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[Senate Report 114-364]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 652
114th Congress     }                                     {       Report
                                 SENATE
 2d Session        }                                     {      114-364
_______________________________________________________________________

                                     

      DEVELOPING INNOVATION AND GROWING THE INTERNET OF THINGS ACT

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                S. 2607

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              September, 27, 2016.--Ordered to be printed
                                  ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

59-010                         WASHINGTON : 2016               
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                    one hundred fourteenth congress
                             second session

                   JOHN THUNE, South Dakota, Chairman
 ROGER F. WICKER, Mississippi         BILL NELSON, Florida
 ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
 MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
 KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
 TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
 DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
 JERRY MORAN, Kansas                  ED MARKEY, Massachusetts
 DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
 RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
 DEAN HELLER, Nevada                  JOE MANCHIN, West Virginia
 CORY GARDNER, Colorado               GARY PETERS, Michigan
 STEVE DAINES, Montana
                       Nick Rossi, Staff Director
                 Adrian Arnakis, Deputy Staff Director
                    Jason Van Beek, General Counsel
                 Kim Lipsky, Democratic Staff Director
           Christopher Day, Democratic Deputy Staff Director
                 Clint Odom, Democratic General Counsel

                                                      Calendar No. 652
114th Congress      }                                    {      Report
                                 SENATE
 2d Session         }                                    {     114-364

======================================================================

 
      DEVELOPING INNOVATION AND GROWING THE INTERNET OF THINGS ACT

                                _______
                                

               September 27, 2016.--Ordered to be printed

                                _______
                                

Mr. Thune, from the Committee on Commerce, Science, and Transportation, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 2607]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 2607) to ensure appropriate 
spectrum planning and interagency coordination to support the 
Internet of Things, having considered the same, reports 
favorably thereon with an amendment (in the nature of a 
substitute) and an amendment to the title and recommends that 
the bill (as amended) do pass.

                          Purpose of the Bill

    S. 2607 would take steps to help develop a national 
strategy to encourage the development of the Internet of Things 
(IoT).

                          Background and Needs

    IoT can be described as the widespread integration and 
proliferation of Internet-connected devices, such as home 
appliances, remote sensors, medical devices, and cars. It has 
been said that IoT brings the physical and digital world  
together.\1\ Examples of IoT devices include: subcutaneous body 
sensors that provide a patient's real-time vital signs to 
medical providers; applications (``apps'') that allow users' 
phones to monitor and adjust household functions--from pre-
heating an oven to running a bath to controlling smart 
lightbulbs; smart cities where ubiquitous sensors allow for 
smoother flow of traffic; and censored roadways, buildings, 
bridges, and dams that automatically communicate their 
structural integrity to officials, providing alerts when 
repairs or upgrades are needed.\2\
---------------------------------------------------------------------------
    \1\CNET, ``Samsung 2015 CES Keynote with co-CEO BK Yoon,'' January 
4, 2015, at http://live.cnet.com/Event/
Samsung_2015_CES_Keynote_with_co-CEO_BK_Yoon?Page=0.
    \2\``The Internet of Things Will Thrive by 2025,'' Pew Research 
Internet Project, May 4, 2015, at http://www.pewinternet.org/2014/05/
14/internet-of-things.
---------------------------------------------------------------------------
    IoT is expected to impact every sector of the economy to 
varying degrees. Examples include gains in health care through 
remote monitoring, manufacturing operational efficiency and 
supply chain tracking, electrical grids via reduction in costly 
peak usage, traffic management by adjustments in traffic light 
timing and bus routes, and agriculture through water 
management, including the ability to track changes in soil 
moisture, carbon, nitrogen, and soil temperature.\3\
---------------------------------------------------------------------------
    \3\McKinsey Global Institute study, ``Disruptive technologies: 
Advances that will transform life, business, and the global economy,'' 
May 2013, pp. 56-58, at http://www.mckinsey.com/insights/
business_technology/disruptive_technologies.
---------------------------------------------------------------------------
    McKinsey & Company, for one, estimates that IoT could 
contribute $2.7 trillion to $6.2 trillion to the world economy 
each year by 2025.\4\ Health care applications alone could have 
an economic impact of $1.1 trillion to $2.5 trillion per year 
by 2025.\5\ Using the McKinsey & Company study as a base, the 
Progressive Policy Institute estimates the United States could 
realize one-third of total global IoT economic benefit, raising 
U.S. gross domestic product by 2 to 5 percent by 2025.\6\ 
Worldwide, the global market for IoT devices and services is 
expected to exceed $7 trillion by 2020.\7\
---------------------------------------------------------------------------
    \4\Ibid, p. 54.
    \5\Michael Mandel, ``Progressive Policy Institute, Can the Internet 
of Everything Bring Back the High-Growth Economy?,''September 2013, at 
http://www.progressivepolicy.org/wp-content/uploads/2013/09/09.2013-
Mandel_Can-the-Internet-of-Everything-Bring-Back-the-High-Growth-
Economy-1.pdf.
    \6\Ibid.
    \7\Molly Wood, ``At the International CES, the Internet of Things 
Hits Home,'' The New York Times, January 4, 2015, at http://
www.nytimes.com/2015/01/05/technology/international-ces-the-internet-
of-things-hits-homes.html?_r=1.
---------------------------------------------------------------------------
    Estimates of the impact of IoT on the U.S. economy vary, 
but experts project that it will be substantial. An estimated 
50 billion devices are expected to be connected by the year 
2020.\8\
---------------------------------------------------------------------------
    \8\Federal Trade Commission Staff Report, ``Internet of Things: 
Privacy & Security in a Connected World, January,'' 2015, at http://
www.ftc.gov/system/files/documents/reports/federal-trade-commission-
staff-report-november-2013-workshop-entitled-internet-things-privacy/
150127iotrpt.pdf.
---------------------------------------------------------------------------
    Some have argued that to fully realize the potential of 
IoT, countries should craft a national strategy to promote IoT 
development and adoption, which the United States has not done. 
Establishing such a national strategy to encourage the 
development of IoT has the support of a diverse set of 
stakeholders, including The App Association, the U.S. Chamber 
of Commerce, the Competitive Carriers Association, the Consumer 
Technology Association, Intel, the Information Technology 
Industry Council, the National Association of Manufacturers, 
the Tech CEO Council, the Telecommunications Industry 
Association, and the Semiconductor Industry Association.

                         Summary of Provisions

    S. 2607, also known as the DIGIT Act, is intended to help 
create a national strategy for IoT. The bill would require the 
Secretary of Commerce to convene a working group of Federal 
agencies, advised by a steering committee of nongovernmental 
stakeholders established within the Department of Commerce 
(DOC) to advise the Federal working group, all to provide 
recommendations to Congress on how to plan and encourage the 
growth of IoT.
    The bill is structured so that the nongovernmental steering 
committee would exist to: (1) advise the working group; and (2) 
submit a report with recommendations to the working group. The 
working group, in addition to its own duties and 
recommendations, would also be required to assess steering 
committee recommendations and comment on them in the report the 
working group sends to Congress. The working group would be 
required to submit its findings and recommendations to Congress 
within 18 months of the bill's enactment.
    The bill also would direct the Federal Communications 
Commission (FCC), in consultation with the DOC's National 
Telecommunications and Information Administration (NTIA), to 
assess the spectrum needs required to support IoT.

                          Legislative History

    On March 24, 2015, the Senate unanimously passed S. Res. 
110, introduced by Senators Fischer, Ayotte, Booker, and 
Schatz, a resolution calling for a national strategy to 
encourage the development of IoT.
    On March 1, 2016, Senators Fischer, Ayotte, Booker, and 
Schatz introduced the DIGIT Act.
    On April 27, 2016, the Committee met in open Executive 
Session and, by voice vote, ordered the bill to be reported 
with an amendment (in the nature of a substitute).

                            Estimated Costs

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

S. 2607--Developing Innovation and Growing the Internet of Things Act

    S. 2607 would direct the Department of Commerce (DOC) to 
convene a working group of various federal agency 
representatives and a steering committee of private 
stakeholders to produce reports and recommendations to the 
Congress to improve intragovemmental coordination and to 
encourage the development of the Internet of things. (The 
Internet of things refers to the growing number of devices that 
connect to the Internet and interact with one another.) It also 
would direct the Federal Communications Commission to prepare a 
report assessing the need for spectrum to support such 
development.
    On the basis of information from DOC and the Federal Trade 
Commission, CBO estimates that implementing S. 2607 would 
require about a dozen employees and would cost $3 million to 
convene the working group and to develop the reports required 
under the bill. Those costs would be spread among the federal 
agencies that would be a part of the working group and such 
spending would be subject to the availability of appropriated 
funds.
    Enacting S. 2607 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting S. 2607 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2027.
    S. 2607 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Stephen Rabent. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                           Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported

                       number of persons covered

    The bill does not authorize any new regulations and will 
not subject any individuals or businesses to new regulations.

                            economic impact

    The bill would not have an adverse economic impact on the 
Nation.

                                privacy

    The bill would not have a negative impact on the personal 
privacy of individuals.

                               paperwork

    The bill would require three reports from the Federal 
Government. The first report would be submitted by the steering 
committee to the working group, 1 year after the date of 
enactment. The second report would be submitted by the working 
group to Congress, no later than 18 months after the date of 
enactment. The third report would require the FCC to submit to 
the appropriate committees of Congress within 1 year of 
enactment a report summarizing the comments submitted in 
response to a notice of inquiry.

                   Congressionally Directed Spending

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.

                      Section-by-Section Analysis

Section 1. Short title.

    This section would establish the bill's short title as the 
``Developing Innovation and Growing the Internet of Things 
Act'' or the ``DIGIT Act.''

Section 2. Findings; sense of Congress.

    This section sets out findings and expresses the sense of 
Congress that IoT policies should maximize the potential and 
development of IoT to benefit consumers, businesses, and the 
government.

Section 3. Definitions.

    This section establishes definitions for terms used 
throughout the Act.

Section 4. Federal working group.

    This section would require the Secretary of Commerce to 
convene a working group of Federal entities to study and make 
recommendations on various IoT matters. It also establishes a 
steering committee within the DOC comprised of a wide range of 
stakeholders outside the Federal Government to make 
recommendations to the working group.
    The Secretary has discretion in forming the working group, 
but is required to consider seeking representation from the 
DOC, including from NTIA, the National Institute of Standards 
and Technology, and the National Oceanic and Atmospheric 
Administration, as well as from the FCC, the Federal Trade 
Commission, the National Science Foundation, the Department of 
Transportation, the Office of Management and Budget, the 
Department of Homeland Security, and the White House Office of 
Science and Technology Policy.
    The section would require the working group to: (1) 
identify any Federal regulations, statutes, grant practices, 
budgetary or jurisdictional challenges, and other sector-
specific policies that are inhibiting or could inhibit the 
development of IoT; (2) consider policies or programs that 
encourage and improve coordination among Federal agencies with 
jurisdiction over IoT; (3) consider any findings or 
recommendations made by the steering committee and, where 
appropriate, act to implement those recommendations; and (4) 
examine how Federal agencies use and can benefit from IoT, 
including preparedness to adopt IoT.
    The working group would be required to consult with various 
nongovernmental stakeholders, including, among others, the 
steering committee and subject matter experts representing a 
variety of industry and civil society stakeholders, including 
small business and rural stakeholders.
    The steering committee would advise the working group on: 
(1) potential regulatory, statutory, grant, programmatic, 
budgetary, and jurisdictional challenges to development of IoT; 
(2) spectrum availability to support IoT; (3) policies and 
programs relating to privacy, security, or coordination among 
Federal agencies with jurisdiction over IoT; (4) the use of IoT 
by small businesses; and (5) international proceedings 
affecting IoT. The steering committee would submit its findings 
and recommendations to the working group; the working group is 
required to consider and comment on any recommendations made by 
the steering committee within 1 year.
    The section further provides that the steering committee 
would be required to set its own agenda in carrying out its 
duties, but that the working group can suggest topics or items 
for steering committee consideration. It also states that the 
steering committee's report must be the result of the 
independent judgment of the steering committee. The steering 
committee would terminate on the date on which the working 
group submits its report to Congress as required by this 
section, unless the Secretary of DOC files a new charter for 
the steering committee.
    The working group would be required to submit its findings 
and recommendations to Congress, along with the steering 
committee's findings and recommendations, within eighteen 
months of the bill's enactment.

Section 5. Assessing spectrum needs.

    This section would require the FCC, in consultation with 
NTIA, to issue a notice of inquiry seeking public comment on 
the current and future spectrum needs of IoT. Specifically, the 
inquiry would seek comment on the adequacy of available 
spectrum, what regulatory barriers exist to providing any 
needed spectrum, as well as the role of licensed and unlicensed 
spectrum to support the IoT proliferation. The Commission would 
be required to submit to the appropriate committees of 
Congress, as defined by the DIGIT Act, within 1 year of 
enactment a report summarizing the comments submitted in 
response to the notice of inquiry.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
bill as reported would make no change to existing law.

                                  [all]
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