GSM Association Says Mobile Operators Are Committed to NFC Launch

Many of the world's leading mobile operators have announced firm commitments to launching near-field communications (NFC) services, creating rapid momentum in the contactless technology, the GSM Association (GSMA) says. The industry group says key operators in most regions have voiced their commitment to implementing NFC, including America Movil, Axiata Group Berhad, Bharti, China Unicom, Deutsche Telekom, KT Corporation, MTS, Orange, Qtel Group, Softbank Mobile, Telecom Italia, Telefónica, Telekom Austria, Telenor, and Vodafone, and intend to launch commercial services in select markets by 2012.

CEO of Telecom Italia and Chairman of the GSMA Franco Bernabe stated that while NFC is perhaps best known for its role in enabling mobile payments, its applications go far beyond that, and the technology represents an important innovation opportunity, which could facilitate a wide range of interesting services and applications for consumers, such as mobile ticketing, mobile couponing, the exchange of information and content, control access to cars, homes, hotels, offices car parks and much more.

The GSMA now plans to develop the necessary certification and testing standards to ensure global interoperability of NFC services, using handset SIM cards as the secure element to provide authentication, security and portability.

Outlook and Implications

• Significant Market potential for NFC: The value of the global NFC market has recently been estimated at more than USD150 billion per year by 2015, and the GSMA is now calling on operators, vendors and banks to address this opportunity and to provide valuable new services to mobile users worldwide. NFC will allow handsets to "talk" to payment terminals designed for smart cards, with the potential to replacing credit and debit cards, and transport passes. However, despite much excitement in the industry for several years, there has been little more than a few limited trials, except in Japan and Hong Kong, where systems have been deployed for mass-transit ticketing. However, the GSMA believes that as NFC chips become cheaper, millions of equipped phones will be on the market in the US and Europe before the end of 2011. Canadian giant Research In Motion recently stated that "many if not most" of its BlackBerry handsets will have NFC chips this year, while Google's Nexus S phone already has one, and the company's latest Android software supports the technology. Nokia, the world's number one handset vendor, has committed to putting NFC chips in all its next-generation smart phones.

• Standardisation is Key: The GSMA says interoperability is critical to the widespread adoption of NFC, enabling users to benefit from NFC services around the world, regardless of operator network or device type. Chairman Bernabe stated that the adoption of different approaches to NFC will only serve to fragment the market, and by uniting around a single standardised approach to mobile NFC and by collaborating across the entire ecosystem, the industry can continue to develop the compelling services that customers demand. However, despite the lack of standardisation, NFC technology is currently being trialled globally to bring mobile payments to customers (see World: 25 February 2009: The Potential of NFC-Enabled Handsets as a Mobile Revenue Stream, and World: 27 September 2010: Mobile Money—Business Models and Value Chain).

• Operator Plans Gather Momentum: Many of the large European and North American operators are now rolling out NFC in earnest, including France Telecom's Orange and Deutsche Telekom's T-Mobile units. Deutsche Telekom has also outlined its plans for NFC in 2011, with plans to launch "mobile wallet" services whereby users can pay for goods using their mobile handsets, with T-Mobile USA being one of the first of its operations to launch the service. Many other operators have made moves into mobile payments as more handsets contain NFC capabilities (see United Kingdom: 7 February 2011: O2 UK to Expand Mobile Payments Offering in H2; Poland: 3 February 2011: Orange Poland Launches Mobile Payments and United Kingdom: 28 January 2011: Everything Everywhere to Launch NFC Mobile Payments Service This Year). In the U.S., three of the four largest wireless carriers: Verizon Wireless, AT&T Inc. and T-Mobile USA, have formed a joint venture, ISIS, to roll out payment services in limited regions of the country in the next year. In the Far East, SK Telecom, South Korea's largest mobile operator, recently announced it would collaborate with Japanese operators KDDI and Softbank to offer a mobile payment system within this year that works in both countries, while rival KT Corp has agreed to work with Japan's largest mobile operator NTT DoCoMo, on a mobile payment system that will also work in both countries, and could be launched as early as next year (see Japan—South Korea: 9 February 2011: Japanese, Korean Mobile Operators to Jointly Develop Mobile Payment Services).