Today’s post is from Rudolf Van der Berg of the OECD’s Science, Technology and Industry Directorate.
In 2017 a household with two teenagers will have 25 Internet connected devices. In 2022 this will rise to 50, compared with only 10 today. In households in the OECD alone there will be 14 billion connected devices, up from 1.7 billion today and this doesn’t take into account everything outside the household and outside the OECD. All this leads to the smart world discussed in a new OECD publication, Building Blocks of Smart Networks.
The OECD defines “smart” as: “An application or service able to learn from previous situations and to communicate the results of these situations to other devices and users. These devices and users can then change their behavior to best fit the situation. This means that information about situations needs to be generated transmitted, processed, correlated, interpreted, adapted, displayed in a meaningful manner and acted upon.”
Smart networks are the result of three trends coming together (and all being studied by the OECD). Machine to Machine communication means devices connected to the Internet (also known as the Internet of Things). This generates “Big Data” because all those devices will communicate and that data will be processed, stored and analyzed. And to enable the analysis, Cloud Computing will be necessary, because when entire business sectors go from no connectivity to full connectivity within a few years, they will need scalable computing that can accommodate double digit growth. Underlying these trends is the pervasive access to Internet connectivity.
New devices connected to the Internet may be invented, but you’ll see that the table only has everyday objects you may already have, but if you replace it in the coming years, the new version will be connected. (The ever-popular, but never seen in a shop near you, Internet connected fridge doesn’t make the list.) Connected lightbulbs may well be the Trojan horse of the smart home. Some companies estimate that connected lightbulbs will be the same price as normal lightbulbs five years from now. These lights will be able to dim and change color and fit in a regular socket. They can also serve as hubs, extending the communication network in the home to all devices.
Connecting machines and devices to telecommunications networks is nothing new. Even at the dawn of the Internet there were Internet connected coffee pots and coke-machines. It is the scale of the trend that forces us to pay more attention. Dutch company TomTom now has millions of GPS-navigation devices on the road, which have generated 5000 trillion data points. When systems need to be smart, the number of datapoints goes up. A dumb electricity meter can do with one reading per year. A smart meter needs a reading every 15 minutes for the electricity company, while for home automation a sampling frequency of once every 1 to 5 seconds is proposed, which could be a 31 million times increase over traditional datasets.
There are, however, challenges that need to be faced when introducing smart systems.
Human challenges. The way people interact with networks and systems may limit their use. For eHealth, smart systems can allow people to lead a normal life. However, a portable heart monitor that sends alarms every time it loses the signal or measures a false positive can have the opposite effect. Privacy and security concerns of users have prompted the Dutch parliament for example to change the rules for smart meters.
Lifecycle challenges. A car should last for 15 years. A mobile phone works for 2-4 years. Mobile phone networks move to new protocols every 15 years. Energy networks have a 15-50 year lifecycle. When a technology is introduced in a vehicle today, the first cars with that technology may reach the end of their lifecycle in 2028, the last ones in 2038. What’s more, if the lifecycles of two distinct sectors meet, the effect can be even more pronounced. Think of the charge point for electric vehicles. It may have to function for 30 years or more, meaning that all vehicles in the coming 30 years will have to be compatible and that the infrastructure needs to be active for another 15 years. Today’s choices for smart systems will be long-term decisions.
Business Challenges. A previous OECD report concluded that users of M2M systems that make use of mobile technology are locked-in with their mobile networks. They can’t change networks and when the devices go across borders they are locked in with their operators. And according to Norwegian research, as many 30% of devices can be offline for 10 minutes per day. To solve these problems the OECD advises governments to change their numbering policies, so that large scale M2M users can become independent of mobile operators and use multiple networks at the same time.
Another business challenge is that it is unclear who has the lead in the smart networks sector. For smart metering, energy companies, meter manufacturers, ICT-companies and telecom companies have all said they will lead.
Regulatory challenges. Governments will be confronted with difficult policy issues, notably concerning privacy and security. A recent review of industrial control systems of five major manufacturers showed that all five could be hacked and sometimes very easily. If companies that supply multi-million dollar systems cannot get essential elements of security correct, than how can you trust systems bought in a DIY store? Would it be possible for a hacker to turn up the airconditioning or heating in a million homes to bring down the electricity grid?
Other questions governments face are regarding access to data. Who owns the data, is it the company or the consumer? If a government collects a dataset, can it share that data for other uses?
Today’s post is written by Rudolf Van der Berg of the OECD’s Science, Technology and Industry Directorate
Look around you for a second and count the number of electronic devices, machines and gadgets. All of them – light bulbs, cars, TVs, digital cameras, refrigerators, stereos, cranes, beds – will be connected to the Internet over the next 15 years, if they aren’t already.
This is the potential of the “Internet of Things”: billions and billions of devices and their components connected to one another via the Internet. 50 billion devices by 2020, according to companies like Ericsson. The Internet of Things will radically alter our world through “smart” connectivity, save time and resources, and provide opportunities for innovation and economic growth.
The trends are already visible: Internet-connected TVs are now widespread; eBook readers must have a Wi-Fi or 3G connection; smart electricity meters have already become standard in many countries.
The Internet of Things is the subject of a new OECD report, Machine-to-Machine Communication: Connecting Billions of Devices that examines new technology (the drivers behind connecting devices to the Internet); new markets (user and business demands); new policies (what governments can do to promote this new source of growth).
The basic building block of the Internet of Things is machine-to-machine communication (M2M), devices equipped to communicate without the intervention of humans. Different networking technologies can be used to connect M2M devices, depending on the amount of mobility needed and dispersion over an area. Mobile wireless is often an ideal technology for most applications. However, countries may run out of phone numbers in their current numbering plans as a result of M2M, because 2G and 3G equipped M2M devices require a telephone number to work, unlike 4G where M2M can work with just an IP-address.
M2M creates a new player in the mobile market: the “million device” user. These new large scale M2M users will potentially manage hundreds of thousands of smart meters, cars, and consumer electronics, possibly in higher numbers than some countries have citizens.
Large scale M2M users may offer their services dozens of countries, selling the same devices globally. Their customers may buy the devices abroad and travel with them. The telecommunication industry, however, is still largely organised and regulated on a per country basis. Large M2M users will thus place new demands on telecom companies, and regulation and business models will have to adapt.
Companies creating innovative M2M-based services are currently locked into 10-30 year mobile data contracts and high roaming fees; this dependency hinders the roll-out of new services and innovation.
Governments can set large-scale M2M users free by giving them access to wholesale markets. by changing the rules so that large M2M users can have access to numbers and SIM-cards, just like telecom companies. This will open up the market, break lock-ins, make large M2M users responsible for their own innovation and create a competitive market for roaming for M2M services.
Liberalisation will be a major paradigm shift, and might lead to billions in savings and new services.
Privacy and security need to be designed into products from the start. M2M could allow a detailed view of people’s lives, and parliaments have already curbed or changed some projects as a consequence. For example, cars are increasingly using onboard M2M services and the European Union is now mandating their own service (eCall) to be built into every car from 2014. Since EU legislation requires telephone companies to record a person’s location at the start of each mobile communication, and since turning a M2M car on will itself start a communication, these companies will be inadvertently tracking the start and end of any trip, so even if the automobile company does not register the location, the telecommunication company has to by law.
Governments have tried to make spectrum policy more flexible in recent years, allowing companies to change networking technologies when new technology becomes available. M2M may rigidify spectrum policy, however, because anytime M2M uses a particular networking technology, it expects the spectrum to be there for the lifetime of the device, which is 10 to 30 years. Consumer-oriented wireless technology works on a timescale of a maximum 10 years.
Combining data generated by M2M devices may offer insights to improve society. Cars could notify local governments of icy roads or bottlenecks in infrastructures. This may not always be seen as positive, however, as shown by a case in The Netherlands where anonymous and aggregated data from GPS-systems was used by the police to identify prime locations for speed cameras, which led to a public outcry.
What is certain from the report is that governments will have to change regulations in the telecommunications market, will have to be vigilant to apply privacy and security regulation and stay innovative to make use of the many possibilities it offers. Doing so promises to transform the economy, promote growth in the telecommunications sector, and produce growth and efficiency savings in government and society.