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The Internet of Things: Overcoming Obstacles

May 26, 17:35 UTC+3
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The smart IoT systems are everywhere to optimise business operations, prevent accidents, curb costs and improve the standards of living. Experts expect a three-fold increase in the number of devices within the IoT network over the next five years and the global IoT market to expand at an annual rate of over 15%. The growth in Russia is projected to be even more dramatic, but the evolution is contained by underinvestment, lack of adequate regulations, and the outstanding issue of data security as more and more information is collected by devices.

The Internet of Things (IoT) means inter-networking of physical devices or their connection to a computer for the exchange and collection of data. The difference from traditional networking is that those physical devices include cars, machines, home appliances, arterial pressure sensors or even sports shoes.

  • According to Gartner, some 6.4 billion devices globally are now connected to the internet, not counting here PCs, laptops, smartphones and tablets. 60% of those are consumer devices (cars, home appliances, fitness trackers, etc.), while the remaining 40% belong to the B2B segment. As compared to 2015, the number of these devices has gone up by a third, with another 31% increase expected in 2017 (up to 8.4 billion items), while in 2020 that number will rise to over 20 billion.
  • According to the IDC estimates, in 2016, the world's IoT market expanded by 17.9% to USD 737 billion, including purchases of equipment and software, and payment of services and communication. This market is projected to grow at an average rate of 15.6% per annum up to 2020.
  • The Russian share of the global IoT market stands at 0.5%. In 2016, the IoT segment in Russia was estimated at USD 4 billion with 20 million connected devices. The implementation of a roadmap for the development of the Internet of Things is expected to bring the number of devices in the network up to 500 million by 2020, with the market volume reaching USD 9 billion.

Key consumers of the IoT products are industrial, transport, energy and utilities companies, which account for over 50% of the market in Russia. The use of IoT technologies in agriculture, retail and healthcare also has a considerable potential waiting to be unlocked.

  • In Russia, the IoT technology was used to build the Platon toll system for trucks weighing 12 tonnes or more.
  • From 1 January 2018, all new vehicles in the Customs Union will need to be equipped with the ERA-GLONASS emergency response modules, which transmit the signal about road accidents and other incidents to emergency response teams. Lada Vesta has become the first production car to be equipped with ERA-GLONASS.
  • KAMAZ is developing trucks, dumpers, tractor units and buses harnessing the advanced driver-assistance systems (ADAS), which warn drivers of the dangers and adjust the trajectory to avoid accidents. The first robotic vehicles to be purchased by the Russian Emergencies Ministry are slated for production in 2017, while the manufacturing of ADAS-based long-haul tractors and self-driving buses running the pre-set routes is expected to be fine-tuned by 2020.
  • With the support from the Russian Direct Investment Fund and international investors, Rosseti is piloting Smart Grid projects in the regions of Russia.
  • The Russian Ministry of Energy has drafted a bill prohibiting grid operators from installing or upgrading outdated meters since July 2018. Instead, they will have to set up new smart meters.
  • Moscow's IoT projects include smart parking, traffic monitoring systems, and adaptive traffic control. According to the Government of Moscow, the Russian capital has already become one of the global IoT leaders.
  • MTS and Intouch Insurance have launched the first Russian IoT-based insurance programme Smart Kilometres, which will enable “weekend drivers” to save up to 25% of the MHI cost.
  • At the instruction of Arkady Dvorkovich, Russian Deputy Prime Minister, a roadmap for the development of the Internet of Things in the agricultural industry has been drafted providing for, among other things, tax and loan benefits for the promoters of innovations.
  • From 2017, all cash register equipment in Russia is required to be connected to the internet in order to store and transfer information about each sale to the fiscal data operator, and send online receipts to the customers.

One way or another, there is still a number of barriers standing in the way of a massive IoT roll-out:

  • With IT budgets in a free fall, Russian companies choose to implement and upgrade only the basic IT systems, as the cost of smart devices and systems at an early stage of the market development remains fairly high.
  • The IoT systems have a lot of vulnerabilities. According to the Gartner projections, in 2020, more than 25% of the identified industrial cyber attacks will target the Internet of Things. To minimise any such risks, Russia approved the Doctrine of Information Security at the end of 2016, and took steps to draft a bill On the Security of Critical Information Infrastructure and amend the Criminal Code adding provisions about cyber crimes.
  • There are no umbrella approaches. Nor is there a unified communications protocol, or a clear set of data management rules. Market players keep talking about the need to put in place a regulatory framework and legal requirements for the implementation of IoT technologies, as well as tax benefits, credit facilities, subsidies, and dedicated industry funds.

To that end, in July 2016, Russia's Internet Initiatives Development Fund (the IIDF) joined forces with major communications operators and GS Group to launch a national Internet of Things consortium, with a roadmap for the development of IoT technologies approved in November 2016. The latter provides for R&D activities, the creation of a national IoT platform, implementation of pilots, financing of strategic initiatives, the development of data protection and action plans for microelectronics import substitution, etc.

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