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Near-field communications: The next small thing

I am constantly amazed at the huge variety of radios in the world. Sure, there are lots of designs for many applications, but the core radio implementations themselves exhibit a high degree of variability in both design and implementation. At this point, well over 100 years into the radio revolution, you'd expect that we'd have a single radio for each of personal applications, wireless LANs, cellular and so on. Nope. In fact, the degree of diversity seems to be increasing at an ever-quickening pace.

A case in point is

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near-field communications (NFC). The chances are you've not yet heard of NFC, and I'm not going to tell you today that it will shortly take over the world or anything like that. Indeed, because of the diversity I noted above, the degree of competition among formerly distinct categories of radios is also accelerating. This means that it's increasingly difficult for new ideas like NFC to get established, but a variety of techniques, primarily in the marketing domain, can help. NFC has some powerful backers with a big vision for its future.

NFC, as the name implies, is a very short-range radio technology. It is designed to work over a distance of just a few centimeters or so. If you've used Mobil Oil's Speedpass, you have a general idea of what's involved here. Speedpass allows you to purchase gasoline just by waving a radio token at the pump. The token, usually kept on a key ring, is linked to a credit card, and that's that.

But suppose, as the proponents of NFC envision, we embed a "universal" token in a cell phone handset and then use that radio device for all financial transactions – the handset thus becoming a virtual credit card. That's the core idea behind NFC: a universal standard for transactional (as opposed to networking) services. As it turns out, NFC is the evolution of another wireless technology, known as "contactless smart cards", which has achieved a degree of success in Europe. NFC is in fact backwards compatible with existing contactless smart card infrastructures, and though NFC overlaps RFID to some degree, there's one big difference.

That difference is that NFC is capable of fairly high data rates -- up to about 500 Kbps --- again, over very short distances. But this allows the possibility of rather elaborate transactions, such as sending lengthy security keys or other authentication information with very little latency. This means that the security of financial and other transactions could be significantly enhanced and that your cell phone could be the key -- quite literally -- to banking transactions, purchasing/credit transactions, and even your house and car. And, of course, NFC can also be used for quick-and-dirty file transfer and related operations, just like Bluetooth (and many others).

This once again raises the question of whether NFC can make it in the market. The proponents have formed a trade association, the NFC Forum, to do the vital marketing work required. There are also a few non-marketing issues, mostly relating to the physical real estate required in the handsets for the NFC components and whether the cell phone vendors will adopt the technology regardless. As with many such technologies, both a client and an infrastructure side are required, and one might wait forever for the other unless someone took the lead -- as Intel is doing with WiMAX, for example, both developing client components and investing in service providers.

It's too early to predict the future of NFC. But I'm intrigued, and with the right support from the financial community, NFC could be a winner.

About the author: Craig Mathias is a principal with Farpoint Group, an advisory firm based in Ashland, Mass., specializing in wireless networking and mobile computing. The firm works with manufacturers, enterprises, carriers, government, and the financial community on all aspects of wireless and mobile. He can be reached at craig@farpointgroup.com.


This was first published in October 2006

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