September 2009

Telecom Italia Rejects NFC

Telecom Italia

Telecom Italia had begun trials of NFC (Near Field Communication) technology last year in the hope to make possible the use of a mobile phone to pay for public transport, car parking and even the cinema. By simply approaching a POS (Point of Sale) and waving your phone, payment is accepted. "Cellphones equipped with NFC payment functionality will appear next year", said its 2008 press release. Recently, Telecom Italia appears to have scrapped payment over NFC in favour of a simple text message.

Telecom Italia and Movincom, in partnership, have started developing a SIM Toolkit application. SIM Toolkit is a technology, which was standardised way back in 1995 (ref GSM 11.14) and pretty much supported by every mobile phone currently available. Mobile phone users will now use this application to pay for tickets and parking. The SIM application itself will provide the menu interface and generate the transaction text message. Transactions will be authenticated by the phone number from which each transaction text originates. The configuration–free service will be available on all mobile phones.

Last year, the GSMA (GSM Association) boldly predicted that by mid-2009 full NFC functionality – including the standardised 'Single Wire Protocol' interface – would be built into commercially available handsets. The global trade association, who represent more than seven–hundred mobile–phone operators, called for the standard to be introduced following the success of their 'Pay–Buy–Mobile' initiative, which was trialed across various continents and enabled consumers to use NFC handsets to purchase goods and services. At the 2008 meeting in China, the GSMA's Board stressed the importance of the need for the ETSI endorsed 'Single Wire Protocol' standard to provide the interface (known as the host controller) between the SIM and the NFC chip embedded in the handset. This would provide control of secure chips and application processors and 'ensure that consumers can reap the benefits and of mobile payment services as soon as possible.'

Chief Marketing Officer of GSMA, Michael O' Hara said that by signing up to the 'Pay–Buy–Mobile' scheme, handset manufacturers would avoid fragmenting the market, and benefit from introducing a new attractive service for users – boosting sales at a time when the industry forecasts are looking increasingly bleak.

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The 'Pay–Buy–Mobile' trials were conducted in many countries including Australia, Taiwan, USA, and France, all of whom enjoyed strong results and positive feedback. In South–east Asia, 80% of the users were satisfied with the security of the service, while in the 'Payez Mobile' trial in France, 90% of consumers found contactless mobile payments 'easy to use' while 80% merchants welcomed the 'speed and cutting edge appeal' of contactless payments.

The new payment channel is wholly dependent on the availability of NFC–enabled handsets and device manufacturers incorporating Single Wire Protocol and NFC features as standard. While the GSMA have suggested that collaboration with vendors would help speed up demand, and were confident that a set of minimum requirements will accelerate the delivery of these handsets to the marketplace, it's all gone a little bit flat. We're fast approaching autumn and there's barely a fully functioning NFC phone in the market. So what's happened to the GSMA 'Single Wire Protocol' dream ?

No one doubts that NFC is a useful application. Wave your phone by a door and it opens, near a till and your bill is paid. But much of the technology requires a secure module that doesn't necessarily need to be the SIM. The capabilities of a SIM have greatly advanced in the last few years, with multi–megabyte capacities and fast processors crammed into the package. However, getting payment for this potential hasn't proved as simple. Even the emergence of a dynamic interface such as USB has done little to whet the appetite of the operator, despite USB adoption leaving one pin free on the SIM face, a single wire that allows the SIM to communicate with NFC hardware stored on the handset.

They're more than content to see the secure module embedded in the handset, much like Nokia's 6131 NFC mobile, one of few NFC– enabled handsets on the high streets. While GSMA claim that all and sundry have signed up to make Single Wire Protocol handsets, the reality is that until networks demand it, the manufacturers will be delighted to keep NFC under their full control.

The availability of handsets is minimal, with exceptions such as the LG KU380 and the Apple iPhone, a handset that harnesses RFID to indulge in bizarre activities like knocking over small objects when the device is swung in near–proximity. For Swedish telecom giants, Ericsson, it's a year later than expected. The company's Vice–President, Hakan Djuphammar promised that by next year (2010) every new handset that's sold by Ericsson will possess NFC capabilities.

It's the industry to decide as to how much control the mobile operators should hold over the secure element of the process. SIM manufacturers and mobile operators are pushing for the SIM to play a part in all areas of communication that the NFC chip has with other chips in the phone, to the extent of giving the SIM the authority to reject unfamiliar applications. Subsequently, they're urging the European Telecommunications Standards Institute (ETSI) committee to adopt this particular model.

On the other hand, the handset manufacturers aren't so enthusiastic. Nokia, a key player in the market, only wants communication between the SIM and the NFC chip, and rejects suggestions that the SIM should be involved in applications stored on other secure chips. And while mobile operators rush to ETSI to fight their corner, Nokia has turned to the NFC Forum, an organisation that it helped to create. If Nokia continues to stand its ground (which it inevitably will), the squabbling within the industry will only serve to cause further delays to widespread usage, bump up prices, and dramatically impact the time to market of NFC handsets. The inability to agree on standards, and the lack of a solid business case to justify expenses have contributed to the limited availability of NFC handsets, and the continuing struggle for control of different parts of the supply chain. In the short term, vendors such as INSIDE Contactless have developed a stick–on NFC device that can be attached to a mobile phone thus enabling access to GPS, transit and smart postering solutions. In the longer term, SIM manufacturers may be forced to offer their services as a trusted third party. In the mean time, the rollout of mobile payments is edging ever closer. The specifications are completed; the trial results are in and the outcome is successful. All we're waiting on now is the handsets. But that's easier said than done, no doubt.

Tom Tainton, – Smartcard & Identity News


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