[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
DISRUPTER SERIES: WEARABLE DEVICES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
MARCH 3, 2016
__________
Serial No. 114-125
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Ohio JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
_____
Subcommittee on Commerce, Manufacturing, and Trade
MICHAEL C. BURGESS, Texas
Chairman
JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey Ranking Member
Vice Chairman YVETTE D. CLARKE, New York
MARSHA BLACKBURN, Tennessee JOSEPH P. KENNEDY, III,
GREGG HARPER, Mississippi Massachusetts
BRETT GUTHRIE, Kentucky TONY CARDENAS, California
PETE OLSON, Texas BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas G.K. BUTTERFIELD, North Carolina
ADAM KINZINGER, Illinois PETER WELCH, Vermont
GUS M. BILIRAKIS, Florida FRANK PALLONE, Jr., New Jersey (ex
SUSAN W. BROOKS, Indiana officio)
MARKWAYNE MULLIN, Oklahoma
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
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Page
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 1
Prepared statement........................................... 3
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 4
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 5
Witnesses
Thomas D. Bianculli, Vice President, Enterprise Technology
Office, Zebra Technologies..................................... 6
Prepared statement........................................... 9
Answers to submitted questions............................... 80
Meg Burich, Director of Commercial Development and Marketing,
Adidas Digital Sports.......................................... 16
Prepared statement........................................... 18
Answers to submitted questions \1\........................... 86
Suresh Palliparambil, American Sales and Business Development
Director, NXP.................................................. 21
Prepared statement........................................... 24
Answers to submitted questions............................... 87
Scott Peppet, Professor of Law, University of Colorado School of
Law............................................................ 29
Prepared statement........................................... 32
Answers to submitted questions \1\........................... 91
Doug Webster, Vice President, Service Provider Marketing, Cisco.. 43
Prepared statement........................................... 45
Answers to submitted questions............................... 92
Submitted Material
Letter of March 3, 2016, from Steven K. Berry, President and
Chief Executive Officer, Competitive Carriers Association, to
Mr. Burgess and Ms. Schakowsky, submitted by Mr. Burgess....... 58
Statement of Mercatus Center at George Mason University, by Adam
Thierer, Senior Research Fellow, Technology Policy Program,
March 3, 2016, submitted by Mr. Burgess........................ 60
----------
\1\ Ms. Burich and Mr. Peppet did not answer submitted questions
for the record by the time of printing.
DISRUPTER SERIES: WEARABLE DEVICES
----------
THURSDAY, MARCH 3, 2016
House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:02 a.m., in
room 2123, Rayburn House Office Building, Hon. Michael C.
Burgess (chairman of the subcommittee) presiding.
Members present: Representatives Burgess, Lance, Harper,
Guthrie, Bilirakis, Brooks, Schakowsky, Kennedy, Welch, and
Pallone (ex officio).
Staff present: Leighton Brown, Deputy Press Secretary;
Rebecca Card, Assistant Press Secretary; James Decker, Policy
Coordinator, Commerce, Manufacturing, and Trade; Graham
Dufault, Counsel, Commerce, Manufacturing, and Trade; Melissa
Froelich, Counsel, Commerce, Manufacturing, and Trade; Giulia
Giannangeli, Legislative Clerk, Commerce, Manufacturing, and
Trade; Paul Nagle, Chief Counsel, Commerce, Manufacturing, and
Trade; Olivia Trusty, Professional Staff Member, Commerce,
Manufacturing, and Trade; Dylan Vorbach, Deputy Press
Secretary; Michelle Ash, Democratic Chief Counsel, Commerce,
Manufacturing, and Trade; Christine Brennan, Democratic Press
Secretary; Elisa Goldman, Democratic Counsel, Commerce,
Manufacturing, and Trade; Caroline Paris-Behr, Democratic
Policy Analyst; Diana Rudd, Democratic Legal Fellow; and Matt
Schumacher, Democratic Press Assistant.
Mr. Burgess. The Subcommittee on Commerce, Manufacturing,
and Trade will now come to order.
I will recognize myself for 5 minutes for an opening
statement.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
And I do want to welcome all of our witnesses here today
and welcome everyone to another installment of our Disrupter
Series hearings. Today, we will examine wearable technologies
and how they are disrupting traditional business processes and
transforming ways that consumers can engage in commerce.
Last year, we held a hearing to examine the Internet of
Things, a network of Internet-connected physical objects that
gather information in realtime to predict circumstances,
prevent problems, and create opportunities. That market has now
matured, and wearable technologies have come to represent a
growing segment within that digital ecosystem of interconnected
devices and their applications and platforms.
The defining characteristic of wearables is that they offer
consumers and businesses access to realtime, highly
personalized information through products and devices that are
physically worn by the user. Many of us are familiar with
fitness tracking bands on the market today. They gather
information about an individual's physical activity, or lack
thereof, and are intended to motivate users to improve their
fitness, wellness, and health regimens.
While inspiring better fitness habits is a positive use of
wearable technology, the societal and economic benefits of
these products extends far beyond those applications. We are
just beginning to see the potential of wearable technology
across multiple economic sectors and industries, such as
energy, health care, transportation, retail, professional
sports, manufacturing, education, and others.
In manufacturing, for example, wearables can provide
businesses with greater insight into the daily operations of
their production practices, their workflows, their supply chain
processes.
In sports, coaches and athletic trainers can use wearables
to better assess player recovery time and inform return-to-play
considerations to reduce the risk of further injury. I just
think back to my own brief high school sports career. The coach
would know if I was dogging it realtime. He wouldn't have to
accuse me; he would have the data.
In the automotive sector, wearable technology can sense
early signs of driver fatigue, prompting the wearable device or
vehicle to send alerts or another type of warning to the
driver.
And in the retail industry, retailers can use wearable
technology to customize product offerings and better meet
consumer preferences and demand.
The appeal of this technology is pervasive because of what
it can offer in terms of operational efficiencies, public
safety, improved performance, and cost savings for every
business type and size. The potential for wearable technology
is virtually limitless.
Much of the excitement surrounding wearables is rooted in
the promise to create new opportunities for economic growth,
economic development, and job creation. Wearables create
economic opportunities by providing insights into an
individual's behavior and driving changes to that behavior to
improve job performance and job execution. This can lead to
increased productivity and efficiency, helping a business
reduce waste and optimize resources.
The technology also facilitates smarter decisionmaking,
increased information-sharing, and augmented interactions
amongst workers. The productivity gains achieved through these
operational advances are fundamental to a stronger and more
prosperous economy.
As with all connected technologies, there are important
privacy and security considerations that should be part of
today's discussions. Unlike other connected things within the
Internet of Things, such as connected thermostats,
streetlights, and refrigerators, wearables are physically worn
by users and capable of extracting highly personalized
information about an individual's activities or whereabouts.
In our examination of these issues, it will be important to
understand how consumers are using these technologies and how
they will be protected while preserving the flexibility and the
ingenuity of the innovators that are driving this market
forward.
Once again, I want to thank our witnesses for taking the
time to inform us about the applications and future potential.
I recognize the gentleman from New Jersey, 5 minutes for an
opening statement, please.
[The prepared statement of Mr. Burgess follows:]
Prepared statement of Hon. Michael C. Burgess
Good morning and welcome to another installment of our
Disrupter Series hearings. Today we will examine wearable
technologies and how they are disrupting traditional business
processes and transforming the ways that consumers engage in
commerce.
Last year we held a hearing to examine the Internet of
Things--a network of Internet-connected physical objects that
gather information in real-time to predict circumstances,
prevent problems, and create opportunities. As that market has
matured, wearable technologies, or ``wearables'', have come to
represent a growing segment within that digital ecosystem of
connected devices, applications, and platforms. The defining
characteristic of wearables is that they offer consumers and
businesses access to real-time, highly personalized information
through products and devices that are physically worn by the
user.
Many of us are familiar with the fitness tracking bands on
the market today. They glean information about an individual's
physical activity habits, and are intended to motivate users to
improve their fitness, wellness, and health regimens. While
inspiring better fitness habits is a positive use of wearable
technology, the societal and economic benefits of these
products and devices extend far beyond those applications.
We are just beginning to see the potential of wearable
technology across multiple economic sectors in industries such
as energy, health care, transportation, retail, professional
sports, manufacturing, education, and many others.
In manufacturing, for example, wearables can provide
businesses with greater insight into the daily operations of
their production practices, workflows, and supply chain
processes. In sports, coaches and athletic trainers can use
wearables to better assess player recovery time and inform
return-to-play considerations to reducfacebooke the risk of
further injury. In the automotive sector, wearable technology
can sense early signs of driver fatigue, prompting the wearable
device or vehicle to send alerts, haptic feedback, or another
type of warning to the driver. And, in the retail industry,
retailers can use wearable technology to customize product
offerings and better meet consumer preferences and demand.
The appeal of this technology is so pervasive because of
what it can offer in terms of operational efficiencies, public
safety, improved performance, and cost savings for every
business type and size. The potential for wearable technology
is virtually limitless.
Much of the excitement surrounding wearables is rooted in
their promise to create new opportunities for economic growth,
development, and job creation. Wearables create
economicopportunities by providing insights into an
individual's behavior and driving changes to that behavior to
improve job performance and execution. This can lead to
increased productivity and efficiency, helping businesses
reduce waste, optimize resources, and enhance communications.
The technology also facilitates smarter decision-making,
increased information sharing, and augmented interactions among
workers. The productivity gains achieved through these
operational advancements are fundamental to a stronger and more
prosperous economy.
As with all connected technologies however there are
important privacy and security considerations that should be a
part of today's discussion. Unlike other connected things
within the Internet of Things ecosystem, such as connected
thermostats, street lights, and refrigerators, wearables are
physically worn by users, and capable of extracting highly
personalized information about an individual's activities. In
our examination of these issues, it will be important to
understand how consumers using these technologies will be
protected while preserving the flexibility and ingenuity of
innovators that are driving this market forward.
I thank the witnesses for taking the time to inform us
about the applications and future potential of wearable
technology. I look forward to a thoughtful and engaging
discussion.
Mr. Burgess. I recognize the gentleman from New Jersey, 5
minutes for an opening statement, please.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
Today's hearing gives us an opportunity to look at a
diverse and quickly developing field. Wearable technology, part
of the broader Internet of Things, provides consumers with
capabilities that would have seemed more like science fiction
than reality only a decade ago.
Today, you can buy a wristband that measures UV exposure,
helping you avoid sun damage, or a sensor that sticks to skin
and teaches you how to stretch to alleviate back pain or smart
shoes that give you directions through buzzes to their feet.
Researchers from WINLAB, the Wireless Information Network
Laboratory at Rutgers University in my district, collaborated
to design a wearable that could replace passwords for head-worn
devices by authenticating the user by measuring the unique
movements of the head in response to audio stimulus. WINLAB
reports that the device can accurately tell that the right
person is wearing it at a rate of over 95 percent through tiny
movements of the head alone.
Many wearables measure biometric data, giving consumers
access to a wealth of personal information. Not long ago, if
someone wanted to know their heart rate, quality of sleep, and
calories burned, they would have had to be hooked up to a
roomful of equipment. Today, they can simply put on a small
bracelet and have all of that information at their fingertips.
And these are amazing advancements, but with these new
innovations come new vulnerabilities. For example, when a
doctor measures your heart rate, that information is protected
from unauthorized disclosure. Those privacy protections do not
apply to the same information collected through most wearable
devices. And there are no standards for encryption or other
security measures to protect the data wearables collect.
Long and complicated user terms and agreements have further
compounded the problem. Some include clauses saying that the
data they collect belongs to the company, not to the user. Most
of us do not read every online user agreement word for word, so
many wearable users are surprised when they learn that they may
not own their own data.
Whether by sale or by data breach, the release of personal
information from wearables can have serious implications.
Employers, credit agencies, and health insurers can all use the
data collected from wearables to draw inferences that may have
a negative effect on the user.
As with other Internet of Things products, by building in
security from the beginning, manufacturers of wearables can
more effectively prevent hackers from gaining access to a
device or the data it collects. By building in privacy,
consumers can have confidence in these products and buy them
knowing that highly personal information will not be shared
without their consent.
So I look forward to discussing the many great innovations
in wearable technology today, but with these innovations we
must also devote serious attention to how we can better protect
consumers and their personal information in this space. When
privacy and security are made a priority, both businesses and
consumers benefit.
I yield back, Mr. Chairman.
Mr. Burgess. The Chair thanks the gentleman. The gentleman
yields back.
The Chair would inquire of the gentlelady from Illinois if
she wishes to make an opening statement.
Ms. Schakowsky. I have a short statement.
Mr. Burgess. You are recognized for 5 minutes.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman. And I really
apologize for being late. I thank you, and I thank our panel.
So wearable devices have taken off in the last couple of
years. I am sure there are a lot of people in this room who are
wearing a Fitbit or some similar device. I happen to have lost
mine. It fell off the first week I got it, and I haven't
replaced it.
Companies have developed numerous applications in medical
testing and health monitoring. For consumers, wearables mean
convenient collection of detailed data. There is clearly great
potential here, but as I am sure has been said before--and I
know Chairman Pallone did--we need to make sure the consumers
fully understand what they are getting into.
Let's talk about health applications. When a hospital
collects your health information, that personal data is
protected by HIPAA. Your healthcare provider is not allowed the
share that information with marketers or send it to your
employers without your consent. However, those privacy
protections don't apply to most wearable devices.
In addition, consumers have been surprised to find that
they don't own the data collected through their devices. Last
year, Lark, a company that created a sleep coaching wristband,
stopped supporting its device and the related app. Lark's
customers lost easy access to their data. At the same time,
Lark's privacy policy stated that it could sell this personal
information if it is acquired or goes bankrupt.
This matters to consumers, because some of the data they
collect through wearable devices is very valuable. Minute-by-
minute data from a fitness tracker can be enough to determine
your gender, age, stress level. That is why it is vital for
wearable device companies to adequately protect consumer
information.
Last year, the Federal Trade Commission issued a report
concluding that companies making these devices must adopt
reasonable security measures. The FTC also recommended that
Congress enact baseline consumer privacy legislation for such
devices. In today's hearing, I would like to delve deeper into
these privacy concerns as we consider how today's laws must
evolve to fit tomorrow's technology.
Here are some basic principles that I think we should start
from. Consumers should be able to expect that a company
collecting their personal data is protecting this personal
data. Consumers need to be informed what, how, and when data is
shared. In addition, they need to know if they may lose access
to information they have collected through a wearable device.
Technology is developing rapidly. We need to ensure consumer
protection keeps pace.
With that in mind, I would like to welcome our panelists.
Your testimony is important to informing this discussion.
I yield back.
Mr. Burgess. The Chair thanks the gentlelady. The
gentlelady yields back.
This concludes member opening statements. And the Chair
would remind members that, pursuant to committee rules, all
members' opening statements will be made part of the record.
We do again want to thank our witnesses for being here, for
taking their time to testify before the subcommittee.
Today's witnesses will have the opportunity to give opening
statements, followed by a round of questions from members. Our
witness panel for today's hearing will include Mr. Thomas
Bianculli, Vice President for Enterprise Technologies at Zebra
Technologies--you guys got out of order--Meg Burich, Director
of Commercial Development and Marketing for Adidas Digital
Sports; Suresh--help me pronounce your last name.
Mr. Palliparambil. Palliparambil.
Mr. Burgess. Suresh, welcome to the hearing.
Mr. Palliparambil. No problem.
Mr. Burgess. The Director of Sales and Business Development
for NXP; Mr. Scott Peppet, Professor of Law at the University
of Colorado School of Law; and Mr. Doug Webster, Vice President
for Service Provider Marketing at Cisco.
We do appreciate you all being here with us today.
We are in the middle of a vote on the floor, but, Mr.
Bianculli, I think we have time if you would like to give your
opening statement. Then we will take a brief recess and come
back and resume.
You are recognized for 5 minutes, please.
STATEMENTS OF THOMAS D. BIANCULLI, VICE PRESIDENT, ENTERPRISE
TECHNOLOGY OFFICE, ZEBRA TECHNOLOGIES; MEG BURICH, DIRECTOR OF
COMMERCIAL DEVELOPMENT AND MARKETING, ADIDAS DIGITAL SPORTS;
SURESH PALLIPARAMBIL, AMERICAN SALES AND BUSINESS DEVELOPMENT
DIRECTOR, NXP; SCOTT PEPPET, PROFESSOR OF LAW, UNIVERSITY OF
COLORADO SCHOOL OF LAW; AND DOUG WEBSTER, VICE PRESIDENT,
SERVICE PROVIDER MARKETING, CISCO
STATEMENT OF THOMAS D. BIANCULLI
Mr. Bianculli. Thank you, Chairman Burgess, Ranking Member
Schakowsky, and members of the subcommittee, for the
opportunity to testify before you today.
I am the Vice President of the Emerging Technology Office
at Zebra Technologies Corporation in Lincolnshire, Illinois.
With nearly $4 billion in annual revenue, Zebra is a global
market leader in a number of advanced technologies, including
the Internet of Things and the related area of wearable
technology.
While many Americans may not recognize Zebra by name, they
come into contact with our solutions every day. For example,
the barcode labels that are prominently featured on airline bag
tags, express delivery packages, and pharmaceutical
prescription bottles are often generated by a Zebra barcode
label printer and tracked and managed by Zebra scanners, mobile
computers, and wireless infrastructure.
Our pioneering technology vision and trusted enterprise
solutions, particularly our wearables that are the focus of
today's hearing, are dedicated to helping business, Government,
and nonprofits make smarter decisions and take smarter actions
by providing them with realtime visibility and mission-critical
information in an ever-more-efficient manner.
Zebra commends the subcommittee for hosting this series of
hearings on technological disrupters. Mr. Chairman, I will
stress five key points.
First, let me begin with Zebra's role in the wearable
market. Zebra's leadership in this market derives from our
recreation of the overall wearables product category nearly 25
years ago. With the launch of our wrist-mounted terminal and
ring scanner in 1992, we invented the first handheld laser
barcode scanner, the first barcode printer, and the first WiFi-
enabled mobile computer. We remain at the very forefront of
breakthrough innovation as we continue to create wearables that
go from the wrist and hand, as you see before me, to lanyards
and heads-up computing solutions.
Second, we commend the subcommittee for its recognition of
the wearable category as a disrupter. Wearables earn this
status because they empower workers with total hands-free
mobility in a manner that also provides instant access to
business-critical information.
Instead of needing multiple devices that are all directed
by hand, wearables enable new levels of productivity by
providing employees with tools that marry natural language
interaction with immediately available information, be it
visual, verbal, or augmenting the user's physical reality.
Imagine, Mr. Chairman, a simple verbal command that
provides a worker with full access to data and subject matter
expertise in realtime. Imagine, further, the same worker using
another verbal command to respond back and transmit data or
pictures to a main office, aremotely located colleague, or to
another machine. Now imagine having that ability while
suspended high above the ground repairing the electrical grid
or working inside an aircraft, no hands required. Wearable
technology makes it happen.
Third, I would like to offer a quick look into the future.
Awareness and acceptance of smartphone technology has grown at
a tremendous pace and has built the foundation for wearable
device adoption. Current technologies will continue to evolve
and revolutionize the way people instinctively work with
computers and intuitively interact with their virtual or
augmented reality environments. It is not an overstatement to
say that the possibilities of these devices are limitless.
Over the next few years, they will get smaller with
technological improvements in computing, analytics, power, and
display optics. As part of this trend, we will continue to
advance our portfolio of wearables. We are presently focused on
developing an augmented reality wearable system for true hands-
free application, providing a future solutions approach for
uninterrupted workflow and opening up the possibilities of what
realtime, eye-level information can do.
Fourth, the economic benefits of wearables come from its
significant impact on productivity across virtually every
industry and economic sector. This is because visual computing
or the ability to work hands-free while receiving eye-level
information will drive a major paradigm shift in how we, as
humans, directly interface with computers. Visual or hands-free
computing will enable this kind of frictionless, uninterrupted
workflow. Even a small increase in the efficiency of
manufacturing or warehouse workers through wearables could
bring a profound economic benefit to our economy.
Fifth and finally, we urge Congress and the administration
to take a light touch where wearable technology is concerned,
for the same reasons that many in industry as well as in
Congress and the administration have advocated for a light
regulatory approach to the Internet of Things.
The primary challenge is to allow for the rapid
development, deployment, and subsequent advancement of
wearables in a manner that simultaneously addresses concerns
over data, security, and encryption. The goal is to encourage
technologies which provide enhanced, secure, and realtime
visibility and access to information in a way that empowers
workers to undertake more effective and timely decisions and
actions.
To this end, Mr. Chairman, Zebra stands ready work with the
subcommittee inadvancing policies which keep the United States
at the leading edge of this exciting technology. And I again
thank you for the opportunity to provide our views on
wearables, and I look forward to your questions.
[The prepared statement of Mr. Bianculli follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Burgess. The Chair thanks the gentleman.
Because of the vote, we are going to go into recess.
Look, I want you all to know what you are up against with
this congressional panel. Look at his notes, all stuck together
and handwritten. You are down there with all of these fantastic
technological devices, and we are kind of in the Stone Age.
But thank you for your forbearance. We are going to go
vote. We will reassemble as soon as the last vote is over.
Mr. Bianculli. Thank you, Chairman.
[Recess.]
Mr. Burgess. I thank everyone for their forbearance. The
subcommittee will resume.
We will resume with the testimony of Ms. Meg Burich from
Adidas Digital Sports.
STATEMENT OF MEG BURICH
Ms. Burich. Good morning, Chairman and members of the
subcommittee. Thank you for having me.
Mr. Burgess. If I could just ask you if your microphone is
on?
Ms. Burich. It is on.
Ms. Schakowsky. Pull it a little more closer.
Ms. Burich. Yes. OK. I am Meg Burich here on behalf of
Adidas Digital Sports, and I am Director of Marketing and
Commercial Development.
Adidas Digital Sports is the business unit within Adidas
that drives the development of wearable technology. Our team
consists of technology experts in the fields of data science,
experience design, industrial design, algorithm development,
software and hardware engineering. We have centers of
excellence located in Portland, Oregon, Chadds Ford, PA, and
Herzogenaurach, Germany where our headquarters is.
We have been active in the wearable space for over 15
years, with the first commercial launch of sensor-enabled
footwear in 2001, and the introduction of real-time coaching
under the Adidas miCoach brand in 2008. MiCoach offers real-
time coaching to users, enabling them to achieve their goals by
training with heart rate, speed, and distance to run faster and
further.
Today, we are repositioning our wearables offering to
address the growing opportunity for the larger population to
benefit from this technology. All these products are enabled by
companion software applications designed for mobile or desktop.
I am going to go through three examples to demonstrate the
range of applications for wearables in sports, fitness, and
health, and the first one will be related to schools and school
children.
Adidas is partnering with Interactive Health Technologies
to make fitness personal for kids in phys ed classes. Instead
of competing with each other, kids can wear an Adidas heart
rate monitor that uses simple color zones to guide them through
a fitness challenge. Wearable technology gives every kid the
chance to know the good feeling that comes from a successful
workout.
Next, I would like to cover the use of wearables in
competitive and professional sports. We have a system. This is
the jersey that athletes wear on the training field. Coaching
software is coupled with this system, and coaches can see in
real time what results are coming from the athletes on the
field. So instead of just driving them to train as hard as they
can, they are really trying to train them in a smarter way, and
in professional sports, there is kind of a fine line between
peak performance and injury, so you want to really have this
data to help you tell when you are really stressing an athlete
versus when you are coaching him to the level where he can
perform better.
Adidas uses in-depth experience with professional athletes
and coaches to understand the cutting edge of performance. We
also believe that all athletes and fitness participants deserve
the best coaching, so we take what we learn working with the
elite athletes, and then we translate that to smart systems for
consumers, because consumers don't always have the option to
hire a professional trainer. So we are making those consumer
systems smart systems based on what we know about the cutting
edge of coaching.
The third use case that I am going to go into focuses on
women, and this is kind of a pivot for us in terms of how we
see the market and the opportunity. Today, we know that women
are managing their own health, and they have multi-generational
influence. They are supporting healthcare decisions of their
families and of their parents sometimes, so they are really
kind of that officer of health.
These women are also the main users of fitness apps and
devices. They are participating in digital social communities
that help them stay engaged in their fitness routine. They may
be going for a daily walk, getting ready for a 5K, or training
for a marathon, but we have coaching solutions that will help
them achieve their goal.
We have been talking a lot to women and researching their
needs to understand what they are looking for, and basically,
women are saying step counting is not enough. When they have a
step counter, they either lose it or they drop it within 3 to 6
months. In fact, nearly 40 percent stop using it after 6
months. So we know they are looking for insights beyond how
many steps they took. They really want the picture of their
whole health, and managing it in a proactive way is important
to them, so they are looking for tips on nutrition, they are
looking for exercise tips, they are looking for guidance for
how much to move during the day, how much they should sleep,
and how that connects to their whole health and wellness.
So we know it is hard to stick to an exercise routine, and
we are looking at how we can help women through digital
wearables and digital experiences to stick with their exercise
routine throughout their life, because we know that has an
overall impact on health, disease prevention, and keeping
people well. So we really believe that wearables is in its
infancy, and wearables 2.0 is where we need to go, connecting
consumers to health care and keeping them kind of on the
wellness side. Thank you.
[The prepared statement of Ms. Burich follows:]
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Mr. Burgess. The Chair thanks the gentlelady, and the Chair
now recognizes Mr.--try again, Palliparambil.
Mr. Palliparambil. You got it.
Mr. Burgess. Five minutes.
Mr. Palliparambil. Thank you.
Mr. Burgess. Plus the 1 minute it took me to pronounce your
name.
STATEMENT OF SURESH PALLIPARAMBIL
Mr. Palliparambil. Thank you. Good morning, Chairman, and
members of the committee. Thank you for holding this important
hearing on wearable technologies today. My name is Suresh
Palliparambil, and I am the America's Director of Sales and
Business Development for NXP's secure identification solutions
business line.
NXP helps to make today's ideas into tomorrow's exciting
reality as the supplier of end-to-end solutions that range from
semiconductor ICs to infrastructure components and secure
applications.
We are the inventor of MIFARE and the co-inventor of NFC,
the wireless proximity technology bringing new levels of
simplicity and security to interactions of all kinds. NXP
powers and enriches the IoT as a high-level contributor to
standards bodies, including the FIDO Alliance, whose work
promises to usher in a new era of online security, making the
need to remember complex passwords a thing of the past.
As a proud employer of nearly 7,000 staff members in the
U.S., NXP is committed to security leading-edge design and
bringing products to the domestic market that have a
substantial share of domestically built content and local value
add to end products in which NXP plays a role.
Our company is dedicated to leveraging all of those
resources and partnering with America's leaders to invest in
the country's future and safer, more convenient lives for its
citizens. From rockets in the air, to cars on the road, and
cards in your wallet, our innovation at NXP has been integral
to America's past and the success it enjoys today. As an
important legacy as that is, we at NXP are looking to the
future in building a better, easier, and safer tomorrow with
exciting leading-edge technologies of utmost quality.
This is no small task. The rapid expansion of public and
private data networks, the rise of social media, and the mass
deployment of smart objects across the Internet of Things, IoT,
have connected us in ways we didn't think possible two decades
ago. They have also left us open, vulnerable, and exposed.
To counteract these vulnerabilities, NXP is focused on,
one, avoiding unauthorized access in public and private areas
of the IoT, developing tamper-resistant secure element devices,
and perfecting the end-to-end solution that power the new,
often wearable technologies will use to improve and simplify
health care, entertainment, transportation, and the rest of our
everyday lives
Online security can mean different things to different
people, but the task of keeping data private and ensuring cyber
safety essentially comes down to one thing, access.
NXP has made authentication a top priority for more than 20
years and has continually reached new levels of performance by
making algorithms more resilient, and by increasing the
robustness of secure elements. We are recognized as leaders in
authentication, known for our ability to deliver trusted
security in many of the world's most high-profile applications.
NXP produces chips that have their own unique fingerprint
based upon their crystalline structure, so no two chips are
alike, preventing cloning. NXP's strength in authentication is
closely tied to eGovernment and banking. With roughly 80
percent market share of the electronic passport market, our
technology is trusted by more national governments to increase
security while reducing wait times at international borders. We
are helping governments expand the use of electronic documents,
and our repeated success with large-scale implementations of
electronic IDs, public transportation, and multi-application
cards, which combine payment, transportation, identification,
and other services on a single card make a trusted partner to
municipalities, transit authorities, and banking and payment
organizations worldwide.
NXP brings a comprehensive set of skills to each
authentication challenge and leverage outstanding relationship
with broad spectrum of security leaders to develop and deliver
tailored solutions that address needs in the market. The
evolution in wearable technology is all about enhancing users'
lives and making everyday functions simpler and easier so we
can concentrate on the things that matter.
NXP creates the security, connectivity, and circuitry
solutions that enable these wearable devices their convenient
applications in today's society and the innovative ways they
could be used in the future.
Many applications for wrist-based wearables are in place
through entertainment venues and in the healthcare industry.
The most popular example include keyless entry, smartwatches
for luxury cars, Disney's RFID wristband, the MagicBand, an
all-in-one device that serves as a room key, a park ticket to
get in line, and also the payment, too.
There are already many existing areas where smartwatches
could improve users' lives. Today's keyless entry for vehicles
will probably move to a wearable platform, and in the future,
watches will act as the key for an entire car. In fact, most
luxury car makers already offer their own wristwatches. It is a
great channel to help build their brand recognition.
In the home environment, smartwatches will interact with
communication protocols such as ZigBee and Bluetooth, allowing
users to control the home environment. Heating, lighting, AV
equipment and more, will all be controlled by simply making a
gesture with an arm or using apps installed on the watch. Soon,
the smartwatch will be the only key anyone needs, the
technology passport that gives access and control to your
entire life.
NXP is working hard to simplify lives of citizens to secure
transactions in the connected world, and we currently have the
following tools and accomplishments in place to securely
connect the next generation devices. We have a smart
microcontroller platform; we have MIFARE, the world's leading
contactless technology platform; Near Field Communications,
which is a wireless proximity and contactless technology; and
then high-level contributions to standards bodies, including
the FIDO Alliance for online security.
Thank you for the opportunity to participate in today's
hearing. Thank you very much.
[The prepared statement of Mr. Palliparambil follows:]
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Mr. Burgess. The Chair thanks the gentleman. Mr. Peppet,
Professor Peppet, you are recognized for 5 minutes for your
opening statement, please.
STATEMENT OF SCOTT PEPPET
Mr. Peppet. Chairman Burgess, Ranking Member Schakowsky,
members of the subcommittee, I appreciate the opportunity to
talk to you about wearables. I am a Professor of Law at the
University of Colorado Law School in Boulder, where I work on
markets, technology, and privacy. I should say I am also a
member of the board of directors of Anixter International, an
Illinois-headquartered company, so my remarks today are in my
own capacity, and in no way represent Anixter or anyone else
I also want to say I am involved with four entrepreneurship
and innovation centers: one in Colorado, one at Kellogg in
Illinois, and one at the University of Michigan, and one
actually in Israel at a university called IDC. And in that, in
those roles, I have worked with student teams creating
startups, many of whom are interested in or working in the
wearable space. So I sort of got various perspectives on this
set of issues.
These are exciting technologies, and I agree with my fellow
witnesses who have said how much innovation is happening in
this space, and I agree with all of that and just want to focus
on three things in terms of privacy and security that I think
deserve attention.
The first is one that you have already mentioned, which is
data security, and I think there are two issues in data
security. The first is, is the device itself secure? And that
is a technical matter. Mostly, we know from research, that many
of these devices have not been secured in the first wave of
consumer devices, for example, and the reason is obvious: They
are small, they are generally designed to be relatively
inexpensive. It is hard to pack data security measures into a
thing with a small processor, very limited connectivity, they
are hard to update because they don't talk to the Internet that
frequently.
And so it has been a challenge, and the FTC has worked with
companies, continues to work to try to push companies in that
space, or in the security issue, and I think we will see more
innovation there to try to resolve some of those questions.
The second data security issue is actually not about the
device, it is about the data. What happens to these data once
they are off the device, they are stored in a company's cloud
server somewhere, and someone hacks into that server. At the
moment, if your credit card information is stolen from Target,
for example, as you have all heard about that example, Target
has to say, Hey, we were hacked, and they have to notify the
public. That is our market-based response to data security in
this country is to say, Listen, give consumers information,
they will then choose with their dollars or their feet whether
they want to go back to that store.
In all but one State, and Mr. Chairman, it is the great
State of Texas, only Texas' data breach notification statute
would actually apply to biometric data coming off of most of
the wearables that we are talking about in the consumer space.
The rest of the States really have not yet seen the risk that
these incredibly sensitive data, as you said, pose if they were
to be hacked, which I think is an odd and sort of unfortunate
anomaly.
To the extent that Congress ventures into the data breach
notification area, that is something that it should consider.
So that is security.
The second thing I will talk about is use, and I will just
give a very simple example. There are lots of different devices
at the moment being used in hospitals that keep track of
whether a hospital worker washes his or her hands when they use
the restroom. What they do is they have a lanyard on, you know,
or some kind of ID badge, and there is a device at the sink and
it literally just says how long did they spend standing in
front of the sink? And then if they approach a hospital bed and
they haven't washed their hands properly, their lanyard starts
to buzz and say, hey, wait a minute, and it records that they
have done that, and that is not a good thing.
That is a great idea, right? I think that is a terrific
idea. I hope that every hospital I ever use has that, and
employees, consumers, whoever we are talking about, need to
know what those kinds of data are being used for. So for
example, there might be no issue at all for a hospital or an
employer using the data coming off a wearable for the obvious
use that it was designed for, but I would guess that if one of
the hospital employees discovered that their hand-washing
habits had leaked out into data brokerages and was being used
in credit decisions or insurance decisions or any other kind of
decisions in the economy, they would be both surprised and
unhappy. So the use issue is a very complicated one.
And the last one I will say something about is consent.
Consent is hard, particularly in the consumer space, for these
little devices. A study that I did, I brought 20 of these very
popular devices, I opened all the boxes, and I looked inside.
There is almost never any privacy information. I didn't test
Adidas', but there is almost never privacy information in the
box. Sometimes you get the privacy information when you
download the app that pairs with the device. Often, you are
sent to the Web site or you have to go to Web site of the firm,
and often, when you get there and you read their privacy
policy, it doesn't apply to the data coming off the device. It
applies to the use of the Web site.
So at the moment, we are in a bit of a backward situation
on how to give users and consumers, in particular, good
information about these devices. Is the device information
protected? Who owns the data? Can users go in and delete their
data? Many have discovered that they can't, so their fitness
data is being stored in the cloud somewhere and they say, I
don't want to use this device anymore. They didn't just lose
it. They affirmatively decided they don't like it anymore, and
they say, I want to get my data back. I don't want you to have
it anymore.
Many companies actually will not permit that or permit
editing of this data. And most important, who is the data being
shared with? Can it be sold in a bankruptcy, in an acquisition,
or just in general?
So again, the FTC has been working with industry to try to
come up with some guidance on those issues, but those consent
questions are very difficult at the moment.
I will stop there. Thank you for allowing me to testify.
[The statement of Mr. Peppet follows:]
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Mr. Burgess. The Chair thanks the gentleman. Mr. Webster is
recognized for 5 minutes for your testimony, please.
STATEMENT OF DOUG WEBSTER
Mr. Webster. Thank you, Mr. Chairman and members of
subcommittee. The Internet has revolutionized the world around
us, transforming the way we use and share data to communicate,
to collaborate, and consume entertainment and information. Yet,
the next wave of technology isn't about moving data from one
place to another, it is about connecting physical objects to
the Internet on an unprecedented scale.
Now, increasingly, the things connected are the shirts on
our backs, the glasses on our foreheads, the watches on our
wrists, and the jewelry around our necks, and collectively,
these emerging devices are referred to as wearables.
To be sure, some wearables are mere novelties. However,
many others, like the Fitbit or Apple watch, are improving our
health and wellness by tracking our daily activities, and the
most advanced wearables have the power to save lives and
improve patient outcomes. For example, there is an FDA-approved
heart rate monitor that provides precise information from
cardiac patients to their physicians between visits to the
doctor's office.
Another device looks like a typical smartwatch, but in
reality, it helps epileptic patients manage their stress and
alert family members and physicians when a convulsive seizure
happens.
And a third, a prototype in development, is a glucose-
monitoring contact lens that allows diabetics to monitor their
blood sugar continuously, and the possibilities are endless
here. I mean, virtual reality goggles that provide for
immersive education, connected football helmets to alert the
team physical to a possible concussion, GPS-enabled slippers to
make sure an elderly relative is getting out of bed and doesn't
wander off, and accessories that make mobile payments faster
and easier.
Now, the one feature that unites these devices is their
wireless connectivity to the Internet. Each contains a tiny
radio transmitter that sends data to a receiving device, such
as a WiFi router or a smartphone, and then the data is
transmitted over an IP network to a server or data storage
facility.
Now, once online, software allows you to visualize and
analyze the data to help improve decisionmaking, whether it is
information about your daily run, your average number of steps
per day that gauge your fitness progress, or simply storing
videos so you can decide whether to post it at a later date.
Now, at Cisco, we have been monitoring the growth of
wearables for 3 years, and it is fair to say that these devices
are poised to take off. Here is the forecast from our most
recent Cisco mobile visual and networking index report. By
2020, we forecast approximately 600 million wearable devices
globally, up from 97 million in 2015.
Now, fewer than 15 percent of these devices are expected to
be directly capable of transmitting on a cellular network.
Most, instead, will use WiFi or Bluetooth to connect to the
Internet. Now, the data generated by wearables represents a
tiny trickle in the larger stream of mobile data, mostly
because only a few of these devices are being used to transmit
video.
Traffic from wearables is forecast to account for only 1
percent of total mobile data traffic by 2020, even as the
amount of data generated by each device is expected to grow.
Now, North America has a 40 percent share of global
connections today, and it is because we are early adopters, but
that falls to 30 percent by 2020 as Europe and Asia catch up
with us. By 2020, there are forecasts to be over 180 million
wearable devices in use in North America, compared to about 40
million today, representing a 4 \1/2\-fold increase in just 5
years.
Now, given this growth, it is important for policymakers to
understand the issues affecting wearables. We need to ensure
that radio spectrum is available with the right set of rules to
make sure these devices can connect to the network, to
encourage policy that support investment in the service
provider networks that are needed to transport data to the
Internet.
We need policies that encourage startups and small
companies by ensuring access to venture capital to tax policies
that support research and development, as well as encouraging
more young people to enter careers in science, technology,
engineering, and math, also known as STEM. And we need to
ensure that device manufacturers and applications developers
understand privacy and security threats and take the steps to
protect their devices and the personal information of
consumers.
Here is the bottom line: Wearables represent a measurable
component of the mobile landscape, and they are projected to
continue to grow. They hold incredible promise to improve our
lives. Public policies that encourage the development of this
category should be supported so that the United States can
continue to be a leader in this next chapter of the Internet.
Thank you for your attention, and I look forward to
answering your questions.
[The statement of Mr. Webster follows:]
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Mr. Burgess. The Chair thanks the gentleman. Thanks to all
of our witnesses for your testimony. We will move into the
question-and-answer portion of the hearing.
I would begin the questioning this morning by recognizing
Mrs. Brooks from Indiana for 5 minutes for questions.
Mrs. Brooks. Thank you, Mr. Chairman. Thanks for holding
this hearing. I happen to be one of those brand new users, just
acquired a couple of weeks ago. I kind of wish I had been a
part of this hearing before I bought this. However, I am
excited to be part of the wearable technology consumer base,
and, in fact, bought several of these for my parents and in-
laws for the holidays.
And so we often think about fitness trackers when we hear
wearable technology, and so we are certainly learning a lot,
and when, in preparing for this hearing, learning about
innovations in manufacturing. In Indiana where I am from, is a
heavy manufacturing State, one of the top manufacturing States
in the country.
And so, Mr. Bianculli--I am not sure I caught----
Mr. Bianculli. Bianculli, yes.
Mrs. Brooks [continuing]. Bianculli, what kind of cost
savings--can you talk a little bit more about wearables with
respect to manufacturing?
Mr. Bianculli. Sure.
Mrs. Brooks. What kind of cost savings can be expected in
this area, and how do we achieve this in the manufacturing
sector?
Mr. Bianculli. Yes. Absolutely. Thank you, Congressman.
Looking in the manufacturing sector and breaking it down
really into kind of three major components: raw materials
coming into a manufacturing facility, those raw materials being
processed in the outbound side of that where the goods are
sorted, picked, packed, loaded, and then transported down the
supply chain. Some of the early adoption we are seeing for the
kinds of wearables I spoke about, which is basically being able
to capture and get the right information in front of a worker
in real time have been on the third category, picking, packing,
sorting.
Think about an eCommerce order that is being built, think
about an order that is coming from a manufacturer to a
distribution center, being able to sort the goods, load those
goods, be able to optimize the volumetric efficiency of those
goods onto a trailer or onto a pallet for distribution. A lot
of these cases, we are starting to see be adopted or using
wearables to seamlessly present information in front of the
user as they are going through their workflow to be able to get
the right goods in the right place, to be able to optimize the
way they are loaded onto vehicles, and to be able to get them
down and through the supply chain faster than they have
previously.
So it is really about worker productivity. I use the word
in my testimony about frictionless workflow, so think about it
as taking the--literally taking the friction out of the
workflow and allowing workers to simply get their job done and
let the technology take a back seat and just augment their
capabilities
Mrs. Brooks. Thank you. Ms. Burich. So my daughter was a
college athlete and--but many--several years ago, and so none
of this technology. In fact, when she was in youth soccer, that
is when Under Armour came to be, OK. So just talking about that
type of advancement during this time period and now all of this
wearable technology. What do you anticipate--how do you
anticipate it being used from the youth--the youth sector all
the way up to the professional athlete sector?
Ms. Burich. Yes. We look at the market in terms of like
team sports and individual sports or individual----
Mrs. Brooks. Can you turn your mike on, please.
Ms. Burich. We look at the market in terms of like team
sports, organized sports, which is what you are referring to,
and then individual use for fitness, so where we have our elite
system, it is very sophisticated, and there is definitely an
opportunity to translate it for youth sports, and I would say
recreational team sports to high school, even colleges who
can't afford the solution today. So that is a development and
an opportunity for growth, and again, it is something that the
technology and capability is there and it should be accessible
to more--to broader population.
And then, I think, just connecting that down, there is
probably--it turns into more of the individual use case where
you want kids in phys ed to be using technology so that it is--
they are not--so that you are giving them the right amount of
exercise for their fitness condition, and you are not
overstressing them.
Mrs. Brooks. And these kids at all ages are so tech savvy
from a very, very young age----
Ms. Burich. They like it.
Mrs. Brooks. --so they are going to love this.
Mr. Webster, just shifting gears very briefly, you talked
about the spectrum. Are most wearable devices operating on
unlicensed spectrum or licensed spectrum, if you know, and
could the spectrum be an obstacle hindering widespread adoption
of these devices? We are getting ready to have an auction with
respect to the spectrum. Can you just talk a little bit more
about the spectrum issues?
Mr. Webster. Yes, ma'am. Our forecast indicates about 15
percent of all wearables will directly be connected to the
Internet that would be using a license spectrum. The vast
majority or 85 percent of them will be connected via unlicensed
spectrum to the respective Internet-connected device.
Now, it is important to know that wearables is just one
small part of an even larger Internet of Things----
Mrs. Brooks. Right.
Mr. Webster [continuing]. Initiative, and so when you take
that all en masse, then absolutely, the importance of
continuing to increase the amount of license and unlicensed
spectrum will be key to help really make this industry segment
that is so beneficial to so many continue to prosper.
Mrs. Brooks. Thank you. Thank you all for your testimony. I
yield back.
Mr. Burgess. The gentlelady yields back. The Chair thanks
the gentlelady. The Chair recognizes the gentlelady from
Illinois, 5 minutes for questions, please.
Ms. Schakowsky. Mr. Peppet, I am going to ask you some
questions, but I wanted to first--this idea of kids. To me, I
am a little concerned about that. Is this going to be more
anxiety-provoking, now we are measuring and another way that
you have to look at an electronic device.
I am just wondering if Adidas, in marketing to children,
has talked to child psychologists, to educators on whether or
not, as you say, that forget the awkward, social situation, et
cetera, I mean, that could be a positive. But I feel like now
encouraging kids to measure their every step or their heart
rate or something, I am just wondering if you have done the
kind of research I think would be important before we really
market this to grammar school kids, or middle school kids.
Ms. Burich. I would say in that space, we are providing a
piece of a system that our partners are providing them to the
schools. I don't know how much research they have done in that
area. I know they have done research and they have positive
findings from the use of technology related to attendance and
kids' grades and other things that this is impacting.
Ms. Schakowsky. There is also, you know, a real pushback on
all the testing that is going on. I kind of feel like this may
be in that category. I just wanted to raise that. I don't
immediately accept that this is a great thing to push to kids.
But anyway, let me just raise that and go on to Mr. Peppet,
who actually--and you have a quote at the beginning of your
testimony: Very soon we will see inside ourselves like never
before with wearable, even internal sensors that monitor even
our most intimate biological processes. It is likely to happen
even before we figure out the etiquette and laws around sharing
this knowledge.
In a way, I think I am getting at that with that earlier
question, but here is what I want to get more specific.
In January of last year, the Federal Trade Commission
released a report entitled ``Internet of Things: Privacy and
Security in a Connected World.'' In the report, the FTC states
that there is, quote, a ``need for substantive data security
and breach notification legislation at the Federal level'' and
that such legislation should, quote, ``protect against
unauthorized access to both personal information and device
functionality.''
So in your testimony, Professor Peppet, you say that small
sensor-based connected devices like wearables are inherently
prone to security problems. Can you explain what you mean by
that? What are some of the vulnerabilities specific to wearable
devices?
Mr. Peppet. Sure. Thank you for the question. As I said,
the devices tend to be small, they tend to be designed for a
low price point, and they tend to have very limited computing
and even communication power, and that presents a whole set of
security challenges.
When the first wave of fitness trackers came out, computer
science, you know, security folks discovered very quickly how
easy it was to hack into them, largely because they hadn't
secured whether it was the Bluetooth connectivity or the WiFi
connectivity, whatever they were using, they hadn't secured
those connections. And you know, that was several years ago,
some of those studies were done.
A study came out, I think, three weeks ago, testing some of
the most current and most popular versions of those devices and
found, essentially, the same set of results. So when I talk
with computer scientists, this is a real technical problem
because they are small, and it is very hard to design security
in a comprehensive way.
It will happen, but the FTC, for example, has really been
pushing companies to try harder.
Ms. Schakowsky. So would you say the biggest barrier is
that there are technical issues, or are these wearable
manufacturers taking into account security sufficiently, or
even thinking about it?
Mr. Peppet. I think it is both. Excuse me. I think it is
both on the technical side, as I already described. On the are-
they-trying-hard-enough side, there is at least two problems.
One is a lot of these devices originally have been coming up as
start-ups, and start-ups often, you know, are rushing to market
with a product, may not spend enough time on data security.
The converse problem is interesting, too, which is some of
these devices have come out of very big companies, very
established companies that don't have much experience with the
data stack. They are not IT companies. They are some other sort
of firm, and so when they venture into the tech space--and we
have seen examples of this--they may not have the either
expertise or the depth to build that kind of security.
Ms. Schakowsky. Well, let me ask you this: Get to the
regulatory part. You pointed out Texas. I actually have a bill,
too, that would require breaches to be--also this biometric
stuff and to be--consumers to be reported. Should we follow
Texas' lead in requiring that notification as well?
Mr. Peppet. I think we should. Whether States do it or
Congress does it, I think that consumers should know if their
biometric data or other sensor-based biologic data has been
hacked. I think you would choose between fitness--you know, the
two of you each had fitness devices. I think you might choose
which one you wanted if you knew that one of them, the data had
been stolen. So yes, I think that is something that we should
do for consumer----
Ms. Schakowsky. I am going to submit the rest of my
questions for the record, and I really appreciate all of you.
Thank you. I yield back.
Mr. Burgess. The gentlelady yields back. The Chair thanks
the gentlelady. The Chair recognizes the gentleman from New
Jersey, Mr. Lance, 5 minutes for questions.
Mr. Lance. Thank you. Mr. Webster, we have heard a lot
about the benefits of this technology. Why is it more advanced,
for example, than the smartphone?
Mr. Webster. Well, Congressman, I believe that it is one
part of the broader ecosystem. The sensors can be in a number
of different places and across all different industry verticals
and aspects of our lives. Oftentimes, they will pair it with a
smartphone or another Internet-connected device, and then that
data then will go back to a cloud area or data center where
analytics can be done. So while, oftentimes, the focus on these
types of discussion is on the sensor itself, the reality is it
is the full ecosystem and how they are all interrelated.
And that is why we believe, at Cisco, it is very important
that there is security by design and privacy by design in each
and every one of those parts so that you are able to look at it
in aggregate as opposed to just looking down on one aspect of
the broader ecosystem.
Mr. Lance. Thank you. My son got a--would it be called a
smartwatch?--for Christmas. I don't have one yet, but I am sure
he will inform me about all of this as he does on so much of
the technology, and thank you for the testimony of the entire
panel. It is certainly the wave of the future, and I am pleased
that the chairman and the ranking member have chosen to hold
this hearing, and I yield back the balance of my time.
Mr. Burgess. The Chair thanks the gentleman. The Chair
would note that there are votes on. Mr. Harper, I will
recognize you for 5 minutes for questions, but I do want to
point out to you the Chair has not taken his time for questions
yet, so govern yourself accordingly.
Mr. Harper. With that, I will be brief and respect my
chairman.
Thank you all for being here. Mr. Webster, if I could ask
what types of economic and workplace problems do wearables
solve for business?
Mr. Webster. Congressman, wearables can solve a number of
different problems. We discussed a little bit about the medical
benefits that could be coming about and how it pertains to
workers in hospitals. There is a great example about assembly
line workers that were going through, and because they have
wearables that are giving them step-by-step instructions when
they are doing their quality checks, there is measurably less
defects, and a much greater quality of the products that are
served, and especially as you start going into more complex
maintenance areas, especially safe for remote workers. They are
going to be able to go and create a much higher quality of
step-by-step instructions,
Mr. Harper. Mr. Bianculli, can you comment on that as well?
Mr. Bianculli. Certainly. Yes, we are seeing a host of
opportunities. Something I would call--the movement in the
consumer space has really been around Fitbit and these other--
Adidas as well--around something called quantified self. So
quantifying my behaviors, and what we are seeing in the
enterprise markets is quantifying environments, quantifying
workflow, you fundamentally can't improve what you can't
measure. And so the use cases we are seeing are capturing those
trapped inefficiencies that are there because we are not able
to quantify what is happening in a given workflow, and
basically, you could think about it as, you know, in a large
tier 1 transportation company who might employ, or large
retailer who might employ 300,000 people to restock shelves
every evening in a retail store, understanding the workflow of
each one of those 300,000 workers, which ones are performing in
the best ways possible, and then helping the others to be able
to achieve that level of performance by quantifying the
environment.
Mr. Harper. All right. Thank you very much.
Mr. Bianculli. So lots of opportunities around quantifying
the workflow.
Mr. Harper. Thank you. Mr. Palliparambil, given NXP's
presence in many of the wearable devices on the market today,
do we currently have the infrastructure to support the rapidly
growing wearables market and accommodate multiple users?
Mr. Palliparambil. Yes, sir. Thank you for the question.
Yes, we do, and as you pointed out, the Adidas products and
some of the products from Zebra, so we have the sensors, we
have the micro controllers and the security element that I
talked about in my testimony, which allows to provide that
level of security and often preferences for the consumer is
available today. The technology is available. It is just a
matter of choosing to use it.
Mr. Harper. Thank you.
Mr. Palliparambil. Thank you
Mr. Harper. In the interest of time, I am going to yield
back. The chairman may want to talk. Thank you.
Mr. Burgess. The Chair thanks the chairman. We have been
joined by Mr. Bilirakis of Florida. Mr. Bilirakis, I will
recognize you for questions. You know we have votes on. The
Chair has generously allowed members to go before the
chairman's time, so do bear in mind both you and I have to ask
questions.
Mr. Bilirakis. OK.
Mr. Burgess. I will recognize you for 5 minutes and hope
that you don't----
Mr. Bilirakis. Well, I will yield.
Mr. Burgess. I hope that you don't use all of it.
Mr. Bilirakis. I yield to the chairman.
Mr. Burgess. No, no. I want you to go ahead.
Mr. Bilirakis. OK. All right. I won't use all of it,
promise you.
For the whole panel, what are the incentives for business
and consumers who are not using wearables to start utilizing
wearables and this kind of technology now? And this is for the
whole panel.
Ms. Burich. I can take it.
Incentive. I think there is a lot of data that shows that
when you use a wearable, it can really help you stay on your
fitness journey longer. I mean, there is also data that shows
the more active and fit you are, it prevents disease, it keeps
you out of the healthcare system. So it is a proactive way to
manage your health.
Mr. Bilirakis. Very good.
Anyone else.
Mr. Palliparambil. Sure. So for a regular consumer, beyond
fitness tracking and health, using a wearable for multiple
applications, like payments, transit, and access into
buildings, so logical and physical access. So the same wearable
can, today's technology, allows you to use it for multiple
applications, so beyond life and fitness. And that is the big
advantage that I see, where you can have frictionless movement.
So you have convenience, but you have the security to
conveniently use this in your everyday life.
Mr. Bilirakis. Thank you.
Anyone else.
Mr. Webster. Congressman, the benefits of wearables that I
have seen, in general, really it comes down to a competitive
issue. It is allowing people to be more productive, businesses
to gain more productivity. It is going to help empower those
that are using this is a way that can't be matched in other
ways.
So it is very much a competitive issue, and I think it is
very important that policymakers take the steps to really help
propel this industry forward with the appropriate safeguards
that we can maintain appropriate competitive positioning.
Mr. Bilirakis. Very good. Thank you.
Anyone else?
Mr. Bianculli. Congressman.
Mr. Bilirakis. Yes, please.
Mr. Bianculli. Congressman Bilirakis, I would say we break
this down to two components. One is the input side of
wearables, so being able to collect information about a
particular workflow or what is happening in a given
environment. So that is the input side. Think of that as
Internet of Things sensor connectivity.
And then the wearable instructive part of this, which is
being able to aim somebody in the right direction, being able
to give them information on their wrist or a heads-up
presentation of information while they are going through a
workflow.
So think about the input side as being the Internet of
Things of wearables, and think about the output side as being
an efficient mechanism for being able to consume the data that
is generated by the Internet of Things sensing technology.
Mr. Bilirakis. Very good. Thank you.
Anyone else?
Mr. Peppet. And then just very briefly, another incentive
is that consumers in some contexts are being paid to use these
devices. So many consumers, for example, myself, my healthcare
plan at my employer gives me discounts if I use a wearable and
track my fitness. We have also seen a life insurance company
that has now issued a life insurance policy that gives you a
discount on your premiums if you track your fitness using a
wearable. So there are all sorts of actual direct incentives
being used as well.
Mr. Bilirakis. Very good. Thank you.
And I will yield back, Mr. Chairman. Thanks for the
opportunity.
Mr. Burgess. The gentleman yields back. The Chair thanks
the gentleman.
I will now recognize myself for questions.
And I do, again, want to thank you. This has been a
fascinating hearing. Again, we do have a vote on, but let me
see what I can get through.
Mr. Peppet, you brought up something that actually I am
very interested in.
And, Mr. Webster, obviously, some of the work you do in the
healthcare space. The Affordable Care Act has brought us
insurance with deductibles unlike anything anyone has ever
seen.
But I guess what I am interested in is your comments, Mr.
Peppet, on the monetization of the wearable or the monetization
of the data and the ability to, perhaps, forgive a portion of
the deductible to get the patient's buy-in to the continuation
of the monitoring. So unlike Ms. Burich's population, people
won't drop out of the monitoring, they will continue because
they are getting something positive.
Could either of you speak to that?
Mr. Peppet. That is a very interesting question, and it is
a very interesting domain, because you are exactly right that
ongoing compliance with whatever the medical prescription is
difficult for doctors to get patients to follow through. And
both wearables and other Internet of Things devices, there is a
smart pill bottle that every time you unscrew the cap, it is
connected to WiFi and sends a message to your doctor saying:
They took their pills today.
Those sorts of devices do allow a medical facility,
whatever it is, to extend their reach out to their patients in
all sorts of environments, and that is a potential huge
benefit.
Now, in terms of, I think your question precisely was about
payment or how premiums----
Mr. Burgess. To actually monetize the participation in the
use of a wearable.
Mr. Peppet. Yes, I am not sure I know enough yet to know
how that is going to play out.
Mr. Burgess. But you are experiencing it as a consumer in
your insurance policy. Is that correct?
Mr. Peppet. Yes, you are seeing it in the insurance space,
that is right. And I think what we are seeing is a huge number
of consumers are being introduced to wearables for the first
time in those wellness programs, through that insurance
vehicle.
Now, again, I am actually relatively in favor of that kind
of incentive. The one concern I would express is, for example,
in my own experience with the program that I am involved with,
it was very hard to figure out or to get information about the
use that the data would be put to. So when an employee or a
consumer signs up for that kind of incentive, you want to make
sure they know what they are signing up for.
Mr. Burgess. Mr. Webster, just in general, is there a way
to quantify the benefit from the use of some of these wearables
in the healthcare space?
Mr. Webster. Congressman, I don't claim to be an expert
into the healthcare industry, but, no question, it is a major
vertical where IoT is being leveraged. I think if we start
looking at the quality of care that is able to be delivered, to
the extent of the medical reach, as was mentioned, and also
just, I think, to the well-being, knowing that an elderly
relative is active, for example, or being able to track them
down should they wander off, say, an Alzheimer's patient, I
think there are a lot of benefits there that I think could be
challenging to quantify from a monetary benefit, but all
recognize that it is good from a social benefit as well.
Mr. Burgess. Thank you.
Mr. Bianculli and Ms. Burich, you both have stuff that you
brought with you. Would you spend just a minute and tell us
what you have brought?
Let's start you, Mr. Bianculli.
Mr. Bianculli. Yes, certainly. We had mentioned in the
testimony that we developed wearable categories in the early
1990s actually, particularly for warehouse workers. And that
has evolved over the last 25 years. And so one of the
capabilities we have today is a wrist-mount mobile computer
that is worn on the wrist of a user inside of a warehouse or a
distribution center-type facility; a ring scanner that is able
to image, take images, and also read machine-readable codes,
like bar codes, inside of a warehouse-type environment.
And so a user as they are, for instance, loading a vehicle
with goods that are coming from, say, an e-commerce order
online, they are scanning those packages with that scanner that
is mounted to their hand, loading them into the vehicle. Their
hands are staying free--again, back to the frictionless notion
before--allowing them to get their work done without having the
technology get in the way.
And so this is a probably very early example of application
of wearable inside the enterprise space. We have got the
Bluetooth ring scanner connected to a mobile computer on the
wrist. That mobile computer on the wrist is connected over a
WiFi network back to the IT systems of some of these major
carriers.
The second example, and a more recent one, and one that we
continue to invest in and we are going to see more of over the
next 3 to 5 years, is this notion of eye-level information. So
being able to have a device, as I am showing here, be worn on
the head and then present through a screen which, if you look
at the screen just a couple inches from your eye, it is going
to look like a 15-inch laptop screen floating right in front of
you.
So if you think about working on an aircraft, where you may
have several hundred thousand pages of schematic drawings about
that aircraft, being able to bring up just the right drawing at
the right moment that tells me what procedure I should do.
Similarly, in battlefield and Government applications, where
you might be working on a tank or a piece of heavy machinery
out in the field, not having to deal with multiple devices,
laptops competing with the sun and everything else that can get
in the way, simply be able to pull that information up on the
screen; or be able to, via the camera that is mounted on this,
send the video that I am seeing, the particular piece of
apparatus that I am looking at, back to a remote expert who can
then talk me through a scenario for repair.
Thank you.
Mr. Burgess. Thank you. And thanks for bringing the
peripherals today.
Ms. Burich, can you do the same with your----
Ms. Burich. Yes, sure. And I think our coaches could wear
that while their players are wearing this.
Mr. Burgess. There you go.
Ms. Burich. This the Elite jersey that professional
athletes wear on the field that contains some sophisticated
sensors in this pod that goes in the back of a shirt. And then
there is integrated heart rate sensing.
So in terms of compliance, it is important to put it all
into one wearable that they can put on and not worry about,
that goes through consumer laundry or laundry without any
special care. So that is the Elite.
Mr. Burgess. Wait, wait, wait. You can put that through the
laundry?
Ms. Burich. Without this.
Mr. Burgess. Oh, without that. OK.
Ms. Burich. You can put this through the laundry.
Mr. Burgess. Just in case anyone was wondering, we do have
a vote on. And I have a voting card that I will go put in. I
have actually laundered it twice and it seems to still work. So
maybe you can work on that same kind of technology.
Ms. Burich. Yes. And then these are some of our hardware
devices for the consumer market, a high-end running watch and
kind of a mainstream fitness device that also has step counting
on there. And I think that is the critical thing, is that
throughout the day you need to be getting intensity, frequency,
and volume in terms of your exercise. So we are learning that
it is not just about your workout, it is about what you are
doing all day.
And then these garments are the translation of the Elite
for consumers. So you can, again, just snap in a heart rate
monitor. It is directly reading your heart rate off your chest.
These are FDA approved in terms of the sensors, so wearable for
consumer population as well.
Mr. Burgess. Very good. Well, thank you. Thank you for
that.
I will tell you this was a fascinating hearing. And I
apologize that we have had votes that have kind of disrupted
things. This is a disrupter series, after all. But there is a
lot that has been shared today.
One of the things that we hear a lot about is on the issue
of encryption. We are hearing questions about privacy and
security of data. Encryption seems to be one of those ways. But
there also seems to be some problems with encryption.
So I am actually going to ask each of you to respond, I
realize we are really out of time and I have to go vote, but I
would like a response to or at least your thoughts on that. As
we develop our policies going forward, how do you balance this
privacy question? Is encryption the way to go?
And then, as we know, we have got the FBI concerned about
the makers' ability to encrypt and whether or not that is a
good thing from a law enforcement standpoint.
So that is one of the questions that actually may end up
before this very subcommittee when it comes down to a
legislative product.
But I can't thank you all enough for being here. Wait a
minute, I have got to do this. Seeing that there are no further
members wishing to ask questions or for any other purpose, I
would like to thank all of our witnesses for being here.
Before we conclude, I would like to submit the following
documents for the record by unanimous consent: a letter from
the Competitive Carriers Association, a letter from the
Mercatus Center at George Mason University. Without objection,
so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Burgess. And pursuant to committee rules, I remind
members they have 10 business days to submit additional
questions for the record, and I ask the witnesses to submit
their responses within 10 business days upon receipt of the
questions.
So without objection, and thanking everyone once again,
the subcommittee is adjourned.
[Whereupon, at 11:40a.m., the subcommittee was adjourned.]
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[Mr. Peppet did not answer submitted questions for the
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