NFC (near field communication)! Why Banks run so fast in the wall ?

Implications: The question is why so many companies launch NFC pilot when the architecture is not yet defined,  the protocol to be use inside the handset is known only since the last few days and I would say whatever the solution adopted the result will be too expensive for being widely deployed. 

Alternative solution exists, technically better and much more less expensive(20€ versus 200€).  Why Banks and NFC customers have not yet considered this exciting alternative. 







Analysis:

NFC (near field communication)!Why Banks run so fast in the wall ?

Every week, we can read more then 20 articles announcing new pilots using NFC Technology.

These pilots involved mainly banks (for contact-less payment). Thru this technology, you can pay transportation ( bus, train, metro, parking), small amount shopping, etc… by using your handset.

I wonder Why, so many clever people are pushing so much to evaluate solutions that have no chance to exist tomorrow.

This solution, technically speaking, needs to determine which architecture to use (1 card or 2 cards inside the handset), which protocol to chose ?

The “internal High speed protocol” has been voted last week only (mid Nov 2006), meaning that all pilots using the alternative protocol (MMC) will bring no value, as the behavior and reactions of the material are so different.

* * * You can read my note regarding the exceptional ETSI session where the vote took place. This article also shows the lost of influence of Gemalto.

On top of that, we have to keep in mind that whatever the technology chosen, NFC handsets will be VERY EXPENSIVE slowing down adoption of this technology.

In the telecom business we have already all experienced, that it is more difficult to launch “high end and expensive” solutions than “low end and cheap” one.

I am strongly convinced that many decision makers are misunderstanding what NFC do, when this technology will be fully available, what will be the real price and what alternatives it exist today to develop same kinds of services at better price with existing technology.

I try to make a parallel with Bluetooth. If you remember well, 3 years ago, many people were shouting that Bluetooth will revolutionize the telecom business, increasing the convergence with PCs, etc….

In fact, as of today, except Bluetooth earring and the opportunity to transfer photos from your handset to your PC, there is none Bluetooth application widely spread.

The percentage of Bluetooth handset increases slowly, because all new appliances get Bluetooth inside only.

May be I am wrong, but I am quite sure that it will be the same for NFC. No one will go to shops for buying a new high priced NFC handset just for paying the metro.

Buying a NFC terminal today, is like buying a Ferrari to pick your children up after school ?

Alternative solutions exist for around 30€ or less when NFC request 200€ or more.

* * *USB is chosen as the High Speed Protocol

This week has seen the end of a multi year battle and discussions. The new smart card high-speed protocol has been adopted, and it is the USB "Inter-Chip". This standard is derived from the USB standard, we all know on PCs.

The vote took place during an exceptional session of ETSI Smart Card Platform Technical Committee in Sophia Antipolis (France) Mid-Nov 2006, where telecom operators, handset makers and SIM vendors finally agreed.

USB was chosen against The MMC protocol, strongly supported by Gemplus (before the Gemalto merger) confirming the lost of influence of Gemalto.

The purpose of a high-speed protocol is to allow the SIM and the handset to exchange high volumes of data, leading to phonebooks with pictures to be saved on SIMs, downloading of rich content media onto the SIM etc…

There are still some remaining issues. Some of the handset manufacturers claim USB will reduce battery life time and it is costly to implement. They also say that no USB handset is ready yet, they will need one to two years before SIM USB "Inter-Chip" compatible handsets are available on the market.

The USB choice as a high-speed protocol has also an impact on NFC standardization. The original creators of NFC protocol, NXP (ex-Philips semiconductors) and Sony, considered a two-wire connection to the SIM, which is no longer feasible once the USB "Inter Chip" is adopted. The remaining option is now the Single Wire Protocol (SWP).