Connected Regulation – What Are the Legal Issues and Regulatory Roadblocks?

On 21 September 2017, the International Institute of Communication (IIC) held the second of its Brussels Chapter at an event on Smart Cars, hosted by AT&T in Brussels.

The event, entitled ‘Connected Regulation – what are the legal issues and regulatory roadblock?’ has gathered great interest from various industry players and the European Commission. In this second event of our series, we discussed the legal issues arising from the application of the existing EU regulations (covering institutional set-up, road safety, liability, connectivity, data protection, competition, etc) that are potentially relevant to the practical deployment of Smart Cars. A roundtable discussion amongst all the participants tried to map the various converging regulations that become relevant for the operators of a Smart Car and examined the regulatory bottlenecks and challenges.

Technology, in the form of connectivity and autonomy, is bringing its own changes, especially in parts of the developed world. But technology may be advancing faster than the readiness of governments, regulators and current car users to deal with their implications. The discussion focussed on how regulation could be an enabler or a road block for Smart Cars deployment, including on the following issues:

• Institutional set-up: different authorities will be responsible to regulate different aspects of the deployment of Smart Cars – from road safety authorities to telecoms regulators and municipalities. Lack of coordination could lead to delays in such deployment. Is regulation needed to ensure a coordinated approach which does not lead to diverging outcomes on interrelated issues, such the deployment of the underlying infrastructure (5G) for the provision of connectivity in the car?
• Road safety: in the UK engaging self-driving mode is currently prohibited on public roads. This is changing – slowly – so that by 2019 UK consumers should be able engage self-driving mode and take their hands off the wheel for up to three minutes – but only on a motorway (highway). In the US, things have progressed further, with the federal government addressing the potential obstacles to adoption presented by differing rules in US states by issuing an automated vehicles policy in September 2016, introducing guidance to states and best practice. But in considering how best to introduce Smart Cars, governments and regulators must have regard to the special circumstance of the transition phase when roads contain both human and autonomous drivers. Over time, humans (drivers, passengers and pedestrians) would also adjust and, hopefully, most of their early anxiety would be laid to rest. But at least for now that anxiety is real. Are regulations necessary or desirable to overcome this anxiety on road safety?
• Data regulation: there is currently a tension between the regulations applying to data generated in a Smart Cars. In part this tension arises from the convergence of regulations (e.g. car manufacturers could become regulated as telecoms operators under the e-Privacy Regulation rather than the General Data Protection Directive, or under traditional telecoms rules, including on net neutrality and emergency access services). From a different angle, this tension also arises from the clashing of diverging business interests (e.g. insurers and independent repairers want access to the data, whilst car manufacturers have reservations about third party access to ‘their’ data). Additionally, consumers will be looking for reassurance about how secure the data coming off vehicles are. Should regulations have a role to here, or is the reputational and business risk for each brand sufficient?
• Connectivity: Intel estimates that, by 2020, the average person will generate 1.5 GB a day, while the average Smart Car will produce 4,000 GB a day. Presumably most of that data would never leave the vehicle, but Hitachi estimates that 25 GB16 of data would be uploaded to the cloud per hour. Even if Smart Cars were able (or required by regulators) to roam across home market cellular networks, unless satellite connectivity were also integrated, there would be losses of connectivity – in many rural areas, even in developed countries, there are plenty of holes in cellular connectivity. Should government and industry have to work together increase connectivity to remove a potential obstacle to connected and autonomous vehicles delivering their full benefits?
• Interoperability: the EU plans to develop a Cooperative Intelligent Transportation System (C-ITS) in 2019 and intends to make 802.11p, a short-range vehicular communication system, the standard for safety-related messages between vehicles. At the same time, communications operators are concerned that this approach may restrict the adoption of more advanced cellular vehicle-to-everything (C-V2X) solutions and are calling for a more technology neutral approach. Should standards be mandated by regulation or left to market forces?
• Competition: even if one accepts that market forces should be left free to decide the successful business models of the Smart Car, regulators may need to remain vigilant to avoid anti-competitive outcomes, as supplier-customer relationships (e.g. communications provider and car manufacturer) become horizontal relationship between competitors (both communications provider and car manufacturer provide connectivity to the Smart Car). Are the existing boundaries of what is permissible under competition law flexible enough to allow pro-competitive collaboration or will they act as an obstacle?

Many of the answers to these questions will ultimately depend on the policy choices that are being made today by governments and legislators. Our next and last event in this series will therefore explore the question whether global policies are sufficiently connected to enable the deployment of Smart Cars.

Hosted by Antonio Amendola (AT&T Executive Director, Brussels Chapter Committee), and moderated by Francesco Liberatore (Squire Patton Boggs Partner, Brussels Chapter Chairman), under Chatham House Rule.