The area of physical world interaction is becoming an important strategic stake for the wireless industry. Near Field Communication (NFC) is the main technology of choice to develop proximity transactions between mobile phones and contactless readers or tags. It enables multiple contactless applications on mobile phones, and should not be restricted only to payment or transport – although these two applications play an essential role in the early adoption of the technology. There is wide scope for innovations in different domains such as mobile marketing, ticketing, loyalty and access control.
Mobile contactless solutions will gain momentum, in particular due to the strong interest claimed by major mobile operators and also some key application providers such as financial players and public transport companies. However, there are challenges ahead, in particular the availability of compatible handsets based on a standard and the establishment of business models.
Japan and South Korea have already moved to commercial deployments, but in other countries we expect the first commercial services based on mobile contactless to start from 2008. However, large-scale adoption by end users and wide availability of services will become a reality from 2010 at the earliest in the most advanced markets. There will be different timelines depending on local market conditions, in particular due to the presence (or absence) of already-deployed contactless infrastructure for transport and payment.
The NFC business case will be a challenging one for mobile operators. We believe NFC needs a long-term investment perspective because short-term benefits, in particular from transport and payment applications, may be limited. Mobile contactless transactions don’t need cellular networks, but mobile operators have an important role to play, in particular by providing enablers to third parties wishing to distribute NFC applications to their customers’ phones and by encouraging the penetration of compatible handsets. Operators will try to monetise this enabler role by generating revenues from application owners, like banks and transport companies, but more importantly they will have the opportunity to leverage the usage of the cellular network in combination with contactless applications.
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