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The Internet of Things: The Good, the Bad and the Ugly

A few months back, the Federal Trade Commission called for public commentary on the nascent phenomenon otherwise known as the Internet of Things (IoT). The inevitable move toward a vast set of sensors, RFID chips and machine-to-machine communications (M2M) that are connected to the Internet—made possible, in part, by opening up IPv6—is fully underway and the FTC wants to know what, if anything, to do about it.

Last week, in anticipation of a roundtable discussion on IoT, the FTC released 27 comments, ranging from industry associations to government regulators to privacy advocacy groups to academics. Set with the knowledge that I’ll be attending said roundtable this November, I perused these comments to get a better understanding of the many benefits, concerns and possible outcomes of IoT.

Here’s some of what I found, but before we go and further, I recommend you hit play on this.

The Stats:

In 2010, there were approximately 80 million M2M devices worldwide, but by 2020, that is expected to reach 50 billion. In less than two years, by 2015, the Consumer Electronics Association expects there to be 25 billion connected devices. According to AAA, there will be 42 million smart cars (what they call the “1,000 pound smartphone”) by 2017, and the GSMA predicts that IoT will produce $4.5 trillion (with a “t”) in global revenue by 2020—$635 billion of which will be from gaming and entertainment services alone.

The Benefits:

Clearly, IoT promises to hold a host of benefits for consumers, businesses, governments, academics—well, just about everyone, let’s put it that way. We’ve already seen the growth of the smart grid to help households use power more efficiently. Here’s more:

  • Smart cars will eventually communicate with traffic lights to improve traffic flows and with the home to know whether it should use gas or electricity (if it knows it’s going home, it will switch to electricity knowing that it can be recharged shortly). Looking for a parking spot? No problem. Your smart car will help you find one. As we’ve already seen with some companies, your smart car data can help you get lower insurance rates (assuming you’re a good driver), but as we’ll see, this is also cause for concern. And smart cars may eventually recognize when the driver is drowsy and make necessary adjustments.
  • Smart homes, in addition to communicating with your smart car, will have refrigerators that will be able to take food inventory and tell your smart phone while you’re at the grocery store. Want to know if the kids are home? Your home will tell you. Smart home security systems are already being offered, but as Kashmir Hill points out in Forbes, there are concerns as well.
  • Smart cities will not only have more efficient traffic flows for individual smart cars but public transportation could be improved by more accurate assessments of transportation fleets, safety habits of drivers, route planning and fuel consumption. Cities may well excel in citizen engagement and municipal services. We might even have smart trash cans that alert when they’re full.
  • Smart health “will probably be transformed more than any other by M2M technologies in the coming years, and the transformation is already under way,” this according to AT&T. Many predict smarter health technology will drastically improve health outcomes, reduce expenditures and will ultimately be more patient friendly. “GlowCaps” fit in standard prescription pill bottles to remind patients to take their medication and to tell doctors when a refill is needed. Preventative devices could help curb diabetic attacks, monitor symptoms and help disease prevention in real time—including in remote areas.
  • Smart retail allows businesses to track and assess inventory and product placement to a very high degree. Consumer tracking will also allow businesses to better tailor their services to their customers, which brings me to the next section…

The Concerns:

With all good things comes the bad, right? As our lives become more connected to the Internet and to other machines, privacy and security concerns rise as well. Information flows are becoming more complex and who gets that information—personal information—raises red flags:

  • Security of all these devices and sensors is not perfect. Just like the online world, malware, identity theft and hacking will always be possibilities.
  • With so much data collection, how are companies using that data? The comments certainly raise concerns about third-party disclosure, particularly of personal information.
  • What about the Fair Information Privacy Principles (FIPPs)? The Future of Privacy Forum points out that “simple application of the FIPPs is a challenge.” For instance, how can a user exercise choice when the system being employed doesn’t have an interface or screen with which to operate? How will transparency be conveyed? What’s an appropriate level of access? How can there be data minimization when just about everything is collected by a device or sensor?
  • If online tracking is chilling to some now, the increased tracking capabilities of IoT will be even more pervasive. The Electronic Information Privacy Center (EPIC) notes the high degree to which sensitive behavioral patterns can be tracked. As security expert Bruce Schneier has pointed out, businesses will have more “eyes and ears” on consumers. Anonymity will be very difficult in a world where the online and offline world converge. Even network anonymity, as EPIC highlights, will diminish as IPv6 allows more device connectivity and identification.
  • Several groups warn of the power imbalance that will be possible between businesses and consumers. One example raises the possibility of loyalty card membership. A store may recognize members, but non-members may not be granted access to the store. The effect could generate geo-fences, social divisions among classes or other demographics. One group even promotes the creation of “privacy habitats” where no connected devices are allowed.

The Conversation:

In reading through these comments, it was hard not to notice the parallel debates we’re already having with online privacy. There will be continued debate around:

  • Data collection versus use. Many argue that collection is inevitable, and that parties should be concerned, not about collection, but about how data is shared with third parties and how businesses demonstrate and exercise accountability and Privacy by Design.
  • De-identification is huge. Many argue that it’s okay to collect and share IoT data as long as it’s anonymized. Others note that pure de-identification is just not possible.
  • What’s the government’s role in all of this? There seems to be a lot of agreement that policy, if any, should be technology neutral.
  • Self-regulation, industry codes of conduct and the FTC’s Section 5 authority will be enough to police the IoT world. ICANN points out there are several self-regulatory initiatives already underway.
  • How can individuals have control in an uber-complicated IoT world? As stated above, applying the FIPPs to IoT may be challenging.
  • Who owns the data? Several groups point out the importance of clarifying a data ownership framework.

So, is the emergence of IoT just magnifying the already complicated issues we find in the privacy world? Or are we on to something completely new? Perhaps, it’s a little of both.

I look forward to the FTC’s roundtable and the discussion ahead.

photo credit: Dioboss via photopin cc

Written By

Jedidiah Bracy, CIPP/E, CIPP/US


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  • Andrea Feb 17, 2014

    this blog was a little bit confusing to read although it does have good information


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