A Hogan Lovells study comparing of regulatory requirements in the European Union, United States, and China shows the complexity and uncertainty of the regulatory framework relevant to Internet of Things (IoT) in Europe. The number of telecoms regulatory constraints affecting IoT in the EU is almost twice as high as in the United States and China. Federal Communications Commission (FCC) Chairman Ajit Pai compares the global race to 5G with World Cup football: “When it comes to 5G, we need to keep the playbook fresh and forward leaning.”
Outdated regulations can slow IoT deployment. Our study shows that many regulations affecting today’s IoT were originally designed for human voice conversations. They simply don’t fit for machine-to-machine communications. Whether it’s privacy regulations, numbering restrictions, emergency calling rules, roaming, or net neutrality, many existing telecom rules are designed to protect interpersonal communications between humans, not communications between industrial machines, such as parking meters, pipelines, and transformers.
We surveyed telecom regulations in China, the United States, and the European Union and found that the European Union has 31 separate categories of regulatory requirements applicable to IoT, whereas China and the United States have fewer than 20. While 5G spectrum is one important factor in the race to 5G and IoT, spectrum is not the only ingredient for 5G success. The ability to use numbering resources across borders, to manage bandwidth flexibly, and to use metadata, are key facilitators for successful machine-to-machine communications.
Technology neutrality is also important to stimulate a coherent, but proportionate, regulatory approach for new IoT use cases. Different technologies for IoT connectivity, including Low Power Wide Area Networks, are evolving rapidly, and provide advantages and drawbacks depending on the different IoT use cases. Regulators should encourage a healthy environment for technological innovation by avoiding asymmetrical regulation that penalizes one technology over another.
The U.S. regulatory regime includes the forbearance principle, which allows the FCC to refrain from applying regulation to certain areas where the regulation is no longer necessary. Europe has the concept of proportionality, which requires that regulation be limited to what is strictly necessary to achieve the relevant policy goal. The internal market principle requires that barriers to cross-border IoT services in the European Union be eliminated.
The EU’s new Electronic Communications Code has taken Europe part of the way forward. But more simplification is needed for machine-to-machine and IoT communications.