Collaboration starts to pay dividends

27 Jun 2007

Mobile operators in the region follow Japan's lead and embrace near-field communication technology in cooperation with large financial companies. Will consumers and retailers get interested and a viable business model emerge‾

Although mobile contactless payment using near-field communication (NFC) technology has found success in Japan, thanks mainly to NTT DoCoMo's aggressive push with Mobile Felica, it is still an uncertain business model elsewhere in Asia.

However, that may soon change. NFC is expected to move one step closer toward wide-scale commercialization in Asia and worldwide during the next five years, thanks to a concerted push from the mobile operator community and a better understanding among major stakeholders within the technology's ecosystem.

Already, there are more than 25 trials underway in Asia, Europe and North America just since 2005. These early attempts are small-scale and largely driven by credit card companies and NFC supporters. They are centered on testing the infrastructure and the technology itself.

However, the recent focus has shifted to moving these trials into actual commercial deployment.
More significantly, a series of announcements during the last six months indicates that NFC is gaining support from the mobile operator community, giving the technology a much-needed push toward true commercial deployment.

'Mobile operators for a long period of time have been waiting for the right time, the right business model and the right technology to jump into this market,' says Patrick Henzen, regional marketing manager for identification at NXP Semiconductors. 'And now they are in the driver's seat, as the market becomes more mature for commercialization.'

Henzen adds that the Pay-You Mobile initiative, announced by the GSM Association in February, is 'the best news' for the industry since it should help promote the global deployment of the technology.

Trial program

The initiative, which has gained support from 24 mobile operators including China Mobile, Vodafone and AT&T, as well as handset makers like Nokia, Samsung Electronics and LG Electronics, is intended to develop a standardized solution enabling NFC applications to be stored on the phone's SIM cards.

The initiative, according to the GSMA, will begin with a business-model analysis and include an end-to-end trial in Korea, led by KTF, along with LG Electronics and Samsung Electronics, in October.

The trial will also include other key participants in the value chain, from banks and credit card providers to merchants and universal integrated circuit card (UICC) manufacturers. Similar trials are also scheduled to start in Q3 and Q4 by operators in Europe and Asia, says Dr. Nav Bains, project director at the GSMA.

The initial focus of the program will center on mobile payments like credit/debit cards, he says, adding that the GSMA is also in talks with other financial services companies about how they might participate.

Ovum analyst Vincent Poulbere says the choice of SIM is strategic for the operators because it helps them play an important role in enabling contactless applications.

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