The widespread adoption of NFC (near-field communications) technology by major mobile phone operators

The widespread adoption of NFC (near-field communications) technology by major mobile phone operators

“Many of the world's leading operators, including América Móvil, Axiata Group Berhad, Bharti, China Unicom, Deutsche Telekom , KT Corporation, MTS, Orange, Qtel Group, SK Telecom, SOFTBANK MOBILE, Telecom Italia, Telefónica , Telekom Austria Group, Telenor and Vodafone, have voiced their commitment to implementing Near Field Communications (NFC) technology, and intend to launch commercial NFC services in select markets by 2012.”

Significance
This week, the largest mobile operators in the UK and abroad all agreed to provide services using NFC  .  This is extremely significant, because the support of mobile operators is essential to grow NFC services and drive its take-up amongst end-users. 

The proliferation of NFC enabled mobile phones will lead to an increase in the adoption of mobile payments, and many analysts predict that 2011 will be the year that the mobile payments market experiences explosive growth.  The value of mobile payments for digital and physical goods, money transfers and NFC transactions will reach almost $630bn by 2014, up from $170bn in 2010.

Apple is in discussions with retailers and contract manufacturers about supporting mobile payments on future iOS devices such as the iPhone5.  This could prove a tipping point for the future of NCF-enabled phones, as Apple has a unique opportunity to popularise mobile payments in the same way as it has popularised mobile Web access and touch-screen technology. 

Background
NFC (which is based on RFID technology) enables electronic devices to exchange information and instigate applications automatically when they are brought close together, and is the technology that powers smart cards and contactless bankcards.  NFC technology can be found in smart cards, key fobs, mobile phones, handheld devices, Point of Sale (POS) and PC peripherals.  

Bluetooth is the other major short-range communication technology integrated into mobile phones; however analysts predict that whilst NFC is still regarded as an emerging technology, it will replace Bluetooth in the near future.  NFC has several advantages over Bluetooth:
  - Shorter set-up time;
  - More secure;
  - Uses significantly less power than Bluetooth;
  - NFC can work when one of the devices is not powered (e.g. when a mobile device is turned off, in a contactless smart credit card or on a smart billboard/poster).

Market Size
As millions adopt smartphones and become more comfortable using them for a growing number of purposes, from finding information on the web, to sending sensitive work documents, to managing their home appliances, paying for goods and services seems a natural next step.  Frost & Sullivan anticipates that NFC-enabled mobile phones will reach 863 million units in 2015 (representing more than 53% of the overall market), at which point NFC will be the most-used solution for mobile payment.   Frost & Sullivan also expects the total payment value for NFC globally to reach €111.19 billion in 2015, while the NFC payment value in the EU is expected to reach €41.87 billion.

Applications
In addition to mobile payments, some other applications for NFC include:
  - Paying for goods & services - global events such as the London Olympics in 2012 are set to kick-start this type of mobile payment with possible plans including having smart   tickets for the Games which can double-up as contactless payment and travel cards to create a cashless Olympic Village;
  - Mobile ticketing – at London Marylebone station, a number of scanning devices were attached to the ticket gates to allow passengers to scan their own phones and open the gates.  NFC-enabled mobile phones can also be used to check in at an airport or hotel;
  - Physical access – like an electronic key, it can allow the user to authenticate themselves for access to hotel rooms, homes, offices or vehicles;
  - Content sharing – from casual users sharing files such as music, videos and photograph to corporate level data exchanges involving business cards and spreadsheets;
  - Health care application – for example, home health care workers can download patient medical records and care requirements by swiping an NFC-enabled handset over tags installed in the patient’s home;
  - Advertising/ marketing industries - posters and other promotional materials can be made NFC-compatible.  End users who see posters advertising products of interest can then flash their phone past the advert to download information to their handsets and pass it on to their friends.  By sharing information both ways, the marketer can offer users an incentive in exchange for information or interest in a product or service.