8 Reasons Why Countries Need a National Internet of Things Strategy

The Internet of Things offers many opportunities to grow the economy and improve quality of life. Just as the public sector was instrumental in enabling the development and deployment of the Internet, it should play a similar role in the Internet of Things to ensure its success.

Here are the eight reasons why national governments should create comprehensive national strategies for the Internet of Things:

1. Network externalities

Many of the social and economic benefits from large-scale deployment of the Internet of Things accrue not to those buying or selling these products and services, but to competitors—through the expansion of network benefits—and to non-users, if the application generates an external benefit. Government efforts can help correct these market failures so that consumers and businesses can seize the full set of benefits.

2. “Chicken-and-egg” dynamics

The success of some Internet of Things applications depends on the success of other technologies and vice versa. While the market will eventually be able to establish effective interdependent systems, it would take longer and happen much more incrementally than it would with government support to resolve chicken-and-egg dilemmas and encourage mutual adoption of these technologies until market forces can take over and drive full deployment.

3. Risk and uncertainty

Because the Internet of Things represents an emerging set of technologies, many potential users, including companies and local governments, will disregard the benefits it promises and delay adoption until the technology is proven. Governments have much to gain from adopting connected technologies, but when they do so, they are not the only ones that benefit; they help the entire Internet of Things ecosystem develop and mature.

4. Competitiveness externalities

The Internet of Things offers a valuable opportunity for countries to gain a competitive advantage in the global marketplace. While business actions can improve an individual firm’s competitiveness, everyone, not just the individual firm, shares in the benefits of a national economy that is more competitive overall. For example, an importer that implements connected technologies to improve the efficiency of its international supply chains and reduce overhead costs will increase the overall competitiveness of domestic companies that can import goods at lower costs.

5. Interoperability

The private sector can and should lead the development and adoption of standards for the Internet of Things. However, standards coordination is important in public-sector applications. National strategies can help identify key areas where increasing interoperability would accelerate public benefits from the Internet of Things.

6. Public goods

Certain aspects of the Internet of Things require public goods that the private sector cannot or will not adequately provide. National strategies should ensure the public sector provides these necessary public goods, which include human capital, radio spectrum, and research and development funding.

7. Innovation-friendly regulation

Excessive, duplicative, or poorly-designed regulations can significantly slow the growth of the Internet of Things. A national strategy for the Internet of Things can forestall such problems by sending a clear message to legislators and regulators that this technology is important and that over-regulation or poorly-designed regulation would limit its growth. Moreover, national strategies can identify opportunities to expand, rather than limit, the use of the Internet of Things.

8. Equity

The Internet of Things can be a valuable tool to help meet the needs of underserved populations, but without appropriate public policies such as ensuring that smart city technologies serve all cities and neighborhoods rather than just affluent ones, adoption will be uneven.

Read more about the need for countries to develop national strategies for the Internet of Things in the latest report from ITIF’s Center for Data Innovation.