[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


     THE INTERNET OF THINGS: EXPLORING THE NEXT TECHNOLOGY FRONTIER

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

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 24, 2015

                               __________

                           Serial No. 114-26
                           
                           
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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

                                 7_____

           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, Tennesseem         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

                              ----------                              
                                                                   Page
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     1
    Prepared statement...........................................     3
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     4
    Prepared statement...........................................     5
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
    Prepared statement...........................................     7

                                Witnesse

Daniel Castro, Vice President, Information Technology and 
  Innovation Foundation..........................................     9
    Prepared statement...........................................    12
Brian Van Harlingen, Chief Technology Officer, Belkin 
  International, Inc.............................................    23
    Prepared statement...........................................    25
Rose Schooler, Vice President, Internet of Things Group, and 
  General Manager, Internet of Things Strategy and Technology 
  Office, Intel Corporation......................................    30
    Prepared statement...........................................    32
R. Brad Morehead, Chief Executive Officer, LiveWatch Security, 
  LLC............................................................    50
    Prepared statement...........................................    53

                           Submitted Material

Letter of March 24, 2015, from Gary Shapiro, President and CEO, 
  Consumer Electronics Association, to Mr. Burgess and Ms. 
  Schakowsky, submitted by Mr. Burgess...........................    74

 
     THE INTERNET OF THINGS: EXPLORING THE NEXT TECHNOLOGY FRONTIER

                              ----------                              


                        TUESDAY, MARCH 24, 2015

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 11:03 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Michael 
Burgess (chairman of the subcommittee) presiding.
    Members present: Representatives Burgess, Lance, Blackburn, 
Harper, Guthrie, Olson, Kinzinger, Brooks, Mullin, Schakowsky, 
Cardenas, Butterfield, and Pallone (ex officio).
    Staff present: Charlotte Baker, Deputy Communications 
Director; James Decker, Policy Coordinator, Commerce, 
Manufacturing, and Trade; Graham Dufault, Counsel, Commerce, 
Manufacturing, and Trade; Kirby Howard, Legislative Clerk; Paul 
Nagle, Chief Counsel, Commerce, Manufacturing, and Trade; 
Olivia Trusty, Professional Staff, Commerce, Manufacturing, and 
Trade; Michelle Ash, Democratic Chief Counsel, Commerce, 
Manufacturing, and Trade; Christine Brennan, Democratic Press 
Secretary; Jeff Carroll, Democratic Staff Director; and Brendan 
Hennessey, Democratic Policy and Research Advisor.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. The Subcommittee on Commerce, Manufacturing, 
and Trade will now come to order. The Chair now recognizes 
himself for 5 minutes for the purposes of an opening statement. 
And again, I want to say good morning to everyone in the 
hearing room today and especially to our panel of witnesses as 
we begin to explore the emerging market in our digital 
ecosystem, the Internet of Things.
    The Internet of Things marks a crucial juncture for the 
U.S. economy and for American consumers as our country looks 
for new economic engines and new sources for jobs. It promises 
a world in which digital and physical elements connect, gather 
information real-time, predict circumstances, prevent problems, 
and create opportunities.
    This morning some of us attended the subcommittee's 
Internet of Things showcase. We saw first-hand some of the 
innovative ways that companies are using the Internet and 
networked sensors to create, enhance, and customize products to 
better meet consumer preference. I thank all of the companies 
who participated in this morning's event.
    The products and services displayed at the showcase 
represent how, in just a very short period of time, increased 
Internet connectivity, capability have led to the creation of a 
vast ecosystem in which machines, devices, appliances, and a 
whole host of other things are able to connect to the Internet.
    We may be most familiar with this concept in the context of 
a connected refrigerator that lets us know what we need to 
purchase on our next trip to the grocery store or a smart watch 
that informs us when we have reached 10,000 steps or met our 
caloric intake for the day or a video monitor in our homes that 
can be watched remotely when traveling for work or vacation. 
These types of ground-breaking technologies, among many others, 
are providing valuable conveniences and invaluable information 
to users.
    And yet this is just the beginning. Much of the excitement 
surrounding the Internet of Things lies in its immeasurable 
scope and potential to touch everything, to touch everyone, and 
every sector of the economy. We are already seeing the 
fulfillment of this promise as this technology expands to other 
areas and captures more than just objects and things.
    Internet connectivity is being integrated into industrial 
processes, transportation routes, workforce practices, 
buildings, and other operational systems and entities across 
several different industries and environments. This is 
improving, this is revolutionizing the efficiency, 
productivity, and effectiveness of the way that individuals, 
businesses, and Governments are conducting various tasks and 
responsibilities. The Internet of Things, or the Internet of 
Everything, is fundamentally transforming the way we operate 
and participate in today's world.
    The market is still very young. The potential for growth 
and innovation is at this point virtually limitless. As a 
physician, I see this potential first hand in the healthcare 
space. Medical professionals are able to interact with patients 
in revolutionary ways through connected devices, really devices 
that no one could have imagined just a few short years ago. 
This technology is offering opportunities to reduce healthcare 
costs, improve healthcare quality, and most importantly, to 
save lives.
    The significance of the Internet of Things is that these 
types of benefits are not unique to healthcare. This technology 
truly has the potential to transform every sector of the 
economy in most profound ways. Notwithstanding the economic and 
societal benefits of the Internet of Things, the consumer 
impact of this market should be a key focus of our discussion 
today. While consumers are benefitting from the technologies, 
attention must also be given to appropriate consumer 
protections for privacy and security.
    Today we will explore these issues, and we should recognize 
that not all devices are created equal. They are manufactured 
for different purposes. They have different capacities, and 
they generate varying levels and degrees of consumer 
information. Unlike other established markets, the Internet of 
Things is still developing, and quite honestly, we are trying 
to understand the nature and basis of the threats that face 
this ecosystem. In our examination of privacy and security 
issues, it is important that we balance these concerns with the 
creativity and innovation that is driving this market. Too much 
potential for economic progress and consumer welfare is at 
stake to act without a full appreciation for what this market 
can offer.
    [The prepared statement of Mr. Burgess follows:]

             Prepared statement of Hon. Michael C. Burgess

    The Internet of Things marks a crucial juncture for the 
U.S. economy and American consumers as our country looks for 
new economic engines and more jobs. It promises a world in 
which digital and physical elements connect and gather 
information in real-time to predict circumstances, prevent 
problems, and create opportunities.
    This morning we attended the subcommittee's Internet of 
Things showcase. We saw first-hand the innovative ways in which 
companies are using the Internet and networked sensors to 
create, enhance and customize products to better meet consumer 
preferences and demand. I thank all companies that participated 
in this event.
    The products and services displayed at this showcase 
represent how, in just a short period of time, increased 
Internet connectivity, capability, and use have led to the 
creation of a vast ecosystem in which machines, devices, 
appliances, and a whole host of other things are able to 
connect to the Internet.
    We may be most familiar with this concept in the context of 
a connected refrigerator that lets us know what we need to 
purchase at our next trip to the grocery store; or a smart 
watch that informs us when we've reached 10,000 steps and met 
our caloric intake for the day; or a video monitor in our homes 
that can be watched remotely when traveling for work or on 
vacation. These types of ground-breaking technologies--among 
many others--are providing valuable conveniences and 
information to users.
    And yet this is just the beginning. Much of the excitement 
surrounding the Internet of Things lies in its immeasurable 
scope and potential to touch everything, everyone, and every 
sector of the economy.
    We are already seeing the fulfillment of this promise as 
this technology expands to other areas and captures more than 
just objects and things.
    Internet connectivity is being integrating into industrial 
processes, transportation routes, workforce practices, 
buildings, and other operational systems and entities across 
several different industries and environments. This is 
improving and revolutionizing the efficiency, productivity, and 
effectiveness of the way individuals, businesses, and 
Governments are conducting various tasks and responsibilities. 
The Internet of Things--or the Internet of Everything--is 
fundamentally transforming the way we operate and participate 
in today's world.
    While this market is still in its infancy, the potential 
for growth, innovation, and advancement is limitless. As a 
licensed physician, I see this potential first hand in the 
health care space. Medical professionals are able to interact 
with patients in revolutionary ways through connected devices 
that we only could have imagined just a few years ago. This 
technology is offering opportunities to reduce health care 
costs, improve health care quality, and most importantly, save 
lives.
    The significance of the Internet of Things is that these 
types of benefits are not unique to health care. This 
technology truly has the potential to transform every sector of 
the economy in profound ways.
    Notwithstanding the economic and societal benefits of the 
Internet of Things, the consumer impact of this market should 
be a key focus of our discussion today. While consumers are 
benefitting from these technologies, attention must also be 
given to appropriate consumer protections for privacy and 
security.
    As we explore these issues, we should recognize that not 
all devices are created equally; they are manufactured for 
different purposes, have different capacities and generate 
varying levels and degrees of consumer information. Unlike 
other established markets, the Internet of Things is still 
developing and we are still trying to understand the nature and 
basis of threats facing this ecosystem. In our examination of 
privacy and security issues, it is important that we balance 
these concerns with the creativity and innovation driving this 
market forward. Too much potential for economic progress and 
consumer welfare is at stake to act without a full appreciation 
for what this market can offer.

    Mr. Burgess. I want to thank the witnesses again for making 
time to be with us here this morning. I look forward to an 
informative and engaged discussion on this very important topic 
and now would like to yield back my time and recognize the 
subcommittee ranking member, Ms. Schakowsky, for the purpose of 
an opening statement.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Well, you don't think often of events in 
this building as being like really fun, and this is a day that 
we can say that it is because the showcase down the hall is 
very, very exciting. And we are going to hear about things that 
I think certainly can enhance and spice up and make our lives 
easier and better from incredible entrepreneurs. So I want to 
thank you all for being here today. I want to thank the 
chairman for holding the showcase and the hearing.
    I would like to take a moment to introduce one of our 
witnesses, Brad Morehead, CEO of LiveWatch Security, which does 
have a demonstration over in the showcase. It is an innovative 
company from my hometown of Evanston, Illinois, that uses the 
Internet of Things technology to better protect, inform, and 
connect its customers. LiveWatch has been honored with the 2014 
gold Stevie Award for Customer Service, the 2013 silver Stevie 
Award for E-commerce Customer Service, and was recognized as an 
enterprise leader by The Economist.
    Mr. Morehead also participated in our showcase this 
morning. I welcome him and thank him for his time today as 
someone who often has people coming in and out of my house who 
don't always know the code on my security system and someone 
who regularly can't find her key. I want to tell you that these 
kinds of technologies can mean a lot in my life.
    The Internet of Things is one of the fastest-growing 
technologies today. An estimated 25 billion products are now 
connected to the Internet, and that number is expected to 
double by 2020. Internet of Things technology brings very clear 
benefits to consumers, vehicles that can tell a driver if a 
part is in need of replacement, as the chairman mentioned, 
refrigerators can tell a parent to buy another gallon of milk, 
health gadgets that monitor a person's heart rate, running or 
walking speed, distance covered. All of these products and many 
more are made possible through the Internet of Things.
    But this technology also presents some new challenges. How 
do we ensure that these technologies are secure? The chairman 
was right to raise the question of the important balance, that 
sensitive information doesn't get out to unintended audiences 
or that products connected to the Internet aren't remotely 
deactivated by an unauthorized user. We must ensure that as 
this technology continues to grow we take common-sense steps to 
assure that it is safe and secure.
    These are issues worthy of the subcommittee's time and 
consideration. Again, I look forward to hearing from this 
distinguished panel about how they are creatively harnessing 
the Internet of Things, and I would yield at this time for Mr. 
Cardenas.
    [The prepared statement of Ms. Schakowsky follows:]

            Prepared statement of Hon. Janice D. Schakowsky

    Thank you, Mr. Chairman, for holding today's showcase and 
hearing on the Internet of Things. I am eager to learn more 
from our distinguished panel about this technology's promise as 
well as the new challenges it presents.
    I'd like to take a moment to introduce one of our 
witnesses--Brad Morehouse, CEO of LiveWatch Security. LiveWatch 
is an innovative company from my hometown of Evanston, 
Illinois, using Internet of Things technology to better 
protect, inform, and connect its customers. LiveWatch has been 
honored with the 2014 Gold Stevie Award for Customer Service, 
the 2013 Silver Stevie Award for eCommerce Customer Service, 
and was recognized as an enterprise leader by The Economist. 
Mr. Morehead also participated in our showcase this morning. I 
welcome him and I thank him for his time today.
    The Internet of Things is one of the fastest-growing 
technologies today. An estimated 25 billion products are now 
connected to the Internet, and that number is expected to 
double by 2020.
    Internet of Things technology brings very clear benefits to 
consumers. Vehicles that can tell a driver if a part is in need 
of replacement. Refrigerators that can tell a parent if they 
need an extra gallon of milk at the grocery store. Health 
gadgets that monitor a person's heart rate, running or walking 
speed, and distance covered. All of those products--and more--
are made possible through the Internet of Things.
    But this technology also presents some new challenges. How 
do we ensure that these technologies are secure? That sensitive 
information doesn't get out to unintended audiences? Or that 
products connected to the Internet aren't remotely deactivated 
by an unauthorized user? We must ensure that as this technology 
continues to grow, we take commonsense steps to ensure that it 
is safe and secure. These are issues worthy of this 
subcommittee's time and consideration.
    Again, I look forward to hearing from our distinguished 
panel about how they are creatively harnessing the Internet of 
Things. I yield back.

    Mr. Cardenas. Thank you. Good afternoon. I want to thank 
the ranking member for yielding me some of her time. I want to 
introduce Brian Van Harlingen, the Chief Technology Officer at 
Belkin. Belkin is a local Los Angeles company, and we are proud 
of them. And they have been doing a great job as a driver for 
jobs and innovations in our great city.
    Since the 1980s, Belkin has been on the forefront of 
innovation creating products that benefit all of our 
constituents in their daily lives. I look forward to watching 
how Belkin will use what we are calling the Internet of Things 
to bring new products and services to their consumers, and I 
look forward to their testimony today. So welcome to 
Washington, DC, and thank you so much for your testimony.
    I yield back my time to the ranking member.
    Mr. Burgess. I thank the gentlelady. The Chair now 
recognizes the vice chairwoman of the full committee, the 
gentlelady from Tennessee, Ms. Blackburn, 5 minutes for an 
opening statement.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman. And I really do 
appreciate the attention to this issue and that my colleagues 
on both sides of the aisle are willing to work on this. We 
don't need to let this get away from us if you will. And Mr. 
Welch and I have put a great deal of attention on the privacy 
and data security issue for the past couple of years and 
thereby have had the opportunity with our colleagues to dig a 
little deeper into some of these issues.
    Going back to the chairman's remarks, I think it is 
important that we look at size and scope when we discuss the 
Internet of Things. You can look at Cisco's report, 50 billion 
devices, 50 billion devices connected to the Internet by the 
time we get to the end of this decade. And then you layer upon 
that what the expectations are for global economic output and 
contribution to the global economy from this. And right now and 
by the time we get to 2025, they are saying $2.7 to $6.2 
trillion looking at that. So when you look at size and scope 
and impact, it behooves us to say, OK, how do we get our hands 
around this and make certain that we approach this in a light-
touch way, that we encourage innovation? As Ms. Schakowsky 
said, we rely on a lot of these, and people like this because 
it does add convenience to our lives. But that accelerates the 
additional problem of privacy and security, whether it is B to 
B, or B to C, and how that is going to be filtered data and how 
we are going to mine it and what we are going to extrapolate 
and how we protect that, how we anonymize it, et cetera, et 
cetera. We have to realize that we are still running and 
hopefully always will on an open-source platform. Go back to 
when the Internet started, four known users, four disparate in 
varied locations, all known one to another, all vetted, all 
secure.
    So we want to be here to enhance that experience for the 50 
billion items that are going to be attached and still provide 
the underpinning and infrastructure that was there when it was 
the initial project of four known users.
    So we welcome you all. We are going to be direct with our 
questions and probably a bit more conversational than some of 
the other hearings that you participate in.
    Mr. Chairman, I thank you for the attention to the issue 
and look forward to the discussion. I yield the balance of my 
time for whomever would like to claim it.
    Mr. Burgess. Does any other member of the Republican side 
seek time? Seeing none, the gentlelady yields back her time. 
The Chair recognizes ranking member of the full committee Mr. 
Pallone, 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 new and evolving technological 
development. The Internet of Things has great potential for 
growing the American economy and offering consumers new 
technology that will enrich their lives and empower them in 
ways never before thought possible.
    Earlier today, along with my colleagues, I had an 
opportunity to see some of the innovation coming out of the 
Internet of Things at a showcase hosted by the subcommittee, 
and I was proud to have there IMPak Health, a New Jersey 
company that is building wireless technologies into products to 
solve practical healthcare needs. IMPak Health has taken 
advantage of wireless technology to help ensure patients are 
taking their medication and staying healthy. And the growth in 
these types of devices is so rapid that they soon will be as 
ubiquitous as electrical outlets. In fact, it is estimated that 
there will be 50 billion connected products by the year 2020.
    But in many ways, the future is already here. Just last 
Friday Tesla announced that it would remotely install software 
updates in its Model S cars providing them with capability of 
autonomous driving. Cars that drive themselves were once found 
only in science fiction, but today it can be a reality with a 
quick update sent over the Internet.
    Yet, along with these innovations come some new 
vulnerabilities, the vulnerabilities that we in Congress have a 
responsibility to protect consumers against. Let us take a 
hypothetical situation for a moment. Let us say that I wear a 
bracelet that monitors different aspects of my health and 
physical activity. It helps me keep track of how many steps I 
take each day. It tells me how well I sleep at night. It 
monitors my heart rate and along with an app in my phone, it 
tracks where I have gone. While, all this data is important to 
me, I may not want to have it released to a potential employer 
who requires it as part of the job application. I might not 
want the bracelet manufacturer selling it to an insurance 
company who might then utilize it for my insurance coverage, 
and I certainly do not want a hacker accessing the bracelet to 
post my information on the Internet or to monitor my location.
    So without strong security and privacy protections, 
consumers can be at real risk. These risks can have devastating 
consequences when the product is accessed and controlled 
remotely by an unscrupulous actor. One hacker has shown that he 
can remotely access an insulin pump and induce a lethal 
overdose. Others have shown that they can remotely hijack the 
operations of a car, suddenly turning the wheel or cutting off 
the brakes.
    In order to protect consumers, there has to be strong 
security and privacy protections built into these products. By 
building in security, manufacturers can more effectively 
prevent hackers from accessing a device or the data it produces 
or collects.
    At last week's hearing, the FTC's witness stated that his 
experience in evaluating the vulnerability in Internet of 
Things products has led the agency to recommend that device 
security be added to data security and breach notification 
legislation. By building in privacy, consumers could have 
confidence in these products, and consumers need to know that 
their intensely personal information will not be shared with 
the world without their consent.
    So I am confident great things will be done through the 
Internet of Things, but I believe that while we encourage 
innovation through these new technologies, we also have to be 
innovative in how we protect the consumer.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Thank you, Chairman Burgess. Today's hearing gives us an 
opportunity to look at a new and evolving technological 
development. The Internet of Things has great potential for 
growing the American economy and offering consumers new 
technology that will enrich their lives and empower them in 
ways never before thought possible.
    Earlier today, along with my colleagues, I had an 
opportunity to see some of the innovation coming out of the 
Internet of Things at a showcase hosted by the subcommittee. I 
was proud to have there iMPak Health, a New Jersey company that 
is building wireless technology into products to solve 
practical healthcare needs. iMPak Health is taking advantage of 
wireless technology to help ensure patients are taking their 
medication and staying healthy.
    The growth in these types of devices is so rapid that they 
soon will be as ubiquitous as electrical outlets. In fact, it 
is estimated that there will be 50 billion connected products 
by 2020.
    But in many ways, the future is already here. Just last 
Friday, Tesla announced that it would remotely install software 
updates in its Model S cars providing them with capability of 
autonomous driving. Cars that drive themselves were once only 
found in science fiction, but today it can be reality with a 
quick update sent over the Internet.
    Yet, along with these innovations come new 
vulnerabilities--vulnerabilities that we in Congress have a 
responsibility to protect consumers against.
    Let's take a hypothetical situation for a moment. Let's say 
that I wear a bracelet that monitors different aspects of my 
health and physical activity. It helps me keep track of how 
many steps I take each day, it tells me how well I sleep at 
night, it monitors my heart rate, and along with an app in my 
phone, it tracks where I have gone.
    While all of this data is important to me, I may not want 
to have to release it to a potential employer who requires it 
as part of the job application. I may not want the bracelet 
manufacturer selling it to an insurance company who might then 
utilize it for my insurance coverage. And I certainly do not 
want a hacker accessing the bracelet to post my information on 
the Internet or to monitor my location.
    Without strong security and privacy protections, consumers 
can be at real risk. These risks can have devastating 
consequences when the product is accessed and controlled 
remotely by an unscrupulous actor. One hacker has shown that he 
can remotely access an insulin pump and induce a lethal 
overdose. Others have shown that they can remotely hijack the 
operations of a car, suddenly turning the wheel or cutting off 
the brakes.
    In order to protect consumers, there has to be strong 
security and privacy protections built into these products.
    By ``building-in'' security, manufacturers can more 
effectively prevent hackers from accessing a device or the data 
it produces or collects. At last week's hearing, the Federal 
Trade Commission's witness stated that its experience in 
evaluating the vulnerability in Internet of Things products has 
led to the agency recommending that device security be added to 
data security and breach notification legislation.
    By ``building-in'' privacy, consumers can have confidence 
in these products. Consumers need to know that their intensely 
personal information will not be shared with the world without 
their consent.
    I am confident great things will be done through the 
Internet of Things. But I believe that while we encourage 
innovation through these new technologies, we also must be 
innovative in how we protect the consumer.

    Mr. Pallone. I yield back. I don't think any other member 
on our side wants the time. So I will yield--oh, you do? OK. I 
will yield my remaining time to the gentleman from California.
    Mr. Cardenas. Thank you very much. I would be remiss if I 
didn't take this opportunity to thank Intel. So Ms. Schooler, I 
just wanted to say thank you very much. Intel made an 
announcement just a few months ago that they are investing $300 
million into their internal diversity initiatives over at 
Intel, and I hope that would be a starting point for all of the 
industries to follow suit as these industries are growing. They 
are the jobs of the future. And for Intel to make that 
commitment and that self-assessment is just wonderful. And many 
people on both sides of the aisle believe that industry does a 
great job when they police themselves and when they look in the 
mirror and they say we can do better. And I think this is a 
great opportunity for us to remind everyone that self-
reflection and self-understanding of where we stand as 
individuals or organizations in the community certainly would 
give us an opportunity to step forward and say we can do 
better. And I think Intel has done a tremendous job, and thank 
you for that commitment.
    Thank you. I yield back my time.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    So again, we want to welcome all of our witnesses, and 
thank you for agreeing to testify before the subcommittee 
today. Our witness panel for today's hearing will include Mr. 
Daniel Castro who is the Vice President of the Information 
Technology and Innovation Foundation; Mr. Brian Van Harlingen 
who is the Chief Technology Officer of Belkin International; 
Ms. Rose Schooler, Vice President of the Internet of Things 
Group and the General Manager of the Internet of Things 
Strategy and Technology Office at Intel Corporation; and Mr. 
Brad Morehead, the Chief Executive Officer at LiveWatch 
Security.
    You each are going to be recognized in turn for 5 minutes 
for the purposes of an opening statement. Mr. Castro, we will 
begin with you. You are recognized for 5 minutes.

   STATEMENTS OF DANIEL CASTRO, VICE PRESIDENT, INFORMATION 
  TECHNOLOGY AND INNOVATION FOUNDATION; BRIAN VAN HARLINGEN, 
  CHIEF TECHNOLOGY OFFICER, BELKIN INTERNATIONAL, INC.; ROSE 
   SCHOOLER, VICE PRESIDENT, INTERNET OF THINGS GROUP, INTEL 
CORP.; AND R. BRAD MOREHEAD, CHIEF EXECUTIVE OFFICER, LIVEWATCH 
                         SECURITY, LLC

                   STATEMENT OF DANIEL CASTRO

    Mr. Castro. Thank you. Thank you, Chairman Burgess, Ranking 
Member Schakowsky, and members of the committee. I appreciate 
the opportunity to discuss the Internet of Things with you 
today.
    The Internet of Things represents the idea that ordinary 
objects will be imbedded with sensors and connected to the 
Internet. While many of these changes will be subtle, over the 
long term, this technology could ultimately have an enormously 
positive impact on individuals, businesses, and society. For 
example, consider healthcare. Individuals can use connected 
devices to prevent, screen, and diagnose a variety of medical 
conditions. By collecting and tracking data about their health, 
individuals can identify health problems sooner, get treatment 
faster, and save on healthcare costs.
    For example, patients can use smart pill bottles to receive 
automated alerts when it is time to take a dose, and these 
types of interventions can help decrease the rate of medication 
non-compliance which costs the United States almost $300 
billion annually.
    Or look at energy. The Internet of Things is helping to 
provide solutions to the global energy challenge by enabling 
clean energy technologies. For example, in home, connected 
devices like smart thermostats can automate energy efficient 
practices and save consumers money.
    Or look at public safety. The Internet of Things helps 
build not only smarter cities but safer cities. In homes 
connected sensors can improve safety by detecting fires and 
other emergencies quickly and reliably and alert authorities 
sooner.
    In vehicles, the sensors can detect a crash and 
automatically alert emergency responders about the vehicle's 
location and the number of occupants. Some of these systems can 
even predict the injuries that might have resulted.
    The availability of this real-time data is crucial in an 
emergency since the faster response time can mean the 
difference between life and death.
    The Internet of Things is transforming industries like 
manufacturing as well. Using low-cost sensors in automation, 
factories can automatically turn off the lights and air-
conditioning when the workers leave, shut off valves if sensors 
detect leaks, and shut down dangerous equipment if sensors 
detect a malfunction. Innovative manufacturers can use the data 
collected on the factory floor to gain insights about the 
physical fabrication process, thereby improving efficiency, 
increasing yields, and reducing product defects.
    Manufacturers can also use sensors to collect real-time 
data such as temperature and moisture about their shipments to 
help ensure quality and optimize logistics. More information 
can mean the difference between a recall and a successful 
shipment.
    As you can see, a significant amount of the data collected 
by the Internet of Things will not involve information about 
individuals but instead will be about the environment, 
factories, vehicles, infrastructure, and other electronic 
devices. And when data is collected about people, much of it 
will be de-identified and aggregated. But when it comes to 
personal privacy, Congress should tread lightly so as to avoid 
impeding innovation. In particular, Congress should recognize 
the privacy principles designed for a small-data world do not 
work in a big-data world. Proposals such as data minimization 
are based on the mistaken belief that it is always possible to 
predetermine what information is useful in the early stage and 
collect only that minimum amount. Many of the benefits from 
data come from exploratory analysis that finds new trends, 
relationships, and insights that were not obvious at the 
outset. Restricting data collection could severely curtail the 
many potential benefits of the Internet of Things.
    As more devices are connected to the Internet, it will be 
more important than ever that they incorporate strong security 
features. While the private sector is moving in the right 
direction, Congress should further incentivize companies to 
adopt strong security practices by adopting policies that 
decrease the cost of strong security and increase the cost of 
weak security. For example, Congress should pass data breach 
notification legislation that preempts State laws and reduces 
the legal compliance costs companies face from abiding by 
multiple rules. This will allow them to focus more resources on 
improving the security of their products.
    Congress should also pass cybersecurity information sharing 
legislation to help organizations respond to real-time threats.
    Finally, Congress should encourage universities to 
integrate cybersecurity training and to technical degrees so 
that the next generation of coders and engineers build strong 
security into their products. By improving education, Congress 
can help raise the bar for security across the entire U.S. tech 
sector.
    The success of the Internet of Things will depend in part 
on the actions of Congress. Just as the United States needed a 
national broadband strategy, it also needs a national strategy 
for the Internet of Things. Not only should Congress avoid 
policies that would impose costs, limit innovation, and slowed 
adoption, they should actively support accelerating the 
development and deployment of the Internet of Things, such as 
by creating pilot projects for smart cities, encouraging smart 
infrastructure projects, and designing an efficient regulatory 
review process for wearable health technologies.
    The Internet of Things has the potential to positively 
impact virtually every industry from agriculture to healthcare, 
and the Federal Government should be an active partner in 
ensuring its success.
    Thank you for the opportunity to speak with you today. I 
look forward to your questions.
    [The prepared statement of Mr. Castro follows:]
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    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back. Mr. Van Harlingen, you are recognized for 5 
minutes for the purpose of an opening statement, please.

                STATEMENT OF BRIAN VAN HARLINGEN

    Mr. Van Harlingen. Thank you, and good morning, Chairman 
Burgess, Ranking Member Schakowsky, and members of the 
committee. Thank you for holding this important hearing on the 
Internet of Things, otherwise known as IoT. My name is Brian 
Van Harlingen, and I am the Chief Technology Officer at Belkin 
International.
    Belkin is the maker of the WeMo home automation brand, 
which allows users to remotely measure, monitor, and manage 
their homes via a software suite including applications, cloud 
infrastructure, and a portfolio of more than 25 connected 
devices. Surpassing 1 million activations, the WeMo ecosystem 
ranges from switches to lighting to home appliances.
    After years of talk, the Internet of Things has arrived, 
and the pace of innovation is accelerating at a phenomenal 
speed. We are pleased that Congress and other policy makers 
have joined the conversation, as policy awareness and 
leadership will help to maximize the benefits of this 
technological revolution and ensure consumer confidence. IoT 
will drive economic growth, create jobs, and facilitate 
entrepreneurship in completely new markets.
    In my testimony, I will discuss three key topics: consumer 
benefits, technological considerations, and privacy and 
security.
    First, consumer benefits. WeMo has been designed as the 
most approachable entry point into the smart home. Affordable 
and easy to use, WeMo provides bite-sized solutions to make 
consumers' lives easier, simpler, and better. WeMo's new Echo 
technology uses the home's existing infrastructure to monitor, 
measure, and manage water, electricity, and natural gas usage. 
Using advanced data science and machine learning, these 
technologies have enormous potential to save both money and 
resources.
    As a connected solution, WeMo gains insight into how 
consumers use WeMo devices in order to provide better 
experiences and design future products. For example, through 
data analytics, we learned that consumers were finding ways to 
turn on their devices at sunrise and sunset, so we built that 
functionality directly into our WeMo app. We also learned that 
most WeMo Switch users were using them for lighting purposes. 
So we developed and marketed the WeMo Light Switch as our next 
product. These are examples of how we use the data from the 
WeMo cloud to drive better experiences for our consumers.
    Second, technological considerations. IoT for the home and 
business cannot exist without two primary technologies: Wi-Fi 
and smart devices. As the maker of both WeMo and Linksys Wi-Fi 
routers, Belkin understands both markets. Wi-Fi has been widely 
adopted with a 61 percent penetration rate in U.S. homes. WeMo 
products use familiar Wi-Fi technology. They do not rely on 
hubs for connectivity or intelligence. WeMo can integrate 
directly into partner products and serve as an on-ramp to the 
Internet of Things for everyday products like Crock-Pot slow 
cookers, Mr. Coffee coffeemakers, and Osram Sylvania light 
bulbs.
    From a policy perspective, the Government and Congress can 
help promote and grow the Internet of Things by making sure 
these devices can talk to each other. Wireless spectrum, 
already an important technology policy issue, becomes even more 
important as IoT adoption accelerates and billions of new 
devices come on line. Congress and the FCC should continue to 
free up new spectrum, particularly on an unlicensed basis. 
Failure to expand spectrum will stifle IoT innovation and 
growth.
    Last but not least, privacy and security. At WeMo, we 
believe the nascent IoT market will benefits when consumers 
know privacy and security are our top priorities. We believe 
the Federal Government can take a light-touch regulatory 
approach and work with the industry to ensure consumer 
confidence.
    We applaud this committee's efforts to pass data breach 
legislation that would address the patchwork of State data 
breach laws. WeMo has a very transparent data policy and 
strictly controls all PII. The data collected from WeMo devices 
is aggregated and anonymized. Non-personal information is used 
to identify trends, to improve network performance, and to 
provide additional benefits to consumers. We understand the 
importance of data security and employ a combination of 
industry-led security standards, procedures, and organizational 
measures.
    We have safeguards in place to prevent security breaches 
and work closely with outside security researchers to identify 
and address potential security vulnerabilities. We support the 
latest security applications and continuously improve and push 
consumer device firmware and application updates. Security will 
always be a top priority, and as the technology evolves, so 
will our efforts to provide safe and secure products for 
consumers.
    In conclusion, at WeMo, we are focused on delivering the 
most user-friendly, innovative, and secure products. I 
appreciate the opportunity to testify today and to share our 
vision of the Internet of Things and answer any questions the 
committee might have.
    [The prepared statement of Mr. Van Harlingen follows:]
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    Mr. Burgess. The Chair thanks the gentleman. The Chair now 
recognizes Ms. Schooler 5 minutes for the purpose of an opening 
statement, please.

                   STATEMENT OF ROSE SCHOOLER

    Ms. Schooler. Good morning, Chairman Burgess, Ranking 
Member Schakowsky, and members of the subcommittee. Thank you 
for the opportunity to provide testimony on the importance of 
the United States' establishing a global leadership role in the 
Internet of Things or the IoT.
    As head of Intel's IoT's Strategy and Technology Office, 
own the IoT strategy for the company. Intel's 30 years of 
investment, innovations, and standards leadership in the 
evolution of computing provide the foundational elements of the 
strategy. Intel believes the IoT presents a transformational 
opportunity for the United States and for the world. It will 
enable innovation, increase productivity, and deliver 
efficiencies across the public and private sector. While some 
think of the IoT as smart thermostats and wearables, these 
consumer devices are only a few of the many applications. The 
primary economic driver will be non-consumer areas such as 
industrial and commercial applications. I will address three 
topics that are important to consider as you chart your policy. 
One: Why is the IoT important? Two: What are the barriers to a 
successful IoT ecosystem? And three: How can policymakers 
accelerate deployments to ensure U.S. leadership?
    First: Why is the IoT important? It will drive 
unprecedented benefits for Government, businesses, consumers, 
and communities. It is estimated that 50 billion devices will 
connect to the Internet by 2020 generating 44 zettabytes of 
data. Consider that in 2009, the World Wide Web was estimated 
at just a half a zettabyte. The IoT presents the opportunity to 
connect these devices, efficiently analyze the data, and use 
the information to improve our decision-making. In doing so, 
the IoT is expected to have a multitrillion-dollar global 
economic impact. What should most excite U.S. policymakers is 
that America and other developed economies are expected to 
capture 20 percent of this impact if we lead.
    Let us consider one IoT application. Saia Trucking is 
located in Georgia and has a nationwide fleet of 3,000 trucks. 
They recently deployed an Intel-based IT solution which alters 
routes and guides drivers' performance real-time. Saia 
increased fuel efficiency by 6 percent translating into $15 
million of annual savings. The U.S. trucking industry consumes 
54 billion gallons of fuel per year. Extrapolating that 
success, our Nation could save over 3 billion gallons of fuel 
yearly while reducing our CO2 emissions.
    What are potential barriers to a successful IoT ecosystem? 
One barrier as noted could be security. It is not implemented 
from the outset. For this reason, Intel prioritizes security as 
the foundational element of our IoT strategy. We will integrate 
security at the outset building cryptography into our chips to 
enable strong identity and data protection. In addition to the 
compute device itself, our solutions will employ advanced 
software security to prevent harmful applications from being 
activated on the device or taking down the network. Integrating 
multiple layers of security at the outset enables trusted data 
transmission necessary for successful IoT deployments.
    Other potential barriers include connecting to legacy 
infrastructure, interoperability between devices, and 
developing global standards. To address these barriers, Intel 
collaborated with industry leaders to define five tenants of 
successful IoT solutions. They are security, ease of 
connectivity, interoperability, data analytics, and ease of 
deploying new applications and services. Based on these 
tenants, we recently launched the Intel IoT platform.
    Finally, how can policymakers accelerate IoT deployments to 
ensure U.S. leadership? Candidly, the United States is behind. 
Other countries are aggressively investing and deploying IoT 
implementations to transform their economies, address societal 
problems, and spur innovation. China, Brazil, Germany have all 
adopted national IoT plans with time-bound goals and are 
investing heavily in IoT R&D and infrastructure. The United 
States must leverage our vast resources and capabilities, 
promoting industry alignment around these large-scale IoT 
deployments based on secure, open, and interoperable solutions 
will showcase U.S. leadership.
    Congress can advance our Nation's IoT momentum by 
collaborating with industry to establish a national IoT 
strategy, encourage public/private partnerships, and invest in 
IoT research. Intel is confidence that the United States can 
lead the IoT transformation with a continued open dialogue as 
you are doing here today and by implementing some of these 
recommendations.
    Thank you for your time, and I look forward to your 
questions.
    [The prepared statement of Ms. Schooler follows:]
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    Mr. Burgess. Thank you. The Chair recognizes Mr. Morehead 
for 5 minutes for the purpose of an opening statement, please.

                 STATEMENT OF R. BRAD MOREHEAD

    Mr. Morehead. Thank you, Chairman Burgess, Ranking Member 
Schakowsky, and members of the committee. We use the IoT every 
day when we check traffic or look at the weather forecast. We 
also see it in the wide variety of smart devices that are 
popping up everywhere, like smart refrigerators, smart coffee 
makers, or smart watches. But rather than talking about smart 
coffeemakers and refrigerators, I would prefer to illustrate 
the potential benefits of a robust Internet of Things by 
sharing a brief story about how the security alarm industry 
works.
    Imagine an emergency at your home or at your school or at 
your work, a burglary or violent crime in progress with 
multiple potential victims on the scene where the intruder or 
the victim has triggered an alarm. Speed and information are 
critically important to the first responders. However, when 
that security alarm goes off at that home, business, or public 
location, that signal is delayed for over a minute to reduce 
false alarms. Furthermore, the process of notifying the alarm 
monitoring center is surprisingly manual, as the alarm is 
transmitted after the delay to a person in the alarm center who 
must then be connected to another person at a 911 public safety 
answering point, or PSAP, for emergency dispatch.
    After an average 1- to 3-minute phone conversation between 
that security station and the PSAP safety agency, emergency 
responders are contacted and dispatched to the site of the 
alarm--again, where time is of the essence. But the first 
responders are given nothing more than basic information about 
the type of alarm and location of the incident. This average 
dispatch total can take 5 to 10 minutes, and that is valuable 
time and information that is lost in a true emergency. By some 
estimates from the DOJ, each year more than 1 million police 
hours are wasted due to these human errors and communication 
issues in this transmission process.
    Adding to that frustration is the fact that there may be 
additional security cameras, motion sensors, door sensors, or 
other sensors at the site of the emergency capturing valuable 
information. Unfortunately, in most cases, those additional 
sensors and cameras have no way of communicating to the 
monitoring station, 911 PSAP, or the first responders.
    In other words, there is potential lifesaving data 
available that no one sees. This can cause first responders to 
arrive at the wrong place at the wrong time and without 
important information to save lives.
    With the IoT, these processes could be seamlessly automated 
and integrated to prevent and mitigate crimes in a more 
efficient way. In the future, the transmission of emergency 
alarms and sensor data could occur instantly from machine to 
machine, or M-2-M, instead of manually. Automated applications 
could be used to gather and interpret the alarm information 
from various IoT devices to determine the probability of a 
false alarm or help first responders use their time more 
efficiently and arrive at the right place. Smart sensors and 
cameras could be used to automatically transmit images and data 
from the scene of the crime directly to the officers.
    Using IoT, two companies and centers were able to cut alarm 
transmission times down to 5 seconds and reduce the volume of 
calls going between these centers by 10 percent. Now imagine if 
that was implemented nationwide, how much more
    productive our police, fire, and EMT responders could be 
with fewer false alarms and better, faster information from IoT 
connected systems and devices. Internet of Things can help 
deliver first responders to the scene faster, more efficiently 
and with more information on the current emergency, if we 
invest now in the IoT infrastructure that we need so that we go 
beyond smart coffeemakers and refrigerators.
    Unfortunately, there are still a few technological barriers 
that are preventing us from implementing an ideal system. The 
IoT consists of a few key components: a power source, a 
communication protocol and data processing.
    Let us begin with power, since this is a subcommittee of 
the Energy and Commerce Committee. These connected sensors in 
the Internet of Things must have a power source, and while 
wired is preferred in some cases, it is typically too expensive 
to implement. Therefore battery power offers the widest array 
of uses, but the currently short battery life must be improved 
to lower the cost of ongoing maintenance and fully tap the 
potential of IoT.
    As an example of this, recently a tech startup called 
Quirky developed a smart egg holder that would tell you when 
you were out of eggs in your refrigerator. This sounds like an 
interesting and useful, but due to current battery technology, 
it unfortunately it needed its batteries replaced more often 
than it ran out of eggs to replace. So when lives are on the 
line instead of omelets, we need to make sure that these smart 
devices don't lose power. This will require investment in more 
powerful batteries with longer lifespans.
    Secondly, we need to insure the availability of open 
wireless spectrum for IoT and specifically IoT for public 
safety agencies. A Government program called FirstNet is 
developing new wireless applications to aid first responders 
instead of existing radio-dispatch technology first used in the 
1960s. We need more funding for projects that involve improving 
our Nation's infrastructure for wireless integration and 
emergency dispatch.
    As an example of our outdated emergency infrastructure, 
currently only about 200 out of 5,900 911 PSAP centers can 
handle text messages. Text messaging has been around for 20 
years, but approximately 3 percent of 911 centers can receive 
texts. And when you consider that 96 percent of young people 
text regularly but only 67 percent make phone calls regularly, 
you can see how much emergency information we may be missing.
    Also in our way looms the threat of multiple connection 
standards for smart devices. Computers generally connect to the 
Internet using one of two methods, Ethernet or Wi-Fi. However, 
smart devices connect using a plethora of standards including 
Wi-Fi, Bluetooth, Ethernet, z-wave, ZigBee, and Thread, in 
addition to numerous proprietary protocols. So currently a Nest 
thermostat may know the temperature in a home is increasing due 
to a fire but it is unable to contact the 911 PSAP through the 
security system if the homeowner is asleep or unavailable. IoT 
standards and interconnectivity would solve this.
    As an example, my company, LiveWatch Security, developed As 
Soon As Possible Emergency Response, or ASAPer, which is an 
application that is a step in that direction. It combines the 
speed of machine-to-machine communication with the latest group 
chat communication technology to allow people to process this 
information from the IoT and sensors. This IoT-enabled system 
has reduced false alarms by up to 30 percent while also 
improving response times, in some cases, by 80 percent. We must 
continue to invest in the entrepreneurs that will develop these 
new applications and improve the way we process data from the 
IoT to turn it into useful information for our first 
responders.
    These are all issues that can be solved with additional 
smart investment in the smart things that make up the Internet 
of Things. We can obtain the most progress towards eliminating 
these obstacles by focusing on engineering advances in battery 
efficacy and low-power radio range, finding better ways to 
utilize wireless spectrum for first responders and creating 
standards for communication between the IoT ecosystems, and 
finally, investing in better first-responder infrastructure 
that can handle new types of communication to, and from, IoT 
devices and users.
    We are at the beginning of the next big shift in technology 
where machines and devices can talk to each other and instantly 
share data in ways that change lives.
    We can use IoT to enhance the security of Americans and the 
safety of our first responders. To me, these are compelling 
reasons to invest in this new frontier of technology. Thank 
you.
    [The prepared statement of Mr. Morehead follows:]
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    Mr. Burgess. The Chair thanks the gentleman for his 
remarks. We will now move into the question-and-answer portion 
of the hearing. I will begin by recognizing myself 5 minutes 
for the purpose of questions.
    I want to ask a couple of general questions just on the 
general theme of the governance of the Internet of Things, and 
I would like to ask each panelist to respond briefly in turn. 
And Mr. Castro, we will start with you. It is an open-ended 
question, and I will acknowledge that. And many of you have 
already addressed this partially in your testimony, but what do 
you see is the appropriate role of Congress right now relative 
to the Internet of Things, bearing in mind we are marking up 
data breach notification tomorrow and probably before the 
spring is over, we will have a mark-up on patent demand 
letters. But irrespective of that, I welcome your thoughts.
    Mr. Castro. Sure. Absolutely. I think the number one issue 
right now, just because it is growing in attention, is data 
breach. We saw, you know, so many data breaches over the past 
year, high profile. This is something that Americans are 
worried about, and it is something where I think Congress could 
take an immediate and important step. But long-term, as I think 
you have heard from at least two panelists up here, we are 
really thinking about national strategy for the Internet of 
Things. This is something that Congress can get behind, that 
the Federal Government can get behind, and you really create a 
new vision for the future of commerce, the future of houses 
that interact with technology and how we can have an impact in 
so many different areas.
    Mr. Burgess. Thank you. Mr. Van Harlingen?
    Mr. Van Harlingen. As has been mentioned, I think data 
breach management and rules around that and consistency around 
that nationwide would be very helpful to both the industry and 
consumers.
    As I mentioned in my opening statement, I think spectrum 
management, both for the unlicensed spectrum and as Mr. 
Morehead mentioned, for emergency first responders in a more 
licensed fashion would be very good investments of time for the 
committee and for the Federal Government.
    I would advocate a light-touch approach. This is a very new 
and emerging space where we have a lot to learn about what is 
possible and what value we can create.
    Mr. Burgess. Thank you. Ms. Schooler, your thoughts on the 
appropriate role of Congress.
    Ms. Schooler. Yes, absolutely. I think it is starting 
today, an open dialogue between industry and Government, 
consumer groups to get the needs and the interests of the 
consumers on the table as we chart policy moving forward as 
well as people from industry environments.
    I think we need, as I mentioned in my statement, to 
encourage a focus on security and interoperability. I think the 
opportunity to leverage public and private partnerships will be 
key, and I think even if you look at the infrastructure and the 
capabilities within transportation's $351 billion opportunity 
in that segment over I think it is 650,000 fleets and tires and 
trucks within the Postal Service in the U.S. Government, 
excellent opportunity to try out some of this technology with 
public and private partnerships.
    We talked about a national IoT strategy. I think that is 
critical moving forward. And again, open standards, open 
architecture, open source, interoperability, allow for the 
continuation of innovation.
    Mr. Burgess. Very good. Mr. Morehead?
    Mr. Morehead. I agree on the points about open standards 
and interconnectivity. For most of the sensors, I think that 
investment in battery power and improved performance for 
batteries will be incredibly important as we develop new 
sensors. But finally I do think investing in the infrastructure 
of our Nation's PSAPs and emergency first responders is 
incredibly important.
    There was an article in the Journal recently about a 
company called Smart Things, and the journal reviewed the 
technology of smart things. And at the end of the article, what 
they found is that the most compelling use of the technology 
was turning on the coffeemaker in the morning, which frankly 
wasn't compelling, was the summary of the article.
    When you talk about investing the types of time and money 
that you would be investing, I think you could look to the 
Nation's infrastructure and truly save lives which has an 
immeasurable benefit of both the first responders and potential 
victims by investing in the public infrastructure and the PSAPs 
to get the right information distributed to emergency first 
responders faster. And that has a faster payback than 
potentially some other projects.
    Mr. Burgess. Great. I thank all the panelists for their 
thoughts on that. Just being mindful that I want to stay within 
the constraints of 5 minutes because I am going to insist that 
everyone else do that on the dais, Mr. Morehead, you referenced 
the fact that, well, the Journal article about the coffeemaker, 
well, that is really not that important. But what some days 
seems trivial to one person may down the road actually be very 
significant, and I guess the overarching theme here is a 
regulatory touch. You heard Ms. Blackburn mention it, the light 
regulatory touch. Could each of you speak in one word or two 
words to the regulatory touch that you would like to see on the 
side of the agencies?
    Mr. Castro. I think we want to embrace innovation and let, 
you know, let these companies--you saw the showcases out there 
today. Imagine what it will look like 10 years from now. You 
want to see that innovation flourish.
    Mr. Burgess. Mr. Van Harlingen?
    Mr. Van Harlingen. Agreed, a light touch that fosters 
innovation and creativity and exploration in this space.
    Mr. Burgess. Great. Ms. Schooler?
    Ms. Schooler. Light touch to spur innovation.
    Mr. Morehead. The coffee from the smart coffeemaker is good 
dark, but regulatory touch I think would be better light.
    Mr. Burgess. Very good. You have all allowed me to fit 
within the constrains. I will now recognize the ranking member 
of the subcommittee, Ms. Schakowsky, 5 minutes for questions, 
please.
    Ms. Schakowsky. Thank you very much for all your testimony. 
I wanted to give a little bit of opportunity to Mr. Morehead to 
tell us a little bit more about LiveWatch. Mr. Morehead, home 
security systems have been in existence long before 2002 when 
LiveWatch was created. So as we increase our technologies, et 
cetera, what motivated you and your business partners to enter 
this space? And how do you think that what you are doing 
improves consumer experience?
    Mr. Morehead. Thank you, Ranking Member Schakowsky. When we 
entered the space, we saw an opportunity with a business model 
in the home security industry that was relatively unchanged for 
decades, predominantly ADT where customers were paying 
significant amounts of money and not getting the value that 
they needed. And we saw an opportunity to bring a technology 
focus, a disruptive technology focus to a relatively nascent 
industry.
    And the nice thing about home security is it is formed upon 
a foundation of security, right? We talk about security and 
privacy here, home security is by definition focused on 
security. So we use that as a foundation to disrupt the 
business by going direct to consumers and lower their prices by 
about 30 to 50 percent, by eliminating the middlemen of sales 
and delivery and having customers self-install their wireless 
systems.
    So all of our infrastructure is wireless. It is formed on a 
basis of security, and then from that point, we added layers of 
additional technology, received multiple patents for that to 
determine how customers could use the information that was 
flowing from those systems. Specifically the opportunity we saw 
there is a home security system was really Internet of Things 
before there was an Internet of Things. We have sensors in 
homes and businesses throughout the country, throughout the 
world. Those produce data. That data is then transmitted to a 
central station where it looks for alarms.
    But the fact of the matter is, we can do additional things 
with that information, and that is where we have taken the next 
step with our product, ASAPer, to allow customers to process 
the information, the data coming from those devices, in a more 
effective way.
    Ms. Schakowsky. Are you concerned at all? Because a number 
of people will be contacted that there is some sort of breach 
of security in the home, right? How do you protect against 
unwanted invasions of that information that is circulated to a 
certain population of people, family members for example?
    Mr. Morehead. The main thing that we try to do is we limit 
the information to the people that the homeowner or the 
business owner specifically selects to receive that 
information. So we keep it in a tight-knit group that is 
selected by that person to receive the information.
    The challenge is that there is power in numbers, and so we 
want to get the information to as many people as we can in an 
emergency because we are looking for the one person that knows 
what is actually happening and that can help resolve it.
    So we need to get it ideally just to the one person that 
knows, but to do that we have to get the information to 
multiple people. So we allow the homeowner to put those people 
on the list, and then we bring them into a group chat to help 
facilitate the resolution of that alarm signal. And we found 
that thus far, implementing the right technology and security 
on the back end, it has been a productive way to do it. And 
instead of having two to three fixed members on an alarm 
distribution list, we have tested it with up to in a school 
setting, up to 170 people simultaneously on one group chat to 
see what would happen if there was an emergency at a school and 
there is no other system that can facilitate that 
communication.
    Ms. Schakowsky. Have you seen any particular problems that 
result from having a universe as large as 170?
    Mr. Morehead. At this point we have not. Overall it has 
been pretty positive. I think that there is some learning curve 
for consumers and users as they get up to speed and say, oh, I 
am chatting and trying to have a conversation with 170 other 
people. But in the end, what you tend to find is that only one 
or two people actually step up in that conversation because 
they are the ones with the relevant information. So of that 
170, we are really just looking for the one or two people that 
can help resolve the situation.
    Ms. Schakowsky. Thank you. Mr. Castro, you said something 
interesting at the end of your written testimony about 
education and building cybersecurity education. I am going to 
read it. Congress should encourage universities to integrate 
cybersecurity training into technical degrees so that the next 
generation of coders, engineers, build strong security into 
products at the outset.
    Do we not do that now as we are training people?
    Mr. Castro. Yes, it is a great question. I mean, the field 
of information security has evolved over time. So originally 
many of the problems that we saw in computer systems were 
because the coders weren't thinking about the security issues, 
and you had people fixing that afterwards. As we are moving 
into the Internet of Things, we want people to be thinking 
about the big issues that exist today and how they can fix them 
at the outset rather than doing it later on.
    Ms. Schakowsky. Thank you. I think universities and 
educational systems have a role, too, to play, and I thank you 
for pointing that out.
    Mr. Burgess. The Chair thanks the gentlelady. The 
gentlelady yields back. The Chair recognizes the gentlelady 
from Tennessee 5 minutes for questions, please.
    Mrs. Blackburn. Thank you, Mr. Chairman, and I have got 
three questions, and I want to hear from each of you on them. 
So I appreciate brevity. And if you want to expand to anything 
further, please do it in writing within the next week or so.
    First of all, let us talk about privacy because that is 
always top of mind. What is this going to do to me if I use 
this thing? And when you talk about big data and the explosion 
of data that is out there, first of all, let us look at it like 
this. What do you think the trend is for growth of data on the 
Internet? Are we going to continue to see this explosion? And 
secondly, what should Congress' role be in protecting that 
data? And let us just start. Very quickly, Mr. Castro, I am 
going to start with you. Let us work down so we can move to 
question two.
    Mr. Castro. Sure. So in terms of the trend, it is 
increasing.
    Mrs. Blackburn. OK.
    Mr. Castro. Do you want me to address the second part?
    Mrs. Blackburn. Sure.
    Mr. Castro. Yes, and so the second part about this is, you 
know, Congress should be really looking at how consumers are 
hurt or not hurt by the use of the data.
    Mrs. Blackburn. So define harm?
    Mr. Castro. Define harm and not regulate the collection. We 
want data to be collected and shared.
    Mrs. Blackburn. OK. Yes, sir?
    Mr. Van Harlingen. So I agree the trend is huge. The amount 
of data that we have is directly proportional to the value we 
can create, and I think the way to deal with it as in the FTC's 
recommendations is pay very attention to providing notice and 
choice to the consumers.
    Mrs. Blackburn. OK.
    Ms. Schooler. I saw data recently where 90 percent of the 
data today was created in the last 2 years.
    Mrs. Blackburn. That is right.
    Ms. Schooler. I think that is indicative of the pace of 
innovation and the creation of data, and I think whatever we 
say in terms of data growth, we will be grossly wrong.
    Mrs. Blackburn. OK.
    Ms. Schooler. We will under-call it. What do we need to do 
from a policy perspective? Again, I think we need to bring 
multiple parties to the table. I think we need to bring the 
Government, industry, consumer groups to understand what some 
of the use cases are and create policy around use case versus a 
broad, blanket policy to try to manage every scenario. And two, 
I think we need to build security in from the onset as I 
mentioned in my testimony from the device to the network to the 
cloud.
    Mrs. Blackburn. OK.
    Ms. Schooler. And when we often say we want to create 
redundancy in that transmission, it means you don't always 
secure it at one point. You secure it throughout the 
transmission and the manipulation of the data. So those are my 
two comments.
    Mrs. Blackburn. OK. Mr. Morehead?
    Mr. Morehead. I think there will obviously be substantial 
growth in the data. I think you will see multiple models emerge 
because this is not a winner-take-all market, and for lack of 
better terms, I will call it an Apple model and a Google model, 
an Apple model where the data is more private and a Google 
model where the data is used publically. The customer, the 
consumer, may get less expensive hardware, less expensive or 
free services, but the data will be used to provide other 
options. So I think multiple models will emerge for the data.
    Mrs. Blackburn. OK. Second question, I want to look at 
education for consumers and some of the consent agreements that 
companies have when you are talking about the Internet of 
Things and the utilization of this data.
    Do you think that companies in these agreements for a 
particular service, did they adequately inform consumers and 
the consumers understand how this data is going to be utilized 
and what can be done to improve those privacy policies if you 
will so that consumers are offering true informed consent when 
they agree to utilization of some of the services that are 
there? And you know, one we discussed yesterday was insurance 
companies wanting you to utilize some type of component, and it 
gives you the number of hard breaks and fast stops and speeds 
driven, things of that nature. And we have got only 45 seconds 
left. So let me do this. I will ask for that response. I want 
to move onto the third question just to lay it out since we are 
going to run out of time, the economic impact. And Accenture 
had a great report on the economic impact of the Internet of 
Things. And I would like to get your take on that statement. We 
have it for you. And I want to know if you agree with it, and 
then I would like for you to speak specifically when you 
respond in writing to the challenges that exist in the United 
States to realizing this type of economic growth. What are the 
barriers to entry? What are the hurdles that are going to be 
there? What are we doing wrong from a regulatory side that are 
disenfranchising innovators? And I yield back my time.
    Mr. Burgess. The Chair thanks the gentlelady. The 
gentlelady yields back, and those responses will be anticipated 
as written responses. Mr. Cardenas of California, you are 
recognized for 5 minutes for questions, please.
    Mr. Cardenas. Thank you, Mr. Chairman. The first question 
that I have is to Ms. Schooler. The City of Los Angeles is 
still a pretty big economic juggernaut for manufacturing in 
this country. When it comes to the Internet of Things and that 
type of innovation, what do we anticipate for manufacturing and 
production of products, et cetera, and the streamlining? And 
what is in the back of my mind is jobs, the opportunity to have 
successful businesses and therefore, a good, robust economy. So 
what can we expect going forward? Is this something that is 
going to be utilized more and more when it comes to 
manufacturing or something that we plateaued on where are we 
at, do you think?
    Ms. Schooler. Excellent question. We very much believe 
manufacturing will be smart manufacturing, in particular will 
be an excellent opportunity for the Internet of Things. At 
Intel we actually deployed a smart manufacturing pilot within 
one of our manufacturing facilities, and as you know, we make 
millions of things every year. So I think we are a pretty good 
test case. In that implementation we found that we collected 
data that allowed us to do predictive maintenance, and with 
predictive maintenance you increase up-time, you improve 
yields. And in that pilot, we realized a $9 million return on 
that single opportunity for that pilot in that single factory.
    Accenture published a report recently that they said 87 
percent of the CEOs in the country see a long-term job growth 
opportunity, and I think to put that into practical terms, if 
you think about lowering the cost of goods sold, that is a 
great way to attract jobs back to the United States. So number 
one, let us optimize our manufacturing facilities from a 
product-cost perspective, use the technology to use predictive 
maintenance as a capability to increase up-times, again 
bringing down the total cost of goods, and to improve the 
utilization and the effective utilization rates of the 
equipment, again, improving output.
    So I think all of these things will result in job creation 
and bringing jobs back on shore.
    Mr. Cardenas. Thank you. And I like your example that you 
gave, and it reminds me that efficiency is a win, win, win, 
win, win, not only for the manufacturer but also for the 
consumer and for the community.
    Which leads me to my next question. Brian, if you could 
please. Hopefully it is a great answer for Los Angeles. 
California is going through a drought. We have yet to see the 
worst of it. So what do you see in the consumer space or even 
in the industrial space when it comes to efficiency, 
opportunities for energy, water, things of that nature with 
this technology?
    Mr. Morehead. So one of the technologies that we are 
working on in particular is a technology that we call Echo that 
allows the consumer's home or a business to monitor their 
energy use, their water use, in great detail through a single 
point using the existing infrastructure in the home. It is a 
very cost-competitive technology or cost-effective technology. 
We think we will educate people about how water and power are 
being used in their house and lead to improved behavior around 
that consumption.
    Mr. Cardenas. So you see a lot of advancements there and a 
lot more usage?
    Mr. Morehead. Absolutely. It is a place that we are putting 
a lot of our research efforts.
    Mr. Cardenas. Yes. Hopefully it is a lot more efficient 
than pounding on the door when I tell my kids they have to take 
shorter showers.
    Mr. Morehead. Agreed. It is also very good at detecting 
leaks which are a huge source of water waste in the city.
    Mr. Cardenas. Absolutely. Well, thank you. And the last 
question to whoever would like to help enlighten us, what can 
we learn from the rest of the world? We are very spoiled in 
this country. We are still the economic juggernaut of the 
planet. We are looked to by many places around the planet for 
leadership. But once in a while we see ourselves looking and 
jog our head back and go wow. They got it right over there. 
They did something really cool or they did something that is 
advanced or something that we probably should have thought of 
but we didn't. What examples can you enlighten us about what is 
going on maybe around the world that we could learn from and 
then take their leadership?
    Mr. Castro. Well, following up on your question about the 
water, if you look at India, I mean, so many countries have 
these big economic and social problems. They don't have any 
alternative but to go to the best technology and really look 
for an innovative solution. So in India, you know, they have 
decaying water infrastructure. Using smart technology, they are 
able to actually you know, cut significant waste at less cost 
than it would have been to replace the infrastructure. So 
really the United States should be looking at the same thing. 
We have decaying infrastructure. We just have a lot more money. 
So how can we do it really efficiently?
    Mr. Cardenas. Thank you. Real quick?
    Ms. Schooler. I would be happy to go next. I think I noted 
in my testimony that we see national IoT plans in other 
countries, Germany, Brazil, China. I definitely think as we had 
a broadband plan, we should have an IoT strategy and plan for 
the country. I think that would help us accelerate our 
learnings and accelerate our deployments which is critical.
    And just interestingly enough, a little tidbit from the 
demo room, I was talking to the SteadyServ beer keg optimizer 
which I think is a fascinating IoT use case. And in that 
deployment, one of the things that he was discussing and we 
were talking about was the adoption between the United States 
and Europe. Well, in Europe, they are looking at the 
opportunity, looking at the return on the investment in 
adopting the technology much more aggressively. And in the 
United States, there is still some hesitancy because it is not 
how we are used to doing it. And I think collectively between 
Government and industry, large business and small business, we 
have to start embracing technology in a much more aggressive 
fashion than we have in the past.
    Mr. Cardenas. Thank you, Mr. Chairman. I yield.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back. The Chair recognizes the gentleman from New 
Jersey, vice chairman of the committee, Mr. Lance, for 5 
minutes for your questions, please.
    Mr. Lance. Thank you, Mr. Chairman. And good morning to the 
panel. I was very pleased to see Alcatel-Lucent, Bell Labs, and 
Qualcomm representing the district I serve at the showcase 
today, and I thought it was a wonderful showcase. And I commend 
the chairman for his hard work in making sure that it occurred.
    Bell Labs demonstrated truly remarkable 5G wireless 
technology that will enable a variety of Internet of Things 
applications such as high-quality videos, smart meters, and 
connected cars. One thing is clear. Spectrum is one of the 
engines that will drive the Internet of Things revolution.
    To the panel in its entirety, what would you suggest that 
Congress do to provide the spectrum resources needed to support 
next generation networks in the Internet of Things? Mr. Castro?
    Mr. Castro. Thank you. As we can see in these demos and 
just looking around the market, there are going to be a growing 
number of devices, a huge number of devices everywhere. So I 
think just in general, we are looking for commercial spectrum 
to be available, both licensed and unlicensed, and that is 
something that I think we are just going to have--Congress will 
have to continue to monitor and promote.
    Mr. Lance. Thank you.
    Mr. Van Harlingen. I agree. I think that there are 
requirements for both licensed and unlicensed spectrum for a 
variety of different applications. I would encourage Congress 
to collaborate in detail with the industry on what those needs 
are and provide that spectrum as available.
    Mr. Lance. Thank you.
    Ms. Schooler. I agree with the previous comments. I think 
we need to leverage both the licensed and unlicensed spectrum, 
utilize the technologies that exist today to get the economies 
of scale that will enable us to drive and growth and accelerate 
deployments. That in lieu of looking at a specific use case and 
a specific spectrum band for IoT, I think we should leverage 
what we have today.
    Mr. Lance. Thank you. Mr. Morehead?
    Mr. Morehead. As we look forward, it is important to 
understand where we are going with the spectrum. I think that 
there are some lessons we can learn from the past. One of the 
challenges for those of us that have been doing IoT for the 
last decade or so is backward compatibility and sunset of 
existing wireless connectivity, 2G, 2 \1/2\G and the sunset 
that is happening with the wireless providers there is creating 
a big issue for us where we already have Internet of Things 
systems in the field and we are having to replace those. It is 
a large expense.
    So as you think about moving forward what you want to do 
with the spectrum, I think it is important to consider backward 
compatibility and when and how those wireless systems sunset.
    Mr. Lance. OK. Thank you very much to the entire panel. Mr. 
Castro, privacy oftentimes means different things to different 
people. Do you think the market is capable of addressing 
concerns related to privacy in the Internet of Things market 
over time?
    Mr. Castro. Yes. I think, you know, consistently what we 
see is when there is new technologies--and this goes back, you 
know, decades, centuries even--when new technologies come out, 
there are fears and doubt and uncertainty about the technology. 
But what we see is over time many of those issues are resolved 
just by the market, that you have this, you know, convergence 
between what business wants to do, what consumers want to have, 
and what Government regulates. And a lot of these issues are 
worked out which is why in general I think we want this light 
touch approach. Especially it is important with the Internet of 
Things because so much of the innovation is around the data, 
and if you can't have companies sharing or reusing this data 
for lots of innovative purposes, this kind of long tail of 
innovation, you are not going to get this magnitude of benefits 
that we want to see.
    Mr. Lance. Thank you. Belkin has a close connection to 
consumers and access to very personal data. How has Belkin 
approached the privacy and security of consumer data in its 
product offerings?
    Mr. Van Harlingen. So Belkin takes privacy very seriously. 
Some of our products, you know, are very close to consumers, as 
you mentioned, including cameras and things like that. We work 
very closely on security, stay standard and ahead of the curve 
with industry standards. We have an application security team 
that is very active in the industry working with the Black Hat 
Community and other security researchers, and they are very 
thorough at reviewing our products, both before launch as well 
as after launch.
    Mr. Lance. Thank you. Mr. Chairman, I yield back 28 
seconds.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
does yield back. The Chair recognizes the gentleman from 
Houston, Mr. Olson, 5 minutes for your questions, please.
    Mr. Olson. I thank the Chair, and welcome to our witnesses. 
I want to follow up on my colleague's comments from California 
about manufacturing. As you all know, in the last decade, loss 
of good manufacturing jobs have left America and gone overseas. 
Many reasons, excessive taxes, excess regulations, but this 
appears to be the opportunity to bring things back to America 
with the IoT. So my question to you, Ms. Schooler, as one who 
has manufacturing as part of your business, you mentioned 
Germany, Brazil, and China. What are they doing that we are not 
doing? What can we learn from them and how can we make sure we 
have U.S. leadership to quote you in the future on the IoT?
    Ms. Schooler. Thank you. So one of the things that I noted 
was some of the advancements in the manufacturing capabilities 
in the IoT standards and national policy in other countries. If 
you look in areas like Germany, you will see some of the most 
highly automated, highly advanced connected factories in the 
world. I think there is a lot we can learn by going into some 
of these other geographies and understanding and levering some 
of the advancements that they have put into place up until now.
    If you look at places like China, they are highly adopting 
and supporting things like smart cities where they are using 
the technology, not only for manufacturing capability but also 
for societal positive impact by looking at the air quality as 
an example. We can look at use cases such as monitoring the 
health of an oil pipeline, all of these things, and a lot of it 
is around predictive maintenance. I think as we journey as 
industry over into these other geographies, understand the 
deployment capabilities that are in place. We need to bring 
that back into the dialogue that we are having on a regular 
basis, both with our other industry partners as well as 
Government to continue to progress our policy to support some 
of the implementations of these technologies moving forward.
    Mr. Olson. I know there are at least two domestic groups 
that are looking at interoperability here in America and open 
standards. Is that enough? Should there be more? Who else 
should be involved in this? Because let us bring those jobs 
back.
    Ms. Schooler. Standards is an excellent point. We have the 
OIC and the IIC which I believe are the two----
    Mr. Olson. Yes.
    Ms. Schooler [continuing]. Consortiums that you are 
inferring. One is the Industrial Internet Consortium and the 
other is the Open Internet Consortium. In both of those cases, 
you are taking very large members of industry, bringing them 
together to really set whether it be an architectural framework 
or series of test beds that allow for the understanding of the 
deployment. It is one thing to set standards. It is another 
thing to architect and build solutions based on those 
standards.
    So in both of those bodies you have not only the definition 
of the architecture but the deployment and the testing of the 
implementation of that architecture.
    So I think those are a good start. I think if you look from 
a connectivity perspective, you have efforts in 3GPP around 5G 
that are looking at IoT-specific use cases. We need to continue 
to put wood behind the arrow on the connectivity solutions as 
well. So I think we have a good start. I think as we continue 
through the commercial deployment phase, it remains to be seen 
as if it is enough or if we need to extend those standards' 
efforts further as we learn more through our initial 
commercialization efforts.
    Mr. Olson. Thank you. Mr. Castro, any comments, sir, on the 
issue of manufacturing, bringing it back to America? And Mr. 
Van Harlingen? Anybody before I get my time run out here?
    Mr. Castro. I think you are absolutely right. When we look 
at, you know, the opportunity here, the United States leads in 
this technology area, and we want to, you know, regain these 
manufacturing jobs. The way to do it is by investing and having 
the most innovative factories. And when we look--you know, the 
examples that I have in my testimony I submitted for the 
record, you know, we see U.S. companies leading in this space 
on the Intel, Harley Davidson, Raytheon, you know, these 
companies that are able to track to the turn of the screw what 
is going on in the factory and use that data to operate more 
efficiently than anyone else. That is our competitive 
advantage. We have to make sure we are investing in that 
opportunity. We have to make sure that our schools that are 
leading the development of this have the funding to do that, 
and that is one opportunity that Congress might be able to help 
support further.
    Mr. Olson. Mr. Harlingen?
    Mr. Van Harlingen. As a consumer electronics company, most 
of our focus is on consumer products. A lot of our 
manufacturing is done off shore, but we are constantly 
evaluating opportunities to bring manufacturing back on shore. 
There have been a couple of instances in some of our business 
areas where we have done so, and we are enthusiastic about 
doing so. We look forward to IoT technologies brought by other 
companies into the manufacturing sector to make that more 
possible and more practical for companies like ourselves.
    Mr. Olson. Well, come back to Texas. Mr. Morehead, your 
final thoughts, sir?
    Mr. Morehead. I am not as involved in the manufacturing 
side, but most of our vendors unfortunately do use off-shore 
partners. Where I see the opportunity, though, here is the fact 
that we are talking about 25 billion devices being implemented 
in the United States or some portion of that. You can't 
outsource the installation, activation, servicing, and 
redeployment of those devices here in the United States. So 
potentially retraining that workforce to get them intelligent 
and smart on how to maintain and install the devices could be 
another way to engage the workforce in the United States as 
opposed to just being dependent on the manufacturing.
    Mr. Olson. Thank you. Yield back. Out of time.
    Mr. Burgess. The gentleman's time has expired. The 
gentleman yields back. The Chair recognizes the gentleman Mr. 
Mullin from Oklahoma for questions, 5 minutes, please.
    Mr. Mullin. Thank you, Mr. Chairman, and first off, I would 
like to thank the CMT staff for organizing the showcase earlier 
this morning and of course, all the participants. I was kind of 
blown away.
    One technology that was out there is brought to you by Al 
Sutherland from my State who shared the amazing technology that 
has already proven extremely useful to people like myself in 
the farming and ranching business. Mr. Sutherland has a product 
called the Mesonet where basically--and I hope I said that 
right--but basically it has a monitoring station in all 77 
counties throughout the State. One of them is just located a 
couple miles from our place. It gives us real up-to-date 
information. He was demonstrating the app on the phone. I had 
that app downloaded real shortly, considering that this time of 
the year we begin to start burning off fields and then we enter 
hay season. It is very useful. In fact, I was very upset that I 
didn't already have it on my phone. It would have helped a few 
times laying that hay down. You can predict weather only so 
well. Well, it gives us some great technology.
    So it shows itself very useful out there. But there is been 
some fear around technology. There is this group of people out 
there that says, you know, it is going to eliminate jobs. And 
so for our panel, whoever wants to answer this, how do we 
combat that fear? You know, people automatically fear things 
that they don't understand. We see that all the time. But there 
is an argument being said that, look. If we go so far and we 
start continuing getting smart machines, our unemployment is 
going to rise. Go ahead, ma'am.
    Ms. Schooler. Yes, I think we need to continue to 
communicate the positive impacts that we see by doing things 
like the smart manufacturing use case that we talked about 
earlier. As I noted Intel implemented a smart capability within 
our own factory, and it provided a $9 million savings in just 
one factory. And what was that savings based on? Equipment 
utilization rates, predictive and preventative maintenance, and 
for every time you institutionalize one of those learnings, you 
bring down product cost. You bring down product costs, you get 
more competitive on a world-wide basis, and you have the 
opportunity to bring jobs back to the United States.
    In those cases, I think we need to get much more aggressive 
in sharing those stories and sharing those learnings to balance 
out some of the fear and uncertainty that are put into the 
press around the other use cases where the news is very 
negative around job destruction.
    Mr. Mullin. All right.
    Ms. Schooler. I noted the data point earlier that in the 
January Accenture survey, 87 percent of the CEOs believe it is 
going to create new jobs. Mr. Morehead noted that, even in some 
cases if it is a consumer device and it is being manufactured 
off shore, these still need installed. There are still 
services. There are still new information-type positions that 
are going to be created. It may not be in all cases the types 
of jobs that we are used to today, but it will result in job 
creation moving forward. I am very passionate about that.
    Mr. Mullin. So how do we educate the people? Do we start 
putting these in trade schools? Do we start in high school? How 
do we implement it? And that is for anybody on the panel that 
wants to try answering this.
    Mr. Castro. I will jump in. I mean so, you know, there is 
myth that robots or automation kill jobs. I think part of that 
is an education problem that, you know, better economics 
lessons will teach people that, you know, if you look at the 
history--you know, I mean, if we want full employment, yes, we 
can get rid of John Deere and all the tractors on farms and, 
you know, problem solved. That is not what we want to do. We 
want to lower prices for consumers. We want more efficiency. 
And most of the Internet things examples that we are talking 
about, they are addressing these issues. They are addressing, 
you know, productivity on farms. You look at safety issues, you 
know, automation with grain bins, you know, making workers 
safer. That is not eliminating jobs. That is actually improving 
quality of life.
    So I think once people start to see how this actually helps 
them, they are going to realize it is not technology to be 
feared but that technology improves their life.
    Mr. Mullin. Anybody else?
    Mr. Van Harlingen. So agreed. You know, this technology 
promises, like any new technology, it is going to bring change. 
Hopefully it will bring manufacturing opportunities back to the 
United States, and that will create jobs. But it is also going 
to create different types of jobs. As we mentioned in the 
service industry and things like that, I think it is going to 
be important to invest in education to prepare people for those 
new types of roles.
    Mr. Mullin. Thank you. I appreciate your time and once 
again appreciate the CMT putting this hearing together. Thank 
you. I will yield back.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back. The Chair recognizes Mr. Harper from Mississippi 5 
minutes for questions, please.
    Mr. Harper. Thank you, Mr. Chairman, and thanks to each of 
you for being here today and really exciting to see the stuff 
on display this morning at the showcase, and I was obviously 
very happy to see Camgian Microsystems there which had a 
display on their new product, Egburt, so Gary Butler who 
started that. It is pretty remarkable what it does and can be 
used for a broad range of remote monitoring including the 
infrastructure help for say bridges and dams, and the future 
looks great for our country and to make sure that we have the 
innovation that we need and how we handle that, how we do it 
from Congress. So thank you for adding your insight to that.
    Mr. Castro, I know we discussed the governance aspect of 
this already, but within that Internet of Things, would there 
be a difference on that governance based upon the specific 
product or machines in that variance there? How would you 
comment on that?
    Mr. Castro. Absolutely. I think, you know, the traditional 
way that Congress has looked at a lot of data issues is 
industry specific. I think that is a very useful framework. And 
it, you know, differentiates us from Europe which has these 
broad-based privacy rules. And I think that is one of the 
reasons we were so much more successful I this space.
    But going forward, we should continue to do that. We should 
look. Are there areas where people have particular 
sensitivities? Maybe it is in education. Maybe it is in 
healthcare. We have different rules there, but we allow that 
same flexibility of sharing data throughout all of those 
sectors.
    Mr. Harper. And so should that governance even different 
within itself be different than other industries, let us say? 
Give me a little bit more meat on the bones for that.
    Mr. Castro. Yes. So you know, it really depends I think on 
what the consumer harm is that we are trying to protect 
against. So for example, you know, a really good example that 
we have historically is discrimination against pregnant women 
when they go to apply for a job. You know, that is something 
that we don't want to have happen. So we restrict that use. It 
doesn't matter how you found that information out. It doesn't 
matter if it is accurate or not. It doesn't matter if you 
guessed it from, you know, using some kind of in-home smart 
system or you, you know, just saw someone walking down the 
street. The point is we regulate the use. And that is what we 
want to do. We want to look very clearly at what it is we don't 
want to have happen and make that illegal. And that provides 
consumers with confidence no matter where their data goes, or 
if there is a data breach, they are still safe.
    Mr. Harper. Well, what we want to make sure of from our end 
is we don't issue some regulation or enable some regulation 
that stifles innovation within the creative industry. And so 
that sometimes is a tough balancing act. But it seems to allow 
for more innovation if we get out of the way sometimes and 
don't create that roadblock at the beginning.
    Ms. Schooler, if I could ask you, do you see an overlap 
between consumer uses and enterprise or industry use of the 
Internet of Things?
    Ms. Schooler. I will respond to that in two factions.
    Mr. Harper. OK.
    Ms. Schooler. I think from a privacy concern the use cases 
are very different. As Mr. Castro noted, I think the consumer 
privacy issues are going to need to have a specific type of set 
of considerations around how you share information, what 
personal information you share, versus in an enterprise 
implementation, you are really collecting, analyzing data 
within the confines of your own enterprise yourself. So I think 
those use cases will be very different.
    The area that I do think that we can leverage learnings is 
in security. I think if we look at security as a foundational 
element built in from the onset of implementation, there is a 
couple different vectors that we have to consider. One, you 
need to secure the device, the network, and the cloud because 
all are critical on-ramps into the Internet of Things. And if 
you only secure one of those assets and not the entire 
pipeline, if you will, I think that is an insufficient way to 
look at the architecture from a device to a cloud perspective. 
So that is one.
    Number two, I think we not only need to build in 
intellectual property into our silicon architectures and we are 
doing much of that at Intel, we also need to also build upon 
that software that monitors and manages those security 
concerns. The unique position that we are in at Intel is that 
we have both assets. So we are looking at how do we not only 
secure the device to the network to the cloud, how do we do it 
in silicon and how do we do it in software, such that we can 
create the most robust, secure, IoT implementation possible 
across consumer, industrial, and commercial implementations.
    Mr. Harper. Thanks to each of you, and I yield back the 
balance of my time.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman from Mississippi. Seeing no other members wishing 
to ask questions, I do want to thank the witnesses and the 
members for participating in today's hearing. Before we 
conclude, I would like to include the following document to be 
submitted for the record by unanimous consent: A letter on 
behalf of the Consumer Electronics Association.
    [The information appears at the conclusion of the hearing.]
    Mr. Burgess. Pursuant to committee rules, I remind members 
they have 10 business days to submit additional questions for 
the record. I ask that the witnesses submit their response 
within 10 business days upon receipt of those written 
questions. I also want to take just a moment and thank the 
subcommittee staff for their hard work on the showcase this 
morning. I thought it was very informative and instructive, and 
without objection, the subcommittee is adjourned.
    [Whereupon, at 12:28 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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