Financial Cryptography

NFC - telco operators get another chance at innovation

Dave Birch posts on telco operators in Britain and NFC -- near field communications. You should read the lot, but here's most of it as it's mostly FC:

I think they are alluding to a tussle between service providers (eg, banks) and mobile operators over NFC. The mobile operators want everything to go through the SIM, generally speaking, including NFC applications. This frames NFC applications in the kind of portal strategy that was so successful for the operators when they introduced WAP. Naturally, the service providers want NFC applications to be directly addressable without going through the SIM, so that anyone can load any NFC application into their phone.

I have to say that my sympathies are with the service providers here. We've been having fun building and loading NFC applications for a variety of clients using -- for instance -- the Nokia NFC phone (see diagram below) and it would be crazy to have get permission from (or, indeed, pay) an operator to load a new application: it would kill creativity.

In fact, I'm sure it would it be bad (even for the operators) to have NFC locked down by the operators. For one thing, contactless payments are only one potential use of NFC phones and the operators should not let this one application (and the ideaof charging banks a transaction fee) to dominate their roadmap. There is a much bigger picture, which is around the integration of mobile phones into their local environments. Look at smart posters, as an obvious example: we've been playing with these for a while now. Incidentally, one of the demonstrations that we will be presenting at the Intelligent Transport Systems World Congress in London next month allows someone to find out a bus timetable by holding their phone up to a poster at a bus stop and then subsequently buy a ticket by waving their phone over a "purchase ticket" label (we'll also be demonstrating phone-to-phone transfer of tickets, which is pretty interesting). Anyway, the point is that no-one accesses these kinds of services by typing URLs into WAP screens: no smart posters means no servicediscovery and therefore no data usage.

We saw this same process with WAP. Some people tried and were constrained (notably, e-gold did WAP based payments from 1999 onwards). Other people didn't bother, as it was clear from the outside that the control structure was too tight to innovate.

So telco operators get another chance with NFC. Will they try (and fail) to control NFC or destroy it in the attempt? As Dave indicates, getting "Internet" thinking to telcos is no easy sale.

I think the answer is they will fail to control it. The reason for this is that there are enough rebel handset manufacturers out there now; there are even, I am told, handsets that can route calls through bluetooth and VoIP (the shame! the horror!). An open market will counter-balance control attempts, and NFC will just become another option independent of the network.

Posted by iang at September 13, 2006 05:52 AM | TrackBack