With the onslaught of smart watches, smart thermostats, and even smart refrigerators that allow you to Tweet hangry messages to your followers, it’s only natural that a “smart city” would follow.

This week, San Francisco city officials agreed to run a one-year pilot project with Sigfox – an FCC certified French start-up that builds low-power wireless networks – to create an Internet of Things (“IoT”) wireless network that caters exclusively to smart devices with low-bandwidth apps. While the term “wireless network” typically conjures up thoughts of the ubiquitous Wi-Fi symbol, this low-power, wide area network (“LPWAN”) on which Sigfox will operate is entirely separate from traditional cellular networks, which require a much higher level of data streaming and power usage.

Sigfox and city technology crews have installed about 20 of its base stations throughout San Francisco, using libraries and other city buildings. Each base station covers about 12 to 18 miles and is roughly the size of a briefcase. Device makers who want to join the network must install a radio chip that costs less than $2 and comes loaded with the Sigfox firmware.

For years, business leaders across the globe have closely studied the San Francisco region, seeking to emulate the way it churns out so many leading tech companies. While San Francisco is the pilot city, Sigfox plans to expand to New York, Boston, Los Angeles, Chicago, Austin, Houston, Atlanta, Dallas and San Jose in 2016.

While the network will certainly be open to consumer devices with IoT connectivity (e.g., fitness trackers), most of the market will likely come from devices used by governments and businesses, such as energy-saving smart street lights and devices that send maintenance alerts for a variety of purposes. Recently, Glen Canyon Corporation – maker of smart electricity meters – announced that it will use the new Sigfox network. The city aims to encourage entrepreneurs to invent more devices that will connect with the network while simultaneously offering existing government agencies and businesses cost-saving measures to monitor activities through smart technology.

Along with the advancement of IoT technology, however, comes mounting concerns over data privacy and security.

Early this year, the FTC issued a 71-page Staff Report on the privacy and security issues with the Internet of Things, which followed the FTC’s public workshop and first enforcement action brought in 2013. The Staff Report covered a swath of potential privacy concerns for consumers and companies alike, including the mishandling of personal data collected by smart devices (especially related to health, finances and children) and the effects of hacking. Hacking – for example – may be especially problematic in the IoT space. Hypothetically, a smart heart monitor operated on a wireless network may be manipulated by a hacker who may change settings or collect unauthorized health data from a user. Further, the government’s use of IoT technology on the network may expose certain agencies to data and security breaches with regard to confidential information. Thus, the level of data privacy and security measures in place for traditional wireless cellular connections must be applied – and perhaps heightened – in the case of new wireless IoT networks.

Similar to general IoT best practices, companies that aim to use the new wireless network technology must be mindful of the types of data they collect and how they use the information, and must always ensure that the necessary disclosures are given to consumers.