NFC Technology Increases Traction in Mobile Phone Integration

( 1 Mar 2008 )

By Stephen Las Marias, Editor


Near-field communications technology (NFC), which enables applications such as contactless payments and touch-and-go transportation solutions, has made very positive inroads into the mobile phone market over the last year. Jeroen Keunen, Regional Marketing Manager, Automotive & Identification, Asia-Pacific, NXP Semiconductors, discussed with Wireless Design and Development Asia the future of the NFC technology, as well as its opportunities and challenges, as it penetrates the mobile consumer segment. Excerpts:

What are the key challenges to global adoption of NFC technology?
Having worked out all of the technical issues around NFC and now coming to an agreement on its implementation, the key challenge remaining is the development of viable business models. In other words, as multiple services converge into a single device, the various transport operators, banks, credit card scheme providers and mobile phone service operators in each country will have to come to an agreement on who will and how to interact with the end customer and agree upon revenue sharing. For example, in the case of a mobile phone, the main customer interface belongs to the mobile phone operator, so there is a lot of discussion at present about how the others can maintain the relationship and loyalty with their customers.

How do you think the differing technologies, and interoperability with other services and providers, will affect the NFC ecosystem?
NFC has become the technology of choice for proximity transactions. These include payments, access to buildings, customer loyalty programs, service discovery and transportation. In terms of market penetration, ABI Research has stated that NFC will quickly become part of the mobile phone specification and expects that 20 percent of all mobile phones will be NFC enabled by 2012—with continuing growth afterwards. That alone will account for more than 250 million NFC phones in 2012, creating an enormous installed base. The goal was to develop a phone that could be used globally, and what hindered that for quite some time was the existence of competing mobile protocols.

The strength of NFC is that it brings the main contactless protocol standards—Type A, Type B and FeliCa—together, so with the establishment of Moversa as the last piece of the jigsaw puzzle we now have a global standard for the secure element, and therefore can produce a truly global phone. Our vision is for a world in which consumers can access content and services easily, from anywhere, and at any time using any portable device over secure, seamless contactless solutions.

NFC adoption requires a high level of standardization, interoperability and security. How do you address these issues?
In its early stages the adoption and roll-out of NFC was a mammoth task. Looking back, however, we now have the full support of more than 130 member companies of the NFC Forum, in addition to the industry acceptance of the NFC standard by GSMA and ETSI.

NFC is also accredited with ISO and ECMA. This success and widespread acceptance is the result of being active in consortia to standardize the technology and ensure that it doesn't remain a proprietary platform with limited scope.

What are the strengths of the Universal Secure Access Module? How about security issues?
Our aim is to provide a global platform allowing handset makers and mobile phone operators to provide phones with global appeal. To give a simple example, a Japanese businessman on a business trip can use his phone to tap-and-go in London's underground, and then buy a hamburger at a McDonald's in the US. We've become accustomed to roaming for voice and data, so the next logical step is to enable an even wider range of services anywhere, anytime.

For the handset maker, the globalization of the platform will bring tremendous advantages in terms of economies of scale. Likewise, mobile operators can tap into additional revenue when their customers access transport networks while traveling overseas.

In terms of security, NXP's Secure Access Modules are based upon the proven SmartMX platform, which has consistently achieved the highest ratings possible in many independent security evaluations, such as Common Criteria EAL5+.

What can users expect from NFC-equipped mobile phones?
From the users' perspective, having an NFC-enabled phone allows the user to have a wallet in their mobile phone for transportation, mobile payments, and even to collect loyalty points. Of course these kinds of transactions can be done with a collection of plastic cards, but a key advantage of using a mobile phone is the richness of the application. A mobile phone allows the user to get a lot more information such as account details, balances, and more. The functionality offered by an NFC-enabled mobile phone is really extraordinary. It can be used for: card emulation, which is securely replacing cards by having information stored and in the phone; and peer-to-peer communications, which will allow two NFC phones to exchange information quickly and easily. It will also have an NFC reader functionality, which allows the phone to "discover" services while on the move, such as a smart poster with discount coupons, timetable information, a link to a movie trailer, and others.

When do you expect mass adoption of NFC, and which applications will lead the market?
The variety of applications that will be popular really depends largely on the region, but in most places I think it will be driven by transportation and payments. One of the most promising areas for NFC adoption is without a doubt in the mobile phone, but we will also see it appearing more and more in the PC and in other consumer electronics products. For example, we will start to see NFC being used in Wi-Fi configuration between devices. NFC will be incorporated into the Bluetooth specification being driven by Bluetooth SIG. In addition, the Wireless USB Association has plans to include NFC in its 1.1 specification.


You can reach Stephen Las Marias at stephen.lasmarias@rbi-asia.com.