Internet of Things: Communities Deploy Projects by Combining Federal Support with Other Funds and Expertise
Released: 2017-07-26T00:00:00

Letter

Background

IoT has no generally accepted, all-inclusive definition. Instead, IoT is generally described as a concept referring to how connected devices interact and process information. The devices themselves are generally not computers, but have embedded components that connect to a network. We define IoT for the purposes of our report as the concept of connecting and interacting with a wide array of objects through a network. An IoT-enabled object is often referred to as a “smart” or a “connected” device, which allows that object to communicate and potentially process information and thereby provide capabilities and functionality beyond what that object would normally provide. For example, connected vehicles—vehicles that “talk” to infrastructure and other vehicles—provide the capability to identify threats and hazards on the roadway and allow drivers to receive notifications and alerts of dangerous situations, potentially reducing the number of accidents.

IoT devices are used in a variety of settings, such as the home (e.g., smart appliances), manufacturing (e.g., predictive maintenance), or a health care setting (e.g., remote patient monitoring). In this report, we focus on the application of IoT within a community setting—often referred to as a “smart city” or “smart community”—with the aim to generally improve the livability, management, or service delivery of that community. For example, a community may deploy streetlights with embedded sensors that detect sound or motion and that are programmed to switch on and off or raise dimmed lighting levels when vehicles or pedestrians pass. By managing the level of streetlight use, communities seek to improve energy efficiency and costs, as well as reduce maintenance costs by reducing service trips to replace burned-out lights. Figure 1 illustrates other examples of how IoT technologies may be used in a community. More indirectly, these technologies can drive economic growth by generating demand for new products, new companies, and new skilled jobs, according to literature and industry experts.

While the idea of connecting objects is not new, recent advancements in technologies that support IoT—such as the decreasing cost and size of electronics and the expansion of connectivity (e.g., broadband networks and Wi-Fi), are driving a proliferation in the number and types of uses of connected devices. One projection puts the future number of IoT devices (excluding computers, mobile phones, and tablets) at over 10 billion in 2020. This would represent an increase of more than 200 percent between 2015 and 2020, at which point the number of connected things would outpace the number of computers, tablets, and smartphones currently connected.

There are also, however, hurdles that may impede widespread use of IoT devices. Security and privacy risks can originate from unintentional threats, such as equipment failures, or intentional threats, such as from hackers. As noted in a Commerce green paper on IoT, published in January 2017, while these risks are generally not unique to IoT, ubiquitous connectivity and growth in IoT devices raise new challenges. As new and more “things” become connected, they increase not only the opportunities for security and privacy breaches, but also the scale and scope of any resulting consequences. For example, in October 2016, a cyberattack that involved the hacking of thousands of unsecured IoT devices interrupted Internet access to a number of major websites across the United States for hours. These hurdles demonstrate the need for strategies to respond to concerns about safety and increased risks to privacy and security. We have reviewed and continue to review some of these issues; for example, we recently issued a report that discusses the specific implications of IoT technologies, including safety, security, and privacy issues.

IoT projects are also complex, crosscutting, and require expertise to design and deploy. IoT projects involve the deployment of rapidly evolving technologies and also often collect and store vast amounts of data that must be analyzed before they can be used to develop community solutions. For example, as we have previously reported, when local transportation departments deploy IoT-enabled sensors on traffic lights to monitor and collect data on traffic flow to help manage congestion, they may need assistance in developing the system requirements; collecting, analyzing, and protecting the vast amounts of data collected; and identifying interdependent goals for the community, such as improving air quality. As such, the local transportation department may hire consultants to help with procurement and deployment of a system; purchase the system from a vendor; partner with academia for support in data analysis and innovative solutions; collaborate with other local-government departments to identify interdependent goals; and collaborate with other entities, such as transit operators or regional planning departments, to leverage outcomes, among other activities.

As noted earlier, researchers and industry stakeholders have noted that successful integration of technologies and projects—including across sectors (e.g., transportation, energy, or public safety)—is key to realizing the full potential of IoT. That is, when systems are interoperable—or work in concert with one another—they may support interdependent goals. For example, sensors deployed in community infrastructure to report on traffic conditions or environmental conditions such as air quality can also, if equipped with audio or visual capability, provide real-time traffic information to public-safety or emergency-response persons, to help determine the fastest route to an emergency. Government departments that work with each other to build integrated systems can help optimize resource expenditures and maximize services to community residents. One research institute estimated in 2015 that IoT applications in cities could have a global economic impact between $930 billion to $1.6 trillion per year in 2025, with systems that are interoperable enabling more than 40 percent of that value.

No single federal agency addresses all aspects of IoT. We identified at least 11 federal agencies that have a key role in supporting IoT in communities, either because they support research or communities, oversee privacy or security protections and threats, or have direct authority over IoT issues. The 11 key federal agencies that we identified include Departments of Commerce (Commerce), Energy (DOE), Health and Human Services (HHS), Homeland Security (DHS), Justice (DOJ), Transportation (DOT), as well as the Environmental Protection Agency (EPA), Federal Communications Commission (FCC), Federal Trade Commission (FTC), National Science Foundation (NSF), and Office of Science and Technology Policy (OSTP). See appendix I for more information on selected agencies’ missions and examples of relevant support for communities’ IoT applications.

The EU also has made investments in supporting IoT projects in communities. For example, in 2013 the EU adopted a research and innovation framework program for 2014 to 2020 (Horizon 2020) that includes cross-cutting focus areas in both: IoT, which aims to enable the emergence of an IoT environment that is supported by open (i.e., publicly available) technologies and platforms, and “Smart cities and communities,” which aims to bring together cities, industry, and citizens to demonstrate solutions and business models that can be scaled up and replicated.

These focus areas are supported by bi-annual funding strategies. The European Commission, similarly to the U.S. government, is divided into departments and executive agencies that have varied responsibilities. For example, the European Commission has departments for Energy; Mobility and Transport; and Communications Networks, Content, and Technology that each have responsibility in carrying out the European Commission’s policies related to the respective industry sector that the departmental entity oversees. With support from the EU, as well as local initiatives, European communities are increasing investments in IoT projects, and according to literature we reviewed and some U.S. and European industry experts we interviewed, some of those communities are generally recognized as having more advanced and mature IoT projects than communities in the United States.

In Addition to Broad IoT Research and Oversight, Federal Agencies More Directly Support Communities by Funding IoT Projects and Fostering Collaboration

Broad Federal IoT Research and Oversight Provide Underlying Support for IoT in Communities

Research

Many of the federal agencies we reviewed are conducting or funding broad research in IoT-related technologies. As communities increasingly deploy IoT devices, they are more dependent on the underlying communications systems—both wired and wireless network systems— that enable those devices to communicate with each other and with other systems. And with wireless systems likely playing an increased role in supporting IoT, demand for access to spectrum—a limited resource already in high-demand—will also rapidly increase. Recognizing the increasing demand for connectivity and spectrum access, 8 of the 11 federal agencies are conducting or funding research on communication systems and the related impacts of those systems—such as privacy, security, and demand for spectrum access—that could subsequently support communities’ IoT projects. For example:

NSF awarded 19 universities over $8 million over 3 years beginning in 2016, through its US Ignite program, for fundamental research in networking technologies to further both the capabilities and understanding of high-speed networking infrastructure to meet the demands of future applications, including community applications. NSF also awarded in 2016 more than $6 million over 2 years for exploratory research in connecting networked computing systems with physical devices through NSF’s EArly-concept Grants for Exploratory Research (EAGER) funding mechanism.

Commerce’s National Telecommunications & Information Administration (NTIA) has a research lab that is developing an IoT testbed for testing the potential of interference posed by new IoT- related spectrum use to existing spectrum users in a dense environment, such as a city. The growth in wireless communications has increased the potential for harmful interference—an action that interrupts or obstructs communication service—when two systems use the same or adjacent spectrum frequencies in the same geographic area. NTIA officials also told us that this lab is also supporting DOT’s efforts to investigate the potential interference of unlicensed wireless devices operating in the licensed spectrum for dedicated short-range communications (DSRC)—the wireless technology that, according to DOT, is expected to be used in a connected vehicle environment.

FTC’s Office of Technology Research and Investigation researches and evaluates the impact of IoT technologies on consumers, including issues related to privacy and security. In addition, in January 2017, the FTC announced a prize competition that challenges the public to develop a tool that consumers can deploy to guard against security vulnerabilities in IoT devices. And while the challenge is not directed to communities, FTC staff noted that it is possible that some of the proposed submissions could help address security issues related to IoT devices in communities.

In late 2016, DOJ formed a threat analysis team to study the potential national-security threats posed by IoT devices as part of a broader effort to assess the next -generation of cyber threats. According to DOJ officials, the team has focused on how IoT devices may be exploited by terrorists or others to cause loss of life or disrupt the nation’s increasing reliance on IoT technologies, which included surveying other federal agency efforts and non-government experts on this issue. DOJ hopes in the future to support an interagency approach to this issue.

In addition to networked communications systems, federal agencies are conducting or funding broad technical research on IoT devices that support communities, such as sensors and intelligent transportation systems technologies, as described in the examples below.

DHS awarded three $100,000 small business innovation research contracts in January 2016 for research and development of modular (i.e., composed of standardized units), low-cost, integrated, IoT- enabled flood inundation sensors. These sensors would (1) monitor flood-prone areas in real-time across large geographic areas and (2) allow emergency responders to predict, detect, and react to flood conditions, among other things. All three awardees received follow-on awards to test and evaluate the sensors in the field, beginning in April 2017. The final phase of the awards involves commercialization of the sensors, and while not funding commercialization directly, DHS plans, among other things, to help bridge relationships between the awardees (sensor developers) and potential buyers (such as first responders).

EPA’s Office of Research and Development formally coordinates with two universities on research related to management and analysis of data collected through sensor networks. This research has included collaborating to develop a freely available data-hosting and visualization tool, as well as analyzing high-resolution air pollution emissions data.

DOE established the Grid Modernization Initiative to support modernization, including ensuring the resiliency and security, of the nation’s electricity grid—commonly referred to as a smart grid. Under this initiative, DOE not only makes funding available but also supports research projects related to IoT technologies, such as sensors, which, according to the initiative’s multi-year program plan, are necessary to assess the health of the grid in real time, predict its behavior, and respond to events effectively. According to DOE officials, the initiative’s projects are in their first year, so no reported results are available, but a peer review panel was held in April 2017 to provide lessons learned and share best practices. DOE officials also told us that they anticipate the initiative to continue through at least 2018.

NSF, through its Smart and Connected Communities program, anticipates awarding about $18.5 million in grants under a 2016 program. This program solicits projects that support interdisciplinary research activities to improve understanding of smart and connected communities and enable sustainable change to enhance community functioning. Also, in 2015, NSF’s $3 million grant awarded through its Major Research Instrumentation program supported the development of a new tool for a project known as the Array of Things. The project’s goal is to install a sensor platform in the City of Chicago that collects data on a variety of community factors, including air quality and traffic, and makes these data publicly available to encourage innovative community solutions from third parties.

Finally, DOT’s Intelligent Transportation Systems Joint Program Office conducts a variety of research and demonstration projects that, according to its current strategic plan, includes the testing of ideas that might be developed into intelligent transportation systems technologies and subsequently deployed to advance transportation.

Oversight

The federal government is also engaged in overseeing IoT-related issues. In doing so, all but two of the federal agencies we reviewed are developing and distributing IoT-related guidelines, seeking input on and making policy recommendations, and convening or participating on working groups that support the development of voluntary consensus standards. As communities continue to deploy IoT devices and analyze the increasing amount of resulting data, federal policies and guidance can help them better understand the benefits of using IoT-related technologies, and help them address the challenges. Notably, Commerce issued a paper in January 2017 that, among other things, sought input on the role of the federal government in fostering IoT and related policy recommendations. The paper also discusses both benefits, such as improvements in safety and efficiency for consumers and governments, and challenges of IoT, including risks to security and privacy. Other examples include:

Safety: DOT issued an Automated Vehicles Policy in September 2016 in order to speed the delivery of an initial regulatory framework and best practices to guide the safe design and deployment of automated vehicles.

Security: In October 2016, through public meetings, NTIA convened a multi-stakeholder process on IoT security upgradability and patching with a goal of fostering a marketplace that offers devices and systems that support security upgrades through increased consumer awareness and understanding, among other things. And, in November 2016, DHS issued a set of industry-neutral, non-binding principles to provide stakeholders with suggested practices that help to account for security and other challenges as stakeholders develop, implement, or use IoT devices.

Privacy: FTC staff issued a report in January 2015 that both summarized a 2013 staff-hosted workshop discussion on benefits and risks of IoT and provided an update on post-workshop developments, including a report on data privacy issued by the President’s Council of Advisors on Science and Technology., The report also included the FTC staff’s recommendations on privacy and security, which continued to recommend that Congress enact broad-based privacy legislation. Also, HHS published a report in July 2016 that highlighted what it referred to as gaps in regulation, as well as confusion among consumers on privacy of health data collected by entities not regulated by the Health Insurance Portability and Accountability Act (HIPAA)., Interoperability: Commerce’s National Institute of Standards and Technology (NIST) participates in international standards-setting organizations. NIST has convened an international public working group to help develop a consensus framework to enable interoperable community IoT solutions and plans to publish a draft consensus framework in late 2017. This effort (and others at NIST) provides the technical basis for NIST contributions to work in international standards-setting organizations. DHS contracted with an international consortium of more than 500 companies, government agencies, and universities to demonstrate how proprietary systems, specifically sensors used by first responders, could be made interoperable using open standards—that is, standards that are publicly available and maintained by a collaborative and consensus-driven process.

Selected Federal Agencies Directly Support Communities by Funding IoT Projects

In addition to broad research and oversight of IoT issues, we identified three federal agencies (Commerce, DOT, and EPA) that are more directly supporting communities through expanded funding for community IoT projects. In December 2015, DOT launched a two-phase prize competition, the Smart City Challenge, which, to date, included the largest single award amount ($50 million) made available by the federal government to support IoT in communities. According to DOT, it had unprecedented community interest, attracting 78 mid-sized cities to apply for the first phase. According to DOT, it was one of the first times, if not the first, that federal funds were made available to explicitly encourage communities to integrate systems across sectors to achieve interdependent goals. As of April 2017, the challenge winner— Columbus, Ohio—is still finalizing its project schedule and details. DOT officials noted that it is challenging to identify measurements that define success and ensure that the projects provide adequate data to inform any evaluation, but that DOT officials are working with Columbus representatives and an independent evaluator to develop a strategy to do so. DOT officials also noted that they provided seven finalist communities $100,000 each and that some communities have used that money to revise their original proposals and bid on other available federal funds.

Two other federal agencies also recently announced funding for deployment of community IoT projects.

In August 2016, EPA launched prize competition—called the Smart City Air Challenge—for the purpose of learning how communities would deploy hundreds of air quality sensors, manage high volumes of data, and make the data public. EPA awarded $40,000 each to Baltimore, Maryland, and Lafayette, Louisiana, to develop innovative strategies for deploying sensor platforms and managing the data collected from 300 sensors, as well as sharing lessons learned with other communities. According to EPA officials, as of April 2017, the communities are testing and deploying the sensors and will meet quarterly throughout 2017 with EPA officials to share knowledge and will participate in webinars with other communities to share best practices. EPA will evaluate the projects at the end of 2017 to determine whether it will award a second round of funding of $10,000 each.

Commerce’s NIST awarded, in September 2016, a total of $350,000 to four communities to collaborate and deploy replicable smart solutions to address community issues. These grants include such projects as using Wi-Fi-enabled sensors to alert first responders to emergencies in a senior community and developing computer models to predict urban flood events. In September 2017, the awardees are expected to submit final reports that include evaluation of the projects against specific criteria including evidence of effective use of existing standards for interoperability across systems and clear and quantifiable performance goals with measurement capabilities incorporated into the system design. NIST officials noted that communities may find it challenging to meet these criteria during a 1- year, small-scale project but noted that regular bi-weekly meetings and continuing interaction between NIST and the communities is intended to help.

DOT also provides funds through other federal grant programs that do not specifically target IoT, but can still be used to support IoT projects. For example, DOT published a guide for communities that identifies existing funding programs or initiatives, such as its Advanced Transportation and Congestion Management Technologies Deployment (ATCMTD) initiative and DOT’s Transportation Investments Generating Economic Recovery (TIGER) grant program that could be used towards funding IoT projects, according to the DOT guide. The guide provides examples of IoT technologies that meet eligibility criteria under these programs, such as the ability of sensor-based infrastructure as an eligible technology for maintenance and monitoring under the ATCMTD Initiative. DOT officials reported that DOT announced for fiscal year 2016, nine ATCMTD and TIGER grants supporting IoT projects, such as a project in the city and county of Denver, Colorado that includes deploying technologies to support its connected freight program with a goal of reducing freight congestion.

Some federal agencies are also working to maximize those federal funds by encouraging or requiring grant recipients to leverage private funds. For example, both DOT’s Smart City Challenge and EPA’s Smart City Air Challenge strongly encouraged communities to leverage funding from the private sector and others. DOT officials told us that Columbus, Ohio, the winner of the DOT Smart City Challenge, was able to leverage an additional $350 million or more from community partners beyond DOT’s $40 million contribution. The EPA challenge solicitation specifically noted that the two community awards of $40,000 each were intended to be seed money for communities to leverage other resources.

Furthermore, federal agencies are promoting project replicability, so that solutions in one community can be more easily deployed in other communities. Due to the complexity of IoT projects and communities’ limited resources, two representatives from industry and academia highlighted that communities are hesitant to be the first adopters of these projects without models or leading practices to follow. In recognizing this hesitance, some federal agencies are promoting the design of projects that are replicable to other communities. Most notably, NIST launched its Global City Teams Challenge (GCTC) program—a collaborative platform for the development of “smart cities”—to encourage collaboration and the development of technology standards. In doing so, NIST recognized that IoT projects tend to be isolated and customized—that is, not interoperable with other projects or replicable to other communities. According to NIST, many custom-designed systems are not cost effective, and the growth of the smart cities market is also hindered by deployments that are customized. And, with standards-based solutions—or replicable projects—communities can build on each other’s work and make their solutions available to other communities that may lack resources. For example, the multi-stakeholder team that is deploying the sensor and computer research platform, called the Array of Things, in the City of Chicago first began as a partnership between the City of Chicago, University of Chicago, and Argonne National Laboratory. This partnership participated in the GCTC program and also received an NSF research instrumentation grant, as discussed above. The team has had inquiries from nearly 90 cities around the world, and is preparing to deploy the IoT technology in an initial set of pilot cities, including Seattle, Washington, and Amsterdam, the Netherlands. $3.1 million award through NSF’s major research instrumentation program and more than $1 million from DOE’s Argonne National Laboratory.

Project description: Chicago’s Array of Things project plans to install hundreds of interactive, modular sensor boxes across the city to collect real-time data on the city’s environment, infrastructure, and activity for research and public use, essentially measuring factors that impact livability such as climate, air quality and noise. The project also reserves space for additional sensors in support of future data collection in other areas and industry sectors.

Electric Power Board (EPB) of Chattanooga, the owner and operator of the region’s smart grid, staff from DOE’s Oak Ridge National Lab use their expertise to test new technologies and develop new analyses, among other things, to help EPB to use its electricity data to improve its operations.

DHS officials also told us that while in the past they have not provided in- kind support, they are currently drafting a contract in which they will be providing in-kind support, including drones and some open-source software, to a quasi-governmental organization that works to advance community IoT projects.

Federal Government Also Supports Communities’ IoT Projects by Fostering Interagency and Community Collaboration

Interagency Collaboration

Issues related to IoT in communities cut across multiple sectors and government agencies—that is, no single government agency addresses all aspects of IoT or communities’ IoT efforts. And similar to other cross- cutting federal efforts, achieving meaningful results requires collaborative efforts of multiple programs and agencies spread across the federal government and often more than one sector or level of government. Both Congress and the executive branch have recognized the need for improved collaboration across the federal government. We also have previously reported that agencies face challenges when attempting to work collaboratively and that the agencies can enhance and sustain their collaborative efforts by engaging in such practices as establishing mutually reinforcing or joint strategies designed to help achieve a common outcome and identifying and addressing needs by leveraging resources to support common outcomes.

To promote government-wide collaboration in supporting deployment of IoT in communities, the White House created an interagency Smart Cities and Communities task force in July 2016—co-chaired by representatives from DOT, NIST, and NSF—that is coordinated through the Networking and Information Technology Research and Development (NITRD) program. Twenty-two federal departments and agencies have participated on the task force as of January 2017 with initial efforts focused on developing (1) a federal strategic plan and (2) a resource guide for communities. On January 12, 2017, the task force released for public comment a draft federal strategic plan that offers a high-level framework to guide and coordinate smart community-related federal initiatives, with an emphasis on local government and stakeholder engagement. The draft plan highlighted five goals motivating the strategy, including accelerating innovation and infrastructure improvement and facilitating cross-sector collaboration and bridging existing silos. It also identified four strategic priorities and next steps that include promoting interagency collaboration and developing a road map for specific federal actions to execute the strategic priorities. According to federal officials who are chairing the efforts, the public comments will help inform a revised federal strategic plan, which, as of April 2017, is anticipated for publication in the summer of 2017. According to these officials, following the completion of the strategic plan, the task force will be dissolved, and the NITRD program’s standing Cyber-Physical Systems interagency working group will identify and coordinate any additional action that is needed to support these efforts, such as any activities related to the execution of the federal strategic plan. The task force’s second effort included the launching of an interactive website resource guide in March 2017 that describes federally funded research and development programs in smart cities and communities. According to the task-force, the guide aims to facilitate collaboration and coordination among task force member agencies, academia, industry, local cities and communities, and other government entities. These officials noted that the guide will be reviewed and updated annually, and that they are using aggregate data on use and search patterns to evaluate the effectiveness and usability of the guide.

At the same time, individual federal agencies are formally and informally collaborating at a program level on specific agency projects or efforts related to community IoT projects. Federal agency officials told us that this collaboration helps bridge issues that cut across agencies, as well as leverage expertise. For example, in 2016, DOT and DOE signed a memorandum of understanding (MOU) that recognizes their departments’ mutual interest in realizing the economic, environmental, and national security benefits achieved by the growing use of smart transportation technologies. The MOU formally states their intention to coordinate actions to leverage DOE’s traditional focus and expertise in transportation energy technology systems and DOT’s traditional focus and expertise in transportation safety technology systems to accelerate the analysis and application of “smart” transportation systems. Under this MOU, and as mentioned above, DOE supports a national lab expert, as part of a technologist-in-cities pilot program, in Columbus, Ohio, who serves as a complement to DOT’s Smart City effort and focuses on energy-related components of the planned projects. In addition, according to NTIA officials, its research lab also coordinates with DOT’s Intelligent Transportation Systems Joint Program Office, including investigating the potential interference of unlicensed wireless devices operating in the licensed spectrum for DSRC—the wireless technology that, according to DOT, is expected to be used in a connected vehicle environment.

Community Collaboration

Some federal agencies have undertaken efforts to support collaboration at the community level, across local governments, academia, and the private sector. NIST’s GCTC program, as discussed earlier, enables local governments, nonprofit organizations, academic institutions, technologists, and private corporations from all over the world to form project teams, or “action clusters,” to work on community IoT projects and facilitate interoperability, according to NIST officials. And since the GCTC program launched in September 2014, GCTC has recruited and supported over 160 project teams, with participation from over 150 cities and 400 companies or organizations from urban and rural communities across the United States and their counterparts in other countries. The White House also has supported collaboration at the community level through promotion of the MetroLab Network—a networking consortium of city-university partnerships that seeks to bring interested cities and universities together to share expertise and lessons learned across municipalities. According to a 2016 MetroLab Network report, the membership consists of more than 35 partnerships and has developed a library of more than 120 research, development, and deployment projects that are currently under way across its membership. The library resource, as well as knowledge-sharing and networking events convened as part of the consortium, enables collaboration with, and the sharing of lessons from communities that have deployed innovative community solutions. For example, according to an official from the Portland Bureau of Planning and Sustainability, a meeting at a MetroLabs event resulted in a partnership between Portland and a stakeholder leading Chicago’s Array of Things project to share information and leverage resources in testing sensors and a sensor platform for an air quality project.

European Union Efforts Are Generally Similar to the United States, Although in Some Cases More Formalized

Broad Research and Oversight

In the European Union (EU), the European Commission directs research on IoT-related technologies and oversees IoT policy-related issues, similar to the U.S. federal government.

Within the EU’s Horizon 2020’s 7-year research program, the European Commission developed an initiative to support innovation, which includes a specific focus area for IoT that is cross-cutting. The focus area aims to enable an IoT environment that is supported by technologies and technology platforms that are open (i.e., publicly available). Funds for the 2016-2017 programs are to be used to demonstrate scientific progress that enables advanced IoT applications.

The EU also has taken legislative steps related to IoT oversight. For example, the EU adopted the General Data Protection Regulation in spring 2016, which, according to European Commission officials, seeks to simplify protection for individuals’ data, including data from IoT devices, by providing a single set of rules that apply to all EU member states. It is scheduled to be implemented over the next 2 years. At the country level, according to community representatives in Sweden with whom we spoke, policy makers are also investigating potential regulatory changes. For example, in one instance, the Swedish government created “policy labs” (also sometimes called a “regulatory holiday,”) specifying some geographic locations or a specific time frame that is free of regulation so that project partners can test what policies are needed in that environment—such as a connected vehicle environment—to make the solution successful.

Funding and Collaboration

The EU also directly supports IoT applications in communities through direct funding. Sometimes it does so through formalized programs, such as joint-departmental funding that is focused on “smart cities and communities.”

Specifically, the Horizon 2020 research program includes a cross- cutting focus area on “smart cities and communities”—which aims, in part, to bring together cities, industry, and citizens to demonstrate community solutions and business models that can be scaled up and replicated, and that lead to measurable benefits in energy and resource efficiency, new markets, and new jobs. The supporting funding program combines funds from multiple departments—the European Commission’s departments on energy, transportation, and communications technology—to support IoT projects in communities that span these sectors. Under this program, the EU has funded three different large-scale pilot projects since 2015 that focus on replicability and support IoT projects. For each pilot project, three European cities were selected as “lighthouse cities,” with up to five different follow-on cities in which successful projects are to be replicated. The lighthouse cities design and implement their smart projects, and when successful, the follow-on cities begin deployment.

We also found examples where individual countries supported community deployment of IoT projects and encouraged those communities to leverage resources from private industry and others. For example, according to community representatives in Sweden, the Drive Sweden project—focused in part on local and national traffic management and deployment of autonomous vehicles and fleets—is jointly funded by three Swedish government agencies: the Swedish Energy Agency, the Swedish Research Council, and Sweden’s Innovation Agency. The project has to leverage private funds, as it is part of a program supporting nationally funded projects that require private industry cost-sharing.

European Commission departments and countries also collaborate in administering programs for community IoT projects and support collaboration among other stakeholders. For example, in 2012, recognizing that IoT technologies span all sectors of the economy and society, the European Innovation Partnership on Smart Cities and Communities (EIP-SCC) was launched. The partnership is a stakeholder group that aims to significantly accelerate the deployment of smart city solutions integrating technologies from energy, transportation, and communications technology. The EIP-SCC is jointly administered by three European Commission departments with jurisdiction over the energy, transportation, and communications technology sectors. It has a mechanism called a stakeholder platform that serves as a collaborative, networking, and knowledge-sharing tool for communities, collecting and analyzing input from all stakeholders. According to its agenda, it seeks to provide bottom-up contributions, such as those from communities, to ensure that EU policy on smart communities reflects the needs and engagement of communities. Also, at the country level, Sweden announced in June 2016 a formal program that supports collaboration among government, private, and academic stakeholders to create innovative solutions for specific societal challenges, one of which is “smart cities.”

Selected Communities Use Federal Funds with Other Resources to Deploy IoT Projects but Face Various Challenges Integrating Projects

Communities Are Using Federal Funds in Conjunction with Other Funding and Expertise to Deploy IoT Projects

Financial Support

In planning and deploying IoT projects, all of the communities we reviewed are using federal funds with other direct funding and in-kind support. As described previously, grant recipients are sometimes required by federal agencies to leverage private funds. For example, the Chattanooga Electric Power Board leveraged more than $115 million in nonfederal investment as part of its federal award of $111.6 million through DOE’s smart grid investment grant program in 2010. Chattanooga used these federal and nonfederal funds to expand its fiber optic network to support communication of its smart grid equipment, which includes smart meters for more than 170,000 energy utility customers.

According to community representatives we interviewed, without a federal cost-sharing requirement, federal funds alone may not be sufficient to cover all project costs. For example, according to City of Columbus representatives, it used its $50 million award from DOT’s Smart City Challenge to leverage about an additional $90 million in support from community partners. Some of the support has come in direct funding while other support has been in-kind, such as research, programmatic support, or equipment contributions. installed a fiber based gigabit internet infrastructure to improve efficiency and resiliency in its utility energy distribution The project included installation of more than 170,000 smart meters for utility customers. Since this project was completed, Chattanooga is making this fiber infrastructure available to other community stakeholders for other IoT projects, including deploying a network of air quality sensors to detect asthma- aggravating particulate matter and pollen in metropolitan Chattanooga. million in direct funds and in-kind contributions, including a $10 million grant from Vulcan, Inc. projects: The Integrated Data Exchange is an open data environment that will: (1) contain data from many different sources; (2) generate performance metrics for program monitoring and evaluation; (3) transparently serve the needs of public agencies, researchers, and entrepreneurs; and (4) provide practical guidance and lessons learned to other potential deployment sites.

Local government officials from two of the communities that we reviewed discussed beginning to leverage value from public assets, making public infrastructure available in exchange for financial support, such as in-kind donations of technology equipment. For example, representatives from two communities highlighted their use of community-based “technology incubators.” In these cases, a technology incubator is generally an entity that supports the collaboration of public, private, and oftentimes academic partners and provides public assets—such as data, resources, and infrastructure—to test technologies and develop innovative solutions to community needs. For example, Chattanooga provides access to its fiber network for use as a test bed to a variety of partners and a variety of projects. One project involves deploying and connecting a network of air quality sensors to detect asthma-aggravating particulate matter and pollen in the community with a goal of providing real-time alerts to end users, such as asthma patients, health institutions, and others affected by elevated pollen levels. Representatives from three of the communities we reviewed, as well as four other industry and academic stakeholders that we spoke with, discussed that developing such business models where local governments leverage value from public assets can help finance the project, and in some cases help sustain the project after initial grant funding runs out.

Highlights of Sweden’s technology incubators Sweden has 33 science parks, which are described as a stimulating meeting place for academia, research, the public sector, and industry. Stockholm Science Park: Kista Science City (KSC) is operated by a not- for-profit foundation that includes public, private, and academic organizations, for the purpose of facilitating collaboration among these stakeholders. An open testbed—the Urban ICT Arena—will serve as the testbed and co-creation arena for developing, testing, and showcasing community IoT solutions. For example, the City of Stockholm will provide access to a fiber optic network for industry and academics to test community technology solutions, including solutions for clean water and efficient transportation.

Representatives from all three of the European communities that we visited also reported having technology incubators where public, private, and academic entities partner to test innovative community solutions. While incubator-like entities can be found all over the world, Sweden has 33 formal technology incubators across the country, called Science Parks, which are jointly funded by industry, universities, and the local governments. These science parks facilitate collaboration among these stakeholders to develop community solutions. Representatives from three science parks that we met with in Gothenburg and Stockholm highlighted the importance of collaboration of public, private, and academic entities— typically referred to as the “triple-helix” model—to the success of the projects. For example, at a science park open testbed in Stockholm, the local and regional government, an industry partner, among others, have provided access to wired and wireless communications networks for other entities to use in developing innovative community solutions, such as improving water quality and transportation efficiency.

Non-financial Support

Representatives from communities we reviewed and industries we spoke with discussed the importance of collaboration among public, private, and academic entities to make the best use of the unique expertise that each member group brings to the table.

Representatives from two communities discussed that local governments can provide a policy framework and help ensure that the solutions are based in the community’s needs, as opposed to driven by the latest technology invention.

A Columbus representative discussed its “culture of collaboration” and how private partners have brought invaluable resources to its DOT Smart City Challenge projects, particularly expertise on technologies and connections to other industry players for innovative ideas and solutions.

Representatives from two of the communities we spoke with have active “convener” organizations that bring public, private, and academic stakeholders together on an on-going basis to discuss collaborative opportunities to address community problems.

While representatives from all of the communities discussed the benefits of collaboration, an industry representative also highlighted that maintaining well-functioning partnerships takes time and resources.

Representatives from all three European communities also discussed the value of collaboration for providing a variety of expertise, and in some cases, independence. For example, in The Netherlands, a non-profit organization oversees part of Eindhoven’s “smart city” projects. Representatives from this organization highlighted this as advantageous to providing government and commercial independence—that is, to best balance the government’s oversight needs with private industry interests. In Stockholm, a local government representative highlighted that the role of some academics is to independently evaluate the IoT projects’ success, both in meeting environmental sustainability goals and economic goals.

Several Factors May Hinder Communities in Integrating IoT Projects

Although integrated projects can help maximize the potential of IoT applications, communities can face challenges in integrating projects. All of the domestic communities we reviewed are planning or have deployed discrete IoT projects—projects that, at least initially, generally focus on addressing a singular issue, such as traffic congestion on a particular corridor. Domestic and foreign community representatives that we spoke with pointed to four main factors that can hinder the deployment of integrated projects, and in some cases, offered perspectives on solutions to these challenges.

Siloed Community Sectors

Siloed community sectors can make it challenging to integrate IoT projects. A variety of representatives that we spoke with—representatives from three of the domestic communities and two of the foreign governments, as well as seven academic and industry representatives— highlighted that local government departments and federal grants tend to be focused on one sector (e.g., transportation, energy, public safety) of a community, inhibiting IoT project integration. An industry representative who works with communities on IoT projects said that community projects tend to be planned and deployed in isolation, in part because it is difficult to leverage resources and benefits across the silos created by government departments. A local government representative from a domestic community noted that there is no sense of a single organization at the federal level when pursuing grants and that while federal grants are helpful, tracking opportunities and developing proposals are a lot of work, and consumes both time and resources. Representatives from one domestic community noted that collaboration between transportation, energy, and environmental monitoring appears be most advanced, in part because these industries have recognizable synergies.

Domestic and industry representatives that we spoke with offered perspectives on how internal or external leadership and a federal strategy could help overcome silos and promote integration.

Leadership: Representatives from a domestic community, as well as four industry representatives, noted that an individual or department within the local government could serve as a mechanism to bridge silos. For example, an industry representative that works with communities on IoT projects noted that some domestic communities are using a Chief Information Officer or Chief Data Officer as a leader who can help integrate projects across departments. And according to local representatives from three domestic communities and two industry representatives, entities that are external to the local government, such as the community’s technology incubator or other consortium, could help convene various stakeholders. For example, in one domestic community, a consortium of public, private, and academic entities helped identify how to leverage a past investment in traffic sensors to expand the capacity to evaluate air quality.

Federal Strategy: While collaboration is helpful to integrating projects, representatives from three communities, three industry and academic representatives, and officials from two federal agencies noted that some kind of federal strategy or guidelines could be helpful. For example, a representative from one community noted the desire for a federal vision or framework that organizes multiple industries and agencies and supports strategies and resources for working together to achieve common goals. As discussed above, through the White House’s NITRD program, a task force that consists of 22 federal agencies, recently issued a draft federal strategic plan that includes a high-level framework to guide and coordinate smart community- related federal initiatives, with an emphasis on local government and stakeholder engagement. Federal officials working on the task force anticipate that the final plan, which will be informed by public comments, will be published in summer 2017.

Proprietary Systems

Representatives from three of the domestic communities and one of the foreign communities, as well as four industry stakeholders we interviewed, identified challenges related to proprietary vendor systems in deploying integrated projects. For example, while private industry can provide communities with needed financial support and expertise, representatives from two communities noted that private interests also encourage the development of proprietary systems that are solely owned by a vendor. Representatives from two communities also noted that proprietary systems risk making the community dependent on one vendor that could go out of business or raise maintenance costs. The use of proprietary systems raises confidence that the components within a system will work together, but challenges arise when communities seek to integrate systems from different vendors, perhaps across sectors. We also recently reported on similar challenges experienced by transit providers, including difficulties changing vendors after an intelligent transportation system has been deployed and getting vendors to work with one another to integrate systems amid concerns about making changes to those systems.

Representatives from all of the domestic and foreign communities we reviewed, as well as four academic and industry stakeholders, said that standards-based and open data platforms could help support integrated projects and innovative solutions. Some federal agencies—such as NIST, EPA, and DHS—are taking steps to address interoperability issues, including promoting consensus-based standards that would encourage proprietary systems to at least be designed to be interoperable. For example, NIST recognized that IoT projects are generally based on custom systems that are not interoperable, portable across cities, or cost- effective. Subsequently, NIST is helping convene an international public working group to develop a consensus framework to enable smart city solutions. Representatives from one foreign community told us that they are working to create an “umbrella” platform to unify all of the diverse systems developed by different projects with different business plans and timelines. Representatives from all three of the foreign communities noted that publicly funded projects often require that data collected be open— that is, available for others to use, including the public or other vendors. Representatives from two of these communities, as well as representatives from three of the domestic communities, noted that open data allow third-party entities access to information they can use to develop innovative solutions.

Resource Constraints

Communities with limited resources—both financial and staff expertise— can face challenges integrating IoT projects due, in part, to the complexity and cross-cutting nature of these projects. As two academic representatives who work to support community projects noted, it is less resource-intensive for communities to deploy singular, discrete IoT projects than to deploy integrated projects that require time and resources to develop a holistic vision and business plan. Industry representatives from two communities and three other industry representatives, however, highlighted that leveraging value from public assets could help finance communities’ IoT projects, as well as help financial sustainability. For example, as discussed above, some communities are making public infrastructure available in return for payment or in-kind donations of technology equipment. Representatives from one of the foreign communities discussed a government push to design projects that are financially sustainable, in such a way that they would be financially viable after grant funding runs out. U.S. federal efforts to support community collaboration have helped communities share their lessons learned on developing new business models, a process that also helps communities invest their funds more efficiently and effectively, by reducing the unknowns and subsequently the risk of investment.

These rapidly developing technologies often also require new and unique expertise, particularly across sectors or disciplines, to deploy and maintain. A local transportation department representative from one community noted that his department’s responsibilities are no longer confined to technical engineering skills but also involve expertise in information technology and data management, which requires additional training. Representatives from two domestic and three foreign communities discussed efforts to create new staff positions or retrain staff in existing positions. Representatives from a foreign community discussed creating a chief digital officer whose responsibilities include using data to improve efficiency for citizens and combining knowledge in data analytics with public policy.

Evolving Technologies

Representatives from two domestic communities we reviewed highlighted the fact that IoT-related technologies are constantly evolving, an evolution that ultimately makes integrating projects even more challenging. And, as we have reported in the past, integrating technologies often requires multiple phases of testing, which requires time and resources, and ultimately may require changes to the system or technology and re- testing. Communities with limited resources may prefer to focus on discrete projects, rather than risk investment in integrated projects with uncertain results. For example, representatives from two of the domestic communities spoke about project integration as the “next step” after they deploy the discrete projects. And representatives from two domestic communities, as well as three other industry and academic representatives, said that it is risky to develop a holistic, integrated project when the specific technology is not proven to be effective or could be completely different in 5 or 10 years. Selected federal efforts seek to help communities design replicable IoT projects and reduce the risk for subsequent communities. These and other efforts, while under way, are likely to take several years or longer to fully implement and measure success.

Agency Comments

We requested comments on a draft of this product from Commerce, DOE, HHS, DHS, DOJ, DOT, EPA, FCC, FTC, NSF, and OSTP. Commerce, DOE, FTC, NSF, and OSTP provided technical comments, which we incorporated as appropriate. HHS, DHS, DOJ, DOT, EPA, and FCC did not provide comments.

We are sending copies of this report to the appropriate congressional committees, relevant federal agencies, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or members of your staff have questions about this report, please contact Mark Goldstein at (202) 512-2834 or goldsteinm@gao.gov or Nabajyoti Barkakati at (202) 512-4499 or barkakatin@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix II.

Appendix I: Information on Selected Federal Agencies

Appendix II: GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff acknowledgments

In addition to the contacts named above, Susan Zimmerman (Assistant Director), Gretchen Snoey (Analyst in Charge), Eli Albagli, Edward Alexander, Jr., Ana Ivelisse Avilés, Brett Caloia, Joseph Cook, John de Ferrari, Camilo Flores, Sara Ann Moessbauer, Christopher Murray, Amy Rosewarne, and Andrew Stavisky made key contributions to this report.

Tommy Baril, Jennifer Beddor, Leia Dickerson, Karen Doran, Lawrance Evans, Jr., Philip Farah, John Neumann, Malika Rice, Stephen Sanford, and Sarah Veale also made contributions to this report.

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