By Bret Swanson
The next act in the Internet saga is upon us. Some call it the Internet of Things, or the Industrial Internet, or the Internet of Everything (IoE). Whatever its name, it will create immense new value for consumers and firms, but it also presents an array of public policy challenges. As the number and diversity of Internet connections grows—from billions to perhaps hundreds of billions—the number and diversity of policy questions concerning privacy, wireless spectrum, and cybersecurity, to name just a few, will also grow.
The IoE will unfurl over decades, but it has already begun to emerge. The wireless chip maker Qualcomm, for example, reported 2014 IoE revenues of $1 billion. AT&T has reached the $1 billion mark in IoE service revenue, and Intel expects IoE sales of $2 billion in 2015.
The Internet is, in many ways, following an intriguingly similar path to that of electricity. As Nicholas Carr, author of The Big Switch, notes, “In 1900, at the end of the first decade in which electrical systems had become a practical alternative for manufacturers, less than five percent of the power used in factories came from electricity.”
Thomas Edison himself thought power generation would happen at numerous, small power plants and be distributed to factories in nearby neighborhoods. By 1930, however, 80 percent of the nation’s electricity was supplied by large, centralized power companies. The spreading web of electricity through regional and then national grids, then through ubiquitous use of batteries that made electricity mobile, and finally through the combination of the two — the charging of billions of mobile devices — has created an immersive electrified world. Over the last century, it served as the foundation of modernity.
Like Edison’s original model for electricity, the Internet began by connecting terminals to one another, most often in the form of desktop PCs. In the last decade, the evolution of the Internet again paralleled the evolution of the electrical model, which saw more centralization of some functions and more decentralization of others. Today, data warehouses and cloud computing have centralized many computing and storage functions, but they have also ignited an explosion of new connected devices.
The idea that most people on Earth now have mobile phones is staggering. These billions of mobile computers far outnumber the connected devices of the earlier Internet era (i.e., PCs). As the world becomes saturated with 7 billion or so mobile phones, however, the immersive Internet will multiply that total several times over. In the next decade, we might connect 50 billion or so devices to the Internet — every car, watch, boat, shoe, package, shipping container, medical device, vending machine, traffic light, household and industrial appliance, camera, drone, sensor, tracker, meter, 3D printer, implantable gadget—you name it.
The Internet has already disrupted and enriched entertainment, finance, and news, to name just a few industries where content was digitized and disseminated in new and faster ways. Industries like TV and finance were obvious targets of disruption for the new communications power of the Internet. We suspected the Internet could push content to users in more targeted ways, and that the users, in contrast to the old broadcast media, could search for and pull information they sought out.
The physicality of the IoE — linking the digital world to the real world, the word to flesh — will have similarly large effects but is a slightly different animal. In the beginning, electricity was an obviously better way to power factories but few envisioned ubiquitous air conditioning, let alone electric toothbrushes or battery-powered aerial drones. The IoE will be full of surprises. Because of its immersive nature, the IoE will not just push and pull existing information. It will, like a digital vacuum, relentlessly collect information about the real and virtual worlds all around us.
Connecting tens of billions of additional devices to the Internet will change mundane industries, enhance productivity, generate unimaginably large troves of data, and improve our understanding of the world. Connectivity, however, cuts both ways.
Electrons Vs. Bits
While the arcs of electrification and the Internet paralleled each other in some ways, the two technological platforms differ in other important facets. Electrons are, in general, clones. Bits—the basic units of information— are individual. Electrons are commodities, while bits are distinct. Bits are created by manipulating and giving order to previously indistinguishable electrons. Bits are smart electrons, both more powerful and more fragile. These differences will manifest themselves in a number of ways, perhaps most importantly in the world of public policy.
While electrification was accomplished largely through utilities, the Internet has spread via private investment in numerous competitive (and thus risky) platforms—telecom, cable, mobile, Internet backbone, satellite, and cloud, to name a few. Electricity had implications for safety and interoperability. But bits are more subtle. Bits contain information about the world around us and thus pose challenges for privacy and security. Bits can interfere with one another, and we must distinguish among them, so the management of wireless spectrum (or radio waves) is crucial. As the number of bit-sensing, bit-storing, and bit-transmitting devices grows toward 50 billion, and beyond, potential sources of conflict will likewise multiply. 
Automating the Automobile
A new General Motors ad campaign boasts of Chevrolet’s wireless broadband connectivity and Buick’s in-car Wi-Fi. Nowhere do the ads mention horsepower, fuel economy, or the other traditional metrics of automobile marketing. Today, there are some 16 million connected cars in the United States and 25 million around the world. The vast majority of new car sales will be network capable, and that number will grow quickly. In just five years, most of the vehicles on U.S. roads will have Internet connectivity, in-car Wi-Fi, and a host of cloud-enabled entertainment and navigation features. Our cars will integrate with our personal cloud profiles and our home networks. Different types of firms will provide these new software and connectivity platforms: the automobile companies themselves, of course, but also firms like AT&T with its Connected Car, and Apple, whose CarPlay system, after several years of development, is finally rolling out preinstalled in Chevys and BMWs.
Connecting cars to the Internet, however, will not just extend today’s familiar Web content into the passenger and driver seats. It will change cars themselves, the ways we (or computers) drive them, and the ways vehicles interact with each other. Development of self-driving cars, or autonomous vehicles, has progressed swiftly over the last decade. DARPA, the Pentagon technology research agency, helped launch the idea of “robo cars” into the popular imagination with its 2004 Grand Challenge, a 150-mile trek by autonomous vehicles (AVs) through the Mojave Desert. None of the entrants that first year made it even to the eight-mile mark. Yet, by the next year, five entrants completed the entire 150-mile journey.
Google has since picked up the mantle and made heroic progress. When Google initiated its self-driving project in 2009, many thought it was science fair vanity or a hobby. Yet, by May of 2015, when Google reported detailed results from the first several years of robo-car testing, the project had become very real. Google’s autonomous cars, according to its July 2015 update, have driven more than 1.1 million miles with excellent results, and it has never caused an accident. Along the way, Google has learned a lot about human driving behavior and the real sources of traffic accidents. It believes AVs will save many lives.
This is an important facet of IoE automation. As connected vehicles, devices, and sensors proliferate, the data we collect will create feedback loops of learning and better performance. As we try to emulate human tasks in hardware and software, we necessarily have to learn at a much deeper level how humans operate and interact with the world around them. Taking the human element out of tasks, it turns out, sometimes gives us a much better understanding of humans. It will also help us create new systems in which each element has better information about the others, enabling, for example, new smart traffic management.
Dan Ricci, head of automotive analytics at IBM, summed up the possibilities:
“Vehicle telematics collect a wealth of data in motion such as sensors for assisted driving, vehicle speed, braking, transmission control systems, air bags, tire pressure and wiper speed, as well as geospatial and environmental conditions. Last year, an estimated 26 million connected cars collected more than 480 terabytes of data. That number is expected to increase to 11.1 petabytes by 2020…Information will deliver a new level of value to automakers, partners and suppliers and to cities looking to operate increasingly efficient transportation systems.”
Over the next few years, increasing numbers of cars will begin incorporating robo-features step by step—first lane avoidance, then assisted parking, then semi-autonomous highway driving. The Boston Consulting Group estimates that fully autonomous vehicles will be on the roads—urban, highways, and anywhere in between—in 2025. Tesla Motors founder Elon Musk believes self-driving cars will be the norm 20 years from now. Some believe long-haul trucking will be the first big application for autonomous vehicles, and Daimler has already broken new ground this year in this area, revealing its 18-wheel Freightliner, “Inspiration Truck.” Most transportation analysts assume that Uber and Lyft will look to robo-cars instead of human drivers for their personal taxi services in the coming years.
Some treatments of autonomous cars underestimate the complexity of the task and oversell the successes to date. Google’s cars, for example, have so far relied heavily on highly detailed maps of well-worn territory—specifically, inch-by-inch surveys of the neighboring streets of Mountain View, CA. Google could not today comfortably drop one of its autonomous vehicles in unfamiliar territory and assume flawless, or perhaps even adequate, performance. In addition to ever-more detailed mapping technologies, future iterations will rely more heavily than today’s versions on real-time sensing of the environment and interaction via the Internet. The foundations of connected and autonomous cars are, nevertheless, growing more robust every day.
The ‘App-ification’ of Medicine
Healthcare is still in the beginning stages of a multi-faceted information revolution. New devices, networks, and apps are sensing, generating, transmitting, and analyzing far more information about our bodies, environments, and treatments than ever imagined. Many of the most popular apps for smartphones are health-related. Fitness trackers have become the most popular early wearable devices, and young physicians and nurses are leveraging information technologies to transform their professions. Yet, these are still early days.
Smartphones and other wearable and implantable devices will vacuum up huge amounts of data on our health and our responses to therapies, nutrition, and the environment.
Doctors and nurses will, in conjunction with all these remote monitoring capabilities, conduct increasing portions of their care via telemedicine. The Good Samaritan Society’s LivingWell@Home program is one successful example of monitoring and treating patients with chronic conditions. The service reminds patients to take medication and helps monitor vital signs, sleep patterns, and responses to treatments, among other remote capabilities. Pooling and then analyzing data from millions of subjects’ FitBits, Apple Watches, and telehealth connections will yield new insights and paths of research.
As the price of sequencing a genome continues to fall (currently less than $1,000), the number of people who get a full DNA workup will explode. Already firms like 23andMe provide basic genealogical information for less than $100. A new firm called Helix aims to be the central repository and “app platform” for much of the world's genetic information.
Google has similar ambitions. Alphabet, the new parent company of Google, is collecting and organizing 10,000 anonymous genomes in an attempt to understand what a “baseline” healthy human looks like. Project Baseline, as it is known, will then be used as a reference for researchers looking into genetic disorders and abnormalities, or merely to better understand the variety of life.
Implantable and ingestible devices will relay information from our bodies to doctors, technicians, and databases and will provide both real-time diagnostic tools and also supply the data to analyze long-term trends. Massachusetts Institute of Technology researchers, for example, have found a way to monitor tumors with tiny sensors that track biomarkers and relay data wirelessly to physicians, eliminating the need for additional MRI scans or biopsies.
These devices, however, are not just passive data collectors. They will also be used to administer therapies inside us. In the future, we may even be able to connect the brain and computers wirelessly. Early research with magnetoelectric nanoparticles (MENs) suggests one possible brain-machine interface. MIT researcher Polina Anikeeva told the New Scientist, “All of a sudden we can have subjects that look entirely natural, no wires, no connectors no implants, and yet they will be equipped with the ability to receive a stimulus…We’re dealing with something very small, injectable, more like a drug than a device. I think it’s really exciting.”
All this genetic, clinical, and real-time information will feed into repositories that can then be analyzed by medical researchers and entrepreneurs seeking new treatments that will be increasingly customized. Peter Huber writes in The Cure in the Code that “the vital core of medicine is now on the same plummeting-cost trajectory as chips and software.”
Just as the macrocosm of vacuum tubes gave way to the microcosm of silicon chips, we are moving from the goopy world of petri dishes to the biocosm of DNA and protein codes, the information networks of molecular metabolics. The new knowledge and tools will yield therapies customized not to symptoms or broad disease categories but to the individual person. And information-based medicine will also provide for diagnostic “sniffers”—molecular sleuths meandering through our bodies and smartphone apps gauging chemicals in our breath and ominous signals in our retinas.
Allowing information-based medicine and healthcare to impart its most powerful economic benefits will require a rethink of policy, research, and the hospital-based delivery system. As Robert Graboyes writes, we need to replace the “fortress” mentality that governs today’s industry and regulatory apparatus with a “frontier” ethos of entrepreneurial business models and scientific discovery.
The Policy Challenge
The massive scale of these new stocks and flows of information will yield correspondingly large benefits—often estimated in the tens of trillions of dollars. An immersive Internet, however, will also spur a number of crucial public policy debates.
Among the list of challenges we can foresee today:
• Is there enough commercially available wireless spectrum—both licensed and unlicensed—to allow all these devices to communicate effectively?
• How will voters and policymakers react to an explosion of information that was once considered “private?” How will we balance the benefits of information abundance versus concerns over privacy and government surveillance?
• With smart devices everywhere, who gets access to the information? Will governments demand “open access” to various forms of public health and transportation data? And who assumes liability for information leaks, drone incidents, or 3D printing mishaps?
• Can we agree on interoperability standards when needed? And can we agree to disagree when competing standards vie for supremacy?
• Will we tolerate individuals altering their bodies (and minds) through wearable and implantable technologies?
• Can we secure these devices and networks against increasingly sophisticated hackers, whether hobbyists, mercenaries, or sovereign states?
Perhaps the biggest challenge is whether society can rationally assess these concerns, address them prudently, and embrace an ethos of innovation, so we might enjoy the benefits of an immersive Internet to its fullest extent. Technology policy analyst Adam Thierer warns us against “threat inflation.” Yes, new technologies are commonly lauded, but he has shown that they are also often accompanied by “techno panics”—or widespread fears of the unknown that can inhibit technological innovation. The best way to avoid these harmful backlashes, perhaps, is to acknowledge the challenges head on and develop common sense ways to mitigate ill effects.
The Urgent Need for More Wireless Spectrum
From connected cars to telemedicine and beyond, tens of billions of new connected devices demand the availability of far more wireless spectrum (i.e., the radio waves that carry information through the air).
According to Cisco, North American mobile data traffic in 2014 was 31 times the total of just 5 years ago, in 2009. Cisco projects additional mobile data growth of 57% annually over the next five years. This growth is straining existing spectrum allocations, and not enough new spectrum is in the pipeline to ensure new devices and services will have the space to experiment and expand.
The immersive Internet requires both licensed and unlicensed spectrum. Licensed spectrum is owned by individual firms and is exclusive. It is used to provide mobile phone or satellite services, for example. Unlicensed spectrum is open for all to use, under power limitations that reduce interference. Examples are Wi-Fi and Bluetooth. Licensed and unlicensed spectrum each have strengths (and weaknesses), and we need more of both.
The most recent U.S. spectrum auction demonstrated the huge demand for spectrum. In the auction known as AWS-3 in early 2015, firms bid a record $41 billion for the slice of airwaves, more than double what experts had predicted. In 2016, the FCC will hold an important “incentive auction” that will, in effect, allow TV broadcasters to sell their underused airwaves to mobile service providers. Yet, even if this auction goes well, the pipeline of spectrum is not sufficient to support future demand and innovation.
Today, the U.S. government owns between 60% and 70% of the best remaining spectrum. Much of this government-controlled spectrum, however, is either unused or underused, and efforts to pry the spectrum from agency hands have seen limited success. The National Telecommunications and Information Administration (NTIA), the agency that manages spectrum, in conjunction with the Pentagon, has recently begun a pilot program of “spectrum sharing.” Under the project, the Navy (in this case) will allow commercial service providers to use its airwaves in limited ways at limited times. It is a good start but is only an experimental baby step, will take years to roll out, and won’t come close to filling the pipeline. Policymakers should thus continue to find novel ways to incentivize government agencies to transfer these highly valuable underused assets into the commercial sphere.
Another important step is Wi-Fi. It extends our broadband networks to our smartphones and tablets and to all kinds of new mobile devices. Because of its success, however, the existing Wi-Fi bands are crowded with users and traffic. We need more unlicensed spectrum to truly unleash the immersive Internet.
Privacy and Security
More information means less privacy. More devices mean more targets to hack. That, at least, would seem to be the common wisdom. On some levels, it is true, and for the immersive Internet to flourish, commercial and civil institutions will have to develop strategies and techniques to combat these modern challenges. We should also remember, however, that technology itself can offer solutions. So can our unique human ability to adapt.
We have long sought to protect health information, through laws such the Health Information Portability and Accountability Act (HIPAA), which contains a number of regulations protecting patient privacy. Yet, the new environment creates new complexity. The amount of health information about to explode and the ways in which we’d like to collect, store, transmit, and use it will change profoundly. No longer is our health information contained in a paper file in a doctor’s office. Now, our health information will be flowing over networks in real time, all the time. We will want it too, for the many benefits it will provide. This will mean laws like HIPAA may in some ways be too constrictive but will also mean we need to find new ways to protect ourselves.
Or consider the geolocation data that will attend connected cars. The constructive use of such data will help us navigate the roads more efficiently and will provide immensely useful data for car makers, city planners, and even economists. Some, however, will be sensitive to this new form of personal information.
In the last few years, hackers have breached a number of high profile targets in both the commercial and government worlds: Target and Home Depot, for example, and, perhaps most spectacularly, the theft of some 21 million employment files from the Federal government’s Office of Personnel Management.
In the summer of 2015, two hackers demonstrated that they could remotely hack into a Jeep vehicle and commandeer it while driving on the road. The group publicized the event to demonstrate the vulnerability and encourage better security practices. In response, Jeep issued a nationwide recall of more than 1.4 million vehicles to patch the security hole. The event startled many: even my car can be hacked!?
Indeed, for all their benefits, connected devices are in some ways more vulnerable precisely because of their connectivity. In other ways, more decentralized connectivity will help mitigate intrusions. Security will thus prove a constant challenge as we race to stay one step ahead of our adversaries.
A long list of government agencies are interested in these privacy and security topics: the Federal Trade Commission, the Federal Communications Commission, the Food and Drug Administration, the Federal Aviation Administration, the National Highway Transportation Safety Administration, to name a few. State and local regulators are also jumping into the fray.
Privacy encompasses both “reputation”—what my neighbors or co-workers know, for instance—and also “discrimination”—what my health insurer or employer knows. There is no sure-fire way to fully enjoy the benefits of sharing more information with those we prefer to know and also completely quarantine it from those we don’t. Security is likewise a balancing act. To make use of information, we must store and transmit it, which inevitably opens the possibility of breaches.
Mercatus’s Thierer counsels that patience and organic adaptation is the wisest path. Fears and concerns are real. Yet, we are remarkably well suited to overcome these fears and thrive with modernity. To ameliorate the unsavory side-effects of new technologies, we often develop or deploy additional technologies. Just so with privacy and security. In addition, we adopt new social arrangements and customs to deal with the cultural discomforts of the information explosion.
Consider the case of the hacked and commandeered Jeep. At first glance, it is a scary incident. Yet, more than a hundred years after the car was invented, some 50,000 people die on American roads each year. If someone told us a century ago that cars would kill millions of people over the next hundred years, would we have allowed automobile technologies to proceed? Autonomous car enthusiasts counter that robo-cars may save the lives of thousands of people by reducing basic human errors, distractions from mobile phones, and drunk driving. In this context, the hacking of the Jeep might thus seem less frightening.
Thierer shows that fears of rapidly changing technologies often follow the same path: first, resistance; then, gradual adaption; and finally, widespread assimilation. This is not to say no new laws and rules will be needed. Concepts of liability and tort law may have to evolve. In some cases, moreover, we may need to find novel ways to increase the costs of hacking by foreign governments.
Because of the interconnected and thus complex nature of this ecosystem, diverse firms and industry associations, meanwhile, will have to work together to agree on new standards and share best privacy and security practices. On this front, there is reason for optimism. As CTIA - The Wireless Association reports, government agencies such as the National Institute of Standards and Technology (NIST), the National Highway Traffic Safety Administration (NHTSA), and the North American Electric Reliability Council (NERC) are actively engaged in standards and information-sharing, as are non-government sector groups like the Institute for Electrical and Electronic Engineers (IEEE), Broadband Forum, and Telecommunications Industry Association (TIA), among many others.
The vital concern, however, is that we continue to prefer open innovation and resist the temptation to preemptively block paths of experimentation.
In August of 1998, the cover of Wired magazine pictured computer scientist Bill Joy. The first Internet wave was very much based on PCs and websites, but Joy had a vision of connecting everything. He even had a new language—Jini—that he thought could be the common link among billions of connected things. The vision was compelling, even if the details have not played out as he surmised. The future will continue to surprise us, usually in pleasant ways—if we let it.
Before long, this emerging Internet of Everything will be so commonplace that the term will drift out of usage. (We do not refer to the “Electrification of Things.”) The Internet will be a foundation of not just Web content but of most industries. It will operate in the background, like electricity. It’s possible we will integrate the IoE with the blockchain to provide a running record of information across the globe and provide a financial underpinning of so many nanoscale transactions.
Just as the old dial-tone of dial-up Internet access gave way to “always on” broadband, we will take for granted that most future devices and platforms will be connected to one another and the cloud. The positive impact, nevertheless, will cascade for many years to come.
Bret Swanson is president of Entropy Economics and a U.S. Chamber of Commerce Foundation Fellow.
The views expressed here are those of the author and do not necessarily reflect those of the U.S. Chamber of Commerce Foundation, U.S. Chamber of Commerce, or their affiliates.
 Nicholas Carr, The Big Switch (New York: W.W. Norton and Co., 2008).
 For much more on the fascinating history of Edison, Westinghouse, Tesla and electrification, see, Jill Jonnes, Empires of Light (New York: Random House, 2003).
 See the CTIA “Annual Wireless Industry Survey.” Note that subscriber devices can exceed the number of subscribers because subscribers can have more than one device (e.g., two cell phones, a tablet, multiple SIM cards, etc.)
 “Google Self-Driving Car Project Monthly Report — May 2015.”
 Dan Ricci, “How vehicle telematics is changing the auto industry,” IBM, April 20, 2015.
 Boston Consulting Group, “Revolution in the Driver’s Seat,” April 2015.
 Cisco, “Visual Networking Index: Global Mobile Data Forecast Update 2014-2019 White Paper,” February 3, 2015.
 The Qualcomm Tricorder XPRIZE, for example, aims to turn the science fiction of Star Trek into reality. Seven finalists, who have developed small devices that can take human vital signs and diagnose 15 different diseases and conditions, are now vying for the $10 million prize.
 Davey Alba, “Google Won the Internet. Now It Wants to Cure Diseases,” Wired, August 2015.
 Jessica Barltett, “MIT's tiny sensor can wirelessly track tumors,” Boston Business Journal, August 9, 2015.
 “20 Billion Nanoparticles Talk to the Brain with Electricity,” New Scientist, June 8, 2015.
 Peter W. Huber, The Cure in the Code (New York: Basic Books, 2013).
 Robert Graboyes, "Why We Need to Liberate America's Health Care," PBS NewsHour, January 9, 2015.
 Adam Theirer, “Technopanics, Threat Inflation, and the Danger of an Information Technology Precautionary Principle,” Minnesota Journal of Law, Science, and Technology, Winter 2013.
 Cisco, “Visual Networking Index.”
 Wi-Fi operates in both the 2.4 GHz and 5 GHz bands. In the fall of 2014, the FCC eased restrictions on 100 MHz of spectrum in the 5 GHz band. It was a good first step. To truly empower the immersive Internet, however, the FCC should take the next step — approving an additional 195 MHz within the 5 GHz band to enable the next generation of Wi-Fi. This new band will help reduce interference among our rapidly proliferating devices and could reach capacity of more than one gigabit per second, or 10 times faster than today’s version.
 Adam Thierer, “The Internet of Things and Wearable Technology: Unlocking the Next Wave of Data-Driven Innovation,” Slide presentation, AEI-FCC Conference, September 11, 2014.