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Will privacy concerns derail IoT growth?

The Internet of Things movement is gaining speed, with the expectation that 80 billion devices could be connected by 2020. Cisco believes that the IoT movement represents a $14.4 trillion opportunity for businesses in increased revenues and efficiency gains.

But will security and privacy concerns derail IoT growth? The Federal Trade Commission, worried about the security of billions of connected devices, has scheduled a hearing on IoT and privacy for Nov. 19. Last month a manufacturer of Internet-connected home security video cameras settled with the FTC on charges that it failed to protect consumer privacy. It was the FTC’s first Internet of Things-related settlement, and likely won’t be the last.

Internet of Things

Kevin Ashton says privacy concerns may lead to speed bumps on the road to Internet of Things adoption.

“Some companies won’t get it and there will be speed bumps,” says Kevin Ashton, a co-founder of the auto-ID Center at MIT who coined the phrase “Internet of Things” in 1999. “Not many, and they won’t slow things down much, but they will help make everybody adopt best practices to ensure privacy and security for the Internet of Things.”

Dan Caprio, former chief privacy officer for the Department of Commerce, is scheduled to be the primary speaker at the FTC event in November (pending the government shutdown). The FTC hopes to hear testimony from industry and privacy advocates regarding the Internet of Things.

Just as the RFID industry struggled with security fears and privacy concerns during the early days of adoption, the massive amount of devices being connected during the Internet of Things movement could lead to similar security and privacy concerns.

“The Internet of Things holds great promise for innovative consumer products and services,” FTC Chairwoman Edith Ramirez said in announcing the FTC settlement. “But consumer privacy and security must remain a priority as companies develop more devices that connect to the Internet.”

Ashton says that privacy and security represent different, yet connected, concerns. He says that privacy is mainly a matter of policy and practice.

“As with any system, people should always know what information is being gathered, who will be able to access it and for what purpose,” he says. “The simple solution to privacy concerns is choice: you should not have to use a system you do not want to use, and you should not be penalized if you opt out, other than the loss of any associated benefit. Sadly, not all companies do things this way, but they would be well advised to.”

Once a consumer selects a data capture device, Ashton stresses that they need an assurance that no information that identifies them personally will be shared with unauthorized third parties. Part of this comes down to policy — the company gathering the data has to agree not to share it with the wrong people — and part of it is about security, with the company making sure that unauthorized parties cannot break into the database and take information without permission.

“There are a lot of strong, state-of-the-art security technologies and practices to keep data secure, and companies that keep data must use them,” says Ashton. “If everybody does all these things, privacy and security will not slow IoT growth. The more likely scenario is that some companies won’t get it and there will be speed bumps.”

Security and privacy fears still exist to a degree with RFID. The retail industry has mostly overcome security and privacy concerns as RFID tagged-apparel items reach a ubiquitous level on retail shelves. Consumer anxiety, however, still exists in some places.

Last month California legislators abruptly dropped a plan that called for inserting RFID chips into state driver’s licenses. A similar program exists over the border in Washington State. Michigan, New York and Vermont also use RFID-enabled ID cards, which can be used to re-enter the U.S. at land borders instead of a passport.

The RFID-enabled licenses would have been optional in California, targeted to residents who make frequent trips over the Mexican border, but were defeated because of privacy concerns. It’s possible that the measure, which was approved by the California Senate, will be re-introduced next year. California’s land border that links Tijuana, Mexico with San Diego is considered the busiest land border crossing in the world.

“Once again privacy advocates were all over this,” says Kathleen Carroll, director of government relations at HID Global. “I find it fascinating because plenty of states have done this, and Washington’s program has been super successful and people there love the enhanced driver’s licenses. It has made the border crossing much easier. In my opinion, this is a disservice to the citizens of California because you’re forcing them to get a California driver’s license as well as a U.S. passport The ID’s have been very successful in Washington without one reported incident.”

Meanwhile, the U.S. trails the rest of the world in adopting RFID-enabled licenses and ID cards. Germany moved to RFID-based ID cards three years ago, and Brazil is introducing smart cards as the country prepares for the 2014 World Cup and the 2016 Summer Olympics. ABI Research predicts that smart card shipments within Latin America will increase from 752 million 2013 to 1.15 billion in 2018.

Even the tiny Republic of Kosovo will begin issuing 1.7 million smart ID cards to its residents by the end of this year.

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