should be technologically agnostic  (e.g. higher security obligations apply to actors who fall within the “telecom” silo of regulation);
  • Sector-specific policies imposing non-technology neutral standards to one industry are not in line with the EU’s 5G development goals;
  • Industrial policy and communications policy are not aligned enough, while this could help promoting sectors such as aviation and agriculture.

Vodafone and other stakeholders are calling for a new EU-wide regulatory framework specifically designed for IoT, which would ensure proportionality of regulation. Maxwell mentioned that the term ‘proportionality’ is used over 70 times in the European Electronic Communications Code, and that in practice it means that Member States should not apply regulations that are not necessary. For example, certain telecom regulations designed to protect end-users may not be necessary for M2M communications involving industrial meters. Even though the European Electronic Communications Code takes a few steps to differentiate between interpersonal communications and non-interpersonal communications and simplify national requirements, Member States and national regulatory authorities will still have considerable discretion when transposing the EECC into national law. There should also be a horizontal, technology-neutral, approach that applies to each link in the IoT value chain. In terms of security for instance, the European Cybersecurity Act provides an opportunity to do this.

Industries Face Challenges That Should Be Addressed in a Cross-Sectoral Manner

During the second panel, a number of industry specific speakers provided insights into the needs of the aerospace, agriculture, transportation, energy and medical industries respectively.

  • Cross-Sectoral Approach – Representatives from various industries insisted that regulators’ approach should be cross-sectoral. For instance, eCall requirements could be expanded to include medical information in order to allow ambulances to know the persons they are about to rescue have a specific condition; the monitoring of heat and water consumption of vulnerable people could help understanding their condition.
  • Legal Certainty and Integration of IoT into the Service Economy – For instance, the meaning of an “electronic communications service provider” should be rethought of in light of IoT devices embedded in manufactured products such as vehicles, which may be offered as a service (Mobility as a Service).  In the healthcare sector, the value of reimbursing IoT devices should be discussed.
  • Allocation of Resources – Regulation should focus on the delivery of the core service that is facilitated by IoT. In the healthcare sector, IoT helps streamline maintenance processes by indicating when a device needs to be cleaned or serviced.
  • Investments – In the agriculture sector, drones, robots, but also animals will revolutionize agriculture through IoT. Other technologies such as blockchain offer promising perspectives, for instance with respect to the traceability of meat. Rural areas will need investments to take advantage of those technologies.
  • Interoperability. IoT technologies need interoperability – For example, in the healthcare sector, IoT offers a lot of opportunities for EU citizens to monitor the food they have and their physical exercise, but interoperability is key.
  • Data ownership and sovereignty – It will be important to monitor intellectual property and data ownership, to facilitate cross-border data flows and ensure the intelligence behind data sets benefit the right actors – the situation of farmers was mentioned.

Regulation Must Ensure Trust from All IoT Players

Taking all of the above into consideration, the conference also highlighted that future IoT regulation will have to ensure trust of all participants in the ecosystem. A new communication from the European Commission should be expected regarding liability issues in connection with the development of IoT.

A copy of Winston Maxwell’s speaking notes is available here.

A video of the conference and speakers’ panel featuring Winston Maxwell is available here.