The adoption of NFC in mobile telephony paves the way to a new generation of uses, and the SIM card will be at the heart of it, says Jérôme Sion.
At an airport, a frequent traveller of an airline collects his boarding card and consults his air miles by presenting his mobile phone to an electronic reader. Further on he passes a poster advertising the latest film release; by the simple action of waving his mobile close up to the poster he downloads the film's trailer. Before boarding his plane, he skims through the day's papers and buys his usual daily, again using his mobile to pay. Simple, quick and safe, the linking of all these new actions is now very nearly a reality thanks to NFC technology.
An acronym for "Near Field Communication", NFC is a radio-frequency technology that permits contactless data exchange between a chip and a terminal. After travel cards, payment cards and passports, this technology is now extending to the mobile phone, which has become the point of convergence par excellence: according to several studies, people might forget their house keys, but they will always be sure to take their mobile with them.
NFC technology offers real interaction with the physical environment. Not only can cards used as payment, travel, loyalty and cinema cards – and even personal keys – be combined, but data can be exchanged via P2P and information can be accessed while on the move.
Telecommunications have inherited a technology which is already used for travel and payment, with, respectively, over 100 million and 25 million contactless cards in use worldwide. This contactless communication protocol and interface, originally developed by Philips (NXP) and Sony (with its FeliCa technology), have become an international standard (ISO, ECMA, ETSI) and herald a revolution once again capable of transforming the uses of mobile telephony.
There are two main applications of the NFC function on a mobile phone:
l One mode which emulates a contactless card, so the phone becomes, for example, a payment card or a Navigo travel pass.
l A reader mode: the phone becomes a terminal for carrying out P2P functions (transaction, data exchange, etc.) or reading "smart posters".
Add all the benefits of a mobile phone: a screen, a keyboard and a connection which can offer added-value services: for example, topping up your card for travel; and for payment, being able to consult your most recent transactions, your account balance, etc., and also the possibility of displaying the bank Visa or MasterCard® logo at each transaction.
So incorporating NFC in a mobile, linking the physical world with the connected world, means that the nature of transactions and their related services can become more sophisticated.
Presented as being safe and intuitive, these solutions are likely to be adopted by the vast majority of people in the near future.
A unifying technology…
There are many wireless technologies. Among them, Bluetooth has become widespread. This technology does have weaknesses, however, such as the system for inter-working and detection between peripherals. This stage, which comes before any transfer, is sometimes tiresome and disconcerting for end users, especially if a number of Bluetooth peripherals are already present in the vicinity. NFC technology, on the other hand, works in peer-to-peer mode (P2P). It handles limited speeds of 106, 212 or 424 kbit/s. This speed depends on the application NFC is used for. It works over a maximum distance of 10 cm, but the average range is about 5 cm. The short distances used in NFC ensure that the user has limited interaction with his immediate environment, which is reassuring compared to Bluetooth.
NFC uses 13.56 MHz frequencies (the same as some RFID chips), which are also compatible with RFIDs conforming to ISO 14443 recommendations. NFC is then used either in reading mode, to read information on an RFID label, or in card emulator mode, to make payments or operate a barrier. Because of its speed and limited range, NFC does not compete with Bluetooth and Wi-Fi. Rather, it is intended to operate with these technologies, for example to initialise a Bluetooth session.
After a first decade dedicated to voice then a second decade dedicated to multimedia (Internet mobile, video, visio, etc.), mobile phone operators are preparing to enter the age of ‘proximity services' thanks to NFC technology.
In a recent study, ABI Research estimates that in 2012, 20% of mobile phones in the world will have NFC technology, enabling users to interact with their environment using their mobile. The market shows promise on the basis of the estimated success with end users, the volumes of transactions that will be generated, and the opportunities they represent, not only for telecom operators, but also for transport companies and banks.
Knowing that there are more mobile phones in circulation (around 2.6 billion) than bank cards (1.5 billion across the world), the convergence between payments and mobile communications is not only logical but actually inevitable. According to Juniper Research, the mobile payment market could reach 10 billion dollars in 2010 .
Among the wide variety of possible applications, travel and payment will be the first specific applications of this technology, as the terminals and readers are already in use. For travel, NFC technology is a guarantee of reduced costs and better services for users via an innovative system. As for banks, they will take advantage of the successful utilisation of the mobile phone to strengthen customer relations, allow micro-payments and offer new services. Other applications will emerge at a later time, once users are equipped with compatible telephones. And it will be then that other service providers (such as airlines) will start taking a huge interest in this market.
Is the SIM best?
There is then the valid question of where to store the NFC applications in the mobile – on the SIM card, on a separate component, or even in the telephone itself?
In GSM type environments, the most logical deployment appears to be to integrate the NFC into the SIM card, the main component offering security and efficiency because of its specific properties:
l Portability (between mobiles)
l Universality (worldwide circulation)
l Dynamic remote management via OTA (Over-the-Air) platforms which will allow the deployment and customisation of these applications in the hands of the user
l Security of logical and physical access
l Longer life cycle than mobiles
l Standardised technology
There are alternatives for storing contactless applications, such as in the terminal itself or on a removable memory card such as MMC or SD, which may be of interest for certain applications requiring a low level of security.
That said, a strong consensus for the SIM card appears to have developed. In September 2006, GSMA grasped the potential of contactless technology on SIM cards when, in February 2007, it announced the "Pay-Buy Mobile" initiative supporting the adoption of NFC. Then increasing support was given to the SWP protocol (Single Wire Protocol, supported by both NXP and its creator Gemalto). SWP should in fact become the standard, supporting both contactless infrastructure and NFC payment systems. SWP can provide a secure connection between the NFC chip and the SIM card via a single connection. All application and personal data are on the SIM card.
SIM/mobile terminal technology is already available from certain suppliers for conducting pilot schemes. The OTA platforms will allow all applications to be managed (e.g. from downloading a bank application to customising it), securely thanks to the creation of a ‘security domain' on the SIM card. This divides the card into compartments for the different applications, using firewalls and different keys held by trusted third parties such as Gemalto, and offers absolutely watertight security.
The technologies will be available very soon. There remains the crucial aspect of finding an appropriate infrastructure in which services offered by telecom operators, financial institutions, shops, public transport providers, and so on, can work together in the same ‘ecosystem'. It is only when such an infrastructure exists that NFC will really be able to take off.
Which ‘ecosystem'?
Already used on a large scale in Japan (FeliCa) and South Korea, only a few thousand testers in France are equipped with NFC mobiles, for example the NRJ Mobile and SFR experiment in Strasbourg, partnered in this by the Crédit Mutuel bank. One of the main challenges for adopting NFC unreservedly is the creation of an ‘NFC ecosystem', that is, outlining scenarios in order to identify a frame of reference for commercial rules and technical constraints.
This is what currently accounts for the cooperation between the telecom world and the banking world. They will need to devise the ecosystem, contribute to standardising technologies and ensure that the adoption of these technologies is as widespread as possible.
At the European level, this is also the ambition of the StoLPaN project (Store Logistics and Payment with NFC), developed by a pan-European consortium consisting of companies, universities and groups of users, and supported by the European Union under the Information Society Technologies programme. This R&D group aims to develop an open architecture intended to develop applications based on NFC technology in mobile terminals . A preliminary report will be submitted in the summer of 2007 and the StoLPaN project should be completed in 2009.
Lagging somewhat behind the European project, some French industrials are nevertheless examining NFC potential. In November 2006, the three mobile operators (Bouygues Telecom, Orange and SFR), in collaboration with two banking networks (BNP Paribas and Crédit Mutuel-CIC), launched an initiative for testing a common solution for contactless payment by mobile phone: a project under the aegis of the competitiveness hub Transactions Electroniques Sécurisées de Basse-Normandie [Secure Electronic Transactions in Basse-Normandie]. Along the same lines, Bouygues Telecom is testing a contactless technology solution in a Navigo pass experiment with RATP and SNCF.
Very recently, Bouygues Telecom, Orange, SFR, Keolis, RATP, SNCF, Transdev and Veolia Transport announced the launch of a working group to define a solution which incorporates travel permits in contactless mobile phones. Placed under the aegis of the competitiveness hub ‘Secure Electronic Transactions', this working group aims to enable the mobile phone to be used to access all public transport networks, whatever the mobile operator. Approval of the specifications and their announcement to the telecommunications and transport industries are expected in the autumn of 2007.
All these pilot projects demonstrate the need for a ‘Trusted Services Manager', i.e. a trusted third party who will look after the deployment and management of the applications and associated data for the banks and transport providers in strict confidence, whatever the telecom network used by the end customer.
Thanks to the incorporation of NFC technology into mobile phones, the marriage between wireless and contactless paves the way for the deployment of brand new applications. The convenience which NFC technology offers, its low consumption and its security (linked to the phone's SIM card) open up new opportunities and new uses which will benefit users. Pilot schemes are underway in 2007 worldwide and mass deployment will begin from mid 2008.
Jérôme Sion is manager of ‘contactless mobile technologies' activities, Gemalto