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June 4, 2019
Internet of Things (IoT): An Introduction
The Internet of Things (IoT) is a system of interrelated
incorporation of IIoT and analytics is viewed by experts as
devices that are connected to a network and/or to each
the Fourth Industrial Revolution, or 4IR.
other, exchanging data without necessarily requiring
human-to-machine interaction. In other words, IoT is a
Internet of Medical Things (IoMT): The healthcare field
collection of electronic devices that can share information
has begun incorporating IoT, creating the Internet of
among themselves. Examples include smart factories, smart
Medical Things (IoMT). These devices, such as heart
home devices, medical monitoring devices, wearable fitness
monitors and pace makers, collect and send patient health
trackers, smart city infrastructures, and vehicular
statistics over various networks to healthcare providers for
telematics. Potential issues for Congress include regulation,
monitoring, analysis, and remote configuration. In 2018,
digital privacy, and data security as discussed below.
over 400 million IoMT devices were connected worldwide,
according to the market data company Statista. At a
IoT Characteristics
personal health level, wearable IoT devices, such as fitness
IoT devices are often called “smart” devices because they
trackers and smart watches, can track a user’s physical
have sensors and complex data analysis programs
activities, basic vitals, and sleeping patterns. According to
(analytics). IoT devices collect data using sensors and offer
one estimate, over 40 million fitness trackers IoT were in
services to the user based on the analyses of the data and
use in the United States in 2017.
according to user-defined parameters. For example, a smart
refrigerator uses sensors (e.g., cameras) to inventory stored
Smart Cities: IoT devices and systems in utilities,
items and can alert the user when items run low based on
transportation, and infrastructure sectors may be grouped
image recognition analyses. Sophisticated IoT devices can
under the category of “smart city.” Utilities can use IoT to
“learn” by recognizing patterns in user preferences and
create “smart” grids and meters for electricity, water, and
historical use data. An IoT device can become “smarter” as
gas where sensors collect and share customer usage data to
its program adjusts to improve its prediction capability so
enable the central control system to optimize production
as to enhance user experiences or utility.
and distribution to meet demand in real-time. Cities can use
transportation IoT for fare readers and status trackers or
IoT devices are connected to the internet: directly; through
locaters that interface across all public transportation
another IoT device; or both. Network connections are used
platforms. Columbus, Ohio’s winning proposal for the
for sharing information and interacting with users. The IoT
Department of Transportation’s Smart City Challenge of
creates linkages and connections between physical devices
2016 incorporated connected infrastructure that interacts
by incorporating software applications. IoT devices can
with vehicles (including electric autonomous vehicles and
enable users to access information or control devices from
shuttles) as well as a common payment and trip planning
anywhere using a variety of internet-connected devices. For
system across multiple transit systems.
example, a smart doorbell and lock may allow a user to see
and interact with the person at the door and unlock the door
Smart Homes: Consumer product IoT devices used in
from anywhere using a smartphone.
homes and buildings are often grouped under the “smart
home” category, including smart appliances, smart TV,
IoT Categories
smart entertainment systems, smart thermostats, and
IoT devices are used in different fields for a broad range of
network-connected light bulbs, outlets, door locks, door
functions. This section describes select IoT categories of
bells, and home security systems. These smart-home IoT
frequent congressional interest.
devices can be connected to a single network and controlled
remotely over the internet.
Industrial Internet of Things (IIoT): The manufacturing
industry has begun to adopt commercial IoT applications.
IoT Revenues
Referred to as industrial Internet of Things (IIoT),
The IoT industry is a growing market both in the United
networked machines in a production facility can
States and globally. Statista estimated that there were over
communicate and share information with a goal of
700 million consumer IoT devices in use in 2017 in the
improving efficiency, productivity, and performance. The
United States and the 2018 U.S. IoT retail consumer market
application of IIoT can vary significantly, from detecting
was worth almost $4 billion. Figure 1 illustrates global IoT
corrosion inside a refinery pipe to providing real-time
revenue from 2012 to 2018 (except 2016). Statista reported
production data. Currently in North America, there are more
the total global IoT revenue in 2018 was about $93.9
consumer IoT connections than IIoT connections, but this
billion. The connected smart cities category was the largest
may change in the future. IIoT has the potential to
portion of 2018 global IoT revenue (41%). The IIoT had the
transform a variety of industries, including manufacturing,
biggest growth in terms of global revenue between 2017
chemicals, food and beverage, automotive, and steel. The
and 2018 among the different categories and accounted for
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Internet of Things (IoT): An Introduction
38% of the 2018 total. The consulting firm McKinsey &
environment where technologies evolve quickly. New
Company projects IIoT systems to increase more than other
technologies may be left unregulated, partially regulated, or
IoT types by 2025. Consumer IoT devices, such as
more fully regulated under a newly developed framework.
wearables and connected smart home devices, generated
They could also be left to self-regulate by the industry,
16% (over $14 billion) of global revenue in 2018. Statista
which is currently the case for many consumer IoT devices.
estimated the 2018 global smart home market size as over
Federal regulation of technologies such as the IoT may
$30 billion with revenue of $2.9 billion. The connected
entail policies for deconfliction, harmonization, and/or
smart vehicles category generated the remaining 5% ($4.5
expansion of agency jurisdictions.
billion) of global revenue in 2018.
Digital Privacy Issues: The IoT facilitates increased
The development, application, and usage of IoT will likely
collection and consumption of data, posing potential digital
continue to grow with the deployment of fifth-generation
privacy concerns, especially for consumers. A piece or
(5G) cellular networks and technologies. These allow a
aggregation of the collected information could be used to
larger number of devices to be connected simultaneously to
identify, locate, track, or monitor an individual without the
a network and communicate with minimal delays,
person’s knowledge. The revealed patterns in their activities
supporting not only consumer but industrial use of IoT
may also be exploited. The dilemma lies in that digital
devices and systems.
privacy and the advancement of smart technologies like the
IoT may be in direct opposition. Increased data collection
Figure 1. Internet of Things Subsystems Revenue
and usage may yield innovation, technological progress,
Worldwide from 2012 to 2018 (Except 2016)
and improved utility. However, increased data collection
and usage could also lead to erosion of privacy and data
exploitation without consent.
Data Security Issues: Connected devices and systems such
as IoT offer the possibility of ubiquitous access, which
equates to more possible entry points for both authorized
and unauthorized users. As more devices become connected
to each other and to the internet, the overall risk and impact
of a compromise increase, along with the possibility of a
cascading effect of a cyberattack. Data security is a tradeoff
to consider between convenience and vulnerability.
The IoT links cybersecurity and physical security. For
example, when smart doors and locks are remotely
controlled by a malicious actor through cyberattack, the
physical security of that building also becomes
compromised. The damage may not be limited to loss of
digital content or information. Loss of data physically
stored in the compromised location as well as personal
security could be jeopardized.
Currently, many IoT devices do not employ strong
encryption at the device or user interface level. Not
implementing strong encryption may be intentional due to
associated benefits—it usually reduces cost, increases
battery life of devices, minimizes memory requirements,
Source: CRS created based on data from Statista, “Revenue of
reduces device size, and is easier to use or implement.
Internet of Things Subsystems Revenue Worldwide from 2012-2018
However, a system may become easier to break into if IoT
(in bil ion U.S. dol ars),” https://www.statista.com/statistics/503466/
devices are the most vulnerable points of a system and are
iot-subsystems-revenue-worldwide/.
targeted by malicious actors for exploitation.
Notes: 2016 data unavailable. Estimates signified by *.
Congress may choose to define the role of the federal
Selected Policy Issues
government in overseeing digital privacy and data security
through legislation that comprehensively addresses IoT
Congress may take legislative and/or oversight actions
related to the IoT. Congressional action may focus on
issues or that revises specific authorities of federal
agencies. In considering options, Congress may face three
regulation, digital privacy, and data security among other
potential policy decisions: (1) whether data privacy and
policy issues. These issues may also apply to several other
emerging technologies.
data security should be addressed together or separately in
different laws, (2) whether various types of personal data
should be treated equally or differently, and (3) which
Regulatory Issues: Emerging and converging technologies,
agencies should be responsible for implementing such laws.
such as the IoT, may not align wholly with federal agency
oversight jurisdictions and legal and regulatory authorities.
Congress may consider the federal regulatory role in an
Suzy E. Park, Analyst in Science and Technology Policy
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Internet of Things (IoT): An Introduction
IF11239
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