COMMISSION STAFF WORKING DOCUMENT Advancing the Internet of Things in Europe Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Digitising European Industry Reaping the full benefits of a Digital Single Market
Date: 2016-04-19
Institutions: Directorate-General for Communications Networks, Content and Technology, European Commission
Subjects: EU industrial policy, Internet, computer systems, consumer protection, data protection, information network, information technology applications, innovation, new technology, single market

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 19.4.2016  SWD(2016) 110 final   COMMISSION STAFF WORKING DOCUMENT Advancing the Internet of Things in Europe Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Digitising European Industry Reaping the full benefits of a Digital Single Market {COM(2016) 180 final}  
 
 
STAFF WORKING DOCUMENT 

Advancing the Internet of Things in Europe 

Table of contents 

1. 

INTRODUCTION ....................................................................................................... 4 

1.1.  What is the Internet of Things? ......................................................................... 5 
1.2.  Expected benefits from the Internet of Things .................................................. 7 
1.3.  Europe's strength in digital technologies in a global context ............................ 8 
1.4.  Challenges for the implementation of the Internet of Things ........................... 9 

2.  A SINGLE MARKET FOR THE INTERNET OF THINGS ................................... 11 

2.1.  Setting the scene: key features of the IoT in a single market .......................... 11 
Machine to Machine (M2M) connectivity ...................................................... 11 
IoT architecture ............................................................................................... 12 
Data handling .................................................................................................. 12 
2.2.  Connectivity obstacles: spectrum, network coverage ..................................... 14 
Spectrum availability ....................................................................................... 14 
Network coverage ........................................................................................... 14 
2.3.  Numbering, addressing, identification and discovery ..................................... 15 
Numbering and addressing .............................................................................. 15 
Identification and discovery ............................................................................ 16 
2.4.  Standardisation and Interoperability ............................................................... 16 
Existing standards and alliances ...................................................................... 16 
Mapping and fostering convergence ............................................................... 18 
Testing and interoperability ............................................................................ 19 
Intellectual Property Rights Licensing ............................................................ 19 
2.5.  Possible obstacles to data flow and access to data .......................................... 20 
2.6.  Safety and liability .......................................................................................... 21 

3.  A THRIVING IOT ECOSYSTEM ........................................................................... 23 

3.1.  Promoting open platforms to foster IoT innovation ........................................ 25 
3.2.  Spurring innovation in lead markets ............................................................... 26 

4.  A HUMAN CENTRED IOT ..................................................................................... 27 

4.1.  Guiding principles for IoT and avoiding a new digital divide ........................ 27 
4.2.  Trust in the IoT ................................................................................................ 29 
Trusted IoT Label ............................................................................................ 30 

2 

 
 
 
 
 
4.3.  Security ............................................................................................................ 30 

5.  ANNEX ..................................................................................................................... 31 

1. Smart Homes ............................................................................................... 31 
2. Personal Wellness and Wearables ............................................................... 33 
3. Smart Manufacturing ................................................................................... 33 
4. Smart Energy ............................................................................................... 34 
5. Smart Cities ................................................................................................. 34 
6. Automated Driving/Smart Mobility ............................................................ 35 
7. Smart Farming ............................................................................................. 37 
8. Circular Economy........................................................................................ 37 

3 

 
 
 
 
 
1.  Introduction 

The Internet of Things (IoT) represents the next major economic and societal innovation wave 
enabled by the Internet. With the IoT, any physical (e.g. a thermostat or a bike helmet) and 
virtual (i.e. a representation of real object in a computer system) object can be connected to 
other objects and to the Internet, creating a fabric between things as well as between humans 
and  things.  The  IoT  can  combine  the  physical  and  the  virtual  worlds  into  a  new  smart 
environment, which senses, analyses and adapts, and which can make our lives easier, safer, 
more  efficient  and  more  user-friendly.  The  Digital  Single  Market  Strategy  for  Europe  (in 
short DSM Strategy) underlines the need to avoid fragmentation and to foster interoperability 
for the IoT to reach its potential1. 

This Staff Working Document (SWD), which builds on a series of studies and consultations 
organised  over  the  past  4  years2,  is  part  of  the  DSM  technologies  and  public  services 
modernisation package. It accompanies the Communication "Digitising European Industry  – 
Reaping the full benefits of a Digital Single Market" (in short Digitisation Communication). 
The latter calls for actions in line with the DSM Strategy to maximise the benefits that digital 
innovation can bring to European economy, and to allow faster business growth in the digital 
economy. The DSM technologies and public services modernisation package also includes the 
Communication  "Priorities  for  ICT  Standardisation  for  the  Digital  Single  Market"  (in  short 
Standardisation  Communication).  Several  of  the  actions  outlined  in  the  Digitisation 
Communication and in the Standardisation Communication concern IoT directly. This SWD 
is  also  related  to  initiatives  already  announced  in  the  DSM  Strategy,  notably  the  Telecoms 
Review and the Free Flow of Data initiative.  

As  pointed  above,  the  Digitisation  Communication  and  the  Standardisation  Communication 
highlight the importance of Europe becoming a leading region in IoT products and services. 
Stakeholders and available expertise point out that advancing work towards these objectives 
would require action along the following 3 pillars:  

1.  A  single  market  for  the  IoT:  IoT  devices  and  services  should  be  able  to  connect 
seamlessly and on a plug-and-play basis anywhere in the European Union (EU), and scale 
up across borders. 

2.  A thriving IoT ecosystem: open platforms used across vertical silos will help developer 
communities to innovate. As a kick-start, IoT deployments in selected lead markets will 
be supported. 

3.  A  human-centred  IoT:  the  IoT  in  Europe  is  to  respect  European  values,  empowering 
people along with machines and businesses, thanks to high standards for the protection of 
personal data and security, visible notably through a 'Trusted IoT' label. 

These three pillars are analysed in the remaining of this Staff Working Document. 

1   Communication A Digital Single Market Strategy for Europe COM (2015) 192 Final. Available at: http://eur-

lex.europa.eu/legal-content/EN/TXT/?qid=1447773803386&uri=CELEX:52015DC0192. 

2  Notably:  policy  papers  and  books  published  by 

the  governance  of 

the  IoT  European  Research  Cluster  (IERC) 
(http://www.internet-of-things-research.eu/); conclusions of the IoT EU Expert Group 2010-2012 and public 
consultation  on 
in  2012 
the 
(https://ec.europa.eu/digital-single-market/en/news/conclusions-internet-things-public-consultation); 
consultation in 2015 on IoT Large Scale Pilots; three dedicated studies in 2013, 2014 and 2015 (available at: 
https://ec.europa.eu/digital-single-market/en/newsroom/reports-studies-etc/internet-things);  results  of 
the 
Future Internet Public Private Partnership (FI-PPP) under FP7; papers published by the Alliance for Internet 
of Things Innovation (AIOTI) in 2015 (available at: https://ec.europa.eu/digital-single-market/en/news/aioti-
recommendations-future-collaborative-work-context-internet-things-focus-area-horizon-2020). 

Internet  of  Things 

launched 

(IoT) 

4 

 
 
 
                                                 
1.1. What is the Internet of Things? 

Originally,  the  Internet  was  conceived  to  interconnect  computers  and  transmit  messages 
with  limited  data  exchange  capability.  With  the  advent  of  web  technologies,  a  first 
revolution took place enabling the linking of documents and the creation of a word wide 
web  of  information  (web  1.0).  In  the  early  years  of  this  century,  the  Internet  evolved 
towards  a  universal  communication  technology  making  it  possible  to  carry  all  voice, 
video,  or  information  content,  with  social  media  enabling  user-generated  content  (web 
2.0). Based on existing communication technologies like the Internet, the IoT3 represents 
the  next  step  towards  digitisation  where  all  objects  and  people  can  be  interconnected 
through communication networks, in and across private, public and industrial spaces, and 
report about their status and/or about the status of the surrounding environment. Think for 
example  of  a  fire  extinguisher,  which  will  directly  call  the  fire  department  when  in  use 
and send information about the incident.  

Figure1. The Internet: From birth to the IoT era 

3   The first use of the term Internet of Things is often attributed to Kevin Ashton (Massachusetts Institute of 
Technology’s Auto-ID (for Automatic Identification) Center in Boston), at that time employee of Procter& 
Gamble. In 2009, he mentioned the need for an Internet for Things as a standardized way for computers to 
capture information from the real world and to understand it. 

5 

 
 
 
                                                 
The  IoT  inaugurates  a  new  age  of  ubiquitous  connectivity  and  intelligence  in  which 
components, products, services and platforms connect, virtualise and integrate everything 
in a communication network for digital processing4.  

The IoT is about setting up new ecosystems that cut across vertical areas, and create new 
markets  for  hardware  (connected  devices),  software  (IoT  platforms  and  systems)  and 
services (IoT applications). IoT has a horizontal and cross-cutting character. It should be 
understood  as  an  ecosystem  where  areas  that  have  been  developed  as  vertical  silos 
(manufacturing, transport, healthcare, devices etc.) relate to each other, thanks to common 
platforms  and  innovation  across  areas.  IoT  ecosystems  are,  therefore,  based  on  bringing 
together multiple sectors and stakeholders to cover an increasingly complex value chain.5 
It also requires open platforms that can integrate many different types of equipment and 
applications.  The  IoT  combines  connectivity,  data  generation,  architecture  and  system, 
processing  and  analytics  with  actuation6  and  new  interfaces,  including  automation  and 
artificial intelligence.  

The IoT is based on various disciplines and technologies like sensors, embedded systems, 
various  communications  technologies  (semantic  and  security  technologies  for  naming 
some). It requires a specific configuration for object identification and search, open/closed 
data sharing, lightweight communication protocols, trade-off between local and networked 
based  information  processing,  and  backend  integration.  It  also  requires  specific 
considerations  of  data  security  (e.g.  location-based  profiling),  liability  (many  service 
providers  involved)  seamless  identification  and  authentication  mechanisms  (including 
those  of  persons/entities  needed  for  managing  contractual  relations,  attribution  and 
liability) and trust.  

Given  these  specificities  and  based  on  the  current  market  developments,  one  may  argue 
that IoT encompasses different steps of evolution that can develop in parallel.  

4   The  IERC/ITU  official  definition  states  that  IoT  is  "A  dynamic  global  network  infrastructure  with  self-
configuring  capabilities  based  on  standard  and  interoperable  communication  protocols  where  physical  and 
virtual “things” have identities, physical attributes, and virtual personalities and use intelligent interfaces, and 
are  seamlessly  integrated  into  the  information  network.".  Available  at:  http://www.internet-of-things-
research.eu/about_iot.htm. 

5   See for instance the speech of Samsung Electronics CEO BK Yoon: 'The Internet of Things needs openness 

and industry collaboration to succeed', available at: http://www.samsung.com/us/news/24395. 

6    An actuator is a mechanical device for moving or controlling a mechanism or system. It takes energy, usually 
transported by air, electric current, or liquid, and converts that into some kind of motion (definition given by 
IoT-A project). 

6 

 
 
 
 
                                                 
Different steps of evolution of the Internet of Things 

1. Data driven innovation in vertical sectors 

Connected  sensors  collect  data  from  objects  (e.g.  a  car,  a  phone  etc.)  These  data  are  analysed 
either  through  embedded  systems  or  through  cloud-based  and  Internet  systems  enabling  the 
creation of new services and big data analytics. Wearables, sensors, equipment parts in business 
and smart city environments are examples of solutions put forward in this step. Innovation is data- 
and  product-driven  and  provides  better  decision  making,  increased  efficiency  and  more 
convenience.  This  happens  at  the  level  of  vertical  sectors,  but  cross-cutting  exchanges  remain 
limited. 

2. Industrial IoT: actuation and semi-autonomous behaviour based on smart connected objects  

The  data  provided  by  connected  sensors  and  objects  allows  single  and  networked  objects  to 
perform specific functions derived from sensing, analysis and intelligence gathered. This operates 
normally within the boundaries of given applications but it is expected, with increasing computing 
power and sophistication to gain high levels of autonomy in their behaviour and “life”. Examples 
include factory automation, logistics and robotics. 

3. Programmable world: data exchange and service creation across large vertical applications  

The third step combines steps one and two by using complex systems, intelligence and actuation. 
Sensors  and  Smart  connected  objects  are  not  only  designed  and  optimised  to  perform  certain 
functions  on  the  basis  of  vertical  business  models.  They  become  part  of  a  bigger  connectivity 
network  which  creates  new  opportunities  to  combine  more  intelligence  and  actuation  across 
vertical markets (verticals), to provide a whole new set of services and to coordinate smart objects 
in their original or other functions. Technical and semantic interoperability are the key factor of 
success.  It  enables  the  programming  of  complex  systems  to  integrate  a  number  of  device-  and 
service providers to deliver complete IoT solutions e.g. at home, in cities, between industries. 

4. The age of the digital nature 

Connected objects of all sorts become autonomous, using artificial intelligence to learn and self-
improve. Natural and cyborg interfaces link people with their hyper-connected environments and 
optimise these objects' functionalities seamlessly, like in a new stage of nature. This stage implies 
objects making decisions on their own to simplify our everyday life. The basic design is intended to 
meet the needs and preferences of individuals and society.   

1.2. Expected benefits from the Internet of Things 

Less  than  1%  of  objects  are  currently  connected  to  the  Internet.  The  number  of  IoT 
connections  within  the  EU  is  estimated  to  increase  from  approximately  1.8  million  in 
2013  to  almost  6  billion  in  2020,  leading  to  the  EU  IoT  market  being  higher  than  one 
trillion  euros  by  20207.  This  growth  in  connectivity  is  expected  to  bring  vast  economic 

7   IDC and TXT Solutions (2014), SMART 2013/0037 Cloud and IoT combination, study for the European 

Commission. Full text here: http://www.telit2market.com/wp-content/uploads/2015/02/TEL_14016_P_112-
114.pdf ; 26 billion “things” may be connected globally by 2020 

7 

 
 
 
 
                                                 
benefits, whereby the IoT significantly reshapes industry structures, with borders between 
products and services, as well as borders between industrial sectors becoming less obvious 
than  today.  This  may  materialise  through,  for  example  new  innovative  IoT  services  or 
applications;  improved  products  thanks  to  the  addition  of  new  services  or  applications 
coming  from  connectivity;  increased  efficiency  in  processes;  reduced  consumption  of 
resources and energy; better understanding of customers' needs; increased flexibility and 
possibility for sharing and co-creation. 

Economic  benefits  are  also  expected  to  derive  from  a  series  of  solutions  addressing 
societal challenges, as can be seen in the following examples:  

  Barcelona's  Energy-Saving  Smart  Streetlights8:  sensors  are  installed  in  streetlights, 
enabling automatic control of brightness by analysing the levels of noise, air pollution, 
and population density. Result: at least 30% energy savings per year;  

  UK’s  Intelligent  Transport  System  that  Reduces  Traffic  Congestion:  UK  built  an 
responsive  transport  system  on  the  M42  motorway  and  reduced  travel  time  by  25% 
and traffic accidents by 50%9; 

  In the Netherlands, IoT based solutions supporting health monitoring and independent 
living  at  home  for  people  with  multiple  chronic  conditions  have  demonstrated 
efficiency gains of care efforts of more than 20%10. 

1.3. Europe's strength in digital technologies in a global context 

In  the  opinion  of  Commission  services,  Europe's  future  digital  industrial  strengths  will 
depend  on  the  capacity  of  its  industry  to  seize  the  opportunities  coming  from  the  wider 
diffusion of digital innovation across sectors. Given Europe's current strengths in vertical 
markets, the development of the IoT offers a unique opportunity for Europe, since it has 
the potential to lead to the establishment and reinforcement of the new digital value chains 
in Europe attracting investments and innovators. The digitisation of all industrial sectors 
will  be  important  to  keeping  a  strong  European  industrial  base  and  to  manage 
transforming value chains and business models. For example, digitisation and the use of 
the  IoT  are  essential  to  the  development  of  smart  farming  or  the  development  of 
traceability and safety of food.  

Although  the  digital  transformation  of  industry  is  creating  tremendous  opportunities  for 
Europe,  available  expertise  points  out  that  a  series  of  leading  industries  are  confronted 
with huge challenges11.  

8   More details at: http://smartcity.bcn.cat/en/growsmarter.html 
9    http://www.roadtraffic-technology.com/projects/m42/ 
10  http://www.greenpeak.com/Company/PressReleases/PR201503ContractZTEHealth.html 
11 See, e.g. Manyika et al. (2015) Unlocking the potential of the Internet of Things; McKinsey Global Institute - 
June  2015;  available  at:  http://www.mckinsey.com/business-functions/business-technology/our-insights/the-
internet-of-things-the-value-of-digitizing-the-physical-world;  
Manyika  et  al.  (2015)  Internet  of  Things:  Opportunities  and  challenges  for  semiconductor  companies; 
McKinsey;  available  at:  http://www.mckinsey.com/industries/semiconductors/our-insights/internet-of-things-
opportunities-and-challenges-for-semiconductor-companies. 

8 

 
 
 
                                                 
In March 2015, the European Commission together with IoT industry players launched the 
Alliance for the Internet of Things (AIOTI)12. AIOTI aims to give EU the lead in the IoT 
field  creating  a  dynamic  European  IoT  ecosystem.  AIOTI  follows  an  approach  to 
European  platforms  that  entails  cross-sectorial  partnerships  and  collaboration,  and 
promotes  a  European  strategy  for  IoT  in  response  to  international  initiatives  such  as 
Industrial  Internet  Consortium  (IIC).  The  Alliance  also  offers  an  opportunity  to  discuss 
regulatory  and  legal  obstacles  to  further  IoT  take  up,  and  to  forge  consensus  on 
standardisation  matters  through  the  European  Telecommunications  Standards  Institute 
(ETSI)13 and oneM2M14.  

Given the very high potential of the Internet of Things, it is not surprising that a number 
of  regions  and  countries  (notably  USA,  China  and  Japan)  are  trying  to  become  global 
leaders in IoT. 

1.4. Challenges for the implementation of the Internet of Things 

Major challenges to the wide deployment and exploitation of the IoT potential are: 

(a)  In  many  industrial  sectors,  digital  transformations  are  leading  to  radical  changes  in 
companies'  roles  and  beneficiaries  throughout  the  value  chain  and  to  the  creation  of 
new  markets.  Monopolising  or  ring-fencing  of  new  IoT  areas  may  be  an  obstacle  to 
the development of these markets, and to the development of open digital platforms. 

(b)  At  the  moment,  many  companies  are  still  cautious  when  it  comes  to  the  IoT  and 
Industry  4.0  implementation  as  it  may  involve  radical  structural  changes  and  radical 
shift in value creation. This could explain why established large players often find it 
difficult to adapt to new business models and engage in new types of alliances. In that 
respect, agile players like SMEs, especially entrepreneurs and start-ups, are considered 
to have the potential to seize new opportunities brought up by the IoT. 

(c)  There  is  a  lack  of  common  standards  and  interoperable  solutions  throughout  the 
products  and  services  life  cycles15.  Interoperability  will  be  essential  for  the 
deployment of the IoT and for ensuring seamless flow of data across sectors and value 
chains.16 

12    For  more  details  on  AIOTI,  please  check  the  link:  https://ec.europa.eu/digital-agenda/en/alliance-internet-  
      things-innovation-aioti. 
13  www.etsi.org 
14   http://www.onem2m.org/.  
15 See Guillemin, P. (2014), Chapter 4 Internet of Things Global Standardisation,  in Friess & Vermesan (editors) 
to  market  deployment,  downloadable  at: 
Innovation 

Internet  of  Things, 
http://www.internet-of-things-research.eu/pdf/IoT-
From%20Research%20and%20Innovation%20to%20Market%20Deployment_IERC_Cluster_eBook_978-
87-93102-95-8_P.pdf  

from  Reserch  and 

16  AIOTI's  report  on  IoT  standards  available  at:    https://ec.europa.eu/digital-single-market/en/news/aioti-
recommendations-future-collaborative-work-context-internet-things-focus-area-horizon-2020;  reports  from 
standards  and  architectures  organised  on  4/11/2015,  available  at: 
the  workshop  on 
https://ec.europa.eu/digital-single-market/en/news/standards-and-architecture-iot-path-convergence-main-
outputs-workshop-iot-standardisation-and. 

IoT 

9 

 
 
 
                                                 
(d)  There  is  a  lack  of  consensus  on  EU  policy  coordination  in  this  area17.  According  to 

stakeholders this lack of consensus creates at least five major risks:  

1)  Risks  of  fragmentation  and  a  need  to  address  a  coordination  failure  between 
Member States. Member States are starting to develop national policies in favour 
of IoT. National barriers could prevent the IoT from operating on a genuine Single 
Market basis, which is recognised by the DSM Strategy18. 

2) Risks of fragmentation between industries. At industrial level, a number of areas19 
are  already  adopting  the  IoT  by  adding  connectivity  to  products  and  processes. 
However, as in many cases each industrial actor acts unilaterally, adopting separate 
architectures, standards and business models, this reality does not encourage cross-
cutting approaches, risks reinforcing silos, and prevents innovation across areas.  

3)  Risk  of  lock-in  in  proprietary  ecosystems,  through  restraint  interoperability  and 

access to data and applications. 

4) Risk of users being forced to compliance and data sharing instead of developing a 
human-centred IoT where users can trust that the IoT systems around them operate 
according  to understood principles and guarantees  for their integrity,  privacy  and 
security. 

5)  Risk  that  the  uncertainty  about  business  models  and  standards  could  generate 
information  asymmetries  and  market  failures,  preventing  investment  and  risk-
taking. 

The challenges  mentioned above  lead to  the general discussion on the need  to  ensure a 
proper balancing of different actions in view of their compliance with the rights enshrined 
in the European Charter of Fundamental Rights20.   

17  See  e.g.  results  of 

the  public  consultation  held  between  April  and  July  2012  available  at; 
https://ec.europa.eu/digital-single-market/en/news/conclusions-internet-things-public-consultation;  and  the 
study  on  Europe’s  policy  options  for  a  dynamic  and  trustworthy  development  of  the  Internet  of  things 
(2013)  available  at:  http://bookshop.europa.eu/en/europe-s-policy-options-for-a-dynamic-and-trustworthy-
development-of-the-internet-of-things-pbKK0113297/. 

18   SWD A Digital Single Market for Europe, op. cit. p.7. "The scale provided by a DSM is also important for 
the  deployment  of  high-speed  infrastructure  to  enable  advanced  digital  services  and  the  development  and 
adoption  of  new  technologies  in  Europe,  such  as  the  Internet  of  Things,  big  data  analytics  or  cloud 
computing. Companies  may refrain from  investing in the deployment of these technologies if they have to 
use different costly specifications or have to invest in new infrastructure (e.g. cloud based data centres), as 
regards the transfer of data or cross-border service delivery, making it unprofitable to innovate". 

19   Areas of application we see today for IoT include but are not limited to: multi-modal mobility and smart road 
infrastructure,  smart  agriculture  and  food  traceability,  smart  assisted  living  and  wellbeing,  smart 
manufacturing, energy management at home and in buildings, worker safety, environmental monitoring and 
management,  load-aware  power  generation  and  demand  response,  smart  living  environment,  smart  public 
safety, smart design, open platforms for the audio-visual industry. 

20  Any policy initiative in relation to IoT needs to ensure the respect of the rights enshrined in the Charter of 
Fundamental Rights, like for example the right to private lift (Article 7), and the protection of personal data 
(Article 8), or the freedom to conduct a business (Article 16). 

10 

 
 
 
 
                                                 
2.  A single market for the Internet of Things 

Stakeholders point out that for achieving a large uptake of the IoT in Europe a functioning 
single market for the IoT is key. It would ensure that IoT devices and services are able to 
connect seamlessly and on a plug-and-play basis anywhere in the EU and scale up without 
obstacles through national borders. Besides connectivity, and as outlined in the Digitisation 
Communication, a DSM for IoT would also need to address issues relevant to numbering 
and addressing, telecom networks, data flows and liabilities. 

Mastering of all the key elements of the technology and value chain and their integration 
into horizontal  platforms  also requires a focused standardisation effort on the delivery  of 
reference architectures, as recognised in the Standardisation Communication. 

2.1. Setting the scene: key features of the IoT in a single market 

The  IoT  starts  from  a  connected  device,  while  at  the  same  time  IoT  is  based  on  an 
architecture that recognises devices and organises their interactions.  

Machine to Machine (M2M) connectivity 

In terms of connectivity, there are a number of available standards, commonly referred to 
as  Machine  to  Machine  (M2M).  The  IoT  is  built  on  an  underlying  multi-protocol 
communications  framework  that  can  easily  move  data  between  embedded  "things"  and 
systems located at higher levels of IoT architecture21. M2M is the most basic requirement 
for the IoT single market.  

Devices can be connected simply through a fixed telecommunications line using protocols 
like  Ethernet.  They  may  also  be  connected  through  wireless  protocols  and  there  is  a 
plethora of short-range or local area, wireless technologies available including RFID, NFC, 
Wi-Fi, Bluetooth, XBee, ZigBee, Z-Wave and Wireless M-Bus. There are also low-power 
longer  range  options,  like  LoRa,  Sigfox  and  a  forthcoming  narrow-band  LTE  standard 
(LTE-NB). GSM and 3G can also be used to connect devices. In the future, 5G promises to 
even better serve IoT devices to offer scalability for M2M, low latency, better quality of 
service and improved spectrum efficiency. 

At  present  no  evidence  exists  of  any  market  failure  in  this  area,  as  there  is  currently 
sufficient  choice  in  the  market  and  strong  consistency  between  the  choice  of  M2M 
connectivity  protocols  and  the  function  of  connected  devices.  The  telecom  industry  has 
created  a  global  standards  initiative  for  M2M  communications,  oneM2M,  to  avoid  that 
connectivity  protocols  constitute  barriers  to  the  development  of  IoT  systems  through 
parallel  standardisation  initiatives.  The  purpose  and  goal  of  oneM2M  is  to  develop 
technical specifications which address the need for a common M2M Service Layer that can 
be readily embedded within various hardware and software, and relied upon to connect the 
myriad of devices in the field with M2M application servers worldwide.  

21   More details at:https://www.linkedin.com/pulse/connectivity-options-internet-things-iot-brijesh-kumar  

11 

 
 
 
 
 
                                                 
IoT architecture 

Reference  architectures  provide  a  common  language  allowing  several  actors  to  build 
infrastructural and functional IoT platforms, and on top of these value-added applications 
and services. They allow cooperation of industry across the value chain, across industrial 
sectors and across functional layers. In particular, a number of stakeholders point out that 
reference architectures for IoT platforms, on which applications and services can be built 
based  on  open  interfaces  and  allowing  cooperation  of  industry  across  the  value  chain, 
could be useful22. This would also help to mobilise an increasingly dynamic and growing 
community of innovators and entrepreneurs in the domain.  

AIOTI has already developed a reference architecture to explain how different IoT systems 
operate  and  how  its  various  components  are  linked.  The  functional  model  of  the  AIOTI 
reference architecture is composed of three layers: 

  The  Application  layer:  contains  the  communications  and  interface  methods  used  in 

process-to-process communications. 

  The  IoT  layer:  groups IoT  specific  functions,  such  as  data storage  and  sharing,  and 
exposes  those  to  the  application  layer  via  interfaces  commonly  referred  to  as 
Application Programming Interfaces (APIs). The IoT Layer makes use of the Network 
layer’s services. 

  The Network layer: the services of the Network layer can be grouped into data plane 
services  (providing  short-  and  long-range  connectivity  and  data  forwarding  between 
entities),  and  control  plane  services  (such  as  location,  device  triggering,  Quality  of 
Service or determinism). 

This model highlights that, if not consistently used, there may be obstacles for IoT systems 
to properly operate across Member States borders or across technological domains. 

Data handling  

The  IoT  generates  large  amounts  of  data,  and  conversely  IoT  systems  rely  on  a  proper 
handling  of  data,  collecting  and  combining  data  from  different  sectors  and/or  different 
sources23. There are already several business models encompassing these layers of a data 
component  in  the  IoT  solutions  available  on  the  market24  as  described  in  the  subsequent 
box.  

22  See for instance the workshop of 4 November 2015 on "IoT Standardisation and Architectures" (op.cit.) 
23   For  instance,  combining  data  coming  from  a  smart  meter  with  data  coming  from  a  washing  machine  to 
minimise energy costs; combining data from the sensors in a street with data collected from the rest of the 
city or other cities and from different sectors: meteorological data, data about traffic, about the activity in the 
factories and so on to respond to various city challenges. 

24  E.g. https://hbr.org/2014/07/how-the-internet-of-things-changes-business-models. 

12 

 
 
 
 
                                                 
IoT business models and their specificities in relation to data handling 

a) In most IoT solutions, e.g. a daily home device (thermostat) is transformed into a smart 
object with the help of an embedded sensor. In such a case, the data (1) generated by the 
sensor is directly (2) transmitted by using a traditional wired Ethernet of Wi-Fi connection 
to  an  (3)  Internet  cloud  service  (e.g.  an  application  service  provider)  where  it  is  (4) 
processed to analyse our home energy consumption. How can the user make use of the (5) 
data  service  element  obtained  (the  analysis  of  their  home  energy  consumption)?  In  this 
case, the cloud connection enables the user to obtain remote access to their thermostat via 
a smartphone or a Web interface25. 

The problem with such a model relates to interoperability challenges when attempting to 
integrate  devices  made  by  different  manufacturers.  Under  current  market  developments, 
the device and cloud service are from the same vendor. If proprietary data protocols are 
used between the device and the cloud service, the device owner or user may be tied to a 
specific cloud service, limiting or preventing the use of alternative service providers26. This 
is commonly referred to as “vendor lock-in’’. Often, in this model the data each IoT sensor 
produces remains a data silo, as the model does not allow for aggregation of other data 
sources.  

b)  Another  possible  model  would  be  one  that  allows  access  to  the  sensor  data  to  third 
parties. The approach is an extension of the above described model, to also include access 
to third parties. All data sensors coming from a particular infrastructure (local/distributed 
one:  e.g.  a  building/a  city)  would  be  stored  in  a  cloud  infrastructure  and  further  on 
processed and transformed into data services. For the moment, the take up by the market 
of  this  model  where  data  are  shared  with  other  parties  is  limited.  In  most  cases,  the 
generation, collection and processing of data is ensured by the same actor. 

c)  Another  model,  also  available  on  the  market,  is  based  on  smart  devices  (carrying  a 
sensor or actuator) that directly communicate with one another, and no longer through an 
intermediary  application  server.  In  doing  so,  they  use  certain  communication  protocols. 
This  model  is  commonly  used  in  applications  like  home  automation  systems,  which 
typically  use  small  data  packets  of  information  to  communicate  between  devices  with 
relatively low data rate requirements. The problem with such a model is the risk of lock-in.  

To deliver a single market for the IoT, the Commission services consider that it is essential 
to facilitate the flow and transfer of data across a series of steps27: 

1) generation of data  
2) transfer of data  
3) storage of data  
4) processing of data  
5) provision of data services  

25   The cloud provider also supports software updates to the thermostat. 
26   Industry efforts to solve this issue, e.g. the AllSeen alliance, see https://allseenalliance.org/ 
27  See also e.g. GSMA (2015) Unlocking the value of IoT through Big Data, 

http://www.gsma.com/connectedliving/wp-content/uploads/2015/12/cl_iot_bigdata_11_15-004.pdf; Key 
Conclusions and Recommendations, Meeting European Commission and European Round Table of 
Industrialists, Brussels, 20 July 2015. 

13 

 
 
 
                                                 
As indicated by a number of stakeholders, obstacles may emerge at each step, which could 
prevent the effective functioning of IoT systems and solutions on a pan-European basis. To 
allow for flexible and interoperable systems, at each step, data should be made available, 
accessible  and  easily  aggregated,  processed,  as  well  as  trusted,  thus  combining  quality, 
reliability and security. 

2.2. Connectivity obstacles: spectrum, network coverage 

Some  framework  conditions  could  become  an  obstacle  for  the  development  of  a  single 
market for IoT, notably spectrum availability and network coverage.  

Spectrum availability 

Spectrum  is  one  of  the key  enablers  of  the IoT.  While  the need  for  additional  speed  and 
capacity for wireless data traffic (Enhanced Mobile Broadband28) is booming, the number 
of connected devices is also estimated to increase very rapidly. As an example, there were 
52 million machine-to-machine (M2M) connections across Europe as of September 2014, 
and their total number is forecast to grow at a compound annual growth rate (CAGR) of 
23% between 2014 and 2020, bringing the total to 190 million29. As these connections are 
mostly  wireless,  to  accommodate  the  resulting  traffic  between  connected  devices,  the 
amount of available spectrum will have to be increased. 

ETSI identifies around 20 different frequency bands30 between 25 MHz and 1000 MHz for 
the usage by Short Range Devices (SRD). This results in a fragmentation of this resource. 
However,  this  is  due  to  the  fact  that  these  bands  are  category-specific  and  cater  for 
different usage conditions and uses; not all devices will have to support all these bands in 
parallel. 

To avoid introducing any undesirable obstacles, the Commission services take full account 
of  the  particularities  brought  about  by  IoT  when  discussing  the  review  of  the  spectrum 
policy with Member States. 

Network coverage 

Another key issue for the broad deployment of the IoT is the availability of communication 
networks  as  all  devices  should  be  able  to  plug  and  play  wherever  they  are  in  the  EU. 
Depending  on  the  use  case  the  connectivity  needs  may  however  be  satisfied  through 
different  technologies:  for  example,  small,  low-powered  sensors  need  a  different  type  of 
connectivity  as  connected  cars.  To  facilitate  the  wide  availability  of  IoT  solutions,  it  is 
important,  in  the  opinion  of  the  Commission  services,  that  European  broadband  policies 
are designed with IoT specificities in mind.  

28   ITU categorization of the future IMT: http://www.itu.int/en/ITU-R/study-groups/rsg5/rwp5d/imt-

2020/Pages/default.aspx  

29   GSMA Intelligence (2014): https://gsmaintelligence.com/  
30   ETSI EN 300 220-1: 

http://www.etsi.org/deliver/etsi_en/300200_300299/30022001/02.04.01_40/en_30022001v020401o.pdf  

14 

 
 
 
 
                                                 
2.3. Numbering, addressing, identification and discovery 

A potential obstacle for the achievement of a single market for the IoT has to do with the 
capacity  to  handle  a  large  number  of  different  connected  devices.  There  is  a  need  to 
securely identify them and to be able to discover them so that they can be plugged into IoT 
systems.  

Numbering and addressing 

Billions of objects will be connected via the Internet to gather data and to remotely enable 
value-added  services.  These  billions  of  objects  will  likely  not  have  a  predefined  static 
location (e.g. being tracked all the way from cradle to usage and to recycling) or are meant 
to  be  able  to  move  around  throughout  the  EU  and  beyond  (e.g.  connected  cars,  fishing 
vessels, cruise ships etc.) while being connected seamlessly. 

Following  the  work  that  the  European  Conference  of  Postal  and  Telecommunications 
Administrations (CEPT)31 has done on the topic, the Commission services consulted with 
Member  States  through the  Body  of  European  Regulators  of  Electronic  Communications 
(BEREC)32  in  2015  to  establish  how  they  see  the  emerging  needs  for  a  European 
numbering  range  in  view  of  the  experience  with  ETNS33.  More  specifically,  the 
Commission  services  wanted  to  examine  how  Member  States  plan  to  address  the 
availability and the extra-territorial use of E.164 and E.212 numbers for M2M services in 
their  national  numbering  ranges.  The  public  consultation34  on  the  EU  Telecoms  Review, 
which included questions on numbering, highlighted the need for further harmonisation to 
support the deployment of infrastructure in line with future market needs and that industry 
is supportive of a more co-ordinated approach. The current numbering scheme seems to be 
too  limited  to  support  the  wide  range  of  future  M2M  applications  and  the  Commission 
services  are  of  the  opinion  that  it  would  need  to  be  developed  further.  The  Commission 
services continue to monitor work in technical fora (e.g. Internet Engineering Task Force 
(IETF)35 and Réseaux IP Européens Network Coordination Centre (RIPE NCC)36) in view 
of ensuring that the technical feasibility of a European/international numbering scheme for 
IoT and that this option remains implementable for the case it would receive considerable 
backing in the future.  

31   www.cept.org 
32   http://berec.europa.eu/eng/document_register/subject_matter/berec/opinions/5091-request-from-the- 
commission-to-berec-for-input-and-opinion-on-the-review-of-the-rf-for-electronic-communications 

33   ETNS  was  a  shared  Country  Code  (+3883)  for  Europe  that  was  intended  to  be  a  complement  to  existing  

individual country codes. 

34   https://ec.europa.eu/digital-single-market/en/news/high-quality-and-high-speed-internet-access-vital- 

achieve-digital-single-market 

35   IETF's  working  group  MODERN  (Managing,  Ordering,  Distributing,  Exposing,  &  Registering  
telephone  Numbers)  is  tasked  to  define  a  set  of  Internet-based  mechanisms  for  the  purposes  of  
managing  the  acquisition  and  resolution  of  telephone  numbers  in  an  IP  environment.  The  Commission  
raised the issue of a possible European/international IoT numbering, to be studied by the group. 

36   www.ripe.net 

15 

 
 
 
 
                                                 
Identification and discovery 

The availability of mechanisms for the identification of physical and virtual/logical objects 
is  a  key  prerequisite  for  the  development,  deployment  and  operation  of  IoT  applications 
and  services.  An  IoT  identification  framework  comes  with  naming,  addressing  and 
discovery  mechanisms.  These  identifiers  operate  at  different  layers  and  serve  different 
purposes.  

As  outlined  in  the  IERC  Position  Paper  on  IoT  Identification37,  a  wide  array  of 
identification  technologies  are  deployed  by  EU  organizations  for  different  types  of 
applications.  These  include  IPv6,  tag  identifiers  (UPC,  RFID),  DOI/Handle,  as  well  as 
several application identifiers. The Commission services acknowledged the importance of 
providing  IPv6  infrastructures  and  have  taken  measures  to  encourage  IPv6  deployment. 
However,  IPv6  deployment  remains  very  small  comparing  to  IPv4.  Furthermore,  IPv6  is 
generally present in core networks, but has still very low penetration in the access part. 

The  Commission  through  Horizon  2020  IoT  Focus  Area38  is  funding  research  into  IoT 
integration  and  platforms  that  will  address  notably  authentication,  identification  and 
discovery. 

2.4. Standardisation and Interoperability 

Standardisation is the critical element to deliver a single market for IoT where any device 
can plug and play anywhere. It can facilitate the interoperability, compatibility, reliability, 
security  and  effective  operations  on  a  global  scale  among  different  technical  solutions, 
softening  (or  even  eliminating)  such  fragmentation,  stimulating  the  emergence  of  new 
ecosystems,  enabling  R&D,  boosting  innovation  and  reinforcing  competitiveness.  IoT 
standards  may  support  the  emergence  of  business  models  unleashing  the  commercial 
capabilities of systems and device integration. 

Existing standards and alliances 

IoT  standardisation  encompasses  standards  for  connectivity,  interoperability,  APIs,  data 
ontologies, data sharing (e.g. cloud services), protection of personal data and security. As 
opposed  to  proprietary  solutions,  open  standards  are  considered  a  solution  in  the  IoT 
landscape,  because  of  their  net  positive  effects  as  regards  large  scale  deployment, 
widespread  adoption  and  preventing  lock-in.  Open  standards  are  also  key  in  creating 
innovative ecosystems cutting across silos. However, standards identification is not enough 

37    Available at: http://www.internet-of-things-research.eu/pdf/IERC_Position_Paper_EU- 

China_IoT_Identification_Final.pdf  

38   https://ec.europa.eu/research/participants/portal/desktop/en/opportunities/h2020/calls/h2020-iot-2016-

2017.html#c,topics=callIdentifier/t/H2020-IOT-2016-2017/1/1/1/default-
group&callStatus/t/Forthcoming/1/1/0/default-group&callStatus/t/Open/1/1/0/default-
group&callStatus/t/Closed/1/1/0/default-group&+identifier/desc 

16 

 
 
 
                                                 
to  ensure  interoperability.39  Reference  implementations  that  can  be  shared  by  industrial 
actors are of utmost importance.40  

In  addition,  a  large  number  of  proprietary  or  semi-closed  solutions  to  address  specific 
needs  have  emerged,  leading  to  non-interoperable  applications,  based  on  different 
architectures and protocols. Consequently, the deployment of IoT applications (i.e. where 
information  of  connectable  “things”  can  be  flexibly  aggregated  and  scaled)  has  been 
limited in scale and in scope, actually limiting the IoT to a set of “intranets of things – or 
goods”.41  

Several  standardisation  initiatives  currently co-exist,  in  individual  Standard  Development 
Organisations  (SDOs)  or  partnerships  (e.g.  ETSI  SmartM2M42,  ITU-T43,  ISO44,  IEC45, 
ISO/IEC  JTC  146,  oneM2M47,  W3C48,  IEEE49,  OASIS50,  IETF51,  etc.)  and  also  in 
conjunction  with  a  number  of  industrial    initiatives  (e.g.  All  Seen  Alliance52,  Industrial 
Internet Consortium (IIC)53, Open Interconnect Consortium (OIC), Platform Industrie 4.054 
etc.). It is important to understand the global dynamics of IoT standardisation in order to 
leverage  existing  standardization  activities  and  to  ensure  a  thorough  understanding  of 
market needs and requirements, via a gap analysis.55  

Large-Scale Pilots in Horizon 2020  

Against  the  background  of  global  competition  and  risks  of  fragmentation  and  delay,  the 
Commission  has  created  a  dedicated  Focus  Area  on  IoT  as  part  of  its  Work  Programme 
2016-17 under Horizon 2020. The Commission will invest more than 100 M€ in demand-
driven  large  scale  IoT  pilots  and  lighthouse  initiatives  in  areas  such  as  smart  cities  and 
homes,  smart  living  environments  for  ageing  well,  driverless  cars,  wearables,  smart  city, 
agro-food  or  manufacturing.  Examples  of  Large-Scale  Pilots  (LSPs)  are  presented  in  the 
Annex  to  this  SWD.  LSPs  will  lead  to  technology  integration  and  also  to  validation  of 
business models and standards. LSPs on IoT will support innovative experimentation and 

39    See e.g. http://www.etsi.org/images/files/SOSInteroperability/SOSinteropIpresentation16.pdf 
40    This approach was notably followed in the context of the Future Internet PPP (FI-PPP).” 
41    Rolling Plan for ICT Standardisation 2015 available at: 

 https://ec.europa.eu/digital-agenda/en/news/rolling-plan-ict-standardisation-0 

42   Smart Machine-to-Machine communications (Smart M2M), see: 
      https://portal.etsi.org/tb.aspx?tbid=726&SubTB=726 
43   ITU Telecommunication Standardization Sector (ITU-T), see: 

http://www.itu.int/en/ITU-T/Pages/default.aspx 

44   International Organization for Standardization, see: www.iso.org 
45   International Electrotechnical Commission, see: www.iec.ch 
46  ISO/IEC Joint Technical Committee 1 Information technology, see: 
     http://www.iso.org/iso/iso_technical_committee?commid=45020 
47  www.onem2m.org 
48  World Wide Web Consortium, see; www.iec.ch 
49  Institute of Electrical and Electronics Engineers, see; www.ieee.org 
50  Organization for the Advancement of Structured Information Standards, see: www.oasis-open.org 
51  http://www.ietf.org/ 
52  http://allseenalliance.org/ 
53  www.iiconsortium.org/ 
54  http://www.plattform-i40.de/I40/Navigation/DE/Home/home.html 
55   Rolling Plan for ICT Standardisation 2015 (op cit.) 

17 

 
 
                                                 
 
testing activities with a focus on cross-border collaboration facilitating access of SMEs and 
mid-caps to technology and EU-wide markets.56  

Most  of  the  relevant  work  on  IoT  related  to  standardisation  has  been  analysed  by  the 
Alliance  for  Internet  of  Things  Innovation  (AIOTI).  The  AIOTI  has  provided  3  key 
documents57: 

  IoT Landscape and IoT Large Scale Pilots Standard Framework Concepts, presenting 

the global dynamics and landscapes; 

  IoT  High  Level  Architecture  (HLA)  that  may  be  applicable  to  LSPs.  The  HLA  takes 

into account existing SDOs and alliances on architecture specifications; 

  IoT Semantic interoperability recommendations for IoT LSPs.  

AIOTI  identified  a  very  significant  number  of  IoT  alliances,  which  have  a  specific 
positioning  and  sometimes  overlap  in  their  aim.  This  may  characterise  the  still  emerging 
nature  of  the  IoT  but  it  may  also  represent  a  risk  of  fragmenting  the  IoT  landscape,  as 
illustrated in figure below.  

Figure 2: IoT SDOs and Alliances landscape 

It is therefore important to promote cooperation between the different SDOs and alliances 
to ensure appropriate leverage of resources and efficient IoT standardisation. 

Mapping and fostering convergence 

56   For more details see Horizon 2020 Work Program 2016-2017: 

http://ec.europa.eu/digital-agenda/en/news/horizon-2020-work-programme-2016-2017-internet-things-large-
scale-pilots 
57  Available at: 
      https://ec.europa.eu/digital-single-market/news/aioti-recommendations-future-collaborative-work-context- 

internet-things-focus-area-horizon-2020 

18 

 
 
 
 
                                                 
It is also essential to understand users' demands on standardisation and how coordination 
within  the  IoT  standards  landscape  could  take  place.  A  gap  analysis  could  help  achieve 
such coordination. The Commission was instrumental in setting up (and participates in the  
steering  and  supports  financially)  ETSI's  Specialist  Task  Force  505  (ETSI  STF  50558)  to 
perform  an  IoT  Standards  landscaping  and  gap  analysis,  and  to  develop  supporting 
references for the LSPs that will be funded by the Commission under the Horizon2020 IoT 
Focus Area59. ETSI STF 505 is tasked to analyse the status of current IoT standardisation; 
to  assess  the  degree  of  industry  and  vertical  market  fragmentation;  and  to  point  towards 
actions that can increase the effectiveness of IoT standardisation, improve interoperability, 
and allow for the building of IoT ecosystems. 

Testing and interoperability 

The complexity and interdependence of IoT standards is illustrated by the interoperability 
tests  (called  "plugtests")  that  are  performed  by  ETSI  (with  EC  funding)  for  key  IETF 
standards  for  IoT,  such  as  6lo  (IPv6  over  Networks  of  Resource-constrained  Nodes)  and 
6TiSCH (IPv6 over Timeslotted Channel Hopping, Time-slotted Channel Hopping having 
in turn been developed by the IEEE). 

LSPs  have  been  proposed  through  Horizon  2020  to  test  standards  through  wide  scale 
operational  testing  of  IoT  solutions.  These  LSPs  should  support  the  deployment  of  IoT 
solutions,  by  enhancing  their  acceptability  and  adoption  by  users  and  citizens  and  by 
fostering  new  market  opportunities  for  EU  suppliers.  Implementing  real-life  IoT  LSPs  is 
essential  to  test  standards  at  work  in  real-life  conditions  and  to  support  the  appropriate 
reference implementations.60  

An  open  standards  environment  is  important  for  the  IoT.  To  achieve  interoperability, 
voluntary implementation of IoT Reference Architectures and interfaces and of open APIs 
is necessary towards a true IoT Digital Single Market.  

the  Commission  services  continues 

the  Internet 
In  parallel, 
standardisation process and maintains contacts at the highest level with key European and 
international  SDOs,  notably  through  the  Multi  Stakeholder  Platform,  and  high-level 
events.61  The  Commission  services  also  hold  a  process  of  international  dialogue  and 
consensus-building  on  IoT  standardisation  with  the  US,  South  Korea,  Japan  and  China, 
notably through the Horizon 2020 joint international calls and the bilateral ICT Dialogues. 

the  monitoring  of 

Intellectual Property Rights Licensing 

58  https://portal.etsi.org/stfs/ToR/ToR505v02_SmartM2M_EC_2015-02_IoT_Analysis.doc 
59    https://ec.europa.eu/digital-agenda/en/news/horizon-2020-work-programme-2016-2017-internet-things-large-

scale-pilots  

60   This includes domains of strategic European interests such as health care, connected vehicles, smart energy 

application, smart cities. 

61    See  for  instance  the  workshop  of  4  November  2015  on  "IoT  Standardisation  and  Architectures",  with 

participation of SDO key figures, policymakers EU and global industry and the Commission, 

        https://ec.europa.eu/digital-single-market/en/news/standards-and-architecture-iot-path-convergence-main-

outputs-workshop-iot-standardisation-and. 

19 

 
 
 
                                                 
Using  multiple  technologies  and  standards  inherent  to  the  deployment  of  complex  IoT 
systems may naturally involve patented or protected technologies. It can be anticipated that 
service or higher layer technologies may be deployed under "free" licensing schemes (e.g. 
APIs  to  stimulate  creation  of  large  communities  of  developers).  At  the  same  time,  a 
number of stakeholders have underlined that other technologies, having necessitated huge 
investment  in  research  and  standardisation  development,  may  be  licensed  under  fair, 
reasonable,  and  non-discriminatory  (FRAND)  terms;  the  latter  ensure  fair  access  to  the 
standard  for  the  implementers  and  fair  return  for  the  standard  essential  patents  holders. 
However, certain stakeholders point out that with the multitude of technologies involved in 
implementing  a  complete  IoT  value  chain,  there  are  possible  risks  of  uncertainty  in 
particular  in relation to i) who is the relevant community of essential patent holders, ii) the 
cost  of  the  cumulated  Intellectual  Property  needed  to  implement  the  IoT  system;  iii)  the 
methodology applied to calculate the value introduced by the patented technology for the 
use in question; and iv) the regime regarding the settlements of disputes. . 

Against  this  background,  industrial  efforts  are  ongoing62  to  develop  a  transparent, 
innovative and globally acceptable licensing scheme for all players of the value chain and 
for the relevant protected technologies of an IoT system.  

2.5. Possible obstacles to data flow and access to data 

The Digital Single Market strategy already announced that the Commission would adopt a 
Free Flow of Data63 initiative, to ensure that data can circulate without obstacles within the 
Union  by  removing  unjustified  restrictions  to  the  location  of  data  and  by  addressing 
emerging  issues  on  'data  ownership',  (re)usability  and  access  to  data  (including  research 
data), and liability amongst others in relation to the Internet of Things.  

Certain stakeholders are of the opinion that the following are aspects that seem particularly 
relevant in the context of fostering the wide availability of IoT solutions:  

  Uncertainties as regards data ownership in relation to non-personal data; 
  Uncertainty as regards data ownership; 
  Restrictions to data location; and 
  Obstacles linked to data interoperability and reliability. 

Among  the  issues  listed  above,  the  concept  of  data  ownership  seems  to  be  the  most 
controversial  one  among  the  IoT  community.  Indeed,  while  the  term  ''ownership'',  when 
understood as a property regime on data, cannot apply in respect to personal data (which 
have  to  be  processed  in  compliance  with  data  protection  rules),  it  has  sometimes  been 
referred to in relation to non-personal data.  

Today  there  is  little  clarity  today  as  to  who  "owns"  or  should  ''own''  machine-generated 
data  or  whether  there  should  be  an  "owner"  at  all.  Depending  on  the  specificities  of  the 
IoT-based device/services and the various business models involved, different contractual 

62  See, 

for 

instance,  http://www.ericsson.com/news/150910-ericsson-invites-industry-players-to-join-its-

licensing-effort-for-internet-of-things_244069645_c 

63    http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015DC0192&from=EN, p. 15 

20 

 
 
 
                                                 
arrangements  may  exist,  whereby  data  can  be  accessed,  transferred  or  used  in  any  other 
form by different actors in the chain. Certain stakeholders claim that a property regime on 
data, similar to the one granted on intellectual creations by the Intellectual Property Rights 
law, would provide more incentives for companies willing to monetise their investments in 
the creation of data-based services or products.64  

Contractual  practices  have  led  to  the  creation  of  a  certain  ownership  regime  that  defines 
rights  and  obligations  of  the  parties  involved  in  the  collection  and  processing  of  data, 
including the scope of usage rights to data65. Current business models providing for various 
case  scenarios  in  this  respect  deserve  to  be  taken  into  account.  These  business  models 
show that data generated by an IoT-based device (including data generated by sensors) is 
not always the property of the owner of the device (or of the owner(s) of the sensors). 

According 
to  findings  pointed  out  by  certain  stakeholders,  current  contractual 
arrangements may lead to restrictions in relation to sharing of data with third parties, or to 
lock-in  situations,  dynamics  that  are  very  relevant  during  the  stages  of  data  processing 
when IoT data are transformed into valuable data. The Commission services are analysing 
existing business models and underlying contractual relationships in the data value chain, 
with a view to better understand 'ownership' models and the contractual conditions under 
which access is given to data and data are transferred. 

Furthermore,  data  ownership  may  also  lead  to  obstacles  in  accessing  data.  Some  public 
services may in the future increasingly rely on access to data that is privately-owned. For 
instance, as discussed in the C-ITS platform66, traffic management systems would be more 
effective  if  access  to  data  coming  from  private  vehicles  is  granted.  In  particular,  certain 
stakeholders  point  out  the  need  to  further  explore  whether  access  to  and  re-usability  of 
privately-owned data  used for public policy objectives  should  be  guaranteed by law, and 
under  which  conditions  of  remuneration,  like  it  has  been  decided  for  the  public  sector 
information through the PSI directive. The Research Data Alliance67 has proposed a set of 
principles  for  research  data  that  could  be  relevant  also  for  machine-generated  data.  The 
Fair  principles  on  data  stipulate  that  Data  should  be:  (F)indable,  (A)ccessible, 
(I)nteroperable, (R)e-usable. 

The  potential  of  technologies,  such  as  blockchains  or  deep-learning,  in  the  field  of  IoT 
could  be  further  explored  too.  Such  distributed  architectures  could  offer  alternative  and 
more  efficient  ways  to  meet  the  challenges  of  interoperability  but  also  of  trust  and  data 
ownership/usage. 

2.6. Safety and liability 

64    For instance, in the agriculture sector, large agricultural corporations such as Monsanto and John Deere offer     
 precision farming technologies and machinery on condition that farmers make the data resulting from such     
 operations available to the corporations themselves. The risk (for farmers) is that such data can be used   not  
 only to offer better, tailor-made solutions but also monetise it in ways that disadvantage farmers and provide  
 disproportionate advantage to "first to market companies" benefiting from a large quantity of data in order to  
 optimise their business offers towards a certain market domination. 

65 Such views were expressed by C-SIG members (e.g. business users of cloud services e.g. EuroCIO) in C-SIG 

plenary sessions and within various working groups. 

66 http://ec.europa.eu/transport/themes/its/doc/c-its-platform-final-report-january-2016.pdf  
67   https://rd-alliance.org/group/data-fabric-ig/wiki/recommendations.html 

21 

 
 
                                                 
Stakeholders  and  available  expertise  point  out  a  number  of  novel  liability  aspects  that 
appear with the emergence of IoT, which are explained in the following paragraphs68.  

The  IoT  creates  sophisticated  interdependencies  between  product  and  service  producers. 
Due  to  the  high  complexity  of  the  IoT  ecosystem  (physical  objects,  software,  Internet 
infrastructure,  behaviour  of  the  final  user,  etc.),  the  variety  of  actors  involved  (product 
manufacturers,  sensor  manufacturers,  software  producers,  infrastructure  providers,  data 
analytics  companies  and  other  actors  involved  in  the  supply  of  different  services,  final 
users), any actor participating in this ecosystem could potentially have a share of liability. 
However,  assigning  liability  in  such  an  intricate  ecosystem  may  be  difficult.  These 
dependencies are not static: they can increase and become more complex, over the life of 
the product/service. Any interdependency gives rise to a number of questions, such as: 

  Who is responsible for guaranteeing the safety of a product? 
  Who is responsible for ensuring safety on an on-going basis? 
  How  should  liabilities  be  allocated  in  the  event  that  the  technology  behaves  in  an 

unsafe way, causing damage? 

IoT  may 

The IoT interdependency can also give rise to challenges in identifying the root cause of 
product  failures,  and  in  determining  where  responsibility  lies  in  the  event  of  a  problem. 
The 
thus  aggravate  existing  problems  of  proof  concerning  non-
conformity/defectiveness/unsafety  of  a  product,  and  issues  of  causation.  Furthermore, 
under existing EU laws, products and services are treated in a distinct manner. Providing 
data  through  an  IoT  system  is  considered as  a service,  and  thus  falls  outside the  product 
liability and safety regimes. Where damage or harm is caused by supply of false data or by 
failure to supply data, liability often may become unclear, and claims potentially difficult 
to enforce.  

Certain academic legal experts are suggesting that current EU acquis might no longer be fit 
for  purpose  and  needs  revision.  Possible  gaps  were  identified  notably  in  relation  to 
Directive  2000/31/EC  on  electronic  commerce  and  the  Liability  for  defective  products 
Directive 85/374/CEE.69  In  this  respect, it is important  to  note that  the Radio Equipment 
Directive 2014/53/EU provides a consistent approach for the safety of the radio equipment 
including  where  it  incorporates  software,  the  interwork  of  radio  equipment  via  network 
with  other  radio or  wireless equipment and the conditions under  which the same  devices 
can be considered compliant to the law after this placement on the market. 

With  the  view  to  better  understand  aspects  of  contractual  and  non-contractual  issues 
surfaced by IoT-based products and services, the Commission is now gathering evidence 
thorough studies and public consultations. 

As  far  as  contractual  liability  in  IoT  is  concerned,  legal  uncertainty  may  arise  from 
machine-to-machine  contracting,  when  smart  objects  enter  into  contracts  with  each  other 

68  Software and mobile applications which qualify as medical device (when they fulfil the definition of medical 

device) are already explicitly covered by the Medical Device Directives. 

69   Findings  were  highlighted  by  the  experts  attending  the  workshop  "Digital  Revolution:  Challenges  for 
Contract  law  in  practice",  organised  by  the  University  of  Munster,  1-2  October  2015.  The  findings  of  this 
workshop  are  summarised  in  Reiner  SCHULZE,  Dirk  STAUDENMEYER  (eds),  Digital  revolution: 
challenges for contract law in practice, Nomos, 2016. 

22 

 
 
                                                 
on  the  basis  of  autonomous  decisions.  Questions  fuelling  the  legal  uncertainty  relate,  for 
instance,  to  whether  and  under  which  conditions  the  person  on  whose  behalf  an  IoT-
powered device places an order is bound by this. 

The analysis of use cases is a possible methodology to assess the challenges in this field. In 
this  context,  a  mapping  exercise  to  clarify  to  what  extent  (parts  of)  these  use  cases  are 
already covered by existing (legal) frameworks could provide a good starting point. This 
may also be a basis for an assessment to what extent existing legal frameworks, including 
sectorial  legislation,  may  still  be  fit  for  purpose.  An  analysis  of  the  existing  contractual 
arrangements  between  the  user  and  the  service  provider  could  be  considered  a  useful 
baseline in  helping  to  identify  whether  a liability  regime  is  needed  and  how  it  should  be 
designed.  Commission  services  are  of  the  opinion  that  further  investigation  may  also  be 
needed  until  envisaging  any  policy  solutions  (e.g.  in  terms  of  proposing  model  contracts 
for  the  B2B  environment,  legislation  clarifying  horizontal  or  specific  liability  regimes 
and/or  requiring  specific  compliance  with  standardisation  frameworks  that  could  tackle 
liabilities through specific technical requirements). 

3.  A Thriving IoT Ecosystem 

The IoT includes both a vertical and a horizontal dimension. A vertical dimension refers to 
applications  belonging  to  a  single  area  and  a  horizontal  dimension  refers  to  establishing 
new  use  cases  (applications)  across  verticals.  A  key  feature  of  the  IoT  ecosystem  is 
therefore  the  dynamic  interaction  between  the  providers  and  users  of  horizontal  IoT 
platforms  and  applications  and  the  providers  and  users  of  vertical  solutions/domain-
specific environments.  

The horizontal character of the IoT has  to be recognised to avoid fragmentation between 
industrial  and/or  domain  specific  application  areas,  between  standards,  between  regions 
and institutional frontiers, thus preventing the full IoT vision to be realised. Also, the IoT 
requires the development of a new cross-cutting business reality exploiting the momentum 
to create market impact and establish European industrial leadership.  

For  this  to  happen,  Commission  services  are  of  the  opinion  that  an  IoT  policy  should 
address specific policy challenges linked to a harmonised DSM, notably to interoperability, 
ubiquity, end-to-end security and trust. The creation of thriving IoT eco-systems is needed 
to accelerate IoT developments, to foster innovation and take-up of the IoT in the EU, to 
avoid  that  vertical  silos  develop  around  established  industrial  players  and  other  sector 
specific  actors  in  given  sectors  slowing  down  speed  and  scale  of  market  adoption.  The 
intrinsic  nature  of  IoT  requires  alliances  between  multiple  sectors,  and  stakeholders,  to 
cover  an  increasingly  complex  value  chain  and  to  prevent  IoT  solutions  from  reaching 
economies of scale. It also requires open platforms that can integrate many different types 
of  equipment  and  applications.  The  figure  below  depicts  the  various  actors  part  of  this 
complex chain. 

23 

 
 
 
                                                 Figure 4: IoT ecosystems 

The  IoT  is  to  become  a  major  innovation  engine  and  to  allow  the  creation  of  new 
ecosystems.  Experience  from  the  mobile  sector  has  shown  that  time  and  scale  are 
important to be successful in the market. Although it can boast a world class expertise in 
mobile  systems,  European  companies  has  not  been  able  to  create  ecosystems  around 
smartphones.  The  advent  of  the  IoT  will  bring  to  the  market  new  devices,  around  which 
innovation  ecosystems  will  take  shape.  The  IoT  will  act  as  an  essential  driver  for 
innovation and competitiveness. More jobs are expected to be created, driven by the need 
for developers generated from the emergence of IoT ecosystems. While today there are just 
300,000  developers  worldwide  contributing  to  the  IoT,  a  new  report  by  VisionMobile70 
projects  4.5  million  developers  by  2020,  reflecting  a  57%  compound  annual  growth  rate 
and  a  massive  opportunity.  This  growing  need  for  well-educated  employees  having  the 
necessary digital skills has implications in terms of education and training in the EU. 

This  is  an  opportunity  for  Europe.  One  lesson  from  the  smartphone  revolution  is  that 
market leaders did not actually win through product features, but by creating networks of 
entrepreneurs.  These  networks  unlocked  new  demand  by  fostering  the  emergence  of 
countless apps and devices that no single company could have created on its own. Future 
actions  could  build  on  the  positive  experience  gained  from  networks  of  start-up 
accelerators in StartupEurope71 and FIWARE72. 

Given  the  importance  of  new  initiatives  in  the  IoT  area  and  as  stated  in  the  DSM 
technologies and public services modernisation package, the Commission has launched a 
study  to  identify  and  map  the  most  promising  clusters  across  the  European  Union.  In 
addition,  the  Commission  services  are  already  engaged  in  working  with  the  Knowledge 
and  Innovation  Communities73  of  European  Institute  of  Technology  Digital  KIC,  which 
bring  together  leading  partners  from  higher  education,  research  and  business,  to  develop 
IoT  solutions  to  challenges.  The  impact  of  the  IoT  in  various  public  services  (as  user, 
provider  or,  for  example,  certification  authority)  asks  for  an  early  involvement  of  the 
public sector in the development of the IoT ecosystem. 

70   Available at: http://www.visionmobile.com/product/IoT-breaking-free-internet-things/    
71   https://ec.europa.eu/digital-single-market/en/startup-europe  
72   http://www.fiware.org/ 
73   http://eit.europa.eu/activities/innovation-communities  

24 

 
 
 
                                                 
In 2015, the Commission has launched a series of projects supported by €53 million of EU 
funding74. The aim is to create ecosystems of "Platforms for Connected Smart Objects" and 
to  overcome  the  fragmentation  of  vertically-oriented  closed  systems,  architectures  and 
application areas. Up to €10 million are targeted to SMEs and start-ups working with these 
platforms.  

Moreover,  in  March  2015,  the  Commission  launched  the  Alliance  for  Internet  of  Things 
Innovation  (AIOTI),  to  assist  in  the  creation  of  a  dynamic  European  IoT  ecosystem 
unleashing IoT potential75. 

3.1. Promoting open platforms to foster IoT innovation 

Promoting open platforms to foster IoT innovation is a key element to achieve leadership 
in  IoT.  For  this  purpose,  several  cross-sectorial  initiatives  that  will  complement  the 
sectorial  approach  of  ongoing  PPPs  will  be  launched.  Commission  services  are  of  the 
opinion  that  the  development  of  reference  architectures  both  at  EU  and  national  level  is 
essential for industrial leadership in next generation platforms. IoT platforms combine a set 
of  IoT  technologies,  interface  standards,  APIs  and  protocols  with  development  and 
deployment tools.  

Today, the bulk of connected objects' market is predominantly integrated vertically, mainly 
in  non-consumer  goods  including  in  buildings,  cities  and  industrial  machines.  However, 
there are signs of emerging platform-building in other sectors like automotive and home. In 
the future, the economies of IoT markets are expected to be driven by platforms setting the 
standards  and  controlling  market  dynamics.  Platforms  thrive,  in  principle,  when  many 
firms, developers and customers use them. 

There are already signs of platform-creation in IoT markets with the arrival of integration 
solutions offered by companies like Apple, Google or Amazon, and attempts to standardise 
software  layers,  as  with  the  AllSeen  Alliance.  It  is  a  fact  that  many  of  these  existing  or 
emerging  platform  initiatives  are  conceived  as  proprietary  platforms  to  lock  consumers 
into specific interface standards. However, as Gartner76 expects there will be no dominant 
ecosystem of platforms in the next two years (i.e. until 2018), and this would let open the 
possibility for European IoT platforms to emerge.  

According  to  the  Digitisation  communication,  European  companies  should  strive  for 
leadership  in  IoT  platforms  allowing  them  to  manage  an  ecosystem  including  SMEs, 
researchers, entrepreneurs and innovators that is anchored in Europe. Successful platforms 
should as well be open. This way they can achieve critical mass, allowing platform owners 
to  encourage  third  party  developers,  suppliers  and  users,  as  well  as  competitors  to  build 
application  and  services  that  run  on  them  –  while  also  preserving  the  role  of  leading 
European stakeholders in key markets. 

74   For more details, see: https://ec.europa.eu/digital-agenda/events/cf/ictpd14/item-display.cfm?id=12597. 
75   For more details on AIOTI, check reference box in section 1.3. 
76  Gartner 

(2013)  "Predicts  2015:  The 

Internet  of  Things."  Newsroom  available  at: 

report 

http://www.gartner.com/newsroom/id/2970017, STAMFORD, Conn., December 12, 2013 

25 

 
 
                                                 
One  example  of  an  open  platform  is  FIWARE,  supported  through  the  Future  Internet 
Public Private  Partnership  (FI-PPP77). The recently launched  openFIWARE Foundation78 
further develops FIWARE components in the context of digitising industries, starting with 
three business sectors: Smart City, Industry 4.0 and Smart Agriculture. This is expected to 
accelerate  the  industrial  use  of  open  digital  platforms  and  reinforce  related  innovation 
ecosystems. 

3.2. Spurring innovation in lead markets 

Tangible business opportunities for the IoT, cloud and data analytics technologies can be 
found across all the “smart environments” identified by several studies. By combining the 
estimated market size and the expected market growth of these environments, some market 
sectors have emerged as those offering the most realistic opportunities now and/or in the 
coming five years. According to IDC79, these include Smart Manufacturing, Smart Homes, 
Smart  Personal  Health  and  Wellness.  Each  of  these  smart  environments  is  already 
producing  (or  will  produce  by  2020)  a  number  of  use  cases,  which  are  successfully 
exploiting IoT technologies, or will do so in the coming years. The following verticals are 
discussed in greater detail in the Annex: 

  Smart  Homes will offer business opportunities in home security, energy  applications 

and household appliances. 

  Personal  Wellness  applications  and  wearable  devices  for  both  generic  and  health-
specific  purposes  are  a  big  opportunity  in  the  area  in  Smart  Health.  They  will  be 
accompanied by remote health monitoring. 

  In  Smart  Manufacturing,  operations  and  asset  management  already  represent  fertile 

ground for IoT solutions and applications. 

  Smart  Cities  are  equipped  with  sensors,  actuators  and  other  appliances  providing 
information  that,  properly  valorised,  will  improve  the  living  conditions  of  their 
inhabitants. 

  Smart  Mobility  will  require  new  mobile  ecosystems  based  on  trust,  security  and 
convenience  in  order  to  ensure  the  security  and  convenience  of  consumer-centric 
transactions and services. 

  Smart  Energy:  smart  meters  and  smart  grids  are  powered  by  IoT  and  can  optimise 
energy  consumption,  whereas  IoT  solutions  and  services  can  help  change  behaviour 
and consumption patterns. 

  In  Smart  Farming  data  gathering,  data  processing,  data  analysis  and  automation 
technologies jointly orchestrated allow for improved operation and management of a 
farm.  

  Earth  and  ocean  observation  systems  and  the  future  blue  economy:  IoT  can  help 
maximise  the  use  of  ocean's  potential,  in  terms  of  fishing,  marine  platforms  and 
aquaculture notably.  

  Circular  Economy:  IoT  can  facilitate  the  transition  to  new  business  models  in  the 
circular economy where all actors of the value chains are closely interconnected and 

77     https://www.fi-ppp.eu/ 
78     https://www.fiware.org/foundation 
79   Definition of a Research and Innovation Policy Leveraging Cloud Computing and IoT Combination by IDC 

and TXT, see: http://ec.europa.eu/newsroom/dae/document.cfm?doc_id=9472 

26 

 
 
                                                 
 
use  collaborative  platforms  to  share  data  on  resource  flows,  and  end-users  are 
empowered in their consumption patterns.  

The AIOTI has established a number of working groups on the areas that it considers more 
mature for IoT innovation and where there is a greater potential for cross-cutting business 
models. The Alliance also set the goal to spearhead some markets.  

In  addition,  also  supporting  creativity-based  innovation  is  essential,  in  the  view  of 
Commission  services,  giving  the  strategic  position  of  cultural  and  creative  industries  to 
foster smart, sustainable and inclusive IoT services and products. 

4.  A Human centred IoT 

Strengthening  trust,  security  and  end-to-end  personal  data  protection  and  privacy  by 
taking into account the needs of the digital and digitised industry in the field of IoT is a 
priority for the European Commission. 

4.1. Guiding principles for IoT and avoiding a new digital divide  

It  is  commonly  recognised  that  IoT  has  the  potential  to  drastically  improve  our  personal 
lives,  our  work  places  and  our  industrial  /  manufacturing  efficiencies  and  capabilities. 
There is, however, a concern that IoT may lead to alienation because of objects capable of 
‘talking’ to one other and to lose sight of human preferences. In order to ensure that IoT 
improves  lives  by  empowering  people  instead  of  transforming  them  into  hostages  of 
technology, Commission services are of the opinion that certain safeguards might need to 
be put in place or current safeguards need to be made more specific.  

The  IoT  can  build  connections  between  human  beings  and  smart,  dynamic  objects.  ICT 
technologies  and  objects  can  minimize  isolation;  mobility  and  security  solutions  support 
people’s participation in society. On the other hand, the ‘smarter’ the objects in our lives, 
the  greater  the  scope  for  misuse.  Where  in  the  IoT  data  are  processed  that  relate  to 
identified or identifiable natural persons, then these qualify as personal data in the meaning 
of  the  EU  Data  Protection  Directive  95/46/EC,  triggering  the  application  of  the  data 
protection rules80. Always being connected to the things around us has the potential to lead 
to  more  surveillance  or  more  profiling  by  public  authorities  and  private  entities.  More 
generally, without appropriate legal, technical and organisational safeguards, the IoT may 
facilitate  the  emergence  of  a  de-humanised  world,  where  machines  enforce  rules 
stringently,  reduce  human  freedom,  and  room  for  fantasy  and  contact  among  them  by 
controlling their behaviour. 

A  human  centred  IoT  would  imply  an  environment  where  IoT  will  empower  people  and 
not  transform  them  into  hostages  of  technology.  The  Commission  services  are  of  the 
opinion that the following questions are important for further reflection in this context: 

80    See Article 29 Working Party "Opinion 8/2014 on the on Recent Developments on the Internet of Things" 
(WP  223).  This  Working  Party  was  set  up  under  Article  29  of  Directive  95/46/EC.  It  is  an  independent 
European  advisory  body  on  data  protection  and  privacy.  Its  tasks  are  described  in  Article  30  of  Directive 
95/46/EC  and  Article  15  of  Directive  2002/58/EC.  Website:  http://ec.europa.eu/justice/data-
protection/index_en.htm 

27 

 
 
                                                 
   How can we ensure end-users fully understand the role, functioning and impact IoT 

services can have on their lives, choices and environment? 

  What precautions should we put in place to make sure our medical information can be 

accessed electronically, but not by the wrong people?  

  How  can  all  users  stay  in  control  of  their  data;  how  can  they  all,  without  specific 
knowledge  of  underlying  technologies,  understand  the  impact81  of  their  decisions  on 
what data is shared with whom82? 

It  is  commonly  recognised  that  in  order  to  have  a  positive  impact  on  people’s  lives,  IoT 
technologies  and  their  application  need  to  be  trusted,  accepted,  wanted,  accessible  and 
usable. The Commission services are of the view that IoT should be designed in view of 
preventing the users from: 

(1) failing to use the services (there are many potential causes for it, technology-related 

but also user-related), or being locked-in by service providers; 

(2) substituting  completely 

face-to-face  services  and 
significantly to virtual environments and unreal worlds); 

interactions 

(or  moving 

(3) misunderstanding technology, especially its usefulness and impact on the main user 

and his/her environment and choices, and  

(4) mistrusting technology-based systems and services.  

In addition, without an appropriate training on the use of IoT, as already highlighted by the 
DSM  technologies  and  public  services  modernisation  package  some  people  can  be  left 
behind and may not entirely benefit from the IoT. This can lead to a lack of trust in these 
new  technologies,  especially  in  specific  IoT  devices  (e.g.  connected  glasses),  although 
other  technologies  are  already  used  and  well  accepted  (e.g.  smartphones).  Users  would 
benefit  from  access  to  an  intuitive  interface,  from  comprehensively  evolving  Human-
Machine  Interfaces  and  from  systems  respecting  the  particular  context  of  the  user  when 
starting an interaction.  

In line with data protection legislation, IoT must be designated and operate so as to comply 
with the requirements established therein. As regards personal data and privacy, the EU is 
committed  to  the  highest  standards  of  protection  guaranteed  by  Articles  7  and  8  of  the 
Charter  of  Fundamental  Rights.  In  particular  the  General  Data  Protection  Regulation 
(GDPR)83  will  increase  trust  in  digital  services  and  IoT,  as  individuals,  public 
administrations  and  businesses  will  profit  from  clear  data  protection  rules  that  are  fit  for 
the  digital  age,  that  give  strong  protection  and  at  the  same  time  create  opportunities  and 
encourage  innovation  in  a  European  Digital  Single  Market.    Under  the  GDPR,  ‘Data 
protection by design and by default’ will become an essential principle. It is expected that 

81   For example, can our car be tagged to improve mobility and traffic safety? If yes, what precautions do we 
want  in  place to  ensure  that data  on  our  traffic  behaviour  does  not  fall  in  the  hands  of  our  e.g.  insurance 
company without our consent?  

82   Some business models currently in place offer "free" data services which are not in reality "free" of charge 

since they are provided in exchange of the user's personal data.    

83        In  December  2015,  the  European  Parliament  and  Council  have  reached  agreement  on  the  data  protection 
reform proposed by the Commission. Once the General Data Protection Regulation and the Data Protection 
for  Police  and  criminal  justice  authorities  receive  formal  adoption  from  the  European  Parliament  and 
Council, the texts will be published in the Official Journal of the European Union in all official languages. 
The  new  rules  will  become  applicable  two  years  thereafter.  See  http://ec.europa.eu/justice/data-
protection/reform/index_en.htm  

28 

 
 
                                                 
it will incentivise businesses to innovate and develop new ideas, methods, and technologies 
for  security  and  protection  of  personal  data.  Used  in  conjunction  with  data  protection 
impact  assessments,  data  protection  certifications,  seals  and  marks,  businesses  will  have 
effective  tools  to  create  technological  and  organisational  solutions  for  the  Internet  of 
techniques  such  as 
Things.  The  General  Data  Protection  Regulation  promotes 
anonymisation  (removing  personally  identifiable  information  where  it  is  not  needed), 
pseudonymisation (replacing personally identifiable material with artificial identifiers), and 
encryption  (encoding  messages  so  only  those  authorised  can  read  it)  to  protect  personal 
data.  This  will  encourage  the  use  of  IoT,  which  can  be  done  using  anonymised  or 
pseudonymised data.  

The GDPR highlights possible work threads to clarify these issues, and notably: 

  The  adoption  by  the  IoT  industry  of  specific  data  protection  codes  of  conducts  and 

certification schemes 

  The further development and elaboration of new Data Protection Impact Assessment 

frameworks and guidance84 

  The  Commission  and  Member  States  support  and  industry  involvement  in  research 
and  development  activities  for  privacy  by  design  and  by  default  technologies  and 
solutions, and in the creation of a viable European market for these technologies. 

Special  data  protection  rules  apply  to  electronic  communications  services  directive  (e-
Privacy Directive85) which is in the process of being reviewed, in particular to adapt it to 
the  new  general  data  protection  framework  and  to  ensure  consistency  with  the  General 
Data Protection Regulation.  

4.2. Trust in the IoT 

In  the  opinion  of  the  Commission  services,  the  main  challenge  for  the  acceptance  of  the 
IoT  remains  therefore  users'  trust  in  a  broad  sense,  be  it  for  private,  business  or 
governmental use86. In this respect, the following challenges should be addressed: 

  Ensuring  a  context-based  security  and  privacy,  which  reflects  different  levels  of 

importance (e.g. emergency crisis, home automation); 

  Necessary  computing  capacity  to  implement  sophisticated  security  protection 
solutions  like  Trusted  Computing,  or  Cryptography  in  Cyber-Physical  systems  and 
IoT hardware; 

  Trustworthy  identification  both  of  users  and  devices  in  a  distributed  environment, 

where governance structures are not always clear; 

84    The Commission facilitated the development of the RFID PIA framework 

http://cordis.europa.eu/fp7/ict/enet/documents/rfid-pia-framework-final.pdf. Another example is the Data 
Protection Impact Assessment Template for Smart Grid and Smart Metering Systems ('DPIA Template') 

       prepared by Expert Group 2 of the Commission's Smart Grid Task Force:  

https://ec.europa.eu/energY/en/topics/markets-and-consumers/smart-grids-and-meters. 

85    Directive 2002/58/EC. 
86    http://www.internet-of-things-research.eu/pdf/IERC_Position_Paper_IoT_Governance_Privacy_Security_ 

Final.pdf 

29 

 
 
 
                                                 
  Compliance  with  data  protection  rules  regarding  profiling.  Correlation  and 
Information  Retrieval,  which  may  support  new  types  of  security  mechanisms,  but 
also allow for intrusive profiles; 

  Anonymisation of both user data and protocol metadata is a challenge in a distributed 

and mobile environment during data collection and processing; 

  Scalability for the billions of devices in IoT and mastering of a wider heterogeneity 

of connected systems, communication technologies and resource constraints; 

  Secure setup and configuration methods for the IoT, as device and software installing 
present a potential attack surface to Hardware Objects and to applications depending 
on them;  

  Critical  infrastructures  and  the  use  of  IoT  where  new  technologies  and  devices  at 

home and in everyday life may lead to new security or privacy concerns; 

  Conflicting market interests as one of the appealing features of IoT from a business 
perspective  through  collection  and  correlation  of  data  from  different  sources  to 
increase revenue. 

Trusted IoT Label 

Security,  liability,  privacy  and  data  protection  are  critical  challenges  for  the  IoT. 
Ultimately  trust  will  emerge  as  a  derived  characteristic.  Industry-led  incentives 
guaranteeing a proper use of data and security to users can be important in this context.  

Co-legislators    have  reached  a  political  agreement  in  December  2015  on  the  Network 
Information  Security  (NIS)  directive87  that  calls  for  cybersecure  solutions  in  critical 
sectors,  such  as  energy,  transport,  health  and  finance.  The  NIS  directive  will  require 
operators  in  critical  sectors  to  be  identified  by  Member  States  to  take  appropriate  and 
proportionate  technical  and  organisational  measures  to  manage  the  risks  posed  to  the 
security  of  networks  and  information  systems  they  use  in  their  operations;  the  Directive 
will also require them to notify, without undue delay, the national competent authority or 
to  the  Computer  Security  Incident  Response  Team  (CSIRT)  of  incidents  having  a 
significant impact on the continuity of the essential services they provide. These measures, 
which  may  be  based  on  national  or  international  standards,  will  be  subject  to  audit  by 
national authorities. It is possible that in response to such emerging requirements, operators 
using the IoT may wish to adopt the Trusted IoT label as a demonstration of compliance, 
where relevant, to the NIS Directive's requirements.  

More generally, a Trusted IoT label could be developed for consumer products, providing 
transparency about different levels of privacy and security88. 

4.3. Security 

Security and the protection of personal data issues are a key concern for a successful take 
up of the IoT. Whilst IoT deployment is in its infancy, several recent examples of object 

87  https://ec.europa.eu/digital-agenda/en/news/network-and-information-security-directive-co-legislators-agree-

first-eu-wide-legislation 

88    Such a labelling system has been implemented as regards energy-efficiency across the EU 

30 

 
 
 
                                                 
hacking have shown that the number of attacks is bound to grow exponentially if known 
vulnerabilities persist as connected objects are increasingly used.  

An important issue has to do with secure authentication. Networked devices that exchange 
data with other IoT devices need to be properly authenticated to avoid security problems. 
This may need to include certain authentication protocols, and to use integrity-secured or 
encrypted channels of communication.  

The Commission services consider important to reflect upon possibilities for certification 
of networked devices that would provide a minimum level of secure authentication, from 
the hardware level to network integrity. This would entail some analysis of the functions 
with which each device is equipped, secure data processing and secure connectivity for the 
devices to which data are transmitted. 

5.  Annex 

This  Annex  describes  in  greater  detail  the  lead  markets  introduced  in  Section  3.2  of  this 
SWD. An investment in IoT technologies is expected to particularly spur innovation in the 
following areas:  

1.  Smart Homes 
2.  Personal Wellness and Wearables 
3.  Smart Manufacturing 
4.  Smart Energy 
5.  Smart Cities 
6.  Automated Driving / Smart Mobility 
7.  Smart Farming 
8.  Circular Economy 
9.  Earth and Ocean Observation Systems and Future Blue Economy 

Areas 1, 2, 5, 6, 7 will each be supported through a Horizon 2020 IoT Large Scale Pilot89. 
Area 3 will be supported through the Horizon 2020 Factories of the Future Public Private 
Partnership90. 

1. Smart Homes 

Powered  by  consumers’  demand,  Smart  Homes  constitute  a  clear  business  opportunity 
thanks to the widespread use and affordability of smart phones, tablets and other mobile 
devices. The IoT is already enabling a wide range of home automation solutions making 
homes  a  “mini  IoT  environment”  in  their  own  right.  Home  automation  solutions 

89   For more details see Horizon 2020 Work Program 2016-2017: 

http://ec.europa.eu/digital-agenda/en/news/horizon-2020-work-programme-2016-2017-internet-things-large-
scale-pilots 

90   Further 

information 

available 

at 

https://ec.europa.eu/digital-single-market/en/factories-future 

and 

http://ec.europa.eu/research/industrial_technologies/factories-of-the-future_en.html.   

31 

 
 
 
                                                 
 
 
 
(including centralized control of lighting, heating, ventilation and air-conditioning, remote 
control of appliances, security locks of gates and doors and other systems) are already a 
reality  and,  to  some  extent,  an  established  market.  Big  players  (like  Deutsche  Telecom, 
Legrand,  IBM,  Cisco,  and  Microsoft  among  many  others)  are  already  experimenting  in 
this area and more interesting developments are expected in the next few years. 

Home  Security  (i.e.  video  cameras  and  multiple  sensors  that  can  track  motion, 
temperature, air quality, vibration, sound, and any other activity inside a building) is by far 
the  most  important  use  case  in  Smart  Homes  today.  It  is  followed  by  the  case  of  Smart 
Energy, where IoT solutions are used to improve climate control and heating, ventilation 
and  air  conditioning  (HVAC)  methods  and  technology  to  lower  energy  usage,  monthly 
expenses and greenhouse gas emissions. Smart Home, however, is a much wider concept 
as  IoT  solutions  can  be  extended  to  the  varied  world  of  home  appliances.  For  the  time 
being,  IoT  seems  to  cover  primarily  small  appliances  (Small  Smart  Appliances,  such  as 
wireless blenders, portable refrigerators, mini meteo-stations). In the future, big Smart and 
Connected Appliances will be more and more connected with sensors and actuators, thus 
making our fridges, ovens, laundry machines even smarter. Smart homes may also adapt 
energy  consumption  based  on  dynamic  tariffs  and  optimise  the  management  of  self-
consumption, storage and feed-in to the grids. 

When  it  comes  to  smart  homes  as  the  preferred  environment  for  ageing  well,91  IoT 
solutions can integrate a range of different devices, data sources and services to increase 
the  efficiency  of  care,  promote  independence  and  improve  the  quality  of  life  of  senior 
citizens  and  their  caretakers.  IoT  can  support  a  range  of  services  helping  people  live 
independently,  such  as  motion  sensors  that  trigger  a  response  from  a  call  centre.  The 
responses may range from a phone call to the person, to alerting a local carer, neighbour, 
the social  services or  the  emergency  services. Other examples include services that alert 
the person in the home to a particular hazard, such as a water-level monitor in a bath, tele-
monitoring  for  chronic  diseases,  telecare  for  people  with  cognitive  decline  or  remote 
rehabilitation  programmes  and  supporting  adherence  to  treatment.  There  is  also  a  great 
potential  in  using  a  range  of  behavioural  and  physiological  data  for  early  risk  detection 
and prevention of diseases, cognitive decline and frailty. 

In the opinion of Commission services, unless Europe provides for more smart and age-
friendly  homes  in  the  existing  residential  building  stock,  many  citizens  might  remain 
dependent on institutional health and long-term care, with the unsustainable costs that this 
carries  to  public  spending.    Conversely,  the  investment  in  the  creation  of  age-friendly 
homes  (AFHs)  building  on  IoT  could  unlock  a  previously  untapped  economic  potential 
bringing  better  quality  of  life  to  individuals,  supporting  sustainable  spending  by 
governments and boosting industrial growth and jobs. 

Furthermore, Horizon 2020 foresees the support of IoT Large Scale Pilot activities in this 
field for strengthening the global position of European industry in IoT developments for 
ageing  well.  They  will  allow  the  use  of  IoT  platforms  and  tools  for  creation  and 
management  of  integrated  IoT  products  and  services  for  elderly  people,  including 

91   The continuously growing population of elderly people needs support for staying active, independent and out 
of  institutional  care  settings  for  longer,  while  at  the  same  time  reducing  the  costs  for  care  systems  and 
providing a better quality of life for vulnerable categories of citizens. 

32 

 
 
                                                 
personalised health and energy management at home. They are expected to also cooperate 
also  cooperate  with  the  EIP  for  Active  and  Healthy  Ageing,92  including  its  Silver 
Economy aspects93. 

2. Personal Wellness and Wearables 

It  is  foreseen  that  wearables  will  be  a  lot  more  present  in  our  lives.  While  many 
technological  challenges  have  been  overcome  (near-field  communications,  energy  use, 
miniaturization  etc.),  others  remain,  many  of  which  are  not  technological  (e.g.  access  to 
the data and data ownership). Barriers to the adoption and acceptance of wearable devices 
should  be  identified  and  overcome  if  the  benefits  of  large  scale  deployments  are  to  be 
achieved.  

Wearables  are  most  effective  when  they  move  beyond  the  collection  of  data  and  the 
simple monitoring of data readings to actuating and, ultimately, to the creation of a closed 
loop  system.  Already  there  is  an  example  of  LED  lighting  being  used  to  create  pain 
relief94,  this  being  triggered  when  the  device  receives  the  appropriate  signals  from  the 
wearable.  Typical  healthcare  challenges  in  Europe  and  elsewhere  (such  as  increasing 
expenditures and an increasing number of patients) will be more and more enabled by IoT 
solutions.  It  is  expected  that  the  IoT  will  play  an  even  greater  role  in  the  coming  years 
when  personal  wellness  solutions  for  generic  purposes  (e.g.  devices  measuring  daily 
calorie in-takes, hours of sleep etc.) will become more popular. 

We should also consider cases whereby a device can perform more than one function thus 
addressing  different 
taking  or 
recommending an action might also serve as a security verification tool, opening doors to 
restricted areas depending on the user’s level of security clearance. 

interest  groups.  For  example,  a  medical  sensor 

3. Smart Manufacturing 

Smart  Manufacturing  is  projected95  to  be  the  number  one  IoT  use  case  in  Europe  in  the 
logistic  chain  and  production  line.  The  proliferation  of  machine-to-machine  devices 
enhances the functionalities of smart products and smart services, and leads to global plant 
floors and autonomous factories. In the future, all forms of advanced industry will have to 
become  more  intelligent  to  compete  effectively.  This  intelligence  may  rely  on  advances 
through IoT and advanced connected objects that provide sensing, measurement, control, 
power management and communication. IoT will enable new levels of factory automation 
for greater efficiency, higher flexibility, agility and lower operational costs. 

Direct customer input to design will increasingly enable companies to produce customised 
products with the shorter cycle-times and lower costs associated with standardisation and 
mass  production.  Intelligence  should  also  be  built  into  even  the  smallest  steps  of  the 
process. Intelligent monitoring also enables better predictive maintenance, enhancing the 

92   https://webgate.ec.europa.eu/eipaha/actiongroup/index/what  
93   https://ec.europa.eu/research/innovation-union/index_en.cfm?pg=silvereconomy&section=active-healthy-

ageing 

94   E.g. https://www.elixa.com/light/healing.htm 
95   https://ec.europa.eu/digital-agenda/en/news/definition-research-and-innovation-policy-leveraging-cloud- 

computing-and-iot-combination  

33 

 
 
                                                 
stability and safety of the production process. Vibration sensing, for example, can give an 
early  warning  when  motors,  bearings  or  other  equipment  need  maintenance.  Algorithms 
enable mechanical engineering firms to predict possible machine outages and hundreds of 
data points help optimize numerous production workflows. 

Physical production processes are increasingly at the centre of much wider value chains. 
Intra-plant  and  extra-plant  logistical  processes  are  integrated  reducing  the  cost  for 
warehousing to zero. Interconnecting the entire value chain via mobile or fixed-line high-
bandwidth  telecom  networks  synchronizes  supply  chains  and  shortens  both  production 
lead times and innovation cycles.  

Communications  both  wired  and  wireless,  is  frequently  the  gating  factor  in  systems  for 
automated  manufacturing.  Increased  bandwidth  will  also  be  important,  especially  for 
wired  communications,  pointing  to  greater  use  of  Gigabit  Industrial  Ethernet.  The  smart 
factory  represents  a  fundamental  change  in  how  production  processes  are  set  up  and 
organized. It may also lead to the decentralization of manufacturing, may provide greater 
intelligence  where  production  activities  take  place,  and  create  an  overall  system  that  is 
cognitive and resilient. 

4. Smart Energy 

Digital  technologies  are  an  essential  ingredient  of  the  transition  to  the  21st  century  low-
emission energy and can support the new panorama of the service-oriented energy system 
responding  to  new  expectations  of  the  customers  for  high-quality,  personalised  services 
available  24/7.  As  a  first  step,  the  current  roll-out  of  smart  meters  and  smart  metering 
infrastructure in Europe will open up wide opportunities for connecting the smart homes, 
smart buildings and industry 4.0 with the energy grids.  

The  availability  of  cheap  connected  IoT  sensors  is  the  basis  for  more  refined  and 
decentralised real-time monitoring and control of energy supply and demand, on the basis 
of  accurate  measurements  and  forecasting.  This  contributes  to  the  adoption  of  renewable 
energy,  which  requires controls  with  faster reaction times  and  needs to  be  balanced  with 
flexibility of generation, active demand and storage.  

The  energy  system  infrastructure  is  based  on  large  expensive  technical  assets  with  long 
life-times.  Smart  asset  management  and  condition-based  maintenance  based  on  the 
information distilled from IoT sensor data allows optimised investments in operational and 
capital costs of the European energy infrastructure.  

The smart management of energy systems based on IoT data also enables the development 
of  optimised  decentralised  solutions  based  on  a  closer  integration  of  various  elements  of 
the energy system, exploiting the combined capacities and flexibilities of electricity, gas, 
heating and cooling, and transport sectors. 

5. Smart Cities 

Towns  and  cities  across  the  European  Union  provide  a  home  to  more  than  70  %  of  the 
EU’s  population.  Cities,  in  particular,  are  seen  as  both  the  source  and  solution  to 

34 

 
 
economic, environmental and social challenges and are therefore central to achieving the 
Europe 2020 goals of ‘smart, sustainable and inclusive growth’ in Eurostat terms96. 

IoT technology merges the distinct pillars of the modern city (energy, mobility, buildings, 
water  management,  lighting,  waste  management,  environment,  etc.)  into  a  structured, 
interconnected  ecosystem  supporting  the  city's  population.  These  technologies  should 
integrate  robust  respect  security  features  as  well  as  privacy  by  design  and  by  default, 
reduce  cost,  emissions  and  energy  consumption  while  being  reliable,  long  lived,  future 
proof  and  scalable.  The  aim  is  to  create  a  city  centric  ecosystem  of  state-of-the-art  to 
increase  the  efficiency  of  the  city  by  enabling  unobtrusive,  adaptable  and  highly  usable 
services at the points of network-edges, gateways and cloud storages. 

The  Smart  City  of  the  future  should  be  capable  of  many  of  the  functions  we  normally 
associate  with  a  living  entity;  it  will  need  to  sense  its  own  state,  identify  unusual  or 
threatening  circumstances  and  then  create  and  execute  plans  to  maintain  people's  safety 
and its own functionality. Doing this requires highly scalable, connected systems capable 
of sensing, acting, controlling, balancing and forecasting in an uncertain and unpredictable 
environment. 

In this context, the Smart City is becoming one of the biggest fields of application for IoT 
technologies. Cities  are increasingly filled with  devices  equipped with  sensors,  actuators 
and  other  appliances  providing  information  that,  in  the  past,  was  either  impossible  or 
relatively difficult to gather. Their main purpose, among other functionalities, is to gather 
information  about  various  parameters  of  importance  to  management  of  day-to-day 
activities  in  the  city  and  to  longer-term  development  planning.  Examples  of  such 
parameters  are  information  about  public  transport  (real-time  location,  utilization),  traffic 
intensity, environmental data (air quality), occupancy of parking spaces, noise, monitoring 
of waste bins, energy consumption in public buildings, etc. 

Smart Cities have emerged as a key customer group for FIWARE. Attracted by its open 
nature  and  multi-vendor  approach,  cities  are  interested  in  making  FIWARE  part  of  their 
operating systems. The recent announcement by Telefónica, Orange, and Atos97 focusses 
on  building  and  supporting  standards  for  smart  cities  based  on  FIWARE's  open 
specifications. The network of "Open & Agile Smart Cities"98 connected in February 2016 
89 cities around the globe. 

6. Automated Driving/Smart Mobility 

Examples of opportunities and added value that the IoT and digital technologies can bring 
to the transport sector include connected and automated driving; hybrid-electric, silent and 
reconfigurable aircraft; personal air vehicles; smart vessels; smart logistics, new forms of 
mobility and business models; next generation air traffic management; reduction of noise 
and  CO2  emissions  in  aviation;  and  the  Behavioural  Digital  Aircraft99  concept.  The 

96 http://ec.europa.eu/eurostat/statistics-explained/index.php/Statistics_on_European_cities 

97   https://www.fiware.org/news/telefonica-orange-engineering-and-atos-join-forces-to-push-common-

standards-for-smart-cities-based-on-the-fiware-platform/ 

98   http://oascities.org/ 
99    Following the work undertaken by the CRESCENDO Project funded under the EU's 7th Framework 

Programme for Research 

35 

 
 
                                                 
concept  of  Connected  Vehicles  (vehicles  connected  to  other  vehicles  and/or  to  the 
infrastructure,  potentially  being  semi-autonomous  and  autonomous)  is  the  next  step  for 
future smart transportation and mobility applications.  

Connected  and  automated  vehicles  have  a  significant  market  potential,  not  only  for 
European  vehicle  manufacturers  and  suppliers,  but  also  for  the  European  ICT  industry, 
mobility service providers and SMEs. The combination of advanced connectivity systems 
and automated vehicles could disrupt the entire road transportation ecosystem. Connected 
and  automated  vehicles  can  enable  the  breakthrough  of  new  "mobility-on-demand" 
services and innovative digital services in areas such as entertainment, commerce, vehicle 
management,  etc.  New  mobile  ecosystems  are  then  based  on  trust,  security  and 
convenience  to  mobile/contactless  services  and  transportation  applications  in  order  to 
ensure  the  security,  mobility  and  convenience  of  consumer-centric  transactions  and 
services. 

Notably,  connected  systems  in  transportation  may  attract  particular  attention  from  car 
manufacturers, policy-makers, ICT companies, service providers, users, and investors. IoT 
technologies  can  be  deployed  to  connect  automobiles  to  outside  systems  and  road 
infrastructure. In doing so, automobiles can relay and share traffic data, speed data, offer 
safety  and  communication  channels  for  driver-vehicle  or  inter-vehicle  interactions.  This 
way,  IoT  technologies  create  a  connected  and  automated  vehicle  with  strongly  reduced 
driving  load,  and  even  driverless  cars,  as  part  of  a  seamlessly  integrated  transportation 
system.  This  can  contribute  to  several  transport  policy  objectives  regarding  safety, 
efficiency of traffic flows, infrastructure capacity and energy efficiency. 

In  the  global  context  of  road  transport,  connectivity  will  be  a  critical  enabler  supporting 
new business opportunities favoured by EU and Member States’ policies on transport and 
future  mobility  services.  The  IoT  will  contribute  to  the  collection  of  additional  data, 
besides  data  already  collected  by  vehicles  and  traffic  management  centres.  Big  data 
analytics  taking  advantage  of  connected  road  users  will  increase  the  understanding  of 
complex  traffic  situations  and  flows,  leading  to  e.g.  more  optimised  responses  to 
emergencies,  to  prediction  of  road-user  behaviour  and  route  planning.  This  data, 
exchanged  on  the  road  and  on  the  Internet,  will  be  useful  in  the  development  of  new 
services for vehicle users, as well as new means of transport management.  

IoT furthermore enhances the opportunities for individualisation and personalisation of not 
only  transport  solutions  but  also  configuration  of  messages,  human-machine  interfaces, 
driver  training  etc.  Wearables  are  being  introduced  as  a  means  of  monitoring  road  user 
health,  and  holds  potential  for  contributing  to  increased  road  safety.  IoT  will  therefore 
enable  new  forms  of  mobility  with  increased  access  and  accessibility  for  persons  and 
goods  as  well  as  opening  for  new  business  models.  Extended  opportunities  will  include 
other modes of transports, such as automated vessels and integrated logistics. 

in  principle,  automated  driving 

is  possible  without  a  sophisticated 
Although 
like  e.g. 
communication 
navigation  positioning  and  high-resolution  digital  maps.  In  fact,  fully  automated  driving 

it  requires  connectivity, 

infrastructure100, 

implementing 

100  Recently, there have been several demonstrations based only on on-board sensor systems (e.g., Audi 550-

mile piloted drive from Silicon Valley to Las Vegas in 2014 -Audi AG, October 2014). 

36 

 
 
                                                 
based only on on-board control systems without any support from wireless communication 
systems  is  until  now  not  trialled  and  tested.  In  all  likelihood,  IoT/connectivity  and 
autonomy must be combined, exploiting both the evolutions in network connectivity and 
low  latency  and  the  capabilities  of  local  vehicle  control  and  autonomy.  In  addition, 
connected  and  automated  driving  can  benefit  from  local  transport  services.  These  allow 
vehicles to adapt in real time, e.g. to the traffic situation, to road conditions (e.g. rain, ice, 
damage etc.) and to unexpected events (like an accident). 

7. Smart Farming 

Smart  Farming  is  understood  to  encompass  the  application  of  data  gathering  (edge 
intelligence),  data  processing,  data  analysis  and  automation  technologies,  that  jointly 
orchestrated  allow  for  improved  operation  and  management  (analytics)  of  a  farm  with 
respect to (near real time) standard operations and re-use of these (animal-plant-soil) data 
in improved chain transparency (food safety) and chain optimization (smart data). In this 
sense,  smart  farming  is  strongly  related,  but  not  limited,  to  the  concept  of  Precision 
Agriculture and Precision Livestock Farming. IoT and smart farming applications will set 
new  trends  in  ICT  and  agriculture,  such  as  solutions  adapted  to  small- and  medium  size 
farms, improvement of farm management systems, development of new agri-food business 
models and enhancement of “transparent farming” approval among European consumers 
and  markets.  IoT  and  smart  farming  applications  hold  many  promises  for  a  more 
sustainable, productive and competitive EU farm sector. 

The agri-food supply chain is very complex: there are many different players involved and 
dynamics  in  the  industry  are  constantly  changing.  There  are  also  differences  in  the food 
supply  chain  (depending  on  the  types  of  products  and  the  locations  in  which  they  are 
produced) and a high degree of volatility (mainly linked to the changing climate, political 
actions  and  social  changes).  Moreover,  consumers  now  want  to  know  more  and  more 
about  the  content  and  safety  of  their  food,  where  and  how  it  is  produced  and  what  the 
environmental and social impacts are. 

Promoting a broader uptake of smart farming technologies at EU level is key to ensuring a 
Digital Singe Market for the IoT applied to agriculture. The final report of the  Precision 
Farming  Focus  Group,  set  up  under  the  EIP-AGRI101,  provides  recommendations  for 
future  research  activities  and  potential  EIP  Operational  Groups  that  could  contribute  to 
mainstream smart farming technologies in Europe. 

8. Circular Economy 

Fully  customised  and  collaborative  business  models  hold  large  potential  for  achieving  a 
circular economy where  people can shape products and services according to  their needs 
and where manufacturing becomes more flexible and more human-centric.  

Recent studies102 have highlighted how the interplay between circular economy and digital 
enablers, such as IoT, provides a fertile ground for innovation and value creation.  

101  http://ec.europa.eu/eip/agriculture/ 
102  Intelligent Assets: Unlocking the Circular Economy Potential, Ellen MacArthur Foundation 2016 

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The  Circular  Economy  to  be  effectively  and  efficiently  implemented  requires  a  systemic 
approach  to  eco-innovation  and  the  adoption  of  new  business  models  for  sustainable 
production and consumption patterns. In this systemic change perspective, it is crucial to 
redesign the whole value and supply chains, from devices and applications, to production 
processes, from logistics to retails. IoT can become the facilitator of this transition that can 
contribute to reindustrialise Europe, through a customised production that would take place 
closer  to  the  end-user  by  setting  up  a  complex  ecosystem  of  on-demand  services  and 
temporary use of assets based on exchanges via online platforms103.  

9. Earth and Ocean Observation Systems and Future Blue Economy 

Horizon  2020  includes  initiatives  to  improve  both  earth  observation  systems  to  monitor 
agricultural  production  and  ocean  observation  systems  for  navigation  and  collecting, 
transmitting,  storing  and  analysing  data.  Furthermore,  the  Blue  Growth  focus  area 
addresses infrastructure in the Arctic and Mediterranean, monitoring of marine resources, 
and maximising the use of the oceans' potential. The promises of IoT technologies can spur 
developments  in  many  value  chains  of  the  future  blue  economy  and  their  synergetic 
interactions. 

Seafood  traceability  has  a  strong  potential  for  sustainable  fisheries,  especially  in  the 
context of global fight against unsustainable, illegal, unreported and unregulated fishing. It 
will therefore help address the increasing need for food security and safety for the EU and 
the  growing  world  population,  in  balance  with  healthy  marine  ecosystems.  Moreover, 
seafood  traceability  could  lead  to  the  optimisation  of  seafood  waste  in  a  circular  blue 
economy. 

Interconnection  through  communication  networks  across  private,  public  and  industrial 
spaces,  and  reporting  about  the  status  of  the  surrounding  environment  could  help 
generating  and  capturing  synergies  between  off-shore industries  or  seabed  infrastructures 
while addressing environmental concerns in the largely unknown global ocean. Long term 
efforts  to  provide  seamless  access  to  marine  data  are  paying  off  with  new  products  and 
services emerging on the blue economy. 

103  Upgrading the Single Market: more opportunities for people and business (COM(2015) 550 final) 

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