€ 1.55 bn of revenues for the Internet of Things (IoT) in Italy shows a growing market, but the report from the Communications Authority stresses the need for regulatory changes to boost the sector. 

Following the consultation on M2M communication services, the Italian Communications Authority (AgCom) issued its report on the matter during the same days when the University of Milan published its annual study on the IoT.

The Status of the IoT market

According to the AgCom there are 250 million M2M connections worldwide generating € 130 bn of revenues, with 61 million connections in Europe of which 11% in Italy.  The value of the IoT market in Italy according to the University of Milan is of € 1.55 bn of which connected cars represent a good portion with 4.5 million cars equal to 38% of the total car market with an increase of 30% year on year.  Also, the smart home sector is in interesting in Italy as such devices increased by 42% in the last 3 years.

But massive potentials are identified in smart city projects that in a city like Milan would ensure savings of at least € 119 million a year which means that, if the same smart city projects were expanded across the whole country, savings of € 3.7 bn a year might be generated without considering the additional savings in terms of more efficiency of people and additional working hours.

Interoperability as a priority on the regulators’ agenda

Interoperability was the “magic” word repeated in several instances at the event arranged by the University of Milan to present their study.  There are too many vertical platforms that are unable to communicate.  Likewise the message conveyed is that there are too many alliances on the development of standards which might not be beneficial for the market.

This is an issue also covered by the AgCom in its report where it stresses the need for a higher level of standardization of products in order to encourage investments and to ensure the possibility to change connectivity provider without bearing excessive costs.  The speakers of the University of Milan event pushed for the identification by the regulator of at least minimum regulatory requirements able to ensure the ability for devices to communicate among them.

What else on the AgCom agenda?

The AgCom report is very detailed and covers a number of issues and the covered topics include among others:

  1. Licensing regime: the current regulations on electronic communication services would require – subject to the peculiarity of the case – that M2M communications of data between devices are subject to the so called prior “general authorization“.  The issue is whether such obligation is only on communication providers or is extended to entities like manufacturers of connected cars for which the current regime might be inadequate.  Additionally, the international nature of M2M services requires a simplification of notification obligations to authorities.
  2. Spectrum: new authorization regimes for the usage of the spectrum might be necessary in order to ensure the “shared” usage of the spectrum in a more flexible and efficient manner.  Also the shutting down of the GSM 2G network might represent an issue for IoT technologies since it is cheaper than more developed technologies;
  3. Permanent roaming: the current international roaming regulations for electronic communication services are not adequate for devices that have to operate in a permanent roaming status.  Alternative solutions should be identified for instance leaving the negotiation of charges to the free negotiation between the parties introducing some safeguards for minor operators;
  4. Better infrastructures: the current network infrastructures appear inadequate for M2M services and this is obliging operators to set up ad hoc proprietary closed infrastructures that are not able to interoperate with other platforms and consequently restrict the level of competition;
  5. Contractual switch: the current regulatory framework aimed at ensuring the possibility to change provider is inadequate since number portability rules apply only at the national level, while M2M services are international;
  6. Numbering: numbers are a scarce resource and regulators shall monitor them in order to ensure their flexible allocation without discriminatory conducts;
  7. Privacy and Security: the protection of individuals’ privacy is a priority as is cybersecurity, but security standards shall not require excessive costs to avoid potential barriers for the entrance in the market.

Conclusions

Very interesting points have been raised above and the hope is that some of those remarks will be translated into actions aimed at creating a better regulatory enviroment for IoT technologies.