CES 2014 Report: The Internet of Things Arrives, but Will Washington Welcome It?

by on January 8, 2014 · 1 comment

With each booth I pass and presentation I listen to at the 2014 International Consumer Electronics Show (CES), it becomes increasingly evident that the “Internet of Things” era has arrived. In just a few short years, the Internet of Things (IoT) has gone from industry buzzword to marketplace reality. Countless new IoT devices are on display throughout the halls of the Las Vegas Convention Center this week, including various wearable technologies, smart appliances, remote monitoring services, autonomous vehicles, and much more.

This isn’t vaporware; these are devices or services that are already on the market or will launch shortly. Some will fail, of course, just as many other earlier technologies on display at past CES shows didn’t pan out. But many of these IoT technologies will succeed, driven by growing consumer demand for highly personalized, ubiquitous, and instantaneous services.

But will policymakers let the Internet of Things revolution continue or will they stop it dead in its tracks? Interestingly, not too many people out here in Vegas at the CES seem all that worried about the latter outcome. Indeed, what I find most striking about the conversation out here at CES this week versus the one about IoT that has been taking place in Washington over the past year is that there is a large and growing disconnect between consumers and policymakers about what the Internet of Things means for the future.

When every device has a sensor, a chip, and some sort of networking capability, amazing opportunities become available to consumers. And that’s what has them so excited and ready to embrace these new technologies. But those same capabilities are exactly what raise the blood pressure of many policymakers and policy activists who fear the safety, security, or privacy-related problems that might creep up in a world filled with such technologies.

But at least so far, most consumers don’t seem to share the same worries. Instead, they are too busy shouting “More, More, More!” IoT technologies have generated enormous interest and every projection I’ve seen so far shows that explosive growth can be expected across all classes of devices. ABI Research estimates that there are more than ten billion wirelessly connected devices in the market today and more than thirty billion devices expected by 2020. Last year Cisco projected that by 2020 thirty-seven billion intelligent things will be connected and communicating but has now apparently revised that estimate upward to 40 or 50 billion. Thus, we are well on the way to a world where “everyone and everything will be connected to the network.”

Yet, it remains unclear what the IoT public policy landscape will look like in coming years and what disposition lawmakers and regulators will adopt toward these new amazing new technologies. Two distinct policy disposition are clashing over what approach should govern the future of innovation in this space.

I discussed this tension during a CES panel this morning on “The Internet of Things and the Home of the Future.” It featured outstanding opening remarks by FTC Commissioner Maureen K. Ohlhausen, who made the case for regulatory humility and focusing on how these new technologies can empower individuals in important new ways. “The Internet has evolved in one generation from a network of electronically interlinked research facilities in the United States to one of the most dynamic forces in the global economy, in the process reshaping entire industries and even changing the way we interact on a personal level,” she noted. “And the Internet of Things offers the promise of even greater progress ahead for consumers and competition.” I strongly encourage you to read Commissioner Ohlhausen’s entire speech. It is terrific and sets exactly the right tone for these discussions.

After Commissioner Ohlhausen spoke, we had a panel discussion that was expertly moderated by tech policy guru Larry Downes and which included remarks from Robert M. McDowell (Hudson Institute), Jeff  Hagins, (Smart Things), Robert Pepper (Cisco), Marc Rogers (Lookout), and me.

When I spoke, I described the future of the Internet of Things as a grand battle of two alternative worldviews: the “precautionary principle” and “permissionless innovation.” The “precautionary principle” refers to the belief that new innovations should be curtailed or disallowed until their developers can prove that they will not cause any harms to individuals, groups, specific entities, cultural norms, or various existing laws, norms, or traditions. The other worldview, “permissionless innovation,” refers to the notion that experimentation with new technologies and business models should generally be permitted by default. Unless a compelling case can be made that a new invention will bring serious harm to society, innovation should be allowed to continue unabated and problems, if they develop at all, can be addressed later.

I’ll soon be releasing a new eBook about this conflict of visions. The book will be called, “Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom” and it should be out in the next few weeks. In it, I will explain how precautionary principle thinking is increasingly creeping into modern information technology policy discussions, explain how that is dangerous and must be rejected, and argue that policymakers should instead unapologetically embrace and defend the permissionless innovation vision — not just for the Internet but also for all new classes of networked technologies and platforms.

This intellectual tension is already evident in debates over the Internet of Things. While we are still very early in this debate, we can expect rising calls for preemptive regulatory controls on IoT technologies based on various safety, security, and especially privacy rationales.  If the precautionary principle mentality wins out and trumps the permissionless innovation ethos that has already powered the first wave of the digital revolution, it will have profound ramifications.

As I’ll note in my forthcoming eBook, preserving and extending the permissionless innovation ethos to the Internet of Things is not about “protecting corporate profits” or assisting any particular technology, industry sector, or set of innovators. Rather, preserving an environment in which permissionless innovation can flourish is about ensuring that individuals as both citizens and consumers continue to enjoy the myriad benefits that accompany an open, innovative information ecosystem. More profoundly, this general freedom to innovate is essential for powering the next great wave of industrial innovation and rejuvenating our dynamic, high-growth economy. Even more profoundly, this is about preserving social and economic freedom more generally while rejecting the central-planning mentality and methods that throughout history have stifled human progress and prosperity.

Safety, security, and privacy problems will continue to persist, of course, and we should work to find practical, “bottom-up” solutions to them. As I detail in my eBook, education and empowerment, social pressure, societal norms, voluntary self-regulation, transparency efforts, and targeted enforcement of existing legal norms (especially through the common law) are almost always superior to “top-down,” command-and-control regulatory edits and bureaucratic schemes of a “Mother, May I” (i.e., permissioned) nature. Preemptive technological controls of that sort would limit new innovation in this space and sacrifice the many benefits that will flow to consumers from continued experimentation.

Those who advocate precautionary regulatory approaches to the Internet of Things should think through to consequences of preemptively prohibiting technological innovation and realize that not everyone shares their same values, especially pertaining to privacy, which is a highly subjective concept that is often difficult to legislate around. We should instead find ways work with together to seek out those practical, bottom-up solutions that will help individuals, institutions, and society learn how to better cope with technological change over time. Using this approach, we can embrace our dynamic future together without doing permanent damage to our innovative minds and economy.

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