Overcoming SEP hurdles to stimulate the UK IoT

The potential of the Internet of Things (IoT) to significantly contribute to economic growth and innovation in the UK is immense. As the interconnected network of devices and sensors continues to expand, it has the power to revolutionize industries, enhance productivity, and create new business opportunities. By leveraging IoT technologies, UK businesses can optimize operations, automate processes, and improve efficiency, leading to cost savings and increased competitiveness.

Cellular and Wi-Fi are the main royalty bearing connectivity standards powering the IoT, with the former making up the great majority of Standard Essential Patent (SEP) licensing disputes in recent years, pointing towards unaddressed frictions in the cellular SEP licensing landscape.

This study analysed in more detail the SEP licensing risk exposure of the UK smart energy meter sector, the UK smart water meter sector, and the UK telematics sector. The main findings include:

• The UK IoT market was valued at £27bn in 2022 and is projected to grow at a CAGR of 11.8% until 2026, supported by a wide range of standardised technologies like cellular, Wi-Fi, and royalty-free protocols such as Bluetooth and Zigbee.
• Licensing Standard Essential Patents (SEPs) at the end device level creates high transaction costs, legal complexity, and risks non-FRAND royalties—posing significant burdens, especially for SMEs. Licensing at the component level could cut transaction costs by over 99%.
• SEP licensing issues threaten key UK sectors including smart meters, water metering, and transport telematics. Without policy intervention, SEP holders could disrupt growth by leveraging their position to demand excessive royalties, as seen in the automotive industry.