Mobile devices are inherently disruptive technologies. They cause significant change and always have.  Initially uncomfortable for consumers and businesses alike, the adoption of mobile form factors & device families can alter the consumer technology landscape and because of this, they can have huge impact on industries far beyond wireless technologies. In fact, we’ve already seen this happen in numerous areas. The introduction of the iPod & iTunes changed not only MP3 players, but also the music and movie industries. The introduction of Google Maps Navigation and free navigation for Ovi Maps significantly impacted Garmin, TomTom and other GPS device manufacturers. As mobile devices evolve, particularly smart phones, and integrate more valued features for consumers, the trail of markets impacted becomes deeper and wider.

This will be the case as Near Field Communication (NFC) becomes more prevalent worldwide (If you’re not familiar with NFC, please read this article on Wikipedia and this background information to catch up). NFC has the potential to be the next major paradigm shifting addition to mobile devices.  Because of the depth and breadth of its impact, it has faced huge obstacles to deployment, particularly in North America, where mobile innovation is a concoction of marketers rather than a charge to engineering visionaries.

Around the world, various implementations of NFC have been in use for years. NFC, or a variant, has been the foundation for Sony’s FeliCa chips showing integration in TV remotes, embedded in Nokia handhelds, used as the primary mode of payment for transit system, and as a means of syncing and sharing data across multiple devices, enhancing  Bluetooth. While there have been successful explorations of NFC deployments in North America, the largest trials including the NYC Mobile Trial and the San Francisco BART trials, most of these efforts have resulted in only brief mentions in even the geekiest of  the North American tech  press. Why is this?  Put simply, lack of a direct cash stream.

The primary problem that companies pushing this technology (Nokia, Sony, Gemalto, Broadcom, even Visa and Mastercard to a lesser degree) face is that the North American carriers can’t figure out how to get their share of dollars being transmitted between mobile devices sporting NFC chips and the readers used to collect payments and disperse tickets or other goods. NFC, in its most basic implementations, can be used in the following ways:

• Contactless Payment Transactions: Because it has a limited distance, can be built to require PIN entry or a “tap and go” approach, NFC can easily be used for purchases, or as a “digital wallet.”
• Ticketing: NFC could replace physical tickets for events and shows. Consumers could essentially purchase season tickets for your favorite team, and have the tickets on your handheld, allowing you to simply tap to enter the venue come game day.
• Information sharing: NFC enable “smart posters,” or other mechanisms can be deployed to provide people with access to critical information relevant to their interested or needs. For instance, movie posters could provide NFC enabled devices to automagically download a trailer, soundtrack and/or even purchase tickets (see above, and see above that.) Museums could provide detailed information on collections, and governments could provide details regarding office availability and services.
• Door access: Hotels, office buildings and so forth present an excellent opportunity for deploying contactless interactions for customers significantly reducing the waste and excessive costs associated with key cards.
• Health Information: Patient information could be stored on an NFC chip and used to update an emergency room physician and provide details medical history, insurance and other related information.

To be fair, NFC standards continue to evolve, and the use of variants such as Sony’s FeliCa or MiFare versus standard basic NFC has created barriers, but these issues could easily be overcome if mobile carriers recognized the enormous shape shifting potential they could wield by pushing for global standardization. The problem inherent to all of these use cases, however, is the lack of an obvious direct flow of cash to the mobile carriers, and that is the reason why North America again trails the rest of the mobile world. NFC does not rely on cellular data. It relies on proximity to the device or reader. It does not require a cellular subscription, or even an IMEI number for authentication. An embedded chip in a mobile device can require a user to enter a PIN, or not, depending on how it’s programmed and implemented. Because of this, while Visa and Mastercard try to push this vision for consumers, AT&T, Verizon and so forth, stall the North American Market into ignorance, or even worse, obsolescence.

North American carriers could have, and still should, be leading the way in contactless. The lack of a direct revenue flow from mobile payments or information sharing should be considered a minor hurdle, and should generate more creative business partnerships. Arrangements for revenue sharing from device manufacturers, NFC chip and tag manufacturers and retailers looking to increase sale opportunities and creative marketing agreements could produce financial windfalls if implemented early and established as the foundation. Again, NFC does not rely on cellular connectivity, so this has nothing to do with bandwidth, except that users couldn’t be charged for data usage. Instead, the carriers have wanted to steer payments directly through their hands, and without that, have not thought through the potentially lucrative opportunities contactless can provide.

I’ve worked with Nokia AT&T and VivoTech on NFC trials and deployment, and I’ve seen first hand what is possible and how general consumers respond when NFC is effectively deployed. I was disappointed that NFC was not mentioned in any of the Nokia World 10 news that made it to the masses. I was hoping that the good people pushing this type of innovation would be able to demonstrate advancements in the application of the technology, or in its integration through more high end devices. (My work with NFC focused on the use of the Nokia 6131 NFC, an S40 device) In recent years, there have consistently been rumors of the iPhone adopting NFC in future devices. I’m mixed on this because while the iPhone has the power to bring the public awareness of contactless to the general public, I’m hesitant to believe it would be deployed in a manner that is valuable for the broader population, open enough for third-party development, or in sync with standardization efforts.

Visa has just recently announced an addition to PayWave, brilliantly embedding NFC payment capabilities into MicroSD cards and is running a pilot in the NYC transit system.  While this may indicate a path for financial institutions towards capitalizing on emerging mobile technologies, it may also represent yet another door carriers have closed on themselves.

There is huge opportunity waiting for the clever, entrepreneurial and forward looking individuals out there. Opportunity to be involved in one of the next major shake ups that stem from mobile devices. Much like the impact of the iPod on the music industry, NFC and related contactless technologies can revolutionize multiple markets if approached creatively and strategically.

Do you think NFC will disrupt the mobile market and beyond? I do.

I’m curious to hear what you think.

David has written 2 articles for The Mobile Fanatics.

David Middleton has been a mobile enthusiast since the last millennium, and has worked closely with device manufacturers, carriers and application developers. He can be contacted most easily through his Twitter page.

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