The Socioeconomics of the Internet of Things
Pictured: Adam Smith, 1723 – 1790. Argued for free trade, market competition and the morality of private enterprise.
Between studies, whilst temping at Enable Software (Enable iD’s parent company), I was tasked with writing this blog article. Whilst experienced enough in writing artciels, I was at first unaware of the finer details of the ‘Internet of Things’ (IoT), even if I was still confident I had a relatively good grasp of the concept.
After much research I feel I now have more right to speak on the subject. So what follows is a look over the impact which the emergence of the Internet of Things will have, at a socioeconomic level. I examine impacts for people, industry and for government, as well as the issue of rising data storage and usage and the fine line between what is your private information and what is not. I’ve briefly outlined the uses and concept of IoT throughout, as much for my own benefit as for those who perhaps aren’t fully aware of it.
The Internet of What?
The Internet of Things, a vast network of ‘devices’ connected to the web, spawning private and personal information aimed at revolutionising the way we live our lives. The IoT purports to provide users with a clear and concise method of studying both the mental and physical aspects of their own health, in parallel with connecting entire city infrastructures to improve a wide range of public services. From ‘wearables’ such as Apple’s iWatch and the Fitbit personal exercise monitor, to sensors measuring temperature, traffic congestion and Co2 emissions, numbers of Internet connected devices have been expanding steadily in recent years. Ericsson says it expects IoT sensors and devices to exceed mobile phones as the largest category of connected devices in 2018. Gartner forecasts 20.8 billon connected devices by 2020 and McKinsey projects annual revenue growth of 32.6%, reaching an IoT market valuation of $3.7 billion in the same period.
The more one studies the application and proliferation of the Internet of Things the more the numbers stack up. It is quietly transforming the way the average person lives their life as well as shaping methods used by governments to monitor their citizen’s welfare, and the process with which markets and companies engage consumers. It seems the IoT is as much about observing and changing human behaviour, on an individual level and at scale, as it is about little black boxes or shiny new technology.
As a humanities strudent I’m truly no technology expert, I really have very little authority to speak on the technical side of IoT so I’ll stick to the basic uses and principles as an outline, then look more in depth at its usefulness to society, the implications of its widespread introduction, and people’s thoughts and fears about such technology.
At the moment I am an undergraduate of Economics and Politics. Studying these combined subjects and their intertwining relationship between governments, business and the general public is fascinating to me, which is why IoT’s widespread and mainstream introduction is of such interest. Beyond just being innovative and a step-change in the use of the internet, the Internet of Things is set to become a tool that bonds differing aspects of society together.
Having been brought up in a digital era as well as being of an age which is targeted heavily by establishments who are part of this technological revolution, I can see that the socioeconomic impact of the Internet of Things will likely have great influence upon my life those around me. Uses will range from affecting the way I go about my day, to my health and well-being as well as my consumer interests and the way companies target me. From a layman’s perspective I can see the cost-benefit to corporate enterprise alongside the IoT’s effect on the everyday person, in the case of the latter, externalities (unintended effects) that can evidently be both positive and negative.
The Business Case for IoT
From an economic viewpoint, in my opinion the IoT ticks all the boxes. It is capable of increasing efficiency for society, business and government; indeed, many towns and cities around the world are implementing Internet of Things frameworks to create so called ‘smart cities’. From South Korea to Capetown and Tokyo to Torronto, large-scale IoT networks are seen as a viable and economical tool. Transportation has been adapted to meet modern needs through various IoT inspired solutions, Enable iD’s ‘MyJrny’ intelligent mobility platform is one of them, aimed at improving travel through deeper integration with local information and services that compliment people’s journeys. I’ll look at this example again shortly. My focus however lies upon the wider benefits initiatives such as this can deliver.
Smart city IoT developments exhibit how organisations and regional government authority bodies have been working together to benefit the citizens. The main economic argument for this cooperation is the potential for improved efficiency seen as a result. The UK Government Chief Scientific Advisor, Sir Mark Walport, cites IoT as “the second digital revolution”, highlighting transport, energy, healthcare, agriculture and buildings as sectors best placed to take advantage of its’ real-time data in order to streamline operational activities. Whilst improving transport systems and reducing lateness or even the stress of travel evidences a granular benefit to people’s private lives, as Sir Mark Walport’s IoT report acknowledges, at scale one can begin to measure the impact on wider society and correlate cause and effect between a vast range of political, environmental and socioeconomic factors.
This type of cooperation between industries and the public sector is perhaps then vital to furthering society. While market economists such as Adam Smith and Milton Friedman may have argued that free-trade competition inherently improves efficiency, it seems smart city IoT ‘cooperations’ that match the public sector’s regulatory and compliance challenges with private sector capability and drive for shareholders returns, can yield wider social benefits for individuals whilst also satisfying enterprise. This and arguably produces greater socioeconomic benefits for all. Indeed the ‘shared resource – shared economy’ business models of companies such as Uber and Air B&B could not have been realised without state sponsored licensing combined with the free market economy. IoT provides the catalyst for these conditions through the interconnectivity of regulation and real-time supply and demand.
The potential benefits to business are clearly significant, technology gurus and investors could no doubt talk for days about the inner workings and how firms could potentially increase in size ten-fold, but fundamentally none of this matters if IoT doesn’t work for me and you. We need to benefit clearly and in a user friendly way. Essentially, if the individuals benefit then IoT-based services will most likely be a roaring success in the near future. However, my concern is that if society doesn’t have the feeling that all our information is safe and secure then IoT will not reach its full potential. It’s a point of view shared by Ireland’s Minister for European Affairs, EU Digital Single Market & Data Protection, Dara Murphy, in his forward to the Government Data Forum’s ‘Getting Smarter About Smart Cities’ report:
“…Smart Cities bring huge potential benefits in producing more efficient, productive, sustainable, resilient, transparent, fair and equitable cities. We need to ensure that we carve a path that allows us to harness these benefits while at the same time, ensuring that we do not compromise data privacy, data protection or data security.”
Security is clearly a defining factor and we should all be mindful of it when connecting any ‘thing’ to the Internet, body, car, home or workplace!
On the positive side IoT appears set to connect relationships together in a cohesive and simplistic way, both within your private life and in terms of your relationship with the business world. The possibilities for this in terms of efficiency and ease of access to the market rewards both the user and the business. While the greater link between private and commercial life may worry some, this seems set to be advantageous. Simplicity of booking tickets online for instance; as is a focus of ‘MyJrny’, a connection between those tickets and alternative routes or methods of transport represents a more efficient system and positive socio-economic effect. Other similar examples have also been demonstrated in a magnitude of apps based upon using systems such as HAT (Hub-of-All-Things) and IFTTT (If This Then That), both platforms that focus largely on making daily tasks automatic and simple through better technology.
The subsequent personal data generated, beyond just the hardware and intended utility, also has its uses in socio-economic terms. It provides ‘insight’ that enables businesses to better tailor services to an individual’s needs, creating mutual benefit. The frictionless generation of customer data and information, which emerges as a bi-product of an IoT driven service, can drive down companies’ data-capture and customer profiling costs at the same time as generating increased revenue through personalised offers and higher sales conversion.
Privacy by Design
Aside from the economics and security of the Internet of Things, socially the progression in data generation can benefit all of us, sharing our information across databases so that it can be queried in order make our lives that much better. Enable iD focuses on doing this in a secure way, maintaining anonymity and protecting individuals’ privacy.
IoT systems designed to enhance services through personalisation are being used in environmentally friendly energy and water systems built in homes. They are currently most notable in the form of ‘smart’ thermostats such as Nest and Hive. They’re built to enable out-of-home control, track usage and nudge us with tips on becoming more efficient, as well as automatically becoming more cost effective.
Health has also seen innovations due to IoT and the storage of patient’s data. For example ‘fall detection’ apps exist in care homes for the elderly and disabled, assisting those affected as well as carers. Further to this, sports scientists see the benefit of IoT in monitoring progress and vital signs on sports fields and during training, a practice that has potential to boost health and wellbeing within the community. And by and large it’s down to whether or not we allow our data to be shared with third party organisations.
Of course the implementation of the Internet of Things does generate more debate and discussion around the idea of privacy, and what privacy law actually entitles us to in our lifetime. A major fear of many is the potential for IoT technologies to analyse and share data between machines, abstracted from human intervention. This autonomous sharing of ‘artificial intelligence’, across little black boxes and computer server farms collectively termed ‘the cloud’, inevitably raises questions about those who write the rules for controlling and utilising such sensitive and private information. Given the shared infrastructure of the web, even with best intentions, what level of control is it actually possible to implement? The idea of ‘the robots taking over’ (or least being managed by a select few) will no doubt have an impact on the acceptance of IoT-based services.
While security and privacy issues won’t put off all users, with many simply accepting the subsequent growth of personal data storage we are already seeing, a significant number may withhold consent. The world’s largest technical professional organization, The Institute of Electrical and Electronics Engineers (IEEE), states in its recent IoT report that, “users need to be able to give informed consent to data collection”. Users, however, have limited time and technical knowledge to become ‘informed’. In many cases I fear this factor of imperfect or incomplete information will result in people giving away their personal information without understanding the risks involved, or how their information may be stored and used and stored. Where consent may be given, it will not necessarily be ‘informed’.
Don’t Believe the Hype
Whilst the Internet of Things is fantastic in technical terms, socially public fears may hold back its development and economic impact.
The media undoubtedly plays a key role in influencing people’s views. Unfortunately the big stories most commonly foster scaremongering and fear, the idea that technology and those who preside over it cannot be trusted. Perhaps IoT’s biggest problem is that with the current debate around how governments and big business use private information, it plays into journalists’ hands in terms of its potential for invasion of privacy, leaks and hacking. If a company that utilises IoT were to sell sensitive information to a third party on the black market, for example, then the whole idea of interconnected services could fail for everyone. Hopefully, for the most part would not be the case. Most companies do have corporate social responsibility in respect of both employees and customers enshrined in their founding articles of association. The success of IoT does however rely upon business and government being able to proactively act on these principals and implement social responsibility in order for people to gain trust in their systems.
If individuals trust their data is secure, will not be hacked or sold, development of the Internet of Things and its associated real-time information could create an almost un-paralleled economic impact and positive shift in the way we live everyday life. To achieve this the hype around IoT and Big Data needs to be demystified and understood by users just as it does but by those implementing the technology, and those reporting in it. The potential economic gain should be seen as an incentive to ensure the public is fully aware of all aspects of IoT and personalised data usage. This awareness campaign could perhaps start with a greater focus personal identity and how technology can influence it, throughout our education system.
Over the next decade the entire landscape of data storage and public opinion on data security may change. The Inernet of Things looks, by my reckoning, to be socio-economically beneficial, but the question remains as to how large or small the benefit will be.
Make information readily available and technically simple to the average person and IoT may take off at greater speed, personal data may increase ten-fold and everyone may win from this. Failing that, personal data and the free flow of private information may remain a terrifying idea to some, or worse, a terrifying relaity. With these positions acknowleged I belive the emergence of the Internet of Things is both socially and economically necessary for growth in the modern age, set hopefully to be advantageous to all. If cities benefit, governments benefit, businesses benefit and importantly you benefit, surly that is a net socioeconic effect worth engineering.