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Mobile Ops Unite to Keep NFC in the SIM

Sarah Thomas
11/16/2011
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Mobile commerce is shaping up to be one of the hottest areas to watch in mobile, so the wireless operators are joining forces to make sure they’re not left behind.

Forty-five wireless operators across the globe have banded together to support and implement SIM-based Near-Field Communications (NFC), the GSM Association (GSMA) announced Wednesday, along with a new set of industry specifications to standardize the service.

Included in the global membership are AT&T Inc. (NYSE: T), China Mobile Ltd. (NYSE: CHL), Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Telia Company , Vodafone Group plc (NYSE: VOD) and more. The U.S. Isis joint venture of AT&T, Verizon Wireless and T-Mobile US Inc. wasn’t listed as member, but was included as supporting SIM-based NFC. Google (Nasdaq: GOOG) Wallet partner Sprint Corp. (NYSE: S) is not a member. (See US Operators Partner Up for M-Banking, Google Taps Sprint for Tap-to-Pay and Sprint Stakes Its mCommerce Claim.)

The battle for NFC
Smartphones equipped with NFC are expected to reach 17.5 million consumers by the end of 2011 and grow to 250 million sold to end users in 2014, according to Pyramid Research . (See Who's Holding Up NFC? and Here Come the NFC Phones.)

But the short-range RFID technology, quickly becoming the dominant tech in the U.S., can be stored and encrypted in the handset’s SIM card or the hardware itself. There’s already been dissension on the best location, because where the NFC goes determines who owns that relationship with the consumer. NFC in the handset means the customer stays with the device maker. In the SIM, the customer is locked to the operator but can change handsets freely. (See Operators Vie for SIM-Based NFC Control and OS Watch: RIM Battles Carriers for Mobile Money.)

The operators may have the most bargaining power in markets like the U.S., where they subsidize handsets and choose which to distribute, and Jose Magana, Pyramid Research senior analyst and mobile payments practice leader, says that he also believe this entitles them to an active role in the service -- and the revenues -- even as they take on a partner role. (See AmEx Seeks Mobile Payment Partners, Carriers Can't Take the Credit and US Wireless Operators Spend Big on mCommerce.)

NFC – or not?
Of course, NFC isn’t the only mobile transaction tech available either. The 45 operators will have to assimilate quickly, as there are also a number of agile startups and software giants that aren’t waiting around for them to stake a claim.

Perhaps the most visible is the well-funded startup Square Inc. , which is improving and expanding its transaction services on a daily basis. And large software, carrier-agnostic companies like Google, Amazon.com Inc. (Nasdaq: AMZN), PayPal and potentially Apple Inc. (Nasdaq: AAPL) are poised to take a substantial part of the market regardless of where NFC is housed. (See Scoop! It's the Ice Cream Sandwich.)

"If operators aren’t careful enough in providing the right incentives, there will be people doing this kind of thing," Magana says. "Innovation is key. If there’s no way to negotiate with AT&T or Verizon, there will be people using other technology to pass the network." — Sarah Reedy, Senior Reporter, Light Reading Mobile

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