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Wireless Gets Up Close

Wireless transmissions that travel only a few centimeters may be just the ticket for embedding cell phones with smart-card technology.
September 14, 2004

When comparing wireless transmission range, longer is almost always better. Yet the developers of a new technology called Near Field Communications, or NFC, boast not about how long a distance it works over, but how short.

With a range of just 10 centimeters, NFC can get by with a very small, low-cost radio transmitter that draws only a pittance of power. Its very feebleness of transmission helps to ensure security. Forget about a hacker snooping on your Wi-Fi session from a laptop outside the buildingwith NFC, even a colleague sitting next to you at a meeting may be too far away to sniff the signal. Yet if you do want to swap data and move your NFC device next to hers, the connection is immediate. What’s more, you can take the same device down the hall and use it to buy a soda from a vending machine. These attributes were enough to convince Nokia, and as of August 30, Samsung, to announce that their next-generation cell phones will come equipped with NFC chips. Nokia’s NFC-enabled handsets are promised by the end of the year.

For handset vendors, NFC represents a low-cost entry into the smart card market. Cell phone users could potentially use their phones as contactless smart cards for electronic turnstiles, event ticketing, and even checking out at the supermarket. The technology would also let users display images from a digital camera phone on a nearby TV, graze promotional offers from subway billboards, or swap contact information between devices. And with the help of Philips and Sony, the two consumer electronics giants that jointly developed the technology, the low-cost radio chips could appear in everything from TVs to PCs to digital cameras. The market research firm ABI Research predicts that by 2009, NFC-enabled products will account for half the cellular handset market.

Near Field Communications adheres to a standard ratified last year that specifies transfer speeds up to 424 kilobits per second operating at a frequency of 13.56 megahertz. (Early NFC devices will be limited to half that speed.) NFC offers a much shorter range than the radio frequency identification (RFID) technology on which the new standard is based: 10 centimeters instead of 2 to 5 meters. But like RFID, NFC transmits information via inductive electromagnetic coupling in the radio frequency portion of the spectrum.

The key difference is that NFC adds software that enables instant setup of peer-to-peer networking. As with P2P wireless communications between Bluetooth- or ZigBee-enabled devices, NFC devices automatically seek each other out and establish a communications link. (The popular Wi-Fi wireless networking technology is different, as it requires an access hub.) This P2P approach also differs from RFID networks, which are set up in a master/slave relationship in which passive chips are read by expensive, powered reader devices. NFC devices, on the other hand, can be set to either passive or active mode, so they can send identification data even when the device is turned off (passive mode), making it ideal for smart card applications. At the same time it is also capable of playing the active role, orchestrating communications with other active or passive RFID-based devices.

The key advantage of NFC (aside from its low cost) is the speed with which you can initiate a communications session. NFC has very fast and easy configuration and pairing, says Tariq Shahab, Philips Americas Contactless Identification Business Development Manager. By comparison, Bluetooth, which is also designed to exchange data between devices in close proximity, requires tedious setup procedures between communicating devices. To use Bluetooth with different devices, you have to go through a lot of configuration, but with NFC its just touch and go, Shahab says. Due to this instant connection capability, NFC is being pitched as a kind of virtual connector that can act as a lingua franca for setting up sessions using other, more powerful, wireless technologies such as Bluetooth and Wi-Fi. In other words, devices could first introduce themselves via NFC before moving to a faster, longer-range medium.

An NFC chip can also act as a smart card, as long as it is integrated with a security controller chip equipped with encryption. Visa, the third major partner with Sony and Philips in the NFC Forum that is pushing the technology, has sold hundreds of millions of contactless smart cards, primarily in Asia, where they are used mostly for mass transit fare collection. The more robust NFC is compatible with this similar RFID technology.

If people can move through a turnstile faster and more securely by holding up a contactless card instead of swiping a card through a reader, it should be even more convenient to hold up a cell phone. Smart cards are often too thick to comfortably fit more than one in a wallet, and users need to stop to fish them out of the wallet and slide them back in again. Initial applications of the NFC smart cards will be in point-of-purchase locations where check-out speed is at a premium, such as ticketing, supermarkets and video stores.

Philips is especially keen on selling NFC as a tool for public interactive advertising. Shahab describes a scenario in which pedestrians walking through an airport or subway would stop and glide their phones close to a billboard embedded with an NFC chip. Doing so might download a song, ring-tone, game, ticket, or coupon using either NFC or a faster wireless technology like Bluetooth or Wi-Fi. Alternatively, they could download a URL that the cell phone could automatically connect to in a Web session. Philips is working with content providers such as Vivendi Universal to develop similar displays.

Of course, numerous proposals for such public interactive marketing schemes have been bandied about in recent years, with very little progress. They all confront obstacles that are likely to limit their impact. The technology needs to work simply, quickly, and reliably, and the displays need to be sufficiently numerousand the offers sufficiently irresistibleto convince busy pedestrians to stop and interact. NFC faces an additional obstacle: Although a 10-centimeter range is an advantage for a smart card, it could pose practical and psychological barriers for interactive marketing in a crowded commuter setting. (Excuse me, maam, while I caress the billboard with my cell phone.)

Once the RFID revolution gets rolling in shipping and retail (and some project that could take over a decade), economies of scales should drive down the cost of NFC chips from their present level of a few dollars to about 20 cents (minus the encryption chip). At that price, it should be affordable to embed chips in magazines and other interactive venues. NFC boosters also list intriguing applications such as wireless mice, door keys, and patient ID tags containing medical records. Here, however, NFC is competing with numerous other wireless technologiesfrom Bluetooth and ZigBee on the low end to ultrawideband and Wi-Fi on the high end. Although those technologies tend to be more expensive than NFC, they are also faster and longer-range. The idea of using NFC as a universal set-up scheme for other devices is compelling, yet NFC suffers from the inconvenience of always having to bring devices close together. Finally, with TV powers like Sony and Philips pushing it, NFC could be built into set-top boxes and PCs and play a role in authenticating interactive TV or online purchasesespecially if it becomes tightly integrated with an encryption chip. Yet here, NFC faces even more competition.

NFCs initial success, then, will likely depend on the speed with which electronic payment companiesand here one would look first to NFC Forum partner Visaactively involve vendors in adding NFC support to smart-card ticketing schemes. Gradually, NFC could then follow contactless smart cards into more universal retail transactions. To help entice consumers, the handset vendors may spark interest in using NFC to display digital camera images on TVs or swap contact information. With these nonmonetary tasks, success may hinge upon the lack of same for its closest competitor, Bluetootha technology that received a jolt in late August when original developer Ericcson announced it was shutting down its Bluetooth division.

If a few more handset vendors chime in, its not difficult to foresee NFC emerging as the foundation for the cell phones next starring role as a universal smart card. Before the smart card smart phone becomes a reality, there will be many more plays and players to be heard fromMasterCard, Motorola, Microsoft, and Matsushita, just to start with the M’s. Yet if NFC follows through on its claims for simplicity and affordability, it could very well lie at the core of a development that will truly make the cell phone indispensable.

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