Today, U.S. Deputy Secretary of Commerce Bruce Andrews delivered remarks at the Internet of Things (IoT) Global Summit. The Summit brings together policy makers and leading IoT industry stakeholders to discuss the opportunities and benefits the IoT brings, along with pressing issues affecting the IoT ecosystem in the United States and globally.

In his remarks, Deputy Secretary Andrews underscored the Commerce Department’s belief that industry must drive the pace of innovation in this exciting field, unencumbered by short-sighted regulations and standards. The Deputy Secretary emphasized the Department’s commitment to working with industry stakeholders to support the continued success of industry and the continued growth of the digital economy, highlighting last month’s workshop of discussions on IoT. This forum covered an array of public policy and technical issues – from spectrum and broadband access to privacy, public safety, and interoperability. Commerce is taking the feedback and insights gleaned from this workshop and drafting a policy “green paper” on the Internet of Things, to be released this fall.

Remarks as Prepared for Delivery

Good morning. Thank you for that kind introduction, Nigel. I would like to thank the IoT Council for bringing us together today. As you all know, we live in a time of extraordinary innovation and economic transformation.

Twenty years ago, just one percent of the world population had access to the Internet. Ten years ago, 18 percent. Today, 43 percent are online. That is more than 3 billion people. And another two billion will connect by 2020.  That same year, the “Internet of Things” will comprise a $1.7 trillion global market. Digital technologies now drive at least 5 percent of our national GDP. And the Internet’s impact extends far beyond our borders.

In the developed markets of the G-20, the digital economy is projected to grow at an annual rate of 8 percent over the next five years – outpacing just about every other traditional sector. As digital technologies transform our economy, government has a role to play.

As Deputy Secretary of Commerce, I have met with business leaders in countless industries. And I have found that while many know about the Department of Commerce, few realize the extent of our involvement in the digital economy. The Department of Commerce is the voice of the American business community in government. Our mission is to create the conditions that enable our companies, communities, and people to compete, innovate, and grow. And in today’s rapidly changing economy, one of our top priorities is ensuring that American businesses continue to drive innovation worldwide.

Across our 12 bureaus, the Department of Commerce employs 47,000 people working on everything from international trade and technical standards to patents and broadband access. Put simply: some of the federal government’s foremost experts in online innovation and technology work at the Department of Commerce, and close cooperation with industry informs a great deal of our work.

At the National Telecommunications and Information Administration, we advise the President on far-reaching issues like online privacy, broadband access, and Internet freedom. At the National Institute of Standards and Technology, we develop metrics to help private sector define technical standards across industry, from civil engineering to cybersecurity. And at the International Trade Administration, we work to promote the free flow of data across borders and ensure that American technology firms can compete worldwide. In short, our Department has a long history of collaboration with industry on emerging technologies.

We take pride in the fact that business leaders feel comfortable coming to us when new challenges arise. And in recent years, many stakeholders have asked us to pay more attention to what’s happening in IoT. Across industry, we are witnessing the convergence of the physical and digital worlds. If the last wave of digital innovation transformed what we do online, this new wave is transforming the world around us. And the IoT sector faces some unique challenges. Think about the scale, scope, and what’s at stake with these products.

Let’s start with scale. There are 7.4 billion people on earth – and by 2018, as many as 18 billion devices may be connected to networks. The scope of this sector is also breathtaking. It extends far beyond phones and tablets. We’re talking about everything medical devices and driverless cars to networked appliances and manufacturing equipment.

We all recognize the potential and the promise of IoT to deliver revolutionary leaps forward in safety, efficiency, and convenience across a number of sectors. Yet the physicality of these products also means the stakes are higher. If a device malfunctions, you may lose far more than access to your email. You could have a medical device fail, your car crash, or your home security system compromised.

Make no mistake: industry must drive the pace of innovation. Our goal is not to impose short-sighted regulations and standards.

At the Department of Commerce, our goal is to work together – as partners – to strike the right balance with policies that ensure we overcome the challenges and realize the extraordinary potential of IoT.  Each new chapter in the digital economy has presented us with incredible new opportunities. Yet in times of vast transformation, there are bound to be some growing pains. We confront them every day. From data breaches to email leaks, cyber threats undermine privacy and basic security. Automation is changing how we work and do business.  And across different sectors of our economy, digital disruption has proven to be, for lack of a better word, disruptive.

The challenges are real. In government, our task is not to resist this change but to embrace it, adapt to it, and prepare more Americans to succeed in the face of it. Throughout the expansion of the digital economy, we have learned that static regulations are in many cases incapable of keeping up with today’s innovations. That is why our approach at the Department of Commerce is grounded in a digital economy agenda built around four key policy priorities, including a free and open Internet, security and trust, Internet access and workforce development, and emerging technologies and innovation.

In every respect, our agenda is designed to support the continued success of industry and the continued growth of the digital economy. Especially in emerging areas like IoT. That is why our team launched an IoT working group earlier this year to examine challenges and seek industry feedback. This spring, we released a public request for comments from stakeholders across academia, industry, and the broader public asking several questions, such as:

•         Is IoT a distinct issue that merits our attention?

•         What opportunities and challenges does IoT raise?

•         What is the appropriate role for government, and what should our strategy be for engaging in IoT?

We received over 130 comments from interested parties, from business leaders to consumer advocates.  While they reflected diverse interests, many of them shared a common desire for greater engagement between government and industry around IoT. So last month, the Department of Commerce invited industry stakeholders to join us for a day-long workshop of discussions on IoT. This forum covered an array of public policy and technical issues – from spectrum and broadband access to privacy, public safety, and interoperability.

Now, we are taking the feedback and insights gleaned from this workshop and drafting a policy “green paper” on the Internet of Things that we plan to release this fall. I encourage everyone to be on the lookout for this paper, because we want your reactions. Meanwhile, the National Telecommunications and Information Administration is moving forward with a new collaborative process to address technical concerns around cybersecurity and consumer protection. We hope stakeholders will find these discussions useful for informing technical standards and specifications development in the private sector.

Consider the issue of upgrades. Consumers need the ability to easily understand whether the products they purchase are patchable in the event of a security vulnerabilities. They also need to know how the upgrade process will actually work. The goal of this multi-stakeholder process is to work with you to set terms for technical standards that apply across devices, work across industry, and benefit consumers in the years to come. The first meeting of NTIA’s cybersecurity IoT process is set to take place in just a few weeks, on October 19th in Austin, Texas – and we welcome your participation.

The Department of Commerce also continues to work internationally to ensure the free flow of data across borders. Through our commercial service, the International Trade Administration is helping prevent the rise of new digital barriers to trade. The ability to share data, products, services, and other information across borders is essential for all companies in the 21st century - and especially those in the IoT space.

This summer, we were especially pleased to finalize and implement the EU-U.S. Privacy Shield, which will protect consumers while ensuring companies on both sides of the Atlantic can share data and continue to collaborate in the digital economy. Likewise, we continue to work to pass the Trans-Pacific Partnership, which prevents new data localization measures in the Asia Pacific region and ensures our firms have equal access to fast-growing markets abroad.

We know that when industry and government proactively come together to overcome challenges, we all benefit. Security and innovation are not mutually exclusive goals. At the Department of Commerce, we do not seek to work against you, but to work with you. We know that we cannot guarantee that every product to hit the shelves is immune to security vulnerabilities. What we can do is work together to arrive at standards that work for industry and give consumers confidence in the latest innovations. The more devices and products are born secure, the more resilient our digital economy becomes. 

As Secretary of Commerce Penny Pritzker says, “trust is the lynchpin of the digital economy.” And this claim is backed up with data. Earlier this year, NTIA surveyed 41,000 households across America. Nearly 45 percent of respondents said that concerns over privacy and security have discouraged them from using some online services. This data tells us that the greatest threat to the digital economy is not proactive collaboration between government and industry. Far from it. The greatest threat to the digital economy is the risk that security flaws, cyber-attacks, and product malfunctions undermine trust and threaten consumers’ willingness to embrace the latest innovations.

As data crosses borders, as cars become driverless, as more devices are connected to networks, government and industry must work together to ensure that consumers have confidence in the latest technologies, and that American industry continues to drive world class innovation.  Now is the time for us to confront the risks and seize the opportunities together.  Not as regulators and the regulated, but as partners committed to building trust in technology and ensuring our continued success in the digital economy. Thank you.