Governments need to be part of the $100b internet of things opportunity

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Governments need to take a much stronger role collaborating with industry if Australia is to secure the jobs and economic growth opportunities associated with the rapid deployment of the internet of things (IoT).

Estimates by the loT Alliance Australia (IoTAA) using industry data indicate the wide-scale use of internet connected devices could drive over $100 billion of new economic activity in Australia each year within a decade.

The main areas set to benefit from rapid deployment of IoT are public health, transportation, retail, logistics and worksite automation.

The main driver of this expected rapid rollout is the collapse in the cost of the technology, with the price of sensors now a twentieth of what it was a decade ago. At the same time, bandwidth and the cost of storage and processing has fallen sharply, leading to estimates by Goldman Sachs that up to a trillion devices could be connected globally by 2035.

There is already a vibrant IoT startup community — centred in Melbourne — who are building applications and services across multiple industry and business sectors. These include agritech businesses, renewable energy firms, biotech and mining providers and a number of incubators and co-location operators who are now building out the rapidly growing IoT ecosystem.

These businesses are exploiting remote sensors that are here on the ground today, underlining that IoT has very much arrived in many key sectors. For example, The Yield is a Tasmanian start-up that helps protect high-value oyster crops by capturing data from tidal flows and harnessing smart analytics to predict high temperatures and potential pollutants.

Telcos leading national IoT policy

While other countries have elevated IoT development to national strategic importance, in Australia national policy and direction has been primarily driven through the big telcos, Telstra, Optus and Vodafone, and their equipment vendors such as Nokia, Ericsson and Huawei.

Telecommunications industry group Communications Alliance has led the discussion and deliberation around IoT, and commissioned a foundational research document which sets out the enablers and blockers for IoT deployment in Australia.

The expected rollout of 5G technology over the next few years is predicted to be a game changer for IoT, enabling far larger data transfer capacity and higher speeds. Most importantly, 5G connectivity is expected to reduce latency between the device and the underlying application, making nascent developments like automated cars more of an reality than a concept or a pilot.

Equally important has been the emergence of development platforms to drive application growth and to power real-time data use. According to Forrester, the most mature of these is IBM’s Watson IoT platform, which offers a development environment supported by a large and growing application set, sitting on a cognitive platform to support rapid IoT deployment. The centre of this work is in Germany, probably the leading IoT country in the world.

The German government has identified IoT as one of the fundamental changes driving its Industry 4.0 agenda. Industry 4.0 represents what many believe will be the next major industrial revolution, the application of data to industrial processes.

Frank Zeichner, the co-author of the Comms Alliance report and now CEO of the IoTAA, argues IoT is not a single technology but rather a value chain to solve problems. Conceptually, data is generated from a huge variety of sources, transported to a platform where it is stored, curated and analysed, and then used by various applications in the form of alerts, visualisation, automation and predictive analytics.

It is how this value is tapped that becomes a critical role for government.

IoT opportunities for government

As a user, all tiers of government will be tapping data from internet devices for a wide variety of applications. Health offers massive opportunities through a wide range of wearables that promises to revolutionise health care, especially in the preventative sector.

Transport congestion is the early use case, but widespread automation could see reductions of up to 80% in car numbers, with major implications for road design, traffic and transport management. Applying IoT to transport infrastructure also promises significant returns, especially around maintenance and safety checks.

Applying intelligence to the data coming from energy networks similarly  promises to deliver far more efficient use and deployment of power. Smart meters talking to local and remote generation sources and energy capture and storage is expected to be the backbone of major transformation in the sector.

Sports stadiums and entertainment precincts are also ripe for disruption, with new facilities in the US coming loaded-up with IP devices designed to enhance the fan experience across the stadium journey, including parking, bathrooms, concession queues and seat allocations. New augmented reality and interactive seats are designed to give fans a live sport experience not replicable at home.

Government’s key role as a collaborator

But government’s role goes well beyond being a power user — a position Australia’s federal and state governments have tended to take to date. This is in contrast to European and some Asian governments, where the public sector is playing a major role as collaborators with industry to capture massive jobs and growth benefits predicted to flow from IoT.

There is a raft of planning, technical standards, interoperability issues and policy issues that require focused attention if Australia is to be a leader in what may believe is a classic 21st Century industry.

Not all outcomes are predictable, with recent evidence of unsecured IoT devices being hijacked by hackers forcing government to urgently consider the cyber security implications of IoT deployment.

Policy issues will challenge traditional planning approaches, demanding a far more holistic approach to economic and infrastructure development. While the allure of “smart cities” has been seen as the poster child for IoT application, the reality is that “smart cities” require a whole-of-city approach and a careful strategy to ensure platform and device interoperability in order to capture the full benefits of any major IOT deployment.

Smart cities are also seen as key to attracting international millennial talent. This means governments wanting to capture these benefits will need to organise the planning and procurement of these urban networks in very different ways to the current disaggregated approach to urban development.

Probably the most critical issue is how to manage and secure the vast amounts of data that the plethora of devices is already starting to throw out. Digesting the data will need advanced analytic platforms built for intelligent industrial operational use. This is the territory of cognitive computing and governments are only now just beginning to build out their operational applications using real-time data. New South Wales is arguably the leader in this space and the release of its digital government policy is expected to focus heavily on building out this capability as rapidly as possible.

IoT is most definitely a team sport. As part of the team, government will need to set the vision and share the problem with industry and community in a way it typically has not done in past.

This will be both across traditional portfolios such as health and education but also across verticals such as logistics and freight. In many cases this will involve mixing data from a wide variety of sources, public and private, and applying a variety of algorithms to power this data.

Security and privacy also loom large with the accompanying wide-scale automation making many machines vulnerable to tampering.

Ensuring sufficient skills to build and maintain these networks will be critical, especially at a time of widespread shortages in traditional ICT skills.

Victoria is already reaping the benefits of government leadership in this sector and development. It will be those governments that have a clear focus and understanding of the critical role governments need to play that will attract the large investment and pools of entrepreneurial talent looking to be part of the IoT revolution.

Winning citizen engagement and involving the public in the benefits of data sharing is also going to be critical.  In short this sums to government needing to stop being mere passive observers and to becoming capital-C collaborators if Australia is to be a winner from one of the great industrial changes of our generation.