M2M creates legal risk for operators

The fledgling M2M service sector carries plenty of legal risks for telcos unprepared for them, especially in areas such as privacy and SLAs, a legal expert said Tuesday.

Peter Waters, partner at Gilbert + Tobin, warned that the M2M ecosystem is far more complex than the traditional mobile ecosystem and built on "a fundamentally different equation" involving higher volumes of devices, lower throughput and lower usage charges per device, and higher risk allocation.

One major legal risk is privacy, as M2M systems generate user data, including geolocation data, he said.

"Google's experience has shown that privacy has stopped becoming a regulatory compliance issue, and is now a product issue," Waters said during a conference session on M2M at the CommunicAsia2012 Summit. "You can't sell a service today unless it has adequate privacy protection."

Waters added that it was crucial for operators to get privacy right before launching M2M services. "If you don't do a good job, you'll have a Google problem, and privacy will become a runaway train and will crash from the ensuing media storm. If you try to fix it later, it won't work."

Waters also warned that many M2M apps will require a level of service guarantee that mobile operators in particular are not accustomed to delivering.

"For services like human health, many apps are mission-critical or even life-critical, which cannot be served by the store-and-forward model that operators are used to," Waters said. "If there's a delay in the network, the little old lady could be dead by the time the ambulance arrives."

Many M2M clients will require SLAs for their apps, Waters said. "That raises legal issues. If you can't meet a standard in the contract, it's better not to write up the contract."