Monday April 11, 2011 – Stewart Wolpin
When last we cyber-met, I briefly reviewed a number of new standards winding their way through specification finalization, certification and/or commercialization (and I forgot to mention the G.hn – Gigabit Home Networking – “HomeCord” specification being promoted by theHomeGrid Forum).
This week, I’d like to tackle one of these standards, one that should have been commercialized a long time ago.
In other words, why the heck don’t we have NFC in mobile phones already?
That’s a rhetorical question. After some investigation, I think I know why: too many NFC chefs and not enough cooks,Top Chefwith no Tom Colicchio or Padma Lakshmi.
No NFC ‘Grand Alliance’
Much about the current state of commercialization – or lack thereof – of NFC reminds me of the development of HDTV back in the late 1980s, early 1990s. Like NFC, the development of HDTV created a cacophony of conflicting constituencies – TV makers, TV broadcasters, cable and satellite providers, movie studios, computer companies, mobile phone carriers, the government –all of whom wanted HDTV to be their way or, in a couple of cases, no way.
So the only way to resolve all the HDTV infighting and conflicts of interest was for the FCC to appoint an HDTV czar, and we’re all lucky it was former FCC chairmanRichard Wiley, who formed the Grand Allianceand forced the competitors to work together.
NFC is in a similar, if not more conflicted, state of having too many would-be NFC chefs and not enough cooks. There’s no one to lock all thebattling Bickersonsin a room and settle the issues once and for all as theyseemingly have in FranceandBelgium.
Who’s in NFC charge?
Most of the conflict seems to revolve around who’s going to own/control the digital wallet.
AsOrange has in Europe, U.S. cell carriers want all the personal data to be imbedded on the SIM card, they say to make it easy for consumers to securely move their financial life from phone-to-phone, but equally or more likely to hopefully grab a tiny piece of each transaction.
To this end, Verizon, AT&T and T-Mobile, along with Discover (the runt of the credit card litter) and other financial institutions, havehave formed a coalitioncalledISISto promote this position. Earlier this week,Isis announced its first commercial U.S. deployment– the day after non-Isis participating Sprint announced its own independent NFC plans.
Not everyone believes the carriers need to be so intimately involved in the U.S. First off, European cell users can swap out their own SIM cards. In the U.S., not so much, especially with Verizon and Sprint subscribers, who are limited by lack of backward compatibility. Understandably, Visa and MasterCard would rather the carriers not have this control over their business (and get a piece of their NFC transactional action) and want to promote backward compatibility, and so desire a non-SIM card solution.
Similarly, handset makers such asRIM want the encrypted data somehow built into the phone or, hoping to not have to incur additional hardware/chip costs and to ensure backward compatibility, want the digital wallet to be a special microSD card.
Then there isand, to a lesser extent,Ingenico, the primary makers of POS credit card terminals. There are approximately 265,000 “pin pad” terminals worldwide. Most have contactless modules to handle Visa’s “PayWave” and Chase’s “Blink,” MasterCard’s “PayPass,” American Express’ “ExpressPay” and Discover’s “PayWave” current contactless credit card NFC systems.
But these NFC modules are capable only of contactless payment. Less than 5 percent – an insignificant number, according to Verifone – are fully NFC compliant, which would allow a wider variety of capabilities beyond simple payment, such as coupon pushing and management of loyalty programs.
Even ifdigital wallet systems are somehow unified t, retailers will have to spring for new contactless expansion models for their “pin pay” POS terminals. These are, priced between $100 and $150.
Then there’s the whole separate issue of operating system compatibility (i.e.Android 2.3.3and beyond) and app development – businesses are unlikely to build their own NFC apps with so much confusion in the marketplace over who controls what pieces.
Since the government doesn’t have a seat in this restaurant as it did with HDTV, it is unlikely an objective party will adjudicate the NFC cook-off.
Since the carriers have the upper hand in dictating what kind of handsets they’ll sell, only one entity may be able to dictate how the whole NFC ecosystem will work: Apple.
As we’ve seen, Apple decides what will be in the iPhone, not AT&T, not Verizon. The blogosphere has been contorting itself trying to figure out if/when Apple willbuild NFC capabilities into the upcoming iPhone 5and the next version of iOS. Many NFC sideline watchers believe Apple could create a de facto NFC paradigm, sort of an NFCDaniel Boone leading everyone through a contactless payment Cumberland Gap.
Not everyone, of course, needs to follow Apple’s NFC model, whatever it might be, if it be at all. But if retailers begin to buy the contactless NFC expansion models in large numbers following an Apple NFC phone, if a public transportation network, supermarket or drug chain adopts Apple’s NFC ecosystem, and if iPhone 5 users (or, iPhone 4 users using an NFC-enabled case such as the one fromiCarte) take advantage of the capabilities, everyone else will likely have to follow.
But everyone is likely to follow if the following occurs:: 1) retailers begin to buy the contactless NFC expansion models in large numbers following an Apple NFC phone, 2) a public transportation network, supermarket or drug chain adopts Apple’s NFC ecosystem, and 3) if iPhone 5 users (or, iPhone 4 users using an NFC-enabled case such as the one fromiCarte) take advantage of the capabilities.
Until then, welcome to the contactless payment hell’s kitchen.