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Communic asia summit-m2m-and-the-internet-of-things
1. Peter Waters Adrian Chotar Andrew Hii Joshua Gray
Challenges Posed by M2M
M2M & the Internet of Things
19 June 2012
2. 22172840_1.PPT | Legal Risks and Challenges Posed by M2M | May 2012 page | 2
Overview
1. M2M solutions: key components and issues
2. Commercialising M2M: Drivers enabling M2M
solutions and factors inhibiting M2M development
3. Impact of M2M on business models
4. Legal risks and challenges posed by M2M
technology
3. The 8 characteristics of M2M
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Issue Consequence
Multitude • Magnitude in number of devices creates scalability problems for networks
designed with fewer users at greater throughput levels
Variety • M2M devices vary widely in data exchange rates, computing capabilities etc
• Mainly designed as vertical applications – interoperability
Invisibility • No or limited human control – otherwise cost driven into application
Intrusiveness • As Google shows, privacy is no longer “regulatory compliance headache” but
about product acceptability
Criticality • „mission/life‟ critical messages – problem of network latency in current store an
forward model for data such as SMS
Low throughput /
frequent tolling
• Challenge to usage based charging – ARPUs at 5-10% of “traditional” data usage
• Set-up/tear costs much the same
• Cuts across capacity management and strategies
Functionality • Limited functionality to keep costs down
• Often lack remote software update capabilities
Embedded • + captive base – churn difficult
• - long life can be drag on technology change
4. But the ‘Big Four’ Issues are
1. Challenge of aligning technical/economic characteristics
of networks and M2M requirements
– different traffic profile of M2M requires re-engineering of
network architecture but also tariff models
– does M2M really need high speed fixed or wireless
broadband?
2. Managing risks and liability
– Although individual messages may only bear a low
usage charge, the risks may be substantially greater
because they involve mission critical or life line services
– contractual risk allocation across complex supply chain
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5. But the ‘Big Four’ Issues are
3. Challenge of traditional end user pays model
– economic model needs to take into account avoided
costs of current service delivery
– e.g. should health payments models cover doctors
using M2M rather than face to face?
– scalability global solutions based on roaming:
economics and regulatory viability
4. Privacy and data security
– end user acceptance critical to ubiquity: concerns over
tracking and surveillance over end user activity
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6. M2M solutions – key components
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Need for SLAs
Privacy
Cost
Who funds?
Monetisation
Reconfiguring
networks
Risk allocation
„Lock in‟
Monetisation
Risk allocation
Commercialisation
challenges
Legal issues cut across the value chain
Solution complexity across software / network layer stack
Willingness to pay?
Privacy
Liability claims against providers
7. Case study of M2M application
• Consider a medicine bottle with device
tracking dosage of pills – similar to
Vitality‟s “GlowCap”
• Who ultimately pays for the application?
• Traditional user pay model will not work
• Government costs saving in providing
better delivery of health services
• Economic model needs to take into
account the avoided cost of service
delivery
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Will a patient pay 20 cents
every time they unscrew the
pill bottle lid?
8. No single value proposition = no consistent
business case
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M2M Who realises value?
Anti-theft/service automobile
applications
• End user
• Car manufacturer
Telematics-based insurance • End user
Smart energy grid • End user in lower charges
• Generator/distributors with lower
investment
• Societal benefit re global
warming society
Health care • Government health budgets
Road tolls • Government revenue
9. Legal issues – Risk allocation
• Who‟s doing what? M2M value chain features vertical
integration of a number of players
• Risk allocation:
– managing legal risks and liability within a complex
supply chain and the overall M2M solution
– traditional approaches to contractual risk allocation
mechanisms for once-off technology purchase will not
work within complex supply chains where parties have
ongoing relationship
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10. Legal issues – Risk allocation
• Risk allocation (cont‟d):
– contractual performance needs to be assessed over an
extended period of time rather than single event (eg
through SLAs)
– Independent standardisation and universal
specifications can assist in providing baseline for
measuring performance
– technology solution has to match risk allocation:
changes in network core for M2M
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11. Legal issues – Privacy and data security
• Pervasive nature of monitoring and collection of data raises
serious concerns about use and disclosure of personal
information
• Potential use of personal information to market goods and
services based on individual‟s behavioural patterns and
preferences
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12. Legal issues – Privacy and data security
• Examples of privacy legislation regulating a utility‟s use of
a consumer‟s energy consumption data
– Privacy concerns in the Netherlands saw an initial
proposal for mandatory introduction of smart to give
consumers a right to refuse the service
– anti-surveillance laws: eg, Australia
• European Commission‟s public consultation on the
“Internet of Things” seeking views on ethical and legal
framework to manage privacy, safety and security
concerns
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13. Conclusions
• M2M business cases need to be built on a fundamentally
different equation:
high volume + low throughput + low usage charge + high risk
= what reward / who pays?
• M2M involves a complex ecosystem in which
commercialisation depends on multiple participants
agreeing a new business model allocating value, costs and
risks compared to today‟s voice and data models
• Privacy and data security hurdles to end user acceptance
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14. Slides and useful links can be
downloaded from www.gtlaw.com.au
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