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INTERNET OF THINGS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COURTS, INTELLECTUAL PROPERTY, 

AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JULY 29, 2015 

Serial No. 114–38 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

DARRELL E. ISSA, California, Chairman 

DOUG COLLINS, Georgia, Vice-Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

J. RANDY FORBES, Virginia 

TRENT FRANKS, Arizona 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

BLAKE FARENTHOLD, Texas 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

JERROLD NADLER, New York 

JUDY CHU, California 

TED DEUTCH, Florida 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

ZOE LOFGREN, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

JOE KEELEY, Chief Counsel 

JASON EVERETT, Minority Counsel 
(III) 

C O N T E N T S 

JULY 29, 2015 

Page 

OPENING STATEMENTS 

The Honorable Darrell E. Issa, a Representative in Congress from the State 

of California, and Chairman, Subcommittee on Courts, Intellectual Property, and the Internet .......................................................................................... 1 

The Honorable Jerrold Nadler, a Representative in Congress from the State 

of New York, and Ranking Member, Subcommittee on Courts, Intellectual 

Property, and the Internet .................................................................................. 3 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 5 

The Honorable Suzan DelBene, a Representative in Congress from the State 

of Washington, and Ranking Member, Committee on the Judiciary ............... 5 

WITNESSES 

Gary Shapiro, President and CEO, Consumer Electronics Association 

Oral Testimony ..................................................................................................... 7 

Prepared Statement ............................................................................................. 9 

Dean C. Garfield, President and CEO, Information Technology Industry 

Council 

Oral Testimony ..................................................................................................... 25 

Prepared Statement ............................................................................................. 27 

Mitch Bainwol, President and CEO, Alliance of Automobile Manufacturers 

Oral Testimony ..................................................................................................... 35 

Prepared Statement ............................................................................................. 37 

Morgan Reed, Executive Director, ACT|The App Association 

Oral Testimony ..................................................................................................... 43 

Prepared Statement ............................................................................................. 45 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Letter from Brian J. Raymond, Director, Technology Policy, the National 

Association of Manufacturers (NAM) ................................................................. 82 

Prepared Statement of Public Knowledge ............................................................. 84 

Material submitted by the Telecommunications Industry Association (TIA) ..... 111 

(1) 

INTERNET OF THINGS 

WEDNESDAY, JULY 29, 2015 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, 

AND THE INTERNET

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:05 a.m., in room 

2141, Rayburn House Office Building, the Honorable Darrell E. 

Issa (Chairman of the Subcommittee) presiding. 

Present: Representatives Issa, Goodlatte, Chabot, Poe, Marino, 

Walters, Nadler, Chu, Deutch, DelBene, Jeffries, Cohen, and Johnson. 

Staff Present: (Majority) Vishal Amin, Senior Counsel; Eric Bagwell, Clerk; and (Minority) Jason Everett, Minority Counsel. 

Mr. ISSA. The Subcommittee on Courts, Intellectual Property, 

and the Internet will come to order. Without objection, the Chair 

is authorized to declare a recess of the Subcommittee at any time. 

Today we welcome everyone here for a hearing on the Internet 

of Things. Throughout its short history, the Internet has been 

transformative and a powerful tool. It has shaped communication 

commerce worldwide. Technology, too, has proven to advance at 

rates that only Moore’s law describes with a doubling of capacity 

so quickly that about the time you run out of your short warranty, 

you in fact have a product that can out perform the one on your 

desk. 

But the Internet of Things, which broadly refers to a network 

connected real world items able to exchange data with each other 

and across existing network infrastructure is a newer portion of 

what now becomes the future of our lives and our communication 

in the 21st Century. 

It is estimated by 2020 there will be 25 billion connected things, 

and without a doubt, before we reach 2020, I will be wrong, and 

there will be more connected things. By inventing devices with 

electronic sensors, software capable of connecting a market, we in 

fact have smart devices. Those smarter devices today already include, if you choose, every light switch in your home, the watch you 

wear, and products throughout the home, whether they be speakers 

to hear from or in fact sensors to control climate down to a portion 

of every room. 
2 

Data-driven technology is also improving the way we understand 

healthcare and the introduction of new health monitoring systems 

can in fact prevent, detect, and treat today any number of afflictions. A generation ago, the insulin pump was an amazing product, 

but it wasn’t a true demand pump, it wasn’t connected to your physician, it wasn’t in fact sensing other environments. Today, it not 

only could but it soon will. 

At the same time, as we talk about your home, your lighting, 

your messaging, your voice, and of course, your health and your actual biological function, issues like privacy and data security for 

these interoperable technologies become, not just something to talk 

about, but an area in which we in Congress play a large and potentially destructive role if we’re not careful in the development of 

these technologies. 

Every day in America somewhere someone is being hacked and 

somewhere someone is finding out that their personally identifiable 

information has been compromised. Too often it in fact is the government who we hear it from, the government who controls, if you 

will, whether or not you can further secure your Internet of Things 

products or not. 

A generation ago I stood with one of our witnesses at a time in 

which a Member of Congress, a former FBI agent was trying to 

prevent 256 encryption. He was doing so because the FBI needed 

to be able to quickly crack the bad guys’ transmissions. It had 

needed to be able to unbundle a floppy disk information in a matter of seconds if they were going to deter organized crime. 

Unfortunately, it meant that hackers were taking Microsoft’s operating system and quickly duplicating it and denying them millions or billions of dollars. It took a number of years for Congress 

to realize that that artificial control was not only circumventable 

by exporting their software to other countries and reimporting it, 

but it was ludicrous because the bad guys were not going to limit 

their protection to 256 bits. 

Unlicensed spectrum within the Internet of Things is going to be 

talked about again and again today. I hope my witnesses will feel 

free to talk about the benefits of greater spectrum for the Internet 

of Things. I would remind all panelists, however, that the FCC is 

not within our primary jurisdiction, but to unbundle these and 

other parts of the Internet of Things will take a coordination between Committees that do control spectrum, those of us who control a great deal of the privacy requirements, and of course, the 

overseeing of what government allows. 

In January, the Federal Trade Commission released a report that 

followed months of stakeholder roundtables focused on data privacy 

and security. The report made a broad nonbinding recommendation 

about how companies should address these issues from the onset 

and laid the groundwork for future FTC involvement in the Internet of Things. 

When Congresswoman DelBene and I launched the congressional 

caucus on the Internet of Things in January, the first questions we 

received were usually what is the Internet of Things? And why 

does Congress care? 

To a great extent, we have laid out a number of those even in 

my opening statement today, but I would be remiss if I didn’t say 
3 

that the Federal Trade Commission is an agency that has been enforcing breaches in security while in fact until recently providing 

little guidance. This is yet another example of where we in fact can 

come in with the heavy hand of government but seldom with a safe 

haven, and that’s an area in which the Internet of Things caucus 

and this Committee have an obligation to ensure that we do both. 

So today we look forward to a hearing which stakeholders in the 

Internet of Things marketplace and further opportunities to deal 

with the challenges that Congress brings and those in which we 

can bring relief. 

Thank you. And I look forward to our witnesses, and I now recognize the Ranking Member, the gentleman from New York, Mr. 

Nadler, for his opening statement. 

Mr. NADLER. Thank you, Mr. Chairman. The Internet of Things 

is the next revolution in our increasingly wired world. Everything 

from household appliances to transportation systems can harness 

the power of the Internet to increase productivity, efficiency, and 

consumer choice. This technology holds great promise for consumers, businesses, and governments alike, but we must also consider the potential threats to security and privacy that are inherent 

in system relying on wireless connection and massive data collection as its lifeblood. 

Today’s hearing is an opportunity to examine both the benefits 

and the risks that the Internet of Things presents. The Internet of 

Things has experienced explosive growth in recent years. By some 

estimates, there are already 25 billion connected devices today. By 

2020, in 5 short years, there may be as many as 50 billion. 

We’re already seeing many innovative uses of the Internet of 

Things across various industries as well as the potential risks that 

this technology may hold. For example, according to one study, by 

2020, up to 90 percent of consumer cars may have an Internet connection, up from less than 10 percent in 2013. With this technology, drivers can monitor whether their car needs maintenance, 

the safety of their driving, and even the fuel efficiency of various 

routes. 

But these features also leave their cars vulnerable to a cyber attack. As the New York Times described last week, researchers were 

able to track Internet-enabled cars’ location, determine their speed, 

turn on and off their blinkers from afar, turn on and off their blinkers, lights, windshield wipers, and radios, interfere with navigation 

devices, and in some cases, control their brakes and steering. 

As more and more vehicles use Internet technology, it is vital 

that automakers install strict security features to ward off potential attacks. 

Similarly, so called smart cities are incorporating Internet of 

Things into their transportation energy and even waste management systems to increase efficiency. For example, traffic lights can 

be timed to maximize traffic flow and ease congestion in realtime. 

Street lamps can conserve energy by dimming when sensors tell 

them that no one is around, and garbage cans can signal when 

trash ought to be collected. Imagine the garbage can talking to the 

sanitation department. 

Such technology has the potential to revolutionize students that 

build infrastructure. I don’t want to know what they say. But un-
4 

less cities integrate strong security measures when deploying this 

technology, their infrastructure could be vulnerable to attack by 

hackers looking to do mischief or terrorists seeking to bring a 

whole city to a standstill. 

In addition to security concerns, the Internet of Things also 

raises a host of privacy implications, particularly with respect to 

consumer devices. There is no doubt that Internet-enabled technology can improve a consumer’s experience in ways large and 

small. To maximize energy efficiency, your nest thermostat can be 

controlled remotely and even adjust temperatures on its own once 

it learns your patterns. 

Amazon has introduced a Dash button which will allow customers to press a button and automatically reorder certain household supplies. But what do these companies do with the massive 

amounts of data they collect about their customers? What sort of 

notice do they provide to consumers about their privacy policies, 

and what choice do consumers have about how their information is 

used? And how will companies protect their sensitive information 

from being compromised in a cyber attack? These are all questions 

that must be considered as this technology continues to expand its 

reach. 

For another example, millions of Americans wear devices that 

track their physical activity and other health indicators. At least 

one insurance company is offering its customers a discount if they 

wear such a device and demonstrate a healthy lifestyle, but beyond 

encouraging healthier behavior by their customers, it is not clear 

how else insurance companies may seek to use this personal information in the future. Will it be sold for marketing purposes? Will 

it be used in a discriminatory manner to determine the use of suitability for credit or employment? 

In its examination of these important questions, the Federal 

Trade Commission made a number of important recommendations 

that we must consider. It suggested that companies build security 

into their devices at the outset rather than as an afterthought. It 

also recommended that they monitor connected devices throughout 

their expected lifecycle to provide security patches where possible 

to cover known risks. 

In addition, the FTC urged companies to protect consumers’ privacy by engaging in data minimization as well as providing notice 

in choices to consumers as to how their data may be used. Although the FTC did not make any specific legislative recommendations, we should consider whether congressional action is appropriate at this time to address security and privacy concerns. If so, 

should we seek solutions to these concerns that are specific to the 

Internet of Things or should they be addressed through broader 

legislation on these topics? 

The Internet of Things has already led to important technological 

breakthroughs, and as it expands its reach, it has the potential to 

spur tremendous innovation. Our challenge is to find the proper 

balance between promoting this innovation and ensuring that our 

security and our privacy are protected as this valuable technology 

continues to grow. 

I look forward to hearing from our witnesses about how to address these challenges, and I yield back the balance of my time. 
5 

Mr. ISSA. Thank you, Mr. Nadler. 

I now recognize the gentleman from Virginia, the Chairman of 

the full Committee, Mr. Goodlatte for his opening statement. 

Mr. GOODLATTE. Thank you, Mr. Chairman. Today we’re here to 

learn more about the Internet of Things. I think this technology 

has the ability to not only improve the more mundane aspects of 

our everyday lives but transform the healthcare, transportation, 

and information technology industries. 

This new area of technology is of particular interest to the Judiciary Committee considering our longstanding jurisdiction when it 

comes to issues pertaining to intellectual property, privacy, security, cloud computing, and digital trade. 

The Internet of Things refers to machines containing sensors 

that connect and transmit data to other connected devices and the 

Internet. Dramatic growth in cloud computing over the past several 

years has helped enable this technology to reach its full potential. 

Without the ability for data from an Internet of Things device to 

be analyzed in realtime, the data itself would serve little value. 

The ability to access this information through mobile apps or 

even our cars, makes these Internet of Things devices a key tool 

to finding creative solutions for many of the problems of daily life 

in the 21st Century. Smart agriculture will help us to grow more 

food and prevent waste. Smart transportation will help prevent 

traffic jams but can also be used to monitor road conditions and 

structural components of bridges and overpasses to detect problems 

immediately. 

New wearables not only monitor the number of steps we take but 

can also include sensors that can catch and alert us to a potential 

medical emergency before it actually becomes one. As this Committee continues to study this new technology, it is important for 

us to keep in mind the full scope of the Internet of Things and be 

cognizant of its effects on public policy today and in the future. 

In particular, we need to examine the privacy and security implications of this technology and look into the security and privacy 

measures industry is building now and the measures they intend 

to implement as open standards are developed. 

I’m hopeful that this new technology will help fuel the engine of 

American innovation, prosperity, and creativity. I think we have a 

fantastic panel assembled today. I know all of the witnesses, and 

I look forward to hearing from them about this exciting new area 

of technology. 

Thank you, Mr. Chairman. 

Mr. ISSA. Thank you, Mr. Chairman. 

And now on behalf of the Ranking Member, the gentlelady from 

Washington’s First District, Ms. DelBene, will make a short opening statement. 

Ms. DELBENE. Thank you. I want to thank my co-chair on the 

Internet of Things caucus and our Chairman, as well as the Ranking Member for calling this hearing on this important subject. 

When we examine the way that Internet-connected products and 

sensors are being used and what’s called the Internet of Things 

from home appliances to personal wearables, it might be easy to 

conclude that the promise of the Internet of Things is limited only 

by American ingenuity, but we have an emerging set of challenges 
6 

and opportunities to address for both innovators and for consumers. 

To start, we need to make sure that we update existing laws to 

reflect the way the world works today and where we are headed 

in the future. That means, for example, updating the Electronic 

Communications Privacy Act to ensure that data on a server is protected by the same warrant standard as a document in a file cabinet. For the multi-billion dollar Internet of Things economy to be 

successful, we need to be responsible stewards of policy. 

For example, consumers must feel they can trust their devices 

will be secure and private, not vulnerable to hacking or spying. Devices must be able to talk to each other, and that means forging 

a path to adoption of uniform preferably international standards. 

Regulatory agencies must find ways to strike the right balance between encouraging innovation and firmly upholding their duty to 

protect the public health and safety, particularly in the realm of 

connected cars. 

And as all these devices collect unprecedented amounts of data, 

they hold great promise for things like health research, but we 

must work with stakeholders to create a privacy landscape that 

Internet of Things users can understand that provides individuals 

with control over their own data. 

Again, I want to thank the Chairman and the Ranking Member 

for calling today’s important hearing and setting the stage for what 

I hope will be a productive and informative series of hearings on 

the role that Congress and our Committee can play and create an 

environment where Internet of Things innovation can prosper and 

consumer protection is at the forefront. 

Thank you, Mr. Chair, and I yield back. 

Mr. ISSA. I thank you, and thank for your leadership on this 

issue. 

It is now my pleasure to introduce our distinguished panel. The 

witnesses’ written statements have been entered into the record 

and will be placed in their entirety, and I’d ask witnesses to summarize in about 5 minutes their statements so we can leave time 

for lots of questions. 

But before I introduce the witnesses formally, pursuant to the 

Committee rules, I’d ask that all witnesses stand to take the oath, 

customarily raising your right hand. 

Do you solemnly swear or affirm that the testimony you’re about 

to give will be the truth, the whole truth, and nothing but the 

truth. 

Please be seated. Let the record reflect that all witnesses answered in the affirmative. 

Today, our witnesses include Mr. Gary Shapiro, President and 

CEO of the Consumer Electronics Association; Mr. Dean Garfield, 

President and CEO of the Information Technology Industry Council; Mr. Mitch Bainwol, President and CEO of the Alliance of Automobile Manufacturers; and Mr. Morgan Reed, Executive Director of 

ACT | The App Association 

Before I go down the row for the witnesses, I have to take a little 

bit of a personal privilege. The other three know it. Mr. Shapiro 

and I go back a long time. We were there at the birth of the Modern Consumer Electronics Association, and I once worked for him 
7 

on an unpaid, highly compensated, but unpaid position as the 

Chairman. So if today I rough him up, remember get backs, it 

takes awhile. 

And with that, Mr. Shapiro. 

TESTIMONY OF GARY SHAPIRO, PRESIDENT AND CEO, 

CONSUMER ELECTRONICS ASSOCIATION 

Mr. SHAPIRO. Thank you, Chairman Issa. This is indeed a historic moment in my life because I’ve been referring to you as boss 

for 25 years, and you, as Chairman, oversaw a good portion of our 

freedom and our growth. And thank you, Ranking Member Nadler, 

Chairman Goodlatte, and other Members as well. 

The Consumer Electronics Association represents 2,000 technology companies, and we own and produce the CES, which is held 

each January in Las Vegas, and is the world’s largest innovation 

event. The Internet of Things is a big part of the CES now. In fact, 

it’s so big that some 900 of our 3,600 exhibiters had Internet of 

Things related products at our recent show. 

And the Internet of Things, you should know, exists because of 

smart phones. Over a billion smart phones have been sold, and 

they contain something called MEMS, Micro-Electro Mechanical 

Systems. These are tiny little devices that actually move, and they 

measure all sorts of things like pressure, temperature, location, 

movement, and other valuable information. 

And because of the billions of sales of these devices in phones, 

now they cost just pennies apiece, and very smart innovators are 

putting them together in very clever ways, and what they’re doing 

is creating new services rather rapidly. They use very little energy, 

and they hook up to the Internet, and that is what the Internet of 

Things is based on. 

From garden soil moisture monitors to baby monitors, from 

wearables like smart watches and fitness trackers to connected 

thermostats and lights, from household appliances to connected 

cars, consumers are using these devices to stay healthy, to increase 

efficiency, to be secure, and to make better decisions. 

You’ve heard the estimates of how these are going to grow, and 

they are estimates. I just swore to tell the truth, so I can’t say 

they’re factual, but there is definite growth. We see it ourselves. 

We grew 32 percent in the United States alone in terms of connected home devices. It’s already almost a billion dollar marketplace in the United States just in the home area. 

And these home control systems allow consumers to manage 

their security systems, turn on appliances, manage heating and 

cooling and lighting systems, and they also increase home efficiency and cut bills, they can learn room usage patterns over time, 

they can adjust temperatures and maximize efficiency even when 

no one is home. 

And while these save time and money for ordinary Americans, 

there’s an opportunity here to care for our aging population, as well 

as the 56 million Americans with disabilities. Assistive technology 

has previously been customized and costly. Connected home products consumers are buying today provide novel interfaces like voice 

control that help people with reduced mobility and dexterity. 

Smoke detectors can now be connected to lighting controls so lights 
8 

can flash to a person who can’t hear, and they can light up the 

whole house for a safe exit. 

In today’s low-cost connected home products are life changing 

and sustaining for many Americans. Think about our older loved 

ones. We have limited caregivers with an aging population, and 

smart home devices will help seniors to live independently and 

comfortably, retain their quality of life, and they could do this with 

caregivers watching remotely, and at the same time our older 

Americans will retain their privacy and share just what they’re 

comfortable sharing. 

It’s coming quickly in terms of the Internet of Things, but it does 

face impediments. First, it requires spectrum. Wireless spectrum is 

a platform on which most of these new devices connect, and we 

need additional licensed and unlicensed spectrum. 

Second, the Internet of Things is changing what skills we need 

to retain our Nation’s competitive advantage. We need experts and 

people who can analyze data and make things happen, and we 

don’t have enough skilled workers. That’s why we are pushing for 

highly skilled immigration reform. 

Third, the Internet of Things requires government restraint. It 

does require us to consider new challenges. There are legitimate 

concerns about safety, privacy, security, but—and important questions are being raised as to who actually owns the data, and stakeholders, including government, can and should be discussing these 

issues in a forum like this today. 

As we said in our IoT filing with the FCC over 2 years ago, consumers’ adoption hinges on building trust. I just heard that again, 

Congresswoman. And it’s up to manufacturers and service providers to make good decisions about privacy and security or they 

will fail in the marketplace, and we are passionate that industrydriven solutions are best to promote innovation while protecting 

consumers, but we recognize and respect the legitimate role of government to encourage transparency, clarity, and experimentation. 

CEA itself has been involved already in over 30 standards making operations, activities that produce ANSI-certified standards, 

that are focussing technical aspects of Internet of Things, and of 

course, it’s just beginning. But we have to be careful of overly prescriptive mandates because that could stymie the growth of the 

Internet of Things. Any government action should be very narrow 

and very specific and focus on a real harm. 

The Internet of Things is huge. It’s an opportunity to change the 

world, and we look forward to working with this Committee to ensure that government policies and regulations support growth in 

this dynamic sector. Thank you, and I look forward to answering 

your questions. 

[The prepared statement of Mr. Shapiro follows:] 
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Mr. ISSA. Thank you, Mr. Shapiro. 

Mr. Garfield. 

TESTIMONY OF DEAN C. GARFIELD, PRESIDENT AND CEO, 

INFORMATION TECHNOLOGY INDUSTRY COUNCIL 

Mr. GARFIELD. Thank you, Chairman Issa, Ranking Member 

Nadler, Members of the Committee. On behalf of 61 of the most dynamic and innovative companies in the world, we thank you for 

hosting this hearing. We thank you as well for the context, which 

is outside pending legislation, and as well, Mr. Chairman and Congresswoman DelBene, for your leadership in creating the Internet 

of Things caucus. 

It is our firm view that the Internet of Things has the potential 

to be one of the most transformative technological innovations in 

human history. That is, with the right policy environment. To ensure that I’m not accused of engaging in hyperbolic 

hyperventilation, I would like to focus my testimony on three areas. 

One, why we think that’s the case; two, what we’re doing to enable it; and then third, our humble recommendations on how Congress and the Administration can be helpful. 

As to the first, the Internet of Things is essentially the 

digitization of the physical world through connecting sensors into 

a network with computing systems. What may sound simple has 

the potential to be seismic in the creation of new industries as well 

as disruption of existing ones. Whether we’re talking about watches 

that have the potential to not only help you to be more fit but as 

well to prevent catastrophic health incidents through monitoring 

your heart rate, or we’re talking about windshield wipers that have 

the ability to communicate with other windshield wipers and alert 

your car to an impending storm or alert an autonomous vehicle to 

the potential for a construction zone that’s soon arriving. 

There has been much discussion of the home and personal manifestations of the Internet of Things, which are truly exciting. It is 

important, however, not to ignore the potential, the commercial deployments. Those commercial deployments are real, tangible, and 

have huge potential economic benefit. 

Whether it is the deployment of sensors in our energy grid to ensure greater resiliency and reliance, the deployment of sensors in 

transportation systems to allow more efficient delivery or in mines 

to ensure safety for workers, the economic impact, much of the economic impact will come from those deployments, which by 2030 is 

expected to be almost $7 trillion. 

So what are we doing, as the technology sector, to ensure that 

is the case? We are focused on a multi-facetted approach that heavily emphasize security, privacy, standards as well as investment in 

infrastructure. With regard to security and privacy, we are working 

and innovating all the time around those issues, making sure that 

security and privacy are developed by design so that they are part 

of our forethought rather than an afterthought. 

We’re developing bespoke solutions to ensure that both security 

and privacy are tailored to the particular environment, and as well, 

we’re investing in innovation because consumers demand a high security and privacy and increasing transparency, and it’s in our in-
26 

terest, and it’s the right thing to do to meet that consumer demand. 

As well, we are moving forward on global standards that are 

driven by the sector and as well that are open standards to ensure 

that we have high interoperability as well as scalability. 

Finally, we’re investing in the infrastructure. Mr. Shapiro noted 

the need for broadband, both wireline and wireless, as well as ensuring that spectrum is available. In reality, the use of spectrum 

on mobile data, is growing by 55 percent each year. With the Internet of Things and the digitization of physical things, it will only 

grow more expeditiously, and so spectrum will be increasingly important. 

In addition to doing those things, we intend and need to partner 

with Congress and the Administration to make sure that policy is 

smartly developed, and there are three things that we think it’s important that Congress focus on. 

One is we need a national strategy around the Internet of 

Things. Much in the same way that a national broadband plan was 

able to focus our attention and drive the deployment of broadband, 

having a national strategy around the Internet of Things will be incredibly helpful. 

Second, we need more spectrum, as Mr. Shapiro and I pointed 

out earlier. The U.S. Government is the largest holder of spectrum, 

and hence, has the greatest ability to impact the deployment of 

spectrum, and we hope that we can work toward making it more 

efficient. 

Finally, we need the exercise of restraint. The Internet of Things 

is at its nascent stages, and in order to grow to reach its full potential, it’s important that we avoid mandates that put the thumb on 

the scale of particular technologies versus others. 

I look forward to your question and look forward to the testimony 

of my colleagues. Thank you. 

[The prepared statement of Mr. Garfield follows:] 
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Mr. ISSA. Thank you. 

Mr. Bainwol, you only have to deal with all the questions set up 

in the opening statement, so I look forward to your 5 minutes. 

TESTIMONY OF MITCH BAINWOL, PRESIDENT AND CEO, 

ALLIANCE OF AUTOMOBILE MANUFACTURERS 

Mr. BAINWOL. It’s a piece of cake. Chairman Issa, Ranking Member Nadler, Members of the Committee, thank you for the opportunity to testify this morning. I wore a different hat the last time 

I was here on behalf of another industry that was engaging with 

the challenge of technology. 

During my time at the recording industry, technology upended 

how music was consumed, and access began to replace ownership, 

revenues fell sharply, and the fundamental model of business 

transformed. Now I’m with the Alliance of Automobile Manufacturers for the last 4 years. Instead of fighting with Gary Shapiro, I 

now mostly team up with him. That’s easier. That’s a good thing. 

Mr. ISSA. Only in Washington. 

Mr. BAINWOL. Yeah, right. I represent the Detroit Three, six 

major European manufacturers, and three major Japanese manufacturers as well. 

And for us, the impact of technology is every bit as profound but 

not threatening. Quite the contrary, technology and connectivity 

are ushering in a new era and some might even say a golden age 

in mobility. We’ve seen enormous safety and environmental gains 

both in recent years and over the last half century, striking reductions in fatality numbers and emissions, as well as increases in 

MPG. 

The next generation of progress will come from IoT-based technologies. Ownership patterns may evolve somewhat as ride sharing 

becomes more prevalent, but the truly material impact of technology is the convergence, the convergence of environmental, safety, productivity, and life quality benefits that arise from the 

connectivity of an IoT world. 

It wasn’t that long ago that when it came to cars, safety and environmental objectives conflicted. Do you go heavy and safe or light 

and green? Every parent struggled with that choice for their teenagers. Strategies for safety centered on surviving crashes. Now the 

combination of automation and connectivity harmonizes, harmonizes safety and green. Crash avoidance from technology that 

manages the car better than a human can, fosters more efficient 

mobility because there will be fewer crashes on the road generating 

congestion. Fewer crashes translates into more economic productivity, more personal time, fewer injuries, fewer fatalities, lower 

emissions, and less wasted fuel. In an IoT world where connectivity 

offers the promise of these truly monumental benefits, getting to 

the future as fast and sensibly as we can is critical. 

According to NHTSA, about 95 percent of all traffic fatalities result from human error or environmental conditions. Vehicle factors 

account for just a fraction. Technology is so powerful because it offers the promise of mitigating human error as today’s innovations, 

automatic braking, adaptive lighting, lane departure warnings, 

blind spot warnings, and tomorrow’s technologies, V-to-V and V-toX and to ultimately self-driving vehicles all penetrate the car park. 
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This innovation must be embraced and seen as the answer and 

not the problem, and that means working proactively to address 

concerns about privacy and cybersecurity. Last year, auto manufacturers became the first in the IoT, a non-pure play Internet sector, 

to adopt a comprehensive set of privacy principles to protect vehicle 

owners. The principles have a strong lineage, building on FIPPS, 

FEC guidance, the White House Consumer Privacy Bill of Rights, 

and suggestions from privacy advocates. They address, among 

other elements, transparency, respect for context, data security, 

and choice. For the most sensitive types of consumer information 

that are needed for some driver-assist technologies, geolocation, 

where you’re going, driver behavior, how fast you’re going, and biometrics, the privacy principles require clear and prominent notice 

about the collection of such information, the purposes of why it’s 

collected, and the entities with which it can be shared. 

Similarly, the industry is working to stay ahead of the threat 

posed by malicious hackers. Earlier this month we announced the 

formation of an Auto-ISAC, Information Sharing Analysis Center, 

to establish an industry-wide portal for sharing information about 

existing or potential cyber threats and vulnerabilities. 

The Alliance supports cyber security bills in the House that 

would facilitate threat sharing in the private and public sectors 

while protecting individual security. We hope the Senate acts soon 

so that we can move the bill to the President. 

Mr. Chairman and Members of the Committee, the next 20 years 

in the evolution of the Internet is enormously exciting and offers 

the possibility of amazing outcomes on the road, strengthening the 

quality of life, the environment, and our economy. We look forward 

to working with you to realize the benefits of innovation and to address the challenges that come along the way. 

[The prepared statement of Mr. Bainwol follows:] 
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Mr. ISSA. Thank you. 

Mr. Reed. 

TESTIMONY OF MORGAN REED, EXECUTIVE DIRECTOR, 

ACT | THE APP ASSOCIATION 

Mr. REED. Chairman Issa, Ranking Member Nadler, and distinguished Members of this Committee. My name is Morgan Reed, 

and I’m the executive director of the App Association. I thank you 

for holding this important hearing on the Internet of Things. 

The App Association represents more than 5,000 companies and 

technology firms around the globe, making the software that runs 

the devices you wear and the apps you love. We are current spearheading an effort through our connective health initiative to clarify 

outdated health regulations, incentivize the use of remote patient 

monitoring, and ensure environment in which patients and consumers can see an improvement in their health. 

This coalition of leading mobile health companies and key stakeholders needs Congress, the FDA, HHS to encourage mobile health 

innovation and support polices that keep sensitive health data private and secure. 

Now, traditionally, this is the moment in my oral testimony 

where I should recite some interesting numbers about the industry, 

talk about jobs created, and niches filled, but I’d like to break from 

that a little bit. I want to tell you a story, and it’s one that I know 

is relevant to many of you and certainly to a huge chunk of your 

constituents. 

Nearly everyone in this room is caring for an aging parent or 

knows someone who is. Now, imagine that your parents are fortunate, they’re living in their own home but significant medical challenges are beginning to face them. The questions begin, do I get a 

home health attendant? Do we pay as much as $12,000 a month 

to move them into an assisted living facility? Do they move into my 

basement? How do I deal with the fact that my parents don’t want 

to move into my basement, and mom feels that a home nurse is 

infantilizing. What do I do to help them live at home with dignity? 

Now, most of you remember Life Alert, you know the product 

with the tag line, ‘‘Help, I’ve fallen, and I can’t get up.’’ Well, that 

kind of device is known as a personal emergency response system. 

We called them PERS. These are great devices but incredibly limited to what they can do. 

Now, imagine a far more sophisticated PERS packed with sensors that can track blood sugar, blood pressure, heart rate, biomarkers for medication adherence, geo fencing for Alzheimer’s patients, and much more. Sensors small enough to fit in a watch like 

this one or maybe this one, and all of those devices—yeah, I think 

everyone here has got one. All of those devices connect to a loved 

one’s phone, an alert service, a physician’s tablet, and a medical 

record. Suddenly, mom can stay at home maybe another year, 

maybe two, maybe three, all while managing her health. And if 

mom allows the data to be sent to you, you can be part of the solution, staying in touch and on top of her needs. And not insignificantly, your basement gets to keep its big screen TV. 

By 2050, there’ll be 83.7 million Americans over the age of 65, 

twice the amount from 2012. Eighty percent will have at least one 
44 

chronic condition. Without question, the age group’s rapid growth 

will strain public and private health resources; therefore, the picture I painted you is not a pipe dream but rather is imperative to 

prevent a cataclysmic economic outcome from this boom in aging 

adults. 

So what’s standing in the way of this dream? What is needed to 

ensure that everyone can benefit from these new innovations? Well, 

I have three quick messages. 

One, innovation in healthcare is happening. It can lead to lower 

cost, better care, and improve patient outcomes. Two, the future of 

health IoT will be founded on trust, which requires strong security 

and privacy measures. Three, regulatory barriers, outdated laws, 

and lack of clarity around reimbursement are a threat to the advancement of mobile health. Congress can and in some cases must 

play an important role in improving health outcomes for all Americans through innovative technologies. 

Questions about privacy, security, reimbursement, and government regulation have met to create an environment where companies are worried about making devices more medically relevant, 

and physicians worry about the impact on their practice and their 

liability. Patients and care providers must know that their information is private and secure. Industry best practices around the treatment of sensitive health data as well as a commitment from government to support these practices are important to establish trust 

and push this industry forward. 

Clarifications on government access to data matter as well, including ECPA reform and the LEADS Act. As most of this health 

information will eventually end up in the cloud, and Congress 

should be pushing back on any government pressure to weaken 

encryption. 

Finally, ensuring that doctors are reimbursed for the use of these 

technologies will be essential. Currently, CMS is statutorily prevented from reimbursing certain kinds of remote patient monitoring because of absurd geographic restrictions and antiquated 

technology requirements that were state of the art 15 years ago but 

haven’t moved since. 

Success will come when technology, trust, and means to pay for 

it all come together. I ask that Congress help to ensure that that 

happens now rather than see one more of our family members moving out of the home they love because we failed to act. I look forward to your questions. 

[The prepared statement of Mr. Reed follows:] 
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Mr. ISSA. And on that note, I have questions. 

I recognize myself for a series of questions. 

Mr. Shapiro, you’re not an engineer. You’re a long recovering 

lawyer, but I’ll ask you this question because I think your industry 

is well aware of the answer. 

As we sit here in air, what percentage, more or less, of the bandwidth are we using in this room, of the entire spectrum? 

Mr. SHAPIRO. What percentage as us—— 

Mr. ISSA. If we are to look at the radio waves being used, the 

AM, the FM, the old bandwidth from television, what percentage 

of the spectrum is actually being used as we sit here today? 

Mr. SHAPIRO. Well, it’s all spoken for, but the actual use is a 

small percent. 

Mr. ISSA. Less than 1 percent will actually be in these air waves. 

So if we’re trying—and I said I wasn’t going to dwell too much on 

spectrum, but if we’re trying to create the ability for almost an unlimited amount of communications between large and small devices, isn’t one of our greatest tasks to recognize that we have allocated all the bandwidth virtually and not used hardly any of it in 

any given time in any given room? 

Mr. SHAPIRO. Yes. Now I realize you gave me a softball. Thank 

you. 

Mr. ISSA. And you can follow up with devices that can recognize 

those voids and take advantage of them. 

Mr. SHAPIRO. Right. Thank you. So as you know, there are two 

types. Actually all spectrum is pretty much the same, but we, 

through the laws, categorize it differently, and we categorize it by 

whether it’s licensed or unlicensed. Licensed means that someone 

has bought it or they’ve gotten it for free, a broadcast license, and 

unlicensed means that, subject to good neighbor rules, anyone can 

use it. 

Unlicensed spectrum is very valuable because it promotes innovation. We calculated, in a study we did last year, that there’s 

about $62 billion of activity created by unlicensed spectrum, so we 

are advocates for increasing the amount of unlicensed spectrum because it does allow entrepreneurs and innovators to do really cool 

things that will produce economic activity and provide benefits, but 

there’s a lot of spectrum that the government uses. 

And what we’re asking, and I know there’s legislation pending, 

which is simply that the government catalog and figure out what 

could be available and repurposed for commercial purposes because 

that alone would not only take some of the pressure off a very 

crowded field right now in spectrum, but it would also create a 

huge amount of economic activity, and if sold, it will make a tremendous amount of money for the Treasury. 

Along the way, though, there is technology being developed 

which allows spectrum to be split finer and finer and used, and I 

know that’s some of the issues involving going forward, like we are 

passionate about driverless cars and all the benefits and all the 

great things that are there, but we think there’s an opportunity 

there to look and test some of that spectrum that’s being purposed 

for that area and split it up a little bit and share it, and that’s 

what Mitch and I love to have wonderful conversations about. 
62 

Mr. ISSA. Following up with Mitch. Mr. Bainwol, there’s going to 

be a lot of questions about obviously whether or not automobiles 

that are communicating with the Internet are safe or not, and 

that’s topical, but would it be fair to say that whether or not you 

share the bandwidth has virtually nothing to do with whether or 

not you’re going to be effectively hacked on your encrypted signals? 

Mr. BAINWOL. That’s a question that—— 

Mr. ISSA. That’s a softball. 

Mr. BAINWOL. Well, it may be, and like Gary, sometimes I can’t 

see softballs, and I’m also not an engineer. I think I’d say a few 

things. One is, as it relates to spectrum, we’ve heard the message 

from Congress and the notion of sharing, if we can make that work, 

is something that we really want to do, and field testing is going 

to happen this year, in 2015, and the notion, is to find a way to 

satisfy the use for spectrum but also meet safety imperatives is 

something—that balance has to be struck, and we’re prepared to 

try to test to succeed rather than test to fail, so we’re committed 

to the notion. 

I do want to set context, though, in terms of V-to-V. NHTSA estimates that V-to-V could mitigate or eliminate up to 80 percent of 

all crashes on the road, and so the promise of V-to-V is overwhelming. The implications for life, for injury, for productivity are 

enormous, so I think the predicate for moving forward has to be do 

no harm. Move forward aggressively, find a way to share, but do 

no harm. 

Mr. ISSA. And I want to quickly follow up. The history of data 

in the automobile has been one of the automobile manufacturers 

having proprietary data buses, keeping them closed, not publishing. As a representative, is that going to be different—and it’s 

a self-asking question or answering question, in the vehicle-to-vehicle world, it has to be an open standard that in fact is published 

so that your windshield wipers on one vehicle talk efficiently to another; isn’t that true? 

Mr. BAINWOL. So I think it’s both true that interoperability matters, but I think it’s also true that in a world, a dangerous world 

where you have malicious hackers, that system integrity matters a 

ton, and finding a balance for both is the test. 

Mr. ISSA. Well, as I recognize the Ranking Member, I will tell 

you at least from this part of the dais that working on legislation 

that makes the penalties specific, high, and enforceable against 

those who try to maliciously hack automobiles is an area in which 

I believe our jurisdiction is not only appropriate but our need for 

action is immediate. 

Mr. GARFIELD. If I may add one point. 

Mr. ISSA. With Mr. Nadler’s permission, yes. 

Mr. GARFIELD. It’s actually just the point that we have a history 

of driving open consensus based standards that fully integrate privacy and security protections and can do that in this context as 

well. 

Mr. ISSA. Thank you. Mr. Nadler. 

Mr. NADLER. Thank you, Mr. Chairman. 

Mr. Shapiro, you argue for a market approach to addressing the 

privacy and security concerns raised by the Internet of Things. We 

all hope that companies will act responsibly and that the market 
63 

will punish bad actors, but isn’t it important that the government 

set forth clear rules on what is and is not permissible? 

Mr. SHAPIRO. Thank you, Congressman Nadler. It is important, 

I think, that companies know what is legal and not legal, but there 

is a—something between the two, which is what is right and will 

get customers or not, and we’ve heard many people talk about the 

importance of trust for companies, and their brand and their reputation relies entirely upon trust. 

Everyone wants privacy. Look, HIPAA was passed to protect 

medical privacy, but sometimes there’s different types of information and how far it goes, and even HIPAA has some down sides to 

it. There has been research that’s been lost, there’s been records 

which have not transferred easily because of HIPAA, so there’s a 

trade-off that goes on. If you put too much of a line around privacy, 

you’re trading off opportunities for new services that consumers 

will desire. 

I think what companies have an obligation to provide is transparency in what they’re offering, and the consumers could be able 

to make a reasoned decision about what they’re willing to give up 

in return for sharing some of their privacy. So it is, I think, premature for Congress to say this is the line we’re drawing, but having the discussion is really important, and I think that there 

should be a national consensus about what should be protected and 

what should not and also what consumers should be allowed to 

give up freely and make that choice. 

Mr. NADLER. Should there at least be notice to consumers required? 

Mr. SHAPIRO. In terms of giving up what you—if you are sharing 

something which you shouldn’t expect normally to share, I think 

there should be notice, and it should be clear and conspicuous. I 

think our companies have an obligation—— 

Mr. NADLER. So you do think that government should mandate 

notice? 

Mr. SHAPIRO. I think there’s a difference—the Federal Trade 

Commission has some significant jurisdiction in this area. There’s 

a lot of private lawyers who will be more than happy to sue those 

that don’t give sufficient notice. If the law is unclear, which I do 

not believe it is yet—— 

Mr. NADLER. So the law is clear enough, the FTC should require 

notice, and we should leave it at that for the time being? 

Mr. SHAPIRO. Well, the FTC is taking a case-by-case approach, 

which has provided sufficient guidance. I don’t think there’s a need 

yet. 

Mr. NADLER. Okay. That’s what I’m getting at. There’s not a 

need yet for Congress to do anything because the FTC can handle 

it and is handling it so far. 

Mr. SHAPIRO. I think the case-by-case approach is a good approach because this is a quickly evolving area, and before we foreclose new services and new information, all these great things that 

are happening, rather than jump in, I think we should take a—— 

Mr. NADLER. Okay. 

Mr. SHAPIRO [continuing]. Deep breath and see our consensus. 

Mr. NADLER. Let’s assume that Congress chooses to disagree 

with what you just said and chooses to enact privacy and security 
64 

measures. In that case, are there any ways in which we should 

treat products connected to the Internet of Things differently from 

other companies that collect data or connect to the Internet? 

Mr. SHAPIRO. Well, I’d like to think about that answer and perhaps provide it in writing, but my off-the-cuff answer is that I 

would say the Internet of Things does allow easy connectivity 

quickly and rapidly, and there is clearly sometimes when knowledge is appropriate and permission, but sometimes there isn’t. 

For example, the Internet of Things allows police forces to monitor crowds in a public area. It allows them to monitor conversations and see whether people are being angry or not in a public 

area. It provides an opportunity to have video and see whether 

there’s bad people the FBI wants through identification of not only 

faces but also by voice. There’s a tremendous opportunity here in 

many different areas. 

And to me, what’s most important is we let it play out a little 

bit, and if we’re going to legislate—or you’re going to legislate; I 

don’t have that right—it would be very specific and narrow and address a real problem. 

Mr. NADLER. Thank you. Mr. Bainwol, in your testimony, you reference the consumer privacy protection principles released by the 

Alliance of Automobile Manufacturers. 

Can you briefly describe these principles in some detail? Briefly 

in detail. 

Mr. BAINWOL. Well, the written testimony goes into some depth, 

but it focuses on things like transparency, context, data minimization, and clearly the notion of express consent for marketing. So we 

provide heightened protection for things like biometrics, driving behavior, and geolocation. 

So we think this works as a floor. We’ve provided it to the FTC, 

so it is enforceable, and I think I’d build on Gary’s point of—and 

this applies to privacy and it applies to everything else as we enter 

an era of massive innovation. 

Mr. NADLER. We should be careful and wait for experience. 

Mr. BAINWOL. I’m sorry? 

Mr. NADLER. We should be careful and wait for experience. 

Mr. BAINWOL. Well, I think the fundamental challenge that I’ve 

got is that the pace of innovation far outstrips the pace of regulation, and that’s just a fundamental truism. We’re seeing that in the 

area of distraction at NHTSA, and I’ll give you a specific example. 

Mr. NADLER. Well, don’t, because I have other questions. 

Mr. BAINWOL. Okay. Sorry. 

Mr. NADLER. But thank you, but especially given what you just 

said, do you think that the principles you’ve enumerated in the 

consumer privacy protection principles should apply to all prior to 

the Internet of Things technology or are they uniquely relevant to 

the automobile industry? 

Mr. BAINWOL. Well, they’re based on FIPS and pretty generally 

accepted notions, so I think they’re more broadly applicable, but 

I’m testifying today on behalf of the auto industry, and I’m reluctant to impose my judgment on others. 

Mr. GARFIELD. I can give you my perspective on it. 

Mr. NADLER. Please. 

Mr. GARFIELD. Which is—— 
65 

Mr. NADLER. That saves me from answering other questions 

since my time has run out, but go ahead. 

Mr. GARFIELD. I’ll be brief. We’re talking about the Internet of 

Things as if it’s a single thing, but it is not. So what are the privacy or security regime that we would have in place for a windshield wiper versus a watch that’s monitoring you personally. So 

the sectoral approach that we are taking is one that works. 

In addition, we shouldn’t assume that this is the wild, wild west, 

and there is no one out there monitoring today. The FTC has been 

very engaged in this space and is actually taking action. 

Mr. REED. I know you’re out of time, but if the Chairman will— 

I want to point out something very important in the health context. 

I think you are about to see some very significant industry best 

practices that rise up because ultimately what’s happened right 

now is we aren’t seeing the kind of growth. 

An interesting study came out that shows that only 15 percent 

of doctors are talking about wearables to their patients, yet nearly 

50 percent of doctors think their patients would benefit from the 

use of those. When asked as to why—— 

Mr. NADLER. Why the difference? 

Mr. REED. Privacy. The questions that they have about privacy, 

how it will affect them when the data comes back, and with an 

aging population that’s concerned about how their information 

might be used for marketing or other purposes, they hate those late 

night telephone calls, I think that the industry right now is—well, 

I know. We are working very closely with a lot of folks to come 

with some industry best practices that give some more bright lines. 

We believe the FTC will be a good enforcement mechanism for 

those industry best practices, but that’s where we are today. 

Mr. NADLER. Thank you very much. My time has expired. 

Mr. ISSA. Thank you. And you didn’t even get to the questions 

of what does the garbage man say to the garbage can and what 

does the garbage can say back. 

Mr. NADLER. No, I have to do that in the second round. 

Mr. ISSA. I’m assuming it’s you stink. That’s going to cost me. 

With that, we go to the gentleman from Pennsylvania, Mr. Marino 

for his questions. 

Mr. MARINO. Thank you, Chairman. 

Mr. Garfield, could you—you know, today it’s estimated that the 

average home has 11 WiFi devices. In my house with my tech 

savvy kids, it’s triple that, and I’ll give you an example. 

My children have a different taste in music than I do, this just 

happened last week. I am in the study, I’m listening to this music, 

and the next thing I hear is, Captain Jean Luc Picard’s voice saying, ‘‘This does not compute.’’ My son found a way to connect into 

my system and switch the music that I was playing compared to 

what he wants to play, and tell me that he just didn’t like this 

music, so it’s fascinating what these kids can do with this equipment. 

But be that as it may, you know, this unprecedented boom will 

require significantly more wireless spectrum, I think beyond what 

we realize at this point, that is commercially available today. Could 

you expand on the implications of how this might impact the con-
66 

nection for consumers as well as the overall growth of the sector 

of the economy? 

Mr. GARFIELD. Yeah, I think both are significant. Your household 

actually sounds a lot like mine, so I empathize with you. I agree 

with what my colleagues have said about the need for more spectrum, whether it’s wireless or wireline or whether it’s licensed or 

unlicensed. In this context, wireless is particularly important. 

Given the lack of optimization in the use of spectrum today and 

how much spectrum is held by the government, I think there’s a 

significant opportunity both in the deployment of IoT and economically as well to more efficiently use spectrum and make more of it 

available, and so I think there’s a huge opportunity there. 

The reality is that it’s absolutely necessary because as we think 

about all of the physical world essentially being digitized, then the 

growth that we’ve experienced today in the use of spectrum will 

certainly explode, and so it’s something that we need to plan for, 

anticipate, and take action to deal with. 

Thank you. We realize now that I can raise my garage door up 

and down from 2,000 miles away. I can turn my lights on. But 

what is to prevent the hacker, the state-of-the-art thief from checking in on my software on my computer system in my house? For 

example, when I go on vacation, I will turn the heat down. So they 

could tap into my thermostat, read when the heat is reduced over 

a certain period of time, come to the conclusion even though there 

are lights going on and off all over the house that no one is there. 

And this is open to anyone. What is the industry doing to protect 

us from that? 

Mr. REED. First of all, thank you for your question, and thank 

you for your work on a lot of the encryption and privacy issues, 

Congressman. First off, welcome to encryption. End-to-end 

encryption is a critical element of preventing that from happening. 

Yes, there are technological things you can do, man in the middle, 

et cetera, forms of attacks that we can run. But, you know what, 

once you start getting about 256-bit encryption, 512-bit encryption, 

it takes an enormous amount of power to break it. 

So one of the questions that the consumer electronics side of the 

world, as well as the cloud computing side of the world is looking 

at is, how do I put end-to-end encryption in every device and make 

it so no one can mess with your lights, or more importantly, other 

things in your house that might have a direct impact on the people 

living there. 

So first off, we need to make sure the government doesn’t weaken encryption. Second of all, we need to continue to see the growth 

in the kinds of research around encryption that is in some cases 

supported by the government. 

Mr. MARINO. Yeah. Anyone else? 

Mr. SHAPIRO. Can I answer that? 

Mr. MARINO. Yes, sir. 

Mr. SHAPIRO. I share Mr. Reed’s comments. Also, going back to 

the garage door opener, when that was first introduced it was very 

primitive. And a fun thing to do, was to drive around the neighborhood and open up other people’s garage doors, or similarly with 

cordless telephones. If you played it right, you could listen to other 

people’s phone conversations because it was so, by today’s stand-
67 

ards, relatively primitive even though it was novel then. As we 

have gotten more sophisticated, as memory chips have grown, as 

encryption has grown, there are solutions and we don’t even hear 

about those problems anymore so it has not been an issue. 

Mr. MARINO. Okay. Thank you. 

Mr. GARFIELD. The reality is, is that a significant investment is 

being made in innovating around privacy and security because it’s 

the right thing to do and because consumers are demanding it. So 

that explains, in part, the shift that you have seen that both Gary, 

Mr. Shapiro and Mr. Reed have articulated. 

Mr. MARINO. Okay, just let me know when you have a device 

where I can block my son from changing my music as—— 

Mr. REED. I can help you with that. 

Mr. MARINO. Thank you. I yield back. 

Mr. SHAPIRO. It is called handcuffs. 

Mr. REED. Wow, that is primitive. Yes. 

Mr. ISSA. Mr. Marino, did you get to your question of the launching of your trade secrets bill today? 

Mr. MARINO. Here? 

Mr. ISSA. No, you didn’t. Okay. Well, Mr. Collins will be announcing it, so hopefully you will get to talk on that next. 

I’m sorry, did I mention that there will be an announcement on 

trade secrets bill today? Okay. Did anyone not hear that? Thank 

you. 

We now go to the gentlelady from California, Ms. Chu. 

Ms. CHU. Mr. Bainwol, I recently read an article about two security researchers that were able to wirelessly hack into a Jeep Cherokee, first taking control of the entertainment system and windshield wipers, and then disabling the accelerator. They were able 

to slow down the car to stop on a busy highway. This experience 

reminds us that connectedness flows in both directions and that 

hackers could actually manipulate these devices for evil if they so 

chose. 

What specific best practices does the industry have in place to 

ensure that something like this does not come about and how are 

automobiles being designed to prevent exactly this from happening? And what role do you see the Federal Government playing 

in this scenario? 

Mr. BAINWOL. And I have 5 minutes? Great questions, and the 

Jeep hack of a week or two ago, obviously, received enormous national attention. I’m struck here about the need to both take the 

threat very seriously, and we do, but also not to get caught up in 

the sensationalism that sometimes accompanies a story like this. 

So both things are true. 

Our companies are designing and building to meet security risks 

from the very start. That’s point one. They are working with government, with academia, with third-party security technologists to 

address the hack risk, and the hack risk is real. It’s palpable, and 

we need to address it and we need to take it very seriously. We 

have also formed an ISAC, and this began more than a year ago. 

And the ISAC is a mechanism for the industry to voluntarily share 

risk and how to address those risks. So there is a mechanism that 

is in formation for specifically this challenge. 
68 

The risk here from a governmental side is the one that we 

touched on before, and that’s what’s the touch? How heavy a touch 

should there be? And in a world in which innovations happen so 

rapidly, how do you make it work so that it is not rigid? And that’s 

a challenge. I think what you have done thus far is to facilitate 

sharing of risk threat and that’s great and we hope that moves forward. 

Ms. CHU. Okay, Mr. Garfield, you stated that connectivity and 

communications between vehicles must be secure and reliable, especially for safety applications. That’s something that Congress, 

the Department of Transportation, the Federal Trade Commission 

and other government stakeholders should oversee to protect consumers. You are referring there to the consumer’s physical safety. 

But when it comes to another kind of safety, which is privacy, 

and data security, you urge the Federal Government to essentially 

take a wait-and-see approach, and asking that if we should only 

step in, if industry fails at self-governance. So what in your mind 

is the difference between these two kinds of safety that would warrant such a divergent approach? 

Mr. GARFIELD. I guess two points. Our suggestion is not that the 

government do nothing. Our suggestion is that the government exercise restraint, and that the approach that has been taken today 

on privacy, that is sectorially driven, that includes monitoring and 

enforcement by the FTC is working. In the first instance, there is 

a significant market failure that may not be being met and so immediate action is clear. In the second instance, that is less clear. 

I guess the third and final point is the point that we have all made 

about the innovation that’s taking place in this space, not only 

around IoT, but around ensuring that we are driving privacy and 

security by design at the very beginning of these processes is actually making significant headway and we worry about the unintended consequences of legislation at this stage. 

Ms. CHU. Mr. Shapiro, you acknowledge in your testimony several important concerns about privacy and the collection of data, 

and then go on to state that industry-driven solutions are the best 

way to promote innovation. But how do we rely on the industry to 

self-govern, and avoid the problems implicit in the fox guarding the 

henhouse? And I ask the question particularly in the context of one 

concern you raised which is, who owns the data from these devices? 

Isn’t the industry incentivized to claim ownership over the data? 

Mr. SHAPIRO. Thank you for that question. It is true that a lot 

is going on vertically. We have our own wireless health company 

group that is focusing on creating rules that everyone can live by. 

In part, because it’s the right thing to do; in part because there’s 

Congress, which will probably or a government agency will do it if 

they don’t. But there are already free-market solutions which are 

happening quickly in different other verticals. 

For example, in the automobile, hundreds of thousands, if not 

millions of consumers are already choosing to give up their data to 

insurance companies in return for a lower insurance rate. So the 

insurance company is essentially monitoring how fast they drive 

and what they do and what kind of driving they do because the 

consumers feel it is valuable to give up that information. That’s informed consent. It’s a free market decision, et cetera. 
69 

Also there’s solutions coming up for parents. If they want to give 

the kid the keys to the car, they have the ability to monitor their 

children now with many different solutions that are coming out 

quickly. 

My point is not that it is not a legitimate area for government 

conversation. It’s that there’s so much happening from an innovation point of view, that there’s different directions that we can go 

in. And if industry goes in the wrong direction, we are fully confident that the government will be there saying this is wrong, and 

consumers will be there, trial lawyers will be there. Even in the 

distracted driving area where the Federal Government has stepped 

in rather vociferously and said to industry, you know, you should 

really do everything you can to ban a driver from using any product while in that driver’s seat. There’s at least 80 different solutions and more developing every day which basically cut down on 

distracted driving through monitoring lanes, through monitoring 

the head falling asleep, watching your eyes, or even technology produced locally which monitors your cell phone as a driver and figures out if you are not paying attention to the road. 

Mr. ISSA. Would the gentlelady yield for just a followup question 

very quickly? 

Ms. CHU. Certainly. 

Mr. ISSA. I think, Ms. Chu’s question, though, was who owns the 

data? And wouldn’t you agree that, in fact, data which comes from 

an individual inherently government does have a role in defining 

what rights they have to retain, protect, or retrieve their own personally identifiable data, which I think was your question, wasn’t 

it? 

Ms. CHU. That’s true. 

Mr. SHAPIRO. Well, then I blew the answer. 

Mr. ISSA. It was a good answer, it just wasn’t quite to that question. 

Mr. SHAPIRO. I would say, obviously, a consumer that creates 

data should have some rights in that data. The question is the 

service provider, if they do own data. And this goes into a lot of 

areas of the Internet and not just the Internet of Things. If there 

are apps providing services, et cetera, what is the tradeoff that’s 

involved? And I think it’s fair to say there should be transparency 

as to who is using the data. As to who actually owns it and can 

retain it, I guess I would say that depends on the level of personal 

information in the data. I think whether or not you are using your 

windshield wipers, for example, is a type of data that can be easily 

collected and shared to provide information on where it’s raining 

without a lot of consumers saying that’s fine, as opposed to something much more personal when you get into the health sphere 

where you should, of course, own and determine what happens 

with your data. 

Mr. ISSA. Thank you. I think that will at least start a dialogue 

that will continue. The gentleman from Texas. Mr. Poe. 

Mr. POE. I thank the Chairman. Gentlemen, thank you for being 

here. I’m going to try to break this down and try to keep it less 

complex, very simple. The issue is privacy. The time of the Dick 

Tracy watch is here. In fact, our gentleman here on the end has 
70 

two Dick Tracy watches. I don’t even wear a watch, so that will 

help you in the answers, I hope. 

Mr. ISSA. Ted, what time is it? 

Mr. POE. It’s up there and I can’t even see the clock. So anyway, 

the data that is stored, is stored by a provider and it’s information 

about an individual. The privacy of that individual is paramount 

to me, and I think the law, the Constitution, the right of privacy. 

And it has to be protected by Congress because it’s a constitutional right. Privacy. Congress needs to set the expectation of privacy for individuals that have shared their information with different entities, and I’m concerned about the privacy of the individual two ways: One, the provider or the service provider sharing 

it with other nongovernment agencies. And the service provider 

providing that information to the government. Especially the government. I think there should be—we should update the ECPA 

law, which right now, information stored on the cloud for 6 months 

is private. But 6 months and 1 day, the government can have it. 

There is no expectation of privacy; absurd protection of the constitutional right of privacy for 180 days only. 

I don’t think that we should leave it up to the FTC to set the 

guidelines or the FCC, or the FEC, or any other government agency to determine what the right of privacy should be. 

So I’m not through asking the question yet. So how do you know 

the answer already? Anyway, should not we in Congress update 

the ECPA law to provide whatever rules we think should be provided so that citizens know that the government, to get this information, and you can use geolocation and all other information, has 

got to have a search warrant based on the Fourth Amendment of 

the Constitution before they order you to give the government that 

information about the citizens out there in the fruited plain. 

Shouldn’t we be proactive to do that, or are you recommending 

that we just wait for all of these different things to happen out 

there, and try to solve them, get the lawyers to sue and all of these 

things before we get the right of privacy, or should Congress be 

proactive? I have been working on this for years, and we haven’t 

been able to get anywhere with updating the ECPA law so that 

people know the expectation of privacy that the government knows 

you cannot get that information without a search warrant. Should 

not we do that, Congress do that? And it’s kind of like a yes or no 

answer on that. 

Mr. REED. Yeah, the reason I was coming in there is because I 

wanted to say amen. The reality of the situation is, yes, ECPA reform is absolutely essential; 289 cosponsors. This is something the 

Committee absolutely has to do. 

Congressman Marino was here, Congresswoman DelBene is here 

as well with the LEADS Act that you cosponsor. We absolutely 

need these kinds of legislation to move forward so we know what 

we can tell our customers, what I will protect, how I will protect 

it, and when I will be forced to share it. Absolutely. 

Mr. POE. And a person may not be a customer for this very reason. Well, I like all this stuff out there. This is wonderful, but I 

don’t want the government getting it. And right now you say, well, 

then maybe they can have it, maybe they can’t have it. How about 

the rest of you? 
71 

Mr. REED. Yes. 

Mr. POE. Got an amen here on the right. Good. 

Mr. GARFIELD. We support ECPA reform; strongly support ECPA 

reform. 

Mr. SHAPIRO. I think you are totally right to distinguish between 

what government has a right to, and what private parties can exchange with each other. So when the government says we have 

been burned as an industry pretty seriously to the tunes of billions 

of dollars of sales in Europe, and other countries are using the fact 

that our government took information, is a total competitive disadvantage now to say that cloud servers and things like that 

should not be based in the United States, you know, that they are 

not secure, government can take the information and it has been 

very harmful to the U.S. technology industry and it has been used 

against us. 

And under the Fourth Amendment, yes, it is about as clear in 

the Constitution as you can get about the government must have 

only—will not do unreasonable searches and seizures, and that’s 

been interpreted—ECPA needs an update. I agree with that. 

On a private basis, I think it’s a much more complex discussion. 

The reasonable expectation of privacy is set by the Supreme Court, 

is almost like the definition of obscenity in a way. It changes with 

time. It changes with community, and it changes with technology. 

And I think your reasonable expectation of privacy in some data, 

if you are out in public and I’ll use the windshield wiper example 

again, is not perhaps the same as perhaps other data, and that’s 

a much longer conversation. 

Mr. POE. In the privacy era, it goes into whether it’s voluntary, 

whether you volunteer to give that information to another person. 

And that’s a different—I’m interested about the government, the 

Federal Government, State government, local government, which 

all right now can seize that information in the cloud without a warrant. And the person involved doesn’t have notice about it. One 

more comment. 

Mr. BAINWOL. I’m in on the government side. I would note, as 

Gary indicated, and this is on the nongovernmental side, that data 

is necessary to provide services that consumers want. So whether 

it’s the insurance example, we plug in, I’m one of those consumers. 

I know exactly how my kids drive because I get a report every 

month from the insurance company that tells me how fast they are 

driving, how fast they are braking, when they are driving. And as 

a parent, that’s a useful thing and it’s a disincentive for them to 

drive poorly. So that’s a good thing, and I wouldn’t want to get in 

the way of services like that that are pro-consumer. 

Mr. POE. All right. I yield back to the Chairman. 

Mr. ISSA. I thank the gentleman, and we now go to the 

gentlelady from Washington’s First District, Ms. DelBene. 

Ms. DELBENE. Thank you, Mr. Chair. Thanks to all of you for 

being here. I want to follow up a little bit on the Electronics Communications Privacy Act conversation here. Myself and Congressman Poe and Congresswoman Lofgren have also sponsored legislation that would also create a warrant standard for geolocation information as well as electronic communications. 
72 

And when we talk about issues of making sure there’s a legal 

framework to protect information, and so that consumers feel like 

they understand what’s happening with their information, and law 

enforcement is clear on how they would access information, what 

do you think about expanding that to include geolocation and the 

international issues that we face in terms of access to information? 

Anyone? Or I guess I will start with Mr. Reed. 

Mr. REED. Well, first of all, thank you for your support of the 

LEADS Act. Thank you for your introduction. It’s a very valuable 

thing to figure out how we move forward. I know we are all Americans here and we are in America, but one of the things to realize 

from my members who are developing the applications, is just how 

much our opportunities are overseas. 

And so when the issues that you raise about U.S. Government 

access to that data start harming our sales, it hurts jobs here in 

the United States. So I think you’re precisely right. This is an issue 

that Congress has to step in on. It can’t be done through industry 

best practices or standards. And so the question of geolocation, 

once again, is something that we will have to work both with you 

and with law enforcement because law enforcement does have a 

duty to work and protect the citizenry. 

The problem comes when I have to tell a customer, I don’t know 

about the answer to the question of when I have to hand over that 

information. The difference between the Sixth Circuit and the 

Ninth Circuit and this idea that I have to tell my customer I don’t 

know, is enormous. 

I think the other element that should be raised on this is how 

other countries look at what’s happening. 

If the United States Government says we have access to any 

cloud data, at any time, on any person, any way we darn well 

please, regardless of where the data is stored or who it’s on, we 

have to expect that Russia will want the same privileges from our 

companies; that China will want the same privileges from our companies. And so legislation like what you’re proposing is what we 

need because we need to have a strong stance that we can look at 

those countries and say, no, I won’t hand over that information 

without some better legal authority. So thank you very much. 

Ms. DELBENE. Mr. Garfield. 

Mr. GARFIELD. Yes, your question also gives us another opportunity to raise something that Congress can do in this area which 

is legal redress. The lack of legal redress rights in the United 

States is something that creates great challenges internationally, 

and this Committee and Congress generally has the opportunity to 

do something and so that’s another step that can be taken that 

would help internationally. 

Ms. DELBENE. Folks, also, you were earlier talking about 

encryption, and we have been having a conversation recently about 

whether there should be a backdoor for law enforcement access to 

encrypted data, and whether that should be mandated. If such a 

policy were mandated by the Federal Government, what would, you 

know, the impact be specifically on user data and what do you 

think the impact would be for your customers? 

Mr. GARFIELD. I think the impact would be quite negative both 

here and internationally for a host of reasons. It’s important to 
73 

keep in mind that security is a part of advancing privacy. And if 

you create any kind of door, it won’t only be used by those who you 

intend it to be used by. And so I think in many respects you create 

a Pandora’s Box of challenges that would be highly problematic for 

both privacy and security interest and is something that should absolutely not be done. 

Mr. Bainwol and I both worked in the recording industry years 

ago, and one of the things we realized was rather than fighting 

technology, the best solution is to poyne the use of technology, and 

I would suggest for the Federal agencies in this context, those answers may hold some merit in this context as well. 

Mr. REED. We learned hard lessons. I feel like we are a little bit 

of deja vu right now with the Clipper Chip reducts here that we 

are facing. The reality is is that over 40 of the leading security experts have already come out and said, the idea of the government 

mandating or creating a, as the FBI director said, a front door into 

our devices and our systems, is an anathema to the idea that we 

want to create by telling our customers and our users that we have 

secure systems. So we have done this dance before. It was already 

figured out to be a mistake. I’m disappointed that we are having 

to revisit it again when we know the answer. And that is, end-toend encryption with as few openings as possible is the best solution 

we can provide to all citizens in every country. 

Ms. DELBENE. As you may know, we have a piece of legislation 

to prevent there from being such a backdoor. 

Mr. Shapiro, did you want to add something? 

Mr. SHAPIRO. Yeah, I think we are all Americans and we sympathize with law enforcement in what they are trying to do and so 

it is a different question. It is not that black and white. But I think 

history has shown that having given government a backdoor is not 

the best approach as technologies evolve quickly. 

On the other hand, as Americans, when a super crisis evolves, 

I think you will see companies step up and try to help government. 

I think we saw it in Boston in the bombing where technology companies worked very closely to try to find out who it was that did 

this dastardly act, and I think we have to recognize there’s some 

flexibility and does not require an act of Congress to say that there 

must be a backdoor. If there is a backdoor and everyone must have 

it, it gets not only having the technology industry very uncomfortable, but our consumers very uncomfortable. 

Ms. DELBENE. Thank you. My time is expired. I yield back, Mr. 

Chair. 

Mr. ISSA. I thank the gentlelady and I thank her for her important questions. With that, we go to the gentleman from Georgia, 

Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. Thank you for hosting 

this very important hearing. 

Mr. Garfield, your testimony mentioned the desire of the industry to be free from new regulation without becoming a wild west 

of privacy. Earlier this year the Federal Trade Commission reinforced this message in its staff report on the Internet of Things, 

where it recommended, among other things, that companies build 

privacy and security into the designs of their connected devices. 
74 

Last Congress I introduced the APPS Act, a commonsense approach to an urgent problem that would protect consumers without 

disrupting functionality or innovation through a safe harbor, and 

other mechanisms to promote trust through self-regulation. I 

viewed this legislation as reinforcing of the FTC staff recommendations on privacy and security for connected devices, and I plan to 

reintroduce the APPS Act during this current session of Congress. 

Privacy is an issue that should unite us, not drive us apart. In 

an always-on ecosystem where over 25 billion connected devices 

store and transmit information about consumers, it’s time that we 

have some rules of the road. What steps will private industry take 

to keep Congress informed and address legislative concerns regarding security and privacy of these emerging technologies? 

Mr. GARFIELD. Thank you for your question, Congressman Johnson. The point you made at the beginning about the FTC’s recommendations, particularly around privacy and security by design, 

I think are, in fact, is occurring. The industry is spending billions 

to invest and innovate around privacy and security, in part, because it’s the right thing to do, but also because consumers are demanding it. 

As well, we are advancing, as Mr. Bainwol pointed out, sectorspecific principles around privacy and security as well. And so 

there is much action happening right now in this space and we are 

committed to making sure that Congress is fully aware of the steps 

that the private sector is taking to advance those issues. It is in 

our business interest to be aligned with both you and consumer interest around these issues. 

Mr. JOHNSON. Thank you. Mr. Bainwol, I want to focus on the 

portion of your testimony regarding advanced driver assistance systems. I understand the benefits that you’re explaining about these 

systems, the sensors that provide braking assist, and adaptive 

cruise control. I understand newer software will go far beyond just 

those actions. My concern revolves around the encryption of this 

technology. If these systems are being operated on a broad range 

of wireless communication technologies between vehicles, how are 

these frequencies being protected? 

Mr. BAINWOL. I will give you an answer, and I will come back 

to you with a vetted engineer’s answer. So V-to-V is based on 

DSRC which is a technology that was built for the purposes of communications between vehicles. And I will come back to you again 

with the specifics of the security that is embedded in that. 

We are obviously not at a point of full deployment. This is being 

tested. There has been an expansive test out of Ann Arbor over the 

last several years. It has been tested abroad. And the fundamental 

point I would make is that the benefit stream here, if you do a costbenefit analysis here, the benefit stream is absolutely enormous. 

And yes, we have got to address the cyber risks and the security 

risks, and they are being dealt with from the design phase on up. 

But in terms of the security embedded in DSRC, I will have to 

come back to you. 

[The response from Mr. Bainwol follows:] 
75 

Mr. JOHNSON. Okay, if end-to-end encryption is being utilized, 

how will law enforcement access the information stored within a 

vehicle? Do you have an answer to that question? 

Mr. BAINWOL. So we would require a warrant of some sort. This 

is, again, this is the point that Mr. Poe was making earlier. 

Mr. JOHNSON. Okay, I’m sorry, go ahead. 

Mr. BAINWOL. And so we are very careful and our principles articulate very specifically that the information will not be shared 

with entities unless there’s a compelling, specific reason. 

Mr. JOHNSON. But there will be an ability to counter the 

encryption or to kind of a backdoor, if you will, for lack of a better 

term. 

Mr. BAINWOL. Yeah, I’m going to have—I’m not an engineer, and 

this is a zone that I’m not going to be able to give you a great specific answer on, so let me come back to you in writing shortly. 

[The response from Mr. Bainwol follows:] 

Mr. JOHNSON. All right, thank you. And I yield back. 

Mr. ISSA. I thank the gentleman. You know, I have had two of 

you gentlemen tell me about how you are not engineers, but I want 
76 

to talk about something for a moment that’s a little complex, and 

then make it simple. 

In the aviation space, collision avoidance of all sorts has been 

around for a long time. It started with the large commercial scheduled aircraft and then little by little has come down. One of those 

technologies, ADS-B is, in fact, mandated now in just a few years 

for all aircraft. And it’s a cute name, I have said it forever, but now 

I have to say it’s automatic dependent surveillance broadcast, ADSB, or ADS-B out. 

Now, that technology, in short, says, here is where I am, and it 

sends it out to everybody. The FAA regulates it. Other aircraft 

while they are sending out where they are, receive where you are. 

It makes for a very exact GPS-based within a few feet of knowing 

exactly where you are, and of course, which way you are going, how 

fast, making a collision almost an impossible thing to do if you’re 

simply monitoring the product which has alerts. 

The question and I want to make sure I ask it to Mr. Bainwol 

and others, when the FAA, having jurisdiction over this, they made 

a decision that only those who send out a signal can, in fact, receive a signal. So today, systems that cost anywhere from 6- at the 

very low end, plus installation, to hundreds of thousands of dollars, 

equipped in aircraft, they communicate by sending out and receiving information where others are. 

Mobile devices, devices that could be bought for a matter of a few 

hundred dollars that only receive are blocked from receiving that 

information. Meaning that as you roll out a new technology, and 

Mr. Bainwol, clearly these kinds of technologies are what big auto 

is looking at rolling out, countless millions of automobiles will not 

be equipped with those systems for decades to come. The 1965 

Mustang or any of the classic cars that Congressman Juan Vargas 

has, will not ever been equipped with them. 

Can you comment on the need to make sure that any standard 

allows for aftermarket retrofitting of products that to the greatest 

extent possible enjoy the benefits of newer technology brought to 

market in new automobiles? 

Mr. BAINWOL. I’m happy to comment. There is a challenge in the 

auto space with fleet penetration. The average age of a car is 11 

years old. So when you introduce a new technology, it takes a long 

time to wind it’s way through the entire fleet. 

Mr. ISSA. Not with Mr. Shapiro’s aftermarket products. 

Mr. BAINWOL. So, in the example of antilock braking, it took 30 

years to go from introduction to 95 percent penetration. So you’re 

point about fleet, penetration I think, is a valid one. 

And in the case of these technologies that offer such value to society, I think you raise a legitimate point that we have to find a 

way to fill the gap now. The truth of the matter is, in part that 

gap is filled with this phone that Gary peddles so brilliantly. Just 

to give you an example—— 

Mr. ISSA. I’m not sure Gary wants to be called a peddler, but he 

appreciates you calling many of his members peddlers. 

Mr. BAINWOL. So Waze is a wonderful app, okay, and it’s crowdsource based, and it provides many of the benefits that V-to-V provides, but not with the same absolute standard of certainty. So we 

have got to find a way to fulfill the marketplace. And I think the 
77 

app world does a good job of bridging that, and then ultimately to 

fill the fleet. And so I think your point is a valid one and we have 

got to find a way to make it work. 

Mr. ISSA. Thank you, and Gary, just Mr. Shapiro, the question 

more was as new innovative items come out of the OEM market 

and new fleet, and there’s an ability to get, perhaps, some but not 

all of those benefits, government, at least in the case of aviation, 

has blocked the ability of thousands of small pilots, pilots with a 

Piper Cub made before you and I were born, in which your mobile 

device can be put on board today are blocked from knowing that 

there’s a fast mover heading for them because the FAA has saw fit 

to block it unless you are sending a signal. That’s really the question of enabling as much benefit from potentially low-cost handheld 

devices. 

Mr. SHAPIRO. Mr. Chairman, as a member of the flying public, 

I never quite understood that decision, and I’m glad that it’s being 

rectified and albeit after dozens of years. 

Mr. ISSA. It is being rectified. All aircraft in a matter of a few 

years will have ABS, or I’m sorry, ADS out. However, today somebody can carry a few hundred dollar product and if it were allowed 

to receive the signal, they would be part of knowing where a fast 

mover is, and avoiding it even if they are not putting out that signal. 

Mr. SHAPIRO. Well, I am thrilled to hear you are focusing on it 

because I fly almost every other day, but—— 

Mr. ISSA. And the Cessna 150 needs to know. 

Mr. SHAPIRO. Sir, the reason I have been so excited for years 

about driverless cars is the level of death and injury that’s caused 

by cars is so huge, and of course we all drive them, they are necessary. 

But it can be avoided. We are on the verge of this technology and 

several car companies and Google have proven it. And it would be 

an absolute tragedy if it was delayed in any way because an 

aftermarket was not allowed to develop to move it along. And I 

think that you are absolutely correct in indicating that we will get 

there in two different ways: One, the car manufacturers themselves 

will do everything they can to get this technology in the public 

hands, but along the way as we have seen with almost every other 

automotive technology, including I might add, car security, the 

aftermarket is quicker. It can get greater penetration and provide 

competition. 

And what my concern is about some of the privacy discussions 

is when it comes to matters of losing your limb and losing your life 

which is what we are talking about with collisions in cars, it is a 

little less important to have privacy than it is in some other areas. 

So the privacy discussion is important. I don’t want to denigrate it, 

but when it comes time to our physical safety, it takes a backseat. 

Mr. BAINWOL. I just need to address—— 

Mr. ISSA. Mr. Bainwol, just remember, the two of you did take 

a picture earlier standing next to each other smiling. 

Mr. BAINWOL. This is not to contradict Gary, but just to clarify. 

So Gary used the words about fatalities in cars as the cars are killing people. I just want to clarify, 95 percent, maybe 98 percent, 

maybe 99 percent of the fatalities on the road are a result of both 
78 

environmental challenges and human error. The car itself works 

rather beautifully, and the critical point that we would both embrace, is that—— 

Mr. ISSA. I certainly think Mr. Shapiro was talking about 

antilock brakes, traction control, all of the items that have come 

out that have reduced the death rate in all-too-flawed drivers. 

Mr. BAINWOL. We are very proud of those technologies. We want 

to see them move into the fleet as rapidly as possible, and those 

technologies are the answer to human error which is a huge problem. 

Mr. ISSA. Thank you. And Mr. Reed, since you were given credit 

for the development of those apps, your members wanting to be 

able to develop apps depend on either an open standard or in the 

alternative, being able to, if you will, hack in order to create interfaces because otherwise you’re locked out of interfaces with the 

automobile and other products. Isn’t that true? 

Mr. REED. So open standard would be a significant part of how 

this moves forward. 

Mr. ISSA. Or published standards. 

Mr. REED. But I also think you will end up with published standards, and you will also end up with what I believe will be interfaces where I won’t have to hack it. There is the connotation to 

hack which is a little odd. 

What will end up happening is, is that APIs will be published by 

the car manufacturers that will allow me to the tie into the existing system, or I will do it through the phone, and the phone manufacturer will have done a deal with the auto dealer and then I will 

have a secure, safe, API platform that I can build out the apps on. 

So I’m actually quite hopeful about the connected car. And I 

think that’s a place where you are going to see an explosion of apps 

that will be really helpful and beneficial, especially those with kids 

in the back seat. 

Mr. ISSA. Well, earlier on I mentioned in the opening statement 

that we do not have in this Committee the jurisdiction over the 

bandwidth necessary for many of your products. We do, however, 

have a mandated seat at the table in consultation with the Ways 

and Means Committee and with the Administration in trade. 

Under Trade Promotion Authority for both the European trade and 

the TPP in the Pacific. 

I would like any of you that want to comment on the importance 

of global standards of getting the Internet of Things to, in fact, be 

embraced in a way around the world that allows either for economy 

of scale, or consistency of service, and I will go right down the line 

on that. Mr. Shapiro. 

Mr. SHAPIRO. Global standards are nice, but they are not essential. We have seen in technology that politics and ego often play as 

to whose country’s standards, you know, there’s several—— 

Mr. ISSA. I wasn’t necessarily only talking about standards. I was 

also talking about the access that trade promotion is intended to 

have, the acceptance without tariff for barrier of American products. 

Mr. SHAPIRO. Okay. So standards is one issue, but the fact is, is 

that trade promotion is good. The ITA is great. We are very excited 

with the direction things have taken in the last month. It’s posi-
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tive. Obviously, to the extent that these devices get out there, and 

they are improving people’s lives and saving lives, it is an important thing. 

If there’s an international low tariff approach, that’s always preferred to one which is country-by-country, high tariff. 

Mr. ISSA. Mr. Garfield. 

Mr. GARFIELD. I think the opportunity that you highlighted, that 

trade agreements provide for driving global consensus-based standards that help to advance scaleability and interoperability, are a 

net positive; hence, our strong support for Trade Promotion Authority and ultimately the trade deals that will emanate as a result of 

that. 

Mr. BAINWOL. With a complex blend of membership, sometimes 

trade gets tricky for me. But I would say—— 

Mr. ISSA. Some of your members are for it, and some are against 

it, and you are with your members? 

Mr. BAINWOL. It’s more complicated than that. But the notion of 

harmonization is absolutely a valid one. 

Harmonization has been around for 100 years as a concept, but 

we are building to different standards all around the globe, and 

that ends up upping the cost of the product for consumers all over. 

And a new car is safer than an old car so we can reduce the cost 

of a product through harmonization. We are getting more people 

into newer cars and that’s safer and that’s good for everybody. 

Mr. REED. Two quick points. Every single one of your Members 

of this Committee has a company in their district that is selling an 

app overseas. Guaranteed. We see about 20 percent of all the apps 

in China, are actually from U.S. companies, which is huge. If you 

pay attention to the China market it’s hard, which brings me to the 

second part. 

Our one concern about standards is that we are finding some 

countries are dipping their toe into the idea of creating quote-unquote, ‘‘domestic open standards’’ that are slightly tweaked from 

the United States, and these are strictly barriers that they are putting up to protect domestic manufacturers, domestic app developers. We have seen it in the WiFi space, around the globe. We are 

seeing tweaks to standards strictly to protect domestic production. 

And so we would support your perspective on improving trade 

and improving those standards so that they are available to all. 

Mr. ISSA. Thank you. And on that note, with no further questions, this will conclude today’s hearing. 

I want to thank all our witnesses. Without objection, Members 

will have 5 legislative days to submit additional written questions 

for the witnesses, and additional materials for the record. That also 

leaves our witnesses 5 days, if you could please, to provide additional material, including that which some of you promised to give 

to our Members. And with that, we stand adjourned. 

[Whereupon, at 11:42 a.m., the Subcommittee was adjourned.] 

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