Internet Of Things Needs Government Support - InformationWeek

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Government // Leadership
09:06 AM
Scott Amyx
Scott Amyx

Internet Of Things Needs Government Support

The US risks being left behind as other countries invest in ubiquitous computing. Here's a seven-point framework to bolster the US's support of IoT technologies.

9 Innovative Products: Designers Of Things Conference
9 Innovative Products: Designers Of Things Conference
(Click image for larger view and slideshow.)

For the general public, the term Internet of Things (IoT), if they've even heard of it, is obscure technical jargon that has no impact on their personal lives. So why should the average voter care? Because the IoT has the potential to eclipse the largest and longest economic expansionary periods in human history. It could do more for the labor market, real GDP, and economic growth than any monetary policy by the Fed. Yet what is the US government doing about it?

On the industry standards side, there is already momentum. The Industrial Internet Consortium is creating interoperability and security standards for machines to share information and to move data seamlessly. The SmartAmerica Challenge, a project spearheaded by Presidential Innovation Fellows and the National Institute of Standards and Technology, is facilitating demos and discussions on how machine-to-machine (M2M) interaction can bring tangible benefits to society. The group's current focus is on healthcare and security applications. GovLoop organized a conference, attended by government officials from the Defense Advanced Research Projects Agency, Transportation Department, and Veterans Health Administration, as well as business leaders, to discuss the potential applications of IoT in the public sector. The Federal Trade Commission (FTC) held a workshop last November to explore consumer privacy and security issues posed by IoT. The FTC has made it a priority to bring enforcement cases against deceptive business practices in the Internet of Things.

[For more on how the IoT is changing the economy, see: Make Internet-Ready Products, Or Else.]

But is this enough?
To answer that question, we first need to benchmark against the other economies that, combined with the US, represent 84% of the IoT market.

The Chinese government is expected to invest more than $600 billion in IoT through 2020. According to a GSMA report "How China is Set for Global M2M Leadership," China is the global leader in the adoption of M2M technology with more than 50 million connections in 2013. National policy support grew the M2M connectivity market, with the cooperation of China's largest mobile operators -- China Mobile, China Unicom, and China Telecom -- to nurture a vibrant ecosystem across sectors.

China's Ministry of Industry and Information Technology released its 12th Five-Year Development Plan in 2012, with the goal of scaling the IoT market to RMB 1,000 billion ($163 billion) by 2020. The midterm information and communications technology (ICT) development report of the 18th Central Committee of the CPC Congress significantly expanded the focus on new sectors such as cloud computing and the IoT. Specifically, the Circular 181 and Circular 42 provide preferential tax policies for the software and integrated circuits industries, including interpretation to include IoT manufacturers. The government and private sectors have been tasked with setting communication and security standards, demonstrating practical applications, nurturing new businesses, and planning the regional distribution of the IoT industry. In addition, the IoT Special Fund promotes IoT R&D, applications and services. Grants are offered to self-funded projects, and loan subsidies support enterprises with bank-loan funding.

As part of UK Prime Minister David Cameron's announcement to drive 5G research in partnership with Germany, Cameron unveiled a new set of measures that include a £45 million ($74 million) budget for IoT projects, tripling what was already available, and a £1 million ($1.6 million) European grant fund for companies investing in IoT. Additionally, Parliament members Chi Onwurah and Michael Dugher have launched Labour's "Digital Britain 2015" to review how digital technology can improve the efficiency of public services, to develop a framework for powering digital government, and to put citizens in control of their own data.

A UK government-backed consortium of companies has launched a new open specification called HyperCat, with £6.4 million ($10.5 million) in funding from the UK Technology Strategy Board, to support M2M interoperability by leveraging an online metadata catalog for universal communication between IoT devices.

Germany's INDUSTRIE 4.0 strategic initiative in its High-Tech Strategy 2020 Action Plan establishes the framework to enable the country to take a leadership role in the manufacturing engineering sector, including in IoT.

The South Korean government in May 2014 came up with a master plan for developing IoT services and products through setting up an open IoT ecosystem consisting of service, platform, network, device, and IT security sectors. South Korea aims to increase its domestic market for the Internet of Things from KRW 2.3 trillion in 2013 to KRW 30 trillion ($28.9 billion) by 2020.

The South Korean government has set aside KRW 50 billion ($49 million) over the next five years to grow the IoT market. The country's Ministry of Science, ICT, and Future Planning and Ministry of Trade, Industry, and Energy will invest KRW 37 billion from 2015 in the development of

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Scott Amyx is the founder and CEO of Amyx+McKinsey, a wearables strategy agency specializing in smart wearables strategy and development. He writes for InformationWeek,, IEEE Consumer Electronics Magazine, andIEEE Technology and Society Magazine, and he ... View Full Bio
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User Rank: Author
10/9/2014 | 10:44:03 AM
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I wouldn't be so eager to throw taxpaper money and government bureaucracy at the Internet of Things. To the extent that the feds can facilitate IoT standardization and invest in technical education, terrfiic. But the author seems to be proposing a China-scale national industrial policy. 

Is it the government's business to be picking private sector winners? When it has done that in solar power, it has failed miserably. The author cites SolarCity. Let's not forget the disaster that was Solyndra. Hundreds of millions of dollars poured down the toilet. The author holds up as an IoT investment model China's Ministry of Industry and Information Technology investment, which under a 12-year plan (yes, a 12-year plan!) has committed to scaling the country's IoT market to $163 billion. Which US government 12-year program produced the smartphone, cloud, and big data revolutions? Private sector ingenuity and consumer/business demand produced those revolutions, not government dictates. Governments are terrible at divining technology revolutions.

"As part of its fiscal policy toolbox, the US government should conduct cost-benefit analyses of pursuing public-sector IoT projects, so long as the political winds allow it." In other words, create jobs via massive government spending on IoT projects. The Chinese are held up again as a model: "The Chinese central government has selected 202 cities to pilot smart city projects to collect and analyze transportation, electricity, public safety and environmental data." The Chinese construction market is an enormous bubble ready to burst, yet that's the model?

"The US government can also consider special funds to optimize financing for the Internet of Things, such as infrastructure funds, loans, tax privileges, and other subsidies, while weighing programmatically the economic and social benefits against the investment costs. The key is to ensure that the parameters of government financial support are constrained by the oversight of an independent audit committee to evaluate the merits and management of programs. These tools can be dangerous, fraught with perverse incentives and unintended policy consequences, so they should be used with caution."

My italics. Think massive bureaucracy, corruption, influence peddling, political patronage, and waste. All using taxpayer dollars. Is this really the way to go? The likes of Cisco, Microsoft, Intel, and IBM are behind the Internet of Things -- as are myriad startups of all stripes. Why are we not confident they will drive it forward to the extent that makes economic sense? The government should stick to funding education and basic R&D, and to helping set interoperability, construction, and privacy/security standards where appropriate.

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