“The Internet of Things” was among the top buzzwords of 2014 as wearable electronics and smart locks, refrigerators and thermostats became the hottest commodities on the market. The Internet of Things or its shorter, and even buzzier name, the IoT, is “on the downside of its hype cycle” says Bryan Prohm, managing director of Silverwood Partners at the IP Dealmakers Forum in New York last week.
But the nuts and bolts of the so-called third wave of the Internet are falling into place. Prohm moderated a discussion in which panellists discussed what the IoT is, and what its consequences will be for IP holders in technology and other industries.
IoT had its humble beginnings in what self-described “techy” James Nolan, EVP of IoT solutions at Interdigital explained as “M-to-M,” or machine-to-machine connectivity. M-to-M “is very simple,” and refers to “a machine or control talking to and controlling another device,” says Nolan. IoT, on the other hand, “is something bigger.” It tries to solve the problem “how do we get all these different things to be available on the internet, and then be controlled and provide the internet with data [with which to] influence other objects and things?”
The key term there, is data, both from functionality and monetisation perspectives. Data is what will enable IoT to “track data through analytics, predict intelligently and create value and new business models through that data to do actionable things,” said Nolan.
According to fellow panelist Marek Wernik, president of TechPats, the centrality of data to these models points to the importance of software as the third wave of the Internet crests. “I like to think that these devices would be very simple,” said Wernik, “but really the intelligence would be in the cloud.”
Moreover, the proliferation of the IoT raises questions about how security, standardisation, protected IP, and open source technologies and software will interplay. Products from disparate industries for which compatibility has never been an issue will now have to connect seamlessly in order to remain viable.
“Some players that weren’t in the [IoT and connectivity] space traditionally now are, and in a different position in the stack, so there’s a tail wind,” said Prohm. This is already happening, but will only grow more complex as more companies from more industries must adapt to the IoT or die.
Claudia Tapia, director of IPR policy at Ericsson, said that the Iot brings with it some distinct pricing advantages for the company’s customers. According to a study conducted by the company, by 2022, there will be approximately 28 billion “connected devices” of various types around the world, and the IoT means that that variety is much wider. “What has changed now with IoT is that we guarantee the possibility to have an affordable prices because [IoT] creates economies of scale,” said Tapia. The diversified and widespread nature of connected devices will also mean that Ericsson will incorporate open source software more in order to ensure compatible connectivity. This is “an opportunity and a challenge,” says Tapia, as her company provides connectivity but will not also have to go to greater lengths to ensure security.
But this also raises standardisation and licensing issues. Patia noted that patented technologies and software, in particular, are committed to be licensed under fair, reasonable and non discriminatory terms. But when using open source technology, she said that frequently the providers often later come after companies that used their technologies, asking for fees. “This is not the exception, but almost the rule,” she said, and makes it important to integrate open source technologies with standardisation.
The convergence of products from so many industries around the IoT necessitates standardisation, and more collaborative, consolidated licensing structures. Tapia pointed out that connectivity will be required for all of these products, which would mean that their manufacturers would have to seek out every connectivity provider to license its 2G, 3G, 4G, and, eventually 5G connectivity. As Prohm posed the issue, “IP globalisation is happening faster and faster. Do we reach a point that that growth is so fast that IoT can’t be licensed under old models?”
The answer, at lease for Tapia and Ericsson, is yes. So, Ericsson, along with Qualcomm and other service providers have joined forces under the name Avanci, a consortium that will provide a single broad license for all of those companies’ connectivity to IoT product-makers. This and other alternative models for licensing and standardisation will become increasingly important as IoT proliferates.
