Regulators look for role in the Internet of Things

With more than 20 billion devices getting hooked up to the Internet by 2020, the US government could play a big role in creating rules to eliminate software vulnerabilities in those products.

But regulating the potentially $19 trillion so-called Internet of Things (IoT) industry won't be easy. Officials won't just need to develop rules for products that range from refrigerators to cars, but may also need to decide whether to guide that process or follow Silicon Valley's lead.

As the Department of Commerce seeks public comment for rules to regulate IoT ahead of a June deadline, experts grappled with questions regarding the collision between innovation and regulation on connected devices at an Atlantic Council event on Wednesday. 

“I don’t think we’ve figured out what our hygiene standards are for the Internet of Things,” said Joshua Corman, who leads the Atlantic Council’s Cyber Statecraft Initiative. “The size of the innovator is not necessarily the size of the harm.”

Aaron Alva, a technology policy fellow at the Federal Trade Commission; Duane Kobayashi, counsel at the tech firm Senseware; Nyla Beth Gawel, a principal at Booz Allen Hamilton; and John Miller, vice president of cybersecurity and privacy policy at the Information Technology Industry Council, joined Mr. Corman to discuss how regulators and businesses are dealing with the challenges of setting rules for the new industry. 

Here are a few key takeaways from the event:

1. Make security the default 

Before moving toward regulating IoT – which some worry could stifle innovation – experts said that companies can do more to integrate secure settings into connected products.

“What are a company’s practices, what are the processes that could reduce the risk of a failure happening?" said Mr. Alva, responding to possible questions that the agency might ask when dealing with those kinds of cases. "What could be done by having more security defaults, designing in security from the start.” 

Although FTC Commissioner Terrell McSweeney said in February that the FTC was not likely to develop regulations for the emerging space, the agency settled charges against the router company TRENDnet on the grounds that the company misrepresented the information security features on their SecurView cameras.

2. Make new regs, but keep the old

Just because the government is considering IoT regulations, existing regulations are still useful, too. In fact, experts say rules that already exist, such as the Underwriters’ Laboratories standards to safeguard the market for Internet-connected devices, could help companies make better choices around security.

“I wouldn’t think that we should tear up all existing regulatory frameworks and have a free for all,” said Mr. Miller of the Information Technology Industry Council. “It provides those who are using it with a toolbox. They can make more informed, risk management-based decisions.”

3. Move fast and break (some) things

Since the scope of IoT is huge, companies will have to move quickly to adapt. “Every company is becoming a software company,” said Atlantic Council’s Corman. “Toyota woke up one day and wasn’t just a computer on wheels, but a data center on wheels.”

But even though panelists agreed that regulators should move fast and innovate to keep up with Silicon Valley, they should not secure every Internet of Things device the same way – as many connected gadgets won't house sensitive data.

“There are a lot of industries that can handle failure,” said Nyla Beth Gawel, a principal at Booz Allen Hamilton. “I can handle if my Fitbit doesn’t accurately count my steps. I think there’s a monetization of risk that factors in.”