The SMART IoT Act and the Continued Absence of U.S. Public Sector Guidance

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4Q 2018 | IN-5334

On November 28, 2018, the U.S. House of Representatives unanimously passed the State of Modern Application, Research, and Trends of IoT Act (the SMART IoT Act). The U.S. Senate still needs to vote to approve the bill before it can be signed into law, but the bill provides considerable insight into the overall goals of the U.S. Congress when it comes to shaping federal public policy regarding the Internet of Things (IoT). The bill requires the U.S. Secretary of Commerce to conduct a study on the state of the “internet-connected devices industry” in order to provide recommendations “for growth of the United States economy through the secure advancement of internet-connected devices.”

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Legislative Inaction

NEWS


On November 28, 2018, the U.S. House of Representatives unanimously passed the State of Modern Application, Research, and Trends of IoT Act (the SMART IoT Act). The U.S. Senate still needs to vote to approve the bill before it can be signed into law, but the bill provides considerable insight into the overall goals of the U.S. Congress when it comes to shaping federal public policy regarding the Internet of Things (IoT). The billrequires the U.S. Secretary of Commerce to conduct a study on the state of the “internet-connected devices industry” in order to provide recommendations “for growth of the United States economy through the secure advancement of internet-connected devices.”

While it appears to be a step in the right direction toward supporting and guiding the growing IoT industry, the bill seems to be a partial rehash of 2016’s Developing Innovation and Growing the Internet of Things Act (DIGIT Act) that sought to establish a working group tasked with identifying proposals to drive IoT growth. The working group created by the DIGIT Act already did submit its growth recommendations, but they have apparently done little to influence and shape U.S. IoT public policy and guidance. The DIGIT Act passed the Senate but has not yet passed the House, whereas the SMART IoT Act passed the House but has not yet passed the Senate. This continued lack of meaningful congressional action, while well intentioned, further risks letting other countries define the IoT landscape and shape its market trajectory.     

The SMART IoT Act 

IMPACT


On its surface, the SMART IoT Act is focused on gathering information to influence potential future federal regulations and oversight. The act authorizes the U.S. Secretary of Commerce to conduct a study that surveys the IoT industry to determine what industry sectors develop IoT devices, what existing public/private partnerships promote IoT adoption and use, what standards have been and are being developed, and how IoT devices are being used. Additionally, the act seeks to develop a list of federal agencies with jurisdiction over these industry sectors; to identify interagency activities; and to establish regulations, guidelines, standards, or other policies for implementation.

In reality, the act is focused on identifying what actions agencies have taken since Congress has thus far failed to provide meaningful support and guidance to U.S. players within the industry. This lack of congressional action has led to individual agencies’ (such as the U.S. Department of Commerce and the U.S. Department of Transportation) creating their own policies and guidance regarding IoT. The SMART IoT Act seeks to identify these agencies and what policies they have enacted to prevent agency overlap and to reduce any number of overlapping regulations that could potentially place an unfair burden on IoT device manufacturers and service providers. While this data gathering is necessary for Congress to ultimately implement meaningful legislation toward developing a national IoT strategy, its delay puts the United States behind other countries that have already defined their national IoT strategies.

A Fundamental Lack of Public Support and Guidance

RECOMMENDATIONS


However, the U.S. IoT market has continued to grow and evolve without a comprehensive, national strategy. U.S. providers have not been calling for a national IoT strategy so far because they feel as though any meaningful legislation would either burden them with regulation or inadequately and prematurely define a technology causing further hurdles down the road. Additionally, ABI Research forecasts that the United States will lead all other countries in terms of the number of total IoT connections deployed as well as value-added services revenues generated by these connections through to 2026 even without an IoT strategy in place. In specific industries like video surveillance where US manufacturers were being put at a disadvantage by Chinese manufacturers, Congress acted with sufficient legislation aimed at that industry. States such as California have issued its own legislation regarding cybersecurity and IoT devices, while smart city initiatives have largely been handled at the local and state levels. The industry has continued to move forward, and it will continue to do so with or without a strategy in place.

The issue at stake though is that the lack of a U.S. strategy is allowing other countries such as China to step up and take a leading role in guiding and defining the industry. This lack of action affects other technologies and industries as well. There is a rightful desire among both the public and private sectors to let IoT and other technologies develop freely and openly and to not impose laws or regulations that inhibit organic market growth. However, this inaction has caused other problems to surface—such as potentially conflicting definitions and policies among different U.S. agencies, as previously mentioned. Additionally, other countries such as China, Germany, Japan, and South Korea have established national strategies that have thus far benefited their own economic interests and IoT industry growth. China has established itself as a guiding presence in the global IoT industry. It has strongly influenced the development of international standards, such as the upcoming Open Connectivity Foundation’s (OCF’s) IoT interoperability standard—ISO/IEC 30118, and its dominance of the global IoT market has substantial economic and security ramifications as detailed in the U.S.-China Economic and Security Review Commission’s October 2018 report, China’s Internet of Things.

The SMART Act gives the U.S. Secretary of Commerce a year to release the findings, so realistically, any meaningful national strategy will not be enacted until at least 2020, further putting the United States behind other countries, and that’s even if the bill passes the Senate before the end of 2018. While the U.S. IoT market remains strong in terms of overall connections and service revenues generated, the lack of collaboration and support between the private and public sectors serves as an inhibiting factor that would drive innovation and market share forward in the long term. As a result of this lack of guidance and of a proactive national strategy, the United States now finds itself reacting to policies and actions not only of other countries but also of its own federal agencies and states that have stepped up to fill the policy void. This lack of a national strategy could very well end up being the United States’ strategy. Moving forward, the United States needs to understand that the role of the public sector can go beyond issuing rules and regulations to create legislation that helps to grow the economy through support, guidance, and other economic incentives and avoid the sort of manufactured crises it has thus far faced.  

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