18 Mar 2010

Applying NFC to Real World Applications

Jerome Nadel of Sagem Wireless discusses how NFC, Near Field Communications technology can be applied to real applications

Against a backdrop of a seemingly unquenchable subscriber thirst for connected services, Near Field Communications (NFC) is opening up new opportunities for service providers, device manufacturers and application developers.

The integration of NFC into mobile devices is set to open up new markets for both new types of devices and, significantly, new connected services such as peer-to-peer content sharing, m-payment and m-ticketing and loyalty programmes. With more devices and applications being launched with NFC capabilities, industry analysts are pointing to 2010 as being a breakthrough year for the technology.

What is Near Field Communications (NFC)?

NFC is a short-range wireless technology that allows contactless communications to take place between two devices in both directions. Based on Radio Frequency Identification (RFID) technology, NFC can be applied in a number of areas, whether it's paying for goods and services, ticketing or information sharing between devices. The potential services enabled by NFC are making it attractive technology for both businesses and consumers.

While NFC has a slower maximum data transfer rate than Bluetooth, the other major short-range communication technology being integrated into mobile phones, it has a major advantage in both usability and security. NFC enables devices to communicate and exchange data over a small 10cm distance, simplifying tasks such as paying to use public transport by using data stored securely on the device to authenticate and authorise payment without the user needing to take any additional steps such as 'pairing' devices. Furthermore, NFC is compatible with existing RFID structures and not only uses significantly less power than Bluetooth, but can also work when one of the devices is not powered, for example when a mobile device is turned off, in a contactless smart credit card or on a smart poster.

This flexibility and wide application of the technology means NFC has the potential to be integrated to create virtually any kind of connected device. NFC semi-conductor provider INSIDE Contactless is one company at the heart of driving the use of NFC in secure, fast and reliable transactions in payment, access control, transport and electronic identification. INSIDE's solutions can be found in smart cards, key fobs, mobile phones, handheld devices, Point of Sale (POS) and PC peripherals. It is in the mobile phone, however, where NFC will perhaps enter the mainstream of consumer activities.

Challenges for the mass adoption of NFC

Despite there being over four billion mobile phones and one billion smart cards in use worldwide, NFC has still to achieve its full potential of mass market rollout. However, while significant barriers to growth still remain, the mobile industry is working together to address them and move NFC from the pilot stage to full scale commercial roll-outs. Indeed, industry analysts Juniper Research estimate that by 2014, one in every six mobile customers will own an NFC-enabled device, allowing them to conduct small-scale transactions using their mobile phones.

Collaboration between different players from distinct sectors of the mobile ecosystem is required in order to make NFC a part of our everyday lives. Key partnerships need to include mobile operators, device manufacturers, banks, services providers and other trusted third parties. These partnerships are coming to fruition in the form of new NFC devices and services, such as a project with Banka Koper, MasterCard Europe and Mobitel in Slovenia in which subscribers could use contactless payment services using MasterCard PayPass technology, providing a quick, simple and safe way of paying for products and services by a simple tap of a payment device on the payment reader connected to a POS-terminal.

Companies such as Sagem Wireless are committed to playing a lead role in developing new innovative devices that utilise NFC technology in effective applications. For example, Sagem Wireless' new CosyPhone device uses NFC to offer the older market segment of over 50s a simple product which is customised to their specific lifestyle needs. For example, the phone uses NFC to enable simple calling and access to data services by allowing users to wave their Cosyphone past pre-configured and customised shortcut cards to call friends and family, or services such as the doctors or grocery shopping.

Users can also create customised cards for their calendar or diary. A simple wave of the device past the cards send pre-configured text messages, such as wishing relatives happy birthday.

But manufacturers can't drive the mass adoption of NFC without the support of the other key stakeholders in the mobile ecosystem. Mobile network operators are critical for the roll out of NFC because the technology will facilitate the creation of new connected services, and therefore new revenue streams, through the mobile network. The support of mobile operators is required to grow NFC services and drive its take-up amongst end users.

Equally important are banks and credit card companies who need to deliver the required levels of security for simple but effective payment transactions using NFC.

While all this means that there are significant challenges for the mass adoption of NFC in connected devices, 2010 is set to be a crucial year in deciding which mobile network operators, device manufacturers and service providers become the leaders in the field.

NFC is coming to life

Mobile devices are changing. The growth of the Smartphone has fed a consumer desire for more and more mobile data services. At the same time, monetising mobile usage through new products and services has become a key market driver, and lifestyle brands and mobile operators alike are seeing the revenue potential of creating devices that can drive m-commerce and data usage. They are looking to reclaim their communities from the Smartphone and the generic App Store and deliver and monetise their own branded experience through connected lifestyle devices and services which are personalised to the specific needs of different target communities.

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