A Nonpartisan Policy Vision for the Internet of Things

by on December 11, 2014 · 0 comments

What sort of public policy vision should govern the Internet of Things? I’ve spent a lot of time thinking about that question in essays here over the past year, as well as in a new white paper (“The Internet of Things and Wearable Technology: Addressing Privacy and Security Concerns without Derailing Innovation”) that will be published in the Richmond Journal of Law & Technology early next year.

But I recently heard three policymakers articulate their recommended vision for the Internet of Things (IoT) and I found their approach so inspiring that I wanted to discuss it here in the hopes that it will become the foundation for future policy in this arena.

Last Thursday, it was my pleasure to attend a Center for Data Innovation (CDI) event on “How Can Policymakers Help Build the Internet of Things?” As the title implied, the goal of the event was to discuss how to achieve the vision of a more fully-connected world and, more specifically, how public policymakers can help facilitate that objective. It was a terrific event with many excellent panel discussions and keynote addresses.

Two of those keynotes were delivered by Senators Deb Fischer (R-Neb.) and Kelly Ayotte (R-N.H.). Below I will offer some highlights from their remarks and then relate them to the vision set forth by Federal Trade Commission (FTC) Commissioner Maureen K. Ohlhausen in some of her recent speeches. I will conclude by discussing how the Ayotte-Fischer-Ohlhausen vision can be seen as the logical extension of the Clinton Administration’s excellent 1997 Framework for Global Electronic Commerce, which proposed a similar policy paradigm for the Internet more generally. This shows how crafting policy for the IoT can and should be a nonpartisan affair.

Sen. Deb Fischer

In her opening remarks at the CDI event last week, Sen. Deb Fischer explained how “the Internet of Things can be a game changer for the U.S. economy and for the American consumer.” “It gives people more information and better tools to analyze data to make more informed choices,” she noted.

After outlining some of the potential benefits associated with the Internet of Things, Sen. Fischer continued on to explain why it is essential we get public policy incentives right first if we hope to unlock the full potential of these new technologies. Specifically, she argued that:

In order for Americans to receive the maximum benefits from increased connectivity, there are two things the government must avoid. First, policymakers can’t bury their heads in the sand and pretend this technological revolution isn’t happening only to wake up years down the road and try to micromanage a fast-changing, dynamic industry.

Second, the federal government must also avoid regulation just for the sake of regulation. We need thoughtful, pragmatic responses and narrow solutions to any policy issues that arise. For too long, the only “strategy” in Washington policy-making has been to react to crisis after crisis. We should dive into what this means for U.S. global competitiveness, consumer welfare, and economic opportunity before the public policy challenges overwhelm us, before legislative and executive branches of government – or foreign governments – react without all the facts.

Fischer concluded by noting that, “it’s entirely appropriate for the U.S. government to think about how to modernize its regulatory frameworks, consolidate, renovate, and overhaul obsolete rules. We’re destined to lose to the Chinese or others if the Internet of Things is governed in the United States by rules that pre-date the VCR.”

Sen. Kelly Ayotte

Like Sen. Fischer, Ayotte similarly stressed the many economic opportunities associated with IoT technologies for both consumers and producers alike. [Note: Sen. Ayotte did not publish her remarks on her website, but you can watch her speech from the CDI event beginning around the 17-minute mark of the event video.]

Ayotte also noted that IoT is going to be a major topic for the Senate Commerce Committee and that there will be an upcoming hearing on the issue. She said that the role of the Committee will be to ensure that the various agencies looking into IoT issues are not issuing “conflicting regulatory directives” and “that what is being done makes sense and allows for future innovation that we can’t even anticipate right now.” Among the agencies she cited that are currently looking into IoT issues: FTC (privacy & security), FDA (medical device apps), FCC (wireless issues), FAA (commercial drones), NHTSA (intelligent vehicle technology), NTIA (multistakeholder privacy reviews), as well as state lawmakers and regulatory agencies.

Sen. Ayotte then explained what sort of policy framework America needed to adopt to ensure that the full potential of the Internet of Things could be realized. She framed the choice lawmakers are confronted with as follows:

we as policymakers we can either create an environment that allows that to continue to grow, or one that thwarts that. To stay on the cutting edge, we need to make sure that our regulatory environment is conducive to fostering innovation.” […] “we’re living in the Dark Ages in the ways the some of the regulations have been framed. Companies must be properly incentivized to invest in the future, and government shouldn’t be a deterrent to innovation and job-creation.

Ayotte also stressed that “technology continues to evolve so rapidly there is no one-size-fits-all regulatory approach” that can work for a dynamic environment like this. “If legislation drives technology, the technology will be outdated almost instantly,” and “that is why humility is so important,” she concluded.

The better approach, she argued was to let technology evolve freely in a “permissionless” fashion and then see what problems developed and then address them accordingly. “[A] top-down, preemptive approach is never the best policy” and will only serve to stifle innovation, she argued. “If all regulators looked with some humility at how technology is used and whether we need to regulate or not to regulate, I think innovation would stand to benefit.”

FTC Commissioner Maureen K. Ohlhausen

Fischer and Ayotte’s remarks reflect a vision for the Internet of Things that FTC Commissioner Maureen K. Ohlhausen has articulated in recent months. In fact, Sen. Ayotte specifically cited Ohlhausen in her remarks.

Ohlhausen has actually delivered several excellent speeches on these issues and has become one of the leading public policy thought leaders on the Internet of Things in the United States today. One of her first major speeches on these issues was her October 2013 address entitled, “The Internet of Things and the FTC: Does Innovation Require Intervention?” In that speech, Ohlhausen noted that, “The success of the Internet has in large part been driven by the freedom to experiment with different business models, the best of which have survived and thrived, even in the face of initial unfamiliarity and unease about the impact on consumers and competitors.”

She also issued a wise word of caution to her fellow regulators:

It is . . . vital that government officials, like myself, approach new technologies with a dose of regulatory humility, by working hard to educate ourselves and others about the innovation, understand its effects on consumers and the marketplace, identify benefits and likely harms, and, if harms do arise, consider whether existing laws and regulations are sufficient to address them, before assuming that new rules are required.

In this and other speeches, Ohlhausen has highlighted the various other remedies that already exist when things do go wrong, including FTC enforcement of “unfair and deceptive practices,” common law solutions (torts and class actions), private self-regulation and best practices, social pressure, and so on. (Note: Inspired by Ohlhausen’s approach, I devoted the final section of my big law review article on IoT issues to a deeper exploration of all those “bottom-up” solutions to privacy and security concerns surrounding the IoT and wearable tech.)

The Clinton Administration Vision

These three women have articulated what I regard as the ideal vision for fostering the growth of the Internet of Things. It should be noted, however, that their framework is really just an extension of the Clinton Administration’s outstanding vision for the Internet more generally.

In the 1997 Framework for Global Electronic Commerce, the Clinton Administration outlined its approach toward the Internet and the emerging digital economy. As I’ve noted many times before, the Framework was a succinct and bold market-oriented vision for cyberspace governance that recommended reliance upon civil society, contractual negotiations, voluntary agreements, and ongoing marketplace experiments to solve information age problems. Specifically, it stated that “the private sector should lead [and] the Internet should develop as a market driven arena not a regulated industry.” “[G]overnments should encourage industry self-regulation and private sector leadership where possible” and “avoid undue restrictions on electronic commerce.”

Sen. Ayotte specifically cited those Clinton principles in her speech and said, “I think those words, given twenty years ago at the infancy of the Internet, are today even more relevant as we look at the challenges and the issues that we continue to face as regulators and policymakers.”

I completely agree. This is exactly the sort of vision that we need to keep innovation moving forward to benefit consumers and the economy, and this also illustrates how IoT policy can be a nonpartisan effort.

Why does this matter so much? As I noted in this recent essay, thanks to the Clinton Administration’s bold vision for the Internet:

This policy disposition resulted in an unambiguous green light for a rising generation of creative minds who were eager to explore this new frontier for commerce and communications. . . . The result of this freedom to experiment was an outpouring of innovation. America’s info-tech sectors thrived thanks to permissionless innovation, and they still do today. An annual Booz & Company report on the world’s most innovative companies revealed that 9 of the top 10 most innovative companies are based in the U.S. and that most of them are involved in computing, software, and digital technology.

In other words, America got policy right before and we can get policy right again to ensure we are again global innovation leaders. Patience, flexibility, and forbearance are the key policy virtues that nurture an environment conducive to entrepreneurial creativity, economic progress, and greater consumer choice.

Other policymakers should endorse the vision originally sketched out by the Clinton Administration and now so eloquently embraced and extended by Sen. Fischer, Sen. Ayotte, and Commissioner Ohlhausen. This is the path forward if we hope to realize the full potential of the Internet of Things.

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