FTC's Ohlhausen Warns Precautionary Regulatory Approach Will Limit IoT Development

"News stories about IoT regularly emphasize the potential risks to safety, privacy and dignity," Ohlhausen said. "It is no surprise that some policymakers echo these concerns. But I worry that these concerns are paving the way for a precautionary principle approach to IoT technology." Ohlhausen said innovation requires experimentation and rapid failure, or "failing better," and while failures can cause harm that may need to be addressed by regulators, "a strategy to prevent any and all potential harms will foreclose benefits as well." For regulators to employ her recommended approach of permissionless innovation, she suggested they tell the story of innovation, apply regulatory humility, focus on consumer harm and use tools appropriate to the task.

Regulators need to promote "an accurate understanding of the dramatic benefits of innovation even in the face of constant skepticism," Ohlhausen said. By employing "regulatory humility," regulators recognize the inherent limitations of regulation and act according to those limits, she said. Ohlhausen added that she doesn't believe it makes sense to have a unified regulatory structure for IoT, and that the FTC has been "a pretty good cop on the beat" in terms of privacy enforcement.

Although regulators must learn about industry trends, they "simply cannot gather all the information relevant to every problem," and the data they do collect can quickly become obsolete, Ohlhausen said. "Obsolete data is a particular concern for regulators of fast-changing technological fields like the IoT." Regulators, when considering the IoT and its many facets, should identify and address "real, not speculative, consumer harm," she said. "Agencies have limited resources [and] we should generally spend those resources to stop existing or very likely harms, rather than trying to prevent speculative or insubstantial harms."

Ohlhausen said FTC pronouncements on IoT have been a "mixed bag." She applauded the commission's rejection of calls for "premature" IoT-specific legislation and the emphasis an FTC report placed on data security in IoT devices, but disagreed with the "data minimization" approach called for in the report: "Without examining costs or benefits, the report encouraged companies to delete valuable data that could have many unanticipated beneficial uses." Ohlhausen dissented from the recommendation. Industries throughout the IoT space are adopting privacy and data security strategies through self-regulatory efforts, Ohlhausen said.

5G, IoT Recommendations

Paul Polakos, Cisco fellow, said regulators and those who play a part in the development of the 5G and IoT spaces should keep in mind that some potential applications and benefits may be unknown. He said the main motivator for 5G development is an economic one, and that it must support the new use cases the market demands at a level not achievable with 4G. "The network we'd like to move towards is an information-centric network," he said. This type of network would be aware of the content being requested and be able to retrieve information based on specific content, not location, requests. "The idea is to build a network that is aware of the content itself," Polakos said.

Polakos also suggested building three distinct layers of 5G and folding them into the existing IP networks. There should be mobility, security and storage overlays, and all content delivery networks need to be on top of the current IP networks for 5G to be efficient, he said. The security layer will be critical to 5G and will allow for each packet sent to be signed cryptographically, which will ensure the information is delivered to the appropriate place, Polakos said.

Brian Markwalter, CEA senior vice president-research and standards, said consumers will expect vibrant experiences with 5G across all devices, everywhere, and suggested industry should be the driver for the technology and standards. Current spectrum consumption is enough that it needs to be kept moving through the pipeline to be utilized in the future by developing technologies such as 5G, he said. David Wolter, AT&T Labs associate vice president-radio technology and strategy, said his company will take a multi-radio access technology (RAT) approach to its 5G development, which will enable simultaneous connections to multiple technologies including LTE-U. On the 5G core network, Markwalter said AT&T would like a clean-slate design.

Jennifer Fritzche, Wells Fargo analyst, said carriers are wondering how they are going to pay for 5G development, and that investors are looking for a return on investment. She said that carriers, including T-Mobile, that currently offer packages of unlimited data will likely eliminate that offering in the coming months. On the global scale, Nokia North America spectrum lead Prakash Moorut said, Verizon's recently announced commitment to a partial 2016 5G rollout (see 1509080062">1509080062) has become a global benchmark, and other countries are working to beat the company's timeline. He also said that exclusive spectrum access is preferred for 5G in the U.S., but spectrum sharing could potentially happen.