When I give talks about the internet of things (IoT), people often ask: “Is the internet of things a smart car, a smart city, a smartphone?”

The answer is it’s all of those things, and more. In its simplest term, the IoT is the application of sensors, IT and networking technologies to connect billions of devices around the world. These enable new, smart applications, analytics and business models that result in a cleaner, more efficient and sustainable way of living. Just like the internet connected billions of computing devices and created new applications and business models such as search engines, emails, e-commerce and social media, the internet of things will advance humanity in ways we can’t yet imagine.

Unfortunately, the hype surrounding the IoT has created an endless stream of “smart” conferences, gadgets and campaigns, which focus on the technology itself, and not on the massive, systemic changes it will bring. Also often missing from the conversation is the need for a new set of public policies that will help realize the IoT’s full potential.

A better balance of power

Take the smart grid, for example. This is the application of the IoT to the modernization of our ageing electric infrastructure. In many countries, the grid was built in the 20th century and has not been modernized to tackle the challenges of the 21st century. These new challenges include balancing supply and demand during peak times, integrating more renewable and distributed energy resources (solar panels, electric vehicles, battery), the need to improve reliability (reduce blackouts and outages) and the need to reduce greenhouse gas emissions – while at the same delivering safe, reliable and affordable energy. While it’s important to ensure that the technology is secure, reliable and cost-effective (which it is), it’s far more important to articulate the benefits these technologies bring, such as reducing power outages. The Electric Research Power Institute (EPRI) estimated that in the United States, blackouts and outages cost the economy around $180 billion a year.

In the developing world, there are still many countries where people still lack reliable access to electricity. A few years ago, massive blackouts in India affected more than 620 million people, roughly 9% of humanity. A reduction of just 10% of these outages can already save the world billions of dollars in economic productivity; smart grid technologies have the potential to reduce much more than that. Another benefit of the smart grid is its ability to improve energy efficiency and enable the integration of more renewable and distributed energy resources.

Through improved energy efficiency, less energy will be generated from expensive, polluting plants. By integrating more renewables, we will depend less on fossil fuels. EPRI estimated that a smart grid in the US alone will enable energy savings of between 60 and 200 billion kWh and avoid between 100 and 200 million tons of CO2 emissions. That is the equivalent of taking up to 2 million cars off the road for a year. The smart grid is also exciting for the behaviour changes it can bring about. Studies have found that when people are made aware of how much power they are using, they reduce usage by about 7%. With added incentives, they further curtail use during peak times by 15% or more. The Climate Group estimated that smart grid has the potential to avert 3.71 gigatons of CO2 equivalent in global emissions by 2020, delivering some $464 billion in global energy cost savings to society.

Utilities of the future

To realize these benefits, it’s also important to devise the new regulations, policies and business models necessary to ensure a sustainable environment. For instance, in many developed countries, more and more consumers are installing solar panels and using electric vehicles. New regulations and business models are needed to ensure fair, equitable and sustainable arrangements. These include a mechanism to allow consumers to produce (as well as consume) energy, and a way to assess the benefits and challenges of these distributed energy assets.

How do we ensure reliability while also balancing resources during peak times? Should there be new business models for “utilities of the future”? What regulations will be necessary to enable these? As the world becomes more globalized, what can developing countries learn from the developed world? How can they leverage smart-grid technologies to leapfrog infrastructure developments?

Besides infrastructure, IoT conversations tend to focus on cool gadgets – a new smart watch, a smart car. Instead, let’s focus on the healthcare that these smart wearables will enable. Imagine a world where our well-being is not only safely monitored, but also shared instantaneously with our doctor. What roles would insurers and healthcare providers play in this new paradigm? What policies and regulations are needed to ensure the integrity and security of our personal medical data while ensuring the affordability and quality of our care?

A roadmap to sustainability

Instead of focusing on a new smart car, let’s look at how intelligent transportation infrastructure creates a more efficient, safer, cleaner and more cost-effective system that reduces traffic accidents and pollution. A Texas A&M study found that the estimated $120 billion-a-year cost of congestion can be mitigated using intelligent transportation systems. Furthermore, connected cars have the potential to transform the car insurance industry by aligning insurance premiums with measured risks, such as personal driving styles and distances travelled, instead of the traditional indicators based on age or gender.

When we focus on gadgets, we ignore the wider changes these technologies are bringing about. Take the car-sharing system Uber, for example: it takes the IoT to the next level by creating systemic changes in the flow of work and information. It optimally matches available drivers and passengers, and automates payments. In doing so, it has upgraded existing infrastructure to a better, more timely and more convenient service. Once we frame the IoT in terms of systems and platforms, we start seeing and understanding the massive, disruptive and positive changes it brings to society.

The internet of things stands at the intersection of innovative technology, business and public policy, and new regulations are needed to ensure that it is creating more good than bad. These systemic shifts are creating fresh business models and new jobs that require specific skills and types of knowledge. To make real progress, everyone – government leaders, policy-makers, technology start-ups, consumers, educators or advocacy groups – should try to understand these new paradigms.

There are three steps to designing a system that will help the internet of things benefit everyone. They are:

  • Develop a long-term, comprehensive and sustainable policy
    The technology works and we’re working on new business models. But for the IoT to succeed, we need to have the right policies in place. These cannot be short term and based on election cycles; they should be aligned at local, national, regional and international levels. Our leaders need to demonstrate the political will and strategic resolve to develop a comprehensive “smart infrastructure” policy, where governments recognize the strategic importance of this sector to their global competitiveness. They should channel resources to where they matter: research and development, funding, incentives for deployments, manufacturing and human-capital training to prepare for the knowledge-based economy of the future. A strong public-private partnership is also vital.
  • Build a strong ecosystem
    For the internet of things to become a reality, industry participants need to collaborate to ensure that solutions can securely and easily interoperate with one another. Efforts towards building standards-based solutions are emerging, but need to be further refined to ensure that solutions are future-proof.
  • Educate consumers about the benefits
    We need to better articulate the systemic changes and benefits the IoT will deliver to people. Let’s educate consumers as to the value propositions and benefits, in a language that they’re familiar with. At the end of the day, technology is only a means, but the goal is to achieve its lasting benefits: a better way of life for our society and our planet.

We are now on the cusp of enabling a transformation that will improve the way we work and live. Let’s take bold actions and work together to deliver the benefits of the internet of things. I’m confident that we will rise to this challenge and create a cleaner, more efficient and more sustainable way of living – not only for our generations, but for the many generations to come.

Author: Sonita Lontoh is the Head of Global Marketing at Trilliant and is taking part in the World Economic Forum on East Asia 2015.