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Chapter 4: Interoperability in the digital ecosystem At the most basic level, interoperability (or “interop”) is the ability to transfer and use data and information across different systems, applications, or components. Interop is invisible, and yet crucial, to many parts of a highly interconnected, modern society. The fact that someone can make a seamless international telephone call without thinking about things like signaling standards or transoceanic cables is a tribute to interop. So is the fact that one can send and receive the same e-mail on a mobile phone or in a browser, regardless of device manufacturer or Internet service provider. Importantly, the Internet of Things relies on interop. For that reason, it is critical to develop a shared understanding of how interop functions, the potential costs and benefits of increased levels of interop, and the variety of approaches for encouraging interop. This chapter begins by offering a framework for understanding interop as a concept. Figure 4.0 provides an overview of the concept of interop, its benefits, potential risks and approaches. In theoretical terms, interoperability functions across four broad layers of complex systems: technological, data, human and institutional. When many people think of interop, they think of the exchange of data through technological means. But it turns out that the human and institutional aspects of interoperability are often just as important – and sometimes even more important – than the technological aspects.This chapter offers examples of some of the many benefits and drawbacks of higher levels of interop. The benefits include innovation, competition, choice and access. Drawbacks can include security and privacy risks; an increase in homogeneity; a decrease in reliability, accountability and accessibility; and a threat to certain existing business models.The chapter then offers a taxonomy of the various approaches for managing and optimizing the level of interop. These approaches can be deployed either in a unilateral fashion or in more collaborative ways. Moreover, some approaches can be deployed by the private sector, while regulators and other state actors utilize others. The chapter also considers in depth the unique Trends in Telecommunicaiton Reform 2016 xiii Main current areas of investment • Smart cities • Smart metering & grids • Connected vehicles • Healthcare Main Impacts • Monetary/economic impact: trillions of dollars annually within a decade • Societal impact: Smart cities – infrastructure, transport and buildings – by improving efficiency and sustainability of a whole range of urban activities; smart power and water grids (smart meters)• Individual impact: e.g. transport safety through “connected vehicles”; population health and wellbeing can be enhanced, enabling e.g. care at home Challenges • Cost needs to fall, reliability needs to improve • Issues of connectivity, user interfaces and addressing • Regulatory implications for licensing and spectrum management (access required to 300 MHz-3GHz but also NFC at 13 MHz or EHF bands, AM/FM bands in VHF range, Wi-Fi and 4G mobile networks), standards (interoperability e.g. ITU-T’s initiative IoT-GSI), competition (e.g. impact on competitiveness of different markets, customer lock-in due to fixed SIMs in each device etc…), security and privacy (“by design” approach desirable)