Ministers for the Department of Communications and the Arts

Internet of Things Summit

26 March 2015

#Check against delivery#

Good morning.

Thank you to Suzanne Campbell and Kee Wong, Chair of the AIIA, for today's event. It's great to be here.

And welcome to our international guests including:

  • Lutz Heuser, CEO, Urban Institute in Chemnitz, Germany
  • Steve Leonard, Executive Deputy Chairman, Infocomm Development Authority of Singapore and
  • Bill Chang, Chief Executive Office Group Enterprise of Singtel

Introduction

Muhammad Ali once boasted he was so fast that he could turn off a light switch and be in bed before it's dark.

In the hyper-connected world we are very quickly becoming accustomed to, that feat is not nearly so impressive.

In fact, not only could you be in your bed before it's dark, you could adjust the light's tone to match a photo of your favourite sunset, turn on your favourite song and turn down the temperature of your fridge.

In a world where previously 'dumb' devices can speak to each other - where we move from an Internet of connected computers to an Internet of connected things - Muhammad Ali actually starts to look a bit on the slow side.

In the last two decades the Internet has grown up around us and a new generation of 'digital natives' have in turn grown up around the Internet. It has changed the way we work, communicate, bank, date, catch taxis, watch TV and read the newspaper.

But the growth of the 'Internet of Things' has not been so obvious.  Humans are, in a sense, increasingly being cut out of the conversation as devices communicate with each other as they react to changes in their natural environment.

The two key trends that have driven the 'Internet of Things' has been the increasing ubiquity of connectivity - via mobile, WiFi and fixed line - and the explosion in data. Sensors are now collecting just about everything there is to collect - movement, load, volume, speed, gasses - aided of course by gains in processing power and the ability to store and transmit data more efficiently and cheaply than ever before.

Figures from MIT show that in 2010 there were more than 12 billion devices connected to the Internet, and well over 80 per cent were 'smart' devices such as smart phones and PCs and tablets. By 2020 it's predicted that there will be around 28 billion devices connected to the Internet, with the majority of them being 'things' - that is devices that many today consider to be 'dumb'.

Machines Go Online

Consider that according to the Center for Automative Research in the U.S. the average car sold today has 60 microprocessors in it 1 . It means that a car's central processor will have a better idea of when a car's tyres are getting balder than the driver themselves.

And there will be a great value in that information being made available to numerous parties, such as authorities seeking to minimise road accidents and companies seeking to sell new tyres.

It is not too hard to see that very soon, the value of the information produced by connected 'things' will soon start to outweigh the small cost of producing the sensors themselves - and possibly even the products that they are embedded inside.

General Electric, for instance, has for decades been one of the world's largest manufacturers of domestic and industrial goods. But pondering the potential of the 'internet of things' CEO Jeff Immelt recognised that it would soon have to change the way it not only produced products, but the way its business model operated. "Every industrial company," he said "will be a software company".

History of the Internet of Things

The Internet of Things, of course, it is not a new idea 2:

  • The first Internet 'thing' was connected in 1990 when John Romkey and Simon Hackett developed their toaster that could be controlled through the Internet.
  • And the actual term Internet of Things was first coined at the end of the same decade by Kevin Ashton who established MIT's Auto-ID Center, a global research network of academic laboratories focused on RFID [radio frequency identification] and the IoT.

That was also when IBM introduced the first machine to machine protocol for connected devices.

It was in 1991, almost 25 years ago, that Yale computer science professor David Gelernter 3 published his influential book 'Mirror Worlds' in which he described a world that reflects what we are beginning to see with the IoT.

"You will look into a computer screen and see reality," he predicted.

Gelernter described how vast public software works would soon revolutionise computing and transform society through a digital world mirroring the physical one.

Networks and interconnected things, Gelernter foresaw, would transform computers into crystal balls that enabled us to see the world more vividly and deeply.

He was right. We have in our hands the technological tools to create such a world, but the challenge becomes harnessing those tools to capitalise on them. Any perceived and actual limitations lie not with the technology itself, but with our imagination and our vision.

We are at yet another point of change – it's been called the second digital revolution – where the only thing that will hold us back is our ability - our ability to be agile, flexible and adaptive to new and emerging possibilities.

As we embraced the Internet in the first place, now we must continue to embrace the evolutions that accompany it.

Its true potential, however, will only be displayed when the billions of sensors, devices and applications out there work together seamlessly within and across different sectors.

This does present challenges: developing standards that enable a framework that is open, interoperable and secure.

And ensuring we have the necessary layers of security and trust to address cyber security challenges in an interconnected network where complex systems, designed and managed by different organisations, will need to manage together.

The Internet of Things

You can see from the growth of devices connected in the Internet of Things that it has a huge potential. During this year alone 4:

  • One billion wireless IoT devices will be shipped, 60 per cent more than in 2014.
  • IoT specific hardware is likely to be worth $10 billion, and the associated services enabled by the devices worth about $70 billion.
  • Enterprises and industries will buy and use about 60 per cent of wireless IoT devices.
  • Industry – not consumers – will generate more than 90 per cent of the IoT services revenues.

Putting these figures in context, McKinsey predicts the IoT could add $6.2 trillion to the global economy by 2025. Others predict it could be more than $14 trillion by 2020 5.

About 25 per cent of global manufacturers already use IoT technologies. That could reach 80 per cent within ten years and increase the global economic value of manufacturing by $2.3 trillion 6.

Opportunities for Governments and Business

If the Internet itself was difficult to fully fathom as a concept until it evolved and revealed itself, so is the Internet of Things.

It presents huge opportunities for city management, traffic control, homes, health prevention and treatment, agriculture, power and water efficiency, to name a few.

In the US in 2007 congested roads cost the country 4.2 billion working hours and 10.6 litres of wasted petrol, according to the Texas Transportation Institute 7.

Sit that against the fact it has been estimated there could be 250 million connected vehicles on the world's roads by 2020 8.

Intelligent transport and infrastructure systems that manage traffic flow and advice, and even control individual vehicles (for example, causing them to brake if they ignore warnings to do so) can deliver significant efficiencies and cost savings.

As will smart energy systems. IBM calculates that if the power grid in America alone were just five per cent more efficient, it would save greenhouse emissions equivalent to 53 million cars.

The Internet of Things can reduce energy demand, manage patterns in demand and supply and drive innovation within the energy sector. Smart meter programs are reducing the amount of energy used, and shifting energy use to periods of lower demand, delivering savings for consumers and reducing infrastructure needs.

Utilities around the world have been estimated to lose between 25 per cent and 50 per cent of treated water to leaks. Again this something that can be detected and monitored through smart systems.

Australian water utilities currently spend $1.4 billion per annum on reactive repairs and maintenance, including the consequence cost of social and economic impact. Focusing the asset maintenance efforts on preventative rather than reactive repairs has the potential to save the water industry $355 million 9.

Researchers at NICTA have produced very promising results in predicting pipes most likely to fail and identifying the consequence cost of these high risk pipes 10.

What Government Can Do

Obviously the Government has a role in promoting and investing directly in research and new uses for the Internet of Things.

But at a higher level, we also want to make sure we are setting the right regulatory environment for these technologies to flourish.

That is why we are working with bodies like the ACMA and Communications Alliance to ensure that we get the settings right.

As a Communications Alliance board paper in December noted, "consideration [needs to] be given to where and to what degree Australian policy and regulation needs to be developed and aligned, to best support and encourage the development and growth of Internet of Things in Australia".

Among the regulatory enablers identified by the Comms Alliance were the efficient allocation and cost of mobile spectrum. And indeed, my Government yesterday announced a cost-benefit analysis will be conducted into public safety agencies' use of publicly owned spectrum 11.

The point is to find the most efficient means of creating radio communications networks for our safety agencies to use - whether it be bespoke networks or public-private partnerships - and whether the costs of allocating spectrum in a certain way outweighs its benefits.

As a recent ACMA study found, mobile broadband has contributed $33 billion - or more than 2 per cent of GDP - to our economy in the seven years to 2013 12. And in the Internet of Things environment, you would expect these benefits only to grow - and so too would the costs of inefficient policies.

Another recommendation was spectrum harmonisation among different regulators in the Asia-Pacific region and the world. Indeed Australia has led the way through the ACMA in the Asia Pacific Telecommunity through the '700 MHz Band Plan', which now has 42 regulators in the region allocating, committed to or recommending the band plan for the deployment of advanced mobile networks 13.

And a final recommendation is the encouragement of the 'open data' initiatives.

Improvements in Service Delivery and the DTO

Governments collect, by the very nature of what we do, a huge amount of data. But the problem is, much of the data has spent more time sitting idle, collecting dust in old digital cupboards rather than being opened up and analysed.

We're changing all of that.

We've established a Digital Transformation Office to modernise the way government goes about delivering services in a more coordinated, joined up way. The way we go about both releasing and using data to provide improved insights will be central to the success of the DTO.

It's all about improving the way government delivers services. We need to deliver services that are clearer, simpler and faster to use. And above all else, they must be designed to meet the needs of the user.

We need to move beyond the siloed approach, to one that's truly coordinated by speaking to the customer as one public sector and not dozens of different agencies, each with their own bespoke way of delivering services, presenting information through underutilised websites, and investing in IT.

We need to invest in common platforms that are scalable and can be leveraged by just about every agency. Surely it makes sense to standardise and invest in one common grants administration platform, for example, rather than every agency that provides grants, which is most, developing their own bespoke solution.

Data.gov.au will continue to be built out as the key entry point to finding government data that will continue to be made open and available online and to the public.

Since the Government was elected, the number of datasets available on data.gov.au has increased from 514 to more than 5200: a tenfold increase.

Continuing with the status quo isn't good enough. We shouldn't be satisfied making incremental gains here and there. Our aim must be, the aim of the DTO is to transform every aspect of service delivery - which, after all lies at the heart of government.

Our aim should be nothing less than to making Australia the world's leading digital economy.

Government must lead by example.

Conclusion

Today's event will demonstrate the transformative capabilities of the Internet of Things -- its power to transform the built environment, the delivery of services and the economy.

Things connected to the internet can do all that.

What they can't do is to transform our attitudes to rapidly evolving technologies or our agility and ability to respond to ongoing disruption.

That bit we need to do ourselves.


Deloitte - Technology, Media and Telecommunications Predictions 2015 - p6. Online at: http://www2.deloitte.com/global/en/pages/technology-media-and-telecommunications/articles/tmt-predictions.html

UK Government Office for Science Report - Internet of things: making the most of the second digital revolution - p20. Online at:www.gov.uk/government/publications/internet-of-things-blackett-review

Ibid

Ibid

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