[Senate Report 115-90]
[From the U.S. Government Publishing Office]


                                                         Calendar No. 113
                                                         
                                                         
115th Congress}                                            { Report
                                 SENATE
 1st Session  }                                            { 115-90

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

      DEVELOPING INNOVATION AND GROWING THE INTERNET OF THINGS ACT

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                 S. 88

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                  June 5, 2017.--Ordered to be printed
                  
                  
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
       
                     ONE HUNDRED FIFTEENTH CONGRESS
                             FIRST SESSION

                   JOHN THUNE, South Dakota, Chairman
 ROGER F. WICKER, Mississippi         BILL NELSON, Florida
 ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
 TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
 DEB FISCHER, Nebraska                RICHARD BLUMENTHAL, Connecticut
 JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii
 DAN SULLIVAN, Alaska                 EDWARD J. MARKEY, Massachusetts
 DEAN HELLER, Nevada                  CORY A. BOOKER, New Jersey
 JAMES M. INHOFE, Oklahoma            TOM UDALL, New Mexico
 MIKE LEE, Utah                       GARY C. PETERS, Michigan
 RON JOHNSON, Wisconsin               TAMMY BALDWIN, Wisconsin
 SHELLEY MOORE CAPITO, West           TAMMY DUCKWORTH, Illinois
    Virginia
 CORY GARDNER, Colorado               MARGARETWOODHASSAN,NewHampshire
 TODD C. YOUNG, Indiana               CATHERINE CORTEZ MASTO, Nevada
                       Nick Rossi, Staff Director
                 Adrian Arnakis, Deputy Staff Director
                    Jason Van Beek, General Counsel
                 Kim Lipsky, Democratic Staff Director
           Christopher Day, Democratic Deputy Staff Director
           
           

                                                        Calendar No. 113

115th Congress}                                            { Report
                                 SENATE
 1st Session  }                                            { 115-90

======================================================================
 
      DEVELOPING INNOVATION AND GROWING THE INTERNET OF THINGS ACT

                                _______
                                

                  June 5, 2017.--Ordered to be printed

                                _______
                                

Mr. Thune, from the Committee on Commerce, Science, and Transportation, 
                        submitted the following

                              R E P O R T

                          [To accompany S. 88]

      [Including Cost Estimate of the Congressional Budget Office]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 88) to ensure appropriate 
spectrum planning and interagency coordination to support the 
Internet of Things, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                          Purpose of the Bill

    S. 88 would take steps to help develop a national strategy 
to encourage the development of the Internet of Things (IoT).

                          Background and Needs

    IoT can be described as the widespread integration and 
proliferation of Internet-connected devices, such as home 
appliances, medical devices, remote sensors, and cars. It has 
been said that IoT brings the physical and digital world 
together.\1\ Examples of IoT applications include the 
following: subcutaneous body sensors that provide a patient's 
real-time vital signs to medical providers; applications that 
allow users' phones to monitor and adjust household functions, 
from pre-heating an oven to running a bath and controlling 
smart lightbulbs; smart cities where ubiquitous sensors allow 
for smoother flow of traffic; and sensored roadways, buildings, 
bridges, and dams that automatically communicate their 
structural integrity to officials, providing alerts when 
repairs or upgrades are needed.\2\
    IoT is still in its early stages, but is expected to impact 
every sector of the economy to varying degrees. Examples 
include the following: gains in health care through remote 
monitoring; improvements in manufacturing efficiency and supply 
chain tracking; reductions in peak electrical grid usage; 
traffic management that adjusts traffic light timing and bus 
routes; and improvements in agriculture through better water 
management and the ability to more closely track changes in 
soil temperature as well as levels of carbon and nitrogen.\3\
    One analyst group, McKinsey & Company, has estimated that 
IoT could contribute $2.7 trillion to $6.2 trillion to the 
world economy annually by 2025.\4\ Health care applications 
alone could have an economic impact of $1.1 trillion to $2.5 
trillion per year by 2025.\5\ Worldwide, the global market for 
IoT devices and services is expected to exceed $7 trillion by 
2020.\6\ And an estimated 50 billion devices are expected to be 
connected by 2020.\7\
    Estimates of the impact of IoT on the U.S. economy vary, 
but experts project the impact to be substantial. For instance, 
using the McKinsey & Company study as a base, the Progressive 
Policy Institute estimates the United States could realize one-
third of total global IoT economic benefit, raising U.S. gross 
domestic product 2 to 5 percent by 2025.\8\
    Some have argued, to fully realize the potential of IoT, 
countries should craft a national strategy to promote IoT 
development and adoption, which the United States has not done. 
Establishing such a national strategy to encourage the 
development of IoT has the support of a diverse set of 
stakeholders, including The App Association, the U.S. Chamber 
of Commerce, the Competitive Carriers Association, the Consumer 
Technology Association, Intel, the Information Technology 
Industry Council, the National Association of Manufacturers, 
the Tech CEO Council, the Telecommunications Industry 
Association, and the Semiconductor Industry Association.

---------------------------------------------------------------------------
    \1\``Samsung CEO BK Yoon's Internet of Things Keynote at CES 2015'' 
(Full Transcript), The Sinju Post, January 14, 2015, at http://
singjupost.com/samsung-ceo-bk-yoons-internet-of-things-keynote-at-ces-
2015-full-transcript.
    \2\Pew Research Center, ``The Internet of Things Will Thrive by 
2025,'' May 4, 2014, at p. 8, at http://www.pewinternet.org/2014/05/14/
internet-of-things/.
    \3\McKinsey Global Institute, Disruptive technologies: Advances 
that will transform life, business, and the global economy, May 2013 at 
pp. 56-58, at http://www.mckinsey.com/insights/business_technology/
disruptive_technologies.
    \4\McKinsey Global Institute Study, at pp. 51-55.
    \5\O'Sullivan, Andrea; Thierer, Adam, Projecting the Growth and 
Economic Impact of the Internet of Things, Mercatus Center Policy 
Briefing, June 15, 2015, at p. 7, at https://www.mercatus.org/
publication/projecting-growth-and-economic-impact-internet-things.
    \6\Wood, Molly, ``At the International CES, the Internet of Things 
hits home,'' The New York Times, May 4, 2014,
    \7\Federal Trade Commission Staff Report, ``Internet of Things: 
Privacy & Security in a Connected World,'' January 2015, at http://
www.ftc.gov/system/files/documents/reports/federal-trade-commission-
staff-report-november-2013-workshop-entitled-internet-things-privacy/
150127iotrpt.pdf.
    \8\Mandel, Michael, ``Can the Internet of Everything Bring Back the 
High-Growth Economy?,'' Progressive Policy Institute, September 2013, 
at p.2, at http://www.progressivepolicy.org/wp-content/uploads/2013/09/
09.2013-MandellCan-the-Internet-of-Everything-Bring-Back-the-High-
GrowthEconomy-1.pdf.
---------------------------------------------------------------------------

                         Summary of Provisions

    S. 88, also known as the DIGIT Act, is intended to help 
create a national strategy for IoT. The bill would require the 
Secretary of Commerce (Secretary) to convene a working group of 
Federal agencies, advised by a steering committee of 
nongovernmental stakeholders established within the Department 
of Commerce (DOC) to advise the Federal working group, to 
provide recommendations to Congress on how to plan and 
encourage the growth of IoT.
    The bill is structured so that the nongovernmental steering 
committee would exist to do the following: (1) advise the 
working group; and (2) submit a report with recommendations to 
the working group. The working group, in addition to its duties 
and recommendations, would be required to assess 
recommendations made by the steering committee and comment on 
them in the report the working group sends to Congress. The 
working group would be required to submit its findings and 
recommendations to Congress no later than 18 months after the 
bill's enactment.
    The bill also would direct the Federal Communications 
Commission (FCC or Commission), in consultation with DOC's 
National Telecommunications and Information Administration 
(NTIA), to complete a report summarizing notice of inquiry 
assessing the spectrum needs required to support IoT no later 
than 1 year after the bill's enactment.

                          Legislative History

    On January 10, 2017, Senator Fischer introduced S. 88 with 
Senators Booker, Gardner, and Schatz as cosponsors. On January 
24, 2017, the Committee met in open Executive Session and, by 
voice vote, ordered the bill to be reported without amendment.
    On January 24, 2017, Representatives Paulsen and Welch 
introduced H.R. 686, a House of Representatives companion bill 
that is identical to this bill. That bill was referred to the 
Committee on Energy and Commerce of the House of 
Representatives.
    On April 27, 2016, in the 114th Congress, the Committee 
ordered S. 2607 to be reported favorably with an amendment (in 
the nature of a substitute). The reported text of that bill is 
substantially similar to this bill.
    On February 11, 2015, the Committee, as the Senate 
committee with primary and general jurisdiction over Internet 
and IoT matters, held the first-ever congressional hearing 
examining the economic and policy implications of IoT. The 
Committee received testimony from a panel of five private 
sector witnesses.

                            Estimated Costs

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

S. 88--Developing Innovation and Growing the Internet of Things Act

    S. 88 would direct the Department of Commerce (DOC) to 
convene a working group of representatives from various federal 
agencies and a steering committee of private stakeholders to 
produce reports and recommendations to the Congress to improve 
intragovernmental coordination and to encourage the development 
of the Internet of things. (The Internet of things refers to 
the growing number of devices that connect to the Internet and 
interact with one another.) The bill also would direct the 
Federal Communications Commission (FCC) to prepare a report 
assessing the need for spectrum to support such developments.
    Based on an analysis of information from the affected 
agencies, CBO estimates that implementing S. 88 would require 
about sixteen employees and would cost $4 million over the 
2018-2022 period to convene the working group and to develop 
the reports required under the bill. Those costs would be 
spread among the federal agencies that would be a part of the 
working group and such spending would be subject to the 
availability of appropriated funds. Participating in the 
working group and completing the spectrum report would cost the 
FCC less than $500,000. However, the FCC is authorized to 
collect fees sufficient to offset the costs of its regulatory 
activities each year; therefore, CBO estimates that the net 
effect on discretionary spending for those activities would be 
negligible, assuming appropriation actions consistent with that 
authority.
    Enacting S. 88 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting S. 88 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2028.
    S. 88 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Stephen Rabent. 
The estimate was approved by H. Samuel Papenfuss, Assistant 
Director for Budget Analysis.

                           Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

    The bill does not authorize any new regulations and would 
not subject any individuals or businesses to new regulations.

                            economic impact

    The bill would not have an adverse economic impact on the 
Nation.

                                privacy

    The bill would not have any adverse impact on the personal 
privacy of individuals.

                               paperwork

    The bill would require three reports from the Federal 
Government. The first report would be submitted by the steering 
committee to the working group within 1 year after the date of 
enactment. The second report would be submitted by the working 
group to Congress no later than 18 months after the date of 
enactment. The third report would require the FCC to submit to 
the appropriate committees of Congress no later than 1 year of 
enactment a report summarizing the comments submitted in 
response to the notice of inquiry seeking public comment on the 
current, as of the date of enactment, and future spectrum needs 
of IoT.

                   Congressionally Directed Spending

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.


                      Section-by-Section Analysis


Section 1. Short title.

    This section would establish the bill's short title as 
``Developing Innovation and Growing the Internet of Things 
Act'' or the ``DIGIT Act.''

Section 2. Findings; sense of Congress.

    This section would set out findings and express the sense 
of Congress that IoT policies would maximize the potential and 
development of IoT to benefit all stakeholders, including 
businesses, governments, and consumers.

Section 3. Definitions.

    This section would establish definitions for terms used 
throughout the bill.

Section 4. Federal working group.

    This section would require the Secretary to convene a 
working group of Federal entities to study and make 
recommendations on various IoT matters. It also would establish 
a steering committee within the DOC comprised of a wide range 
of stakeholders outside the Federal Government to make 
recommendations to the working group.
    The Secretary would have discretion in forming the Federal 
working group, but would be required to consider seeking 
representation from the DOC and other departments and agencies 
as follows: NTIA; the National Institute of Standards and 
Technology; the National Oceanic and Atmospheric 
Administration; the Departments of Transportation, Homeland 
Security, and Energy; the Office of Management and Budget; the 
National Science Foundation; the FCC; the Federal Trade 
Commission; and the Office of Science and Technology Policy.
    The section would require the working group to do the 
following: (1) identify any Federal regulations, statutes, 
grant practices, budgetary or jurisdictional challenges, and 
other sector-specific policies that are inhibiting or could 
inhibit the development of IoT; (2) consider policies or 
programs to encourage and improve coordination among Federal 
agencies with jurisdiction over IoT; (3) consider any findings 
or recommendations made by the steering committee and, where 
appropriate, act to implement those recommendations; and (4) 
examine how Federal agencies use and can benefit from IoT, 
including preparedness to adopt IoT.
    The working group would be required to consult with various 
nongovernmental stakeholders, including, among others, the 
steering committee and subject matter experts representing a 
variety of industry and civil society stakeholders, including 
small business and rural stakeholders.
    The steering committee, which would be appointed by the 
Secretary, would advise the working group on the following: (1) 
potential regulatory, statutory, grant, programmatic, 
budgetary, and jurisdictional challenges to development of IoT; 
(2) spectrum availability to support IoT; (3) policies and 
programs relating to privacy, security, or coordination among 
Federal agencies with jurisdiction over IoT; (4) the use of IoT 
by small businesses; and (5) international proceedings 
affecting IoT. The steering committee, within 1 year of the 
bill's enactment, would be required to submit its findings and 
recommendations to the working group; the working group would 
be required to consider and comment on any recommendations made 
by the steering committee within 1 year of the bill's 
enactment.
    The section would further provide that the steering 
committee would be required to set its own agenda in carrying 
out its duties, but that the working group could suggest topics 
or items for steering committee consideration. It also would 
state that the steering committee's report must be the result 
of the independent judgment of the steering committee. The 
steering committee would terminate on the date on which the 
working group submits its report to Congress as required by 
this section, unless the Secretary files a new charter for the 
steering committee.
    The working group would be required to submit its findings 
and recommendations to Congress, along with the steering 
committee's findings and recommendations, no later than 18 
months after the bill's enactment.

Section 5. Assessing spectrum needs.

    This section would require the FCC, in consultation with 
NTIA, to issue a notice of inquiry seeking public comment on 
the current and future spectrum needs of IoT. Specifically, the 
inquiry would seek comment on the adequacy of available 
spectrum, what regulatory barriers exist to accessing 
sufficient spectrum, as well as the role of licensed and 
unlicensed spectrum to support the proliferation of IoT. The 
Commission would be required to submit to the appropriate 
committees of Congress, as defined in section 3, within 1 year 
of enactment a report summarizing the comments submitted in 
response to the notice of inquiry.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
bill as reported would make no change to existing law.

                                  [all]