This article was co-authored by Mr. Delacourt (a partner in Wiley Rein’s Telecom, Media & Technology and Privacy practices) and Umair Javed (an associate in the firm’s Telecom, Media & Technology and Privacy practices).

As the Department of Commerce considers a policy role for the U.S. government in the Internet of Things (IoT), the Department of State is studying a dynamic and evolving international environment around IoT, including technical, commercial, and economic issues. Governments and intergovernmental organizations across the world are waking up to the potential of IoT, and some are looking to move quickly in a nascent landscape to establish themselves as leaders for IoT globally. In the process, few are reaching out to industry. Businesses that have begun to embrace IoT should pay close attention to increasing international activity in this area and encourage the adoption of responsible policies that will foster widespread IoT adoption, while being wary of steps toward a more Balkanized approach that will fragment the IoT space.

Many countries are moving aggressively on IoT—establishing national IoT plans and blueprints, investing substantial funding in IoT research and deployments, and launching public-private partnerships to quickly enable IoT scale. At the same time, regional and intergovernmental organizations are staking out early roles on IoT policy and technical issues. The European Commission, for example, has created the Alliance for Internet of Things Innovation (AIOTI) and suggested future regulations on privacy, security, consumer protection, and functioning competition. In addition, the International Telecommunication Union (ITU) has formed a study group focusing on interoperability and other standards for IoT. These international developments can have far-reaching economic consequences for businesses, governments, and users and help shape the international regulatory environment for IoT going forward.

Against this backdrop, the Department of State gathered industry participants at a meeting of the United States International Telecommunication Advisory Committee (ITAC) to determine where and how diplomacy can best support U.S. innovation and economic growth in IoT. Industry shared their thoughts on a range of topics, including (i) the most significant technical issues at play in the international market; (ii) the impact of national and multilateral initiatives within and among various countries related to Smart Cities and IoT; (iii) international standards and standards bodies; (iv) the appropriateness of international regulation related to IoT; and (v) privacy and security in the IoT environment. The top five recommendations for IoT policymakers from ITAC industry participants are as follows:

1. A market-driven approach will unleash the full innovation potential in the IoT space. Like prior phases of the Internet, IoT will flourish under a market-driven, light-touch regulatory regime. The flexibility afforded by this approach is essential to accommodating rapid technological change and the dynamic needs of various players. Top-down or one-size-fits-all regulation will only serve to limit opportunities to innovate.

2. Technical and interoperability standards for IoT should remain open and voluntary. Technical standardization can reduce barriers to entry to IoT markets and increase economies of scale. However, standards need to be voluntary and carefully designed so that they do not constrain innovation in a still-young market. Historically, the most effective process for developing technical and interoperability standards has been driven by the private sector through a variety of standards development organizations, industry consortia, and individual companies working together. Regulators, in turn, can encourage industry to collaborate in these kinds of open participation global standardization efforts.

3. Industry can ensure security and privacy from the outset of IoT design. Industry is in the best position to develop and determine security and privacy solutions, while regulators can encourage industry alignment around IoT deployments that are secure and that appropriately protect consumer privacy.

4. Flexible spectrum allocations will be critical. One of the key building blocks for IoT will be access to spectrum under the right terms and conditions. Some industry participants see a case for earmarking spectrum specifically for IoT applications. Others favor a more technology-neutral approach of allocating flexible-use spectrum in existing radiocommunication services that could support IoT applications. One thing is clear, regulators must consider the varying spectrum requirements for IoT and how these requirements can be accommodated.

5. Regulators should proceed with caution to avoid stifling innovation. IoT-specific regulation is premature given the rapidly evolving nature of the technology. Instead, regulators should engage industry, experts, and stakeholders in an open dialogue on IoT issues. Government and industry collaboration will be an important asset to accelerate the adoption of IoT, bringing the IoT and its benefits to reality sooner.

The challenge for businesses will be staying ahead of international activities that could define the regulatory environment for a global IoT ecosystem and educating policymakers on market-led innovations. Governments and intergovernmental organizations already are moving ahead in the IoT space. Industry can have a material impact on these developments by engaging their national governments and by monitoring and participating in the many regional and global fora active in these issues.

This article was co-authored by Mr. Delacourt (a partner in Wiley Rein’s Telecom, Media & Technology and Privacy practices) and Umair Javed (an associate in the firm’s Telecom, Media & Technology and Privacy practices).