Data privacy in connected homes

The connected home has been called the next frontier for 'data analytics', and with good reason. Already, a simple smart meter can report energy readings to a utility every few seconds, compared with a standard one, which is read either once a quarter, or whenever a user or meter reader records it. Multiply that by possibly hundreds of sensors and devices in the connected home of the future – which may only be a few years away – and there will be a data tsunami.

But this smart home vision, and the Internet of Things (IoT) generally, has set alarm bells ringing about consumer privacy and it’s becoming apparent that first-class data privacy and security protocols are critical if we as consumers are going to accept it. There is concern both about how data will be used by companies, and also the direct routes into the home that devices such as Internet-connected cameras provide. When Google files a patent for a toy bear equipped with cameras and microphones, and which connects to the Internet, there are obvious concerns for children; while security devices such as connected door locks report the movement in and out of the house and can be used to detect occupancy.

Meanwhile, data from energy monitors can reveal patterns of home occupation and all devices could be hacked over insecure wireless connections, given that ordinary Internet routers are likely to be the hubs that direct communications traffic. The collection of vast amounts of data from home devices can also be used for targeted marketing of individuals and groups of people, in the same way that data is being mined from other sources such as social media and Internet searching.

But it’s a double-edged sword. As we show in our report, ‘How to create growth from the connected home’, much of the value of connected home systems lies in providing services, such as monitoring equipment for faults, detecting hazards such as fires and water leaks, and assessing energy savings from daily living patterns.

On providing these services, the connected home will help manufacturers of appliances and other equipment gain vital feedback on the performance of their products, which features consumers rely on, such as specific spin cycles on a washing machine, could result in a new wave of intuitive white goods. And smart energy meters have the potential for societal good by optimising energy supply and minimising carbon emissions. The European Commission states that smart gas and electricity meters could cut carbon emissions in the European Union (EU) by up to 9 per cent – a more than considerable saving.

With the exception of a do-it-yourself tech enthusiast, who understands what it takes to control silo connected systems on a closed network, smart home technology will see the accumulation and management of data ‘in the cloud’ at remote data centres. Given impending legal imperatives, such as the EU’s General Data Protection Regulation (GDPR), currently mooted to launch in 2017, no smart home provider can contemplate running a service without a compliant data protection policy. As an EU background paper puts it, there is a need for “a clear description of the key data processing operations, their purposes and the categories of data needed to achieve those purposes. This need for transparency is vital to ensuring well-informed consumer choice and consent.”

With many IoT devices being embedded in other devices, but still collecting personal data, there may not be an actual privacy policy that comes with the device itself, so the connected home does pose additional challenges for user consent. The draft GDPR proposes that services need to be built on ‘privacy by design’ principles and there are all manner of compliance issues likely to affect connected home players. For example, ‘pseudonymisation’ of data doesn’t mean it can be treated any less securely than named personal data, and customers will be able to ask for data portability. The new regulations will no doubt keep lawyers and compliance officers busy for years.

Consumers are rightly concerned about data privacy and are no doubt influenced by experts such as world wide web founder Tim Berners-Lee, who has spoken out about the need for people to own their data and not hand it over to corporations. With the connected home there is a great opportunity to build trust by listening to these concerns and, every step of the way, consumers must have the right to opt out of having their data collected or shared. If this option is not provided, then the industry risks losing consumer trust and will be restricted in potential growth opportunities in a market that is only in its early stages.

The good news is that there are connected home ecosystems, such as our open source based platform, which has been built to tick all the boxes around consumer privacy and security, with 'end to end’ encryption guarantees from device to data centre, where information can be kept and analysed in strict accordance with consumer wishes. A key point though is that trust must also be earned with customer propositions that provide genuine value, and with the smart home there are ample opportunities to do this and enter into more of a partnership with users rather than just a traditional supplier relationship.

Jon Carter, UK Head of Business Development – Connected Home, Deutsche Telekom AG

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