The Convergence of Near Field Communication (NFC), RFID, and Wireless Technologies: Providing an intuitive link between consumer devices

Natick, MA — Venture Development Corp. ’s above-titled report says that wireless communication standards such as 802.11 and Bluetooth are attention getting, often creating new market opportunities. These standards significantly influence product development and vendor strategies, especially when they converge with other wireless technologies. The near-field communication (NFC) standard is having a similar impact on the RFID market.

More than just a wireless connection, NFC is positioned as a basic tool that allows customers to interact intuitively with an increasingly electronic environment. However, the near-term success of NFC is challenging to predict as a more complete customer understanding of NFC, its possibilities, and its limitations is required.

What is NFC? Evolving from a combination of contactless, identification and networking technologies, NFC is a short-range wireless connectivity standard. With the increased adoption of RFID contactless smart-cards to support a broad range of applications, such as access, payment, and ticketing, and the commercial availability of NFC-enabled devices such as cell phones from Nokia, the convergence of NFC with RFID is gaining interest.

Pioneered by Philips and jointly developed with Sony, the NFC standard specifies a way for cells phones, PDAs, and other wireless devices to establish a peer-to-peer (P2P) network. After the P2P network has been configured with NFC, another wireless communication technology, such as Bluetooth or Wi-Fi, can be used for longer-range communication or for transferring larger amounts of data.

NFC enables electronic devices to exchange information and initiate applications automatically when they are brought in close proximity, or touched together. NFC operates in the unregulated (Instruments, Scientific, Medical—ISM) RF band of 13.56MHz and fully complies with existing contactless smart-card technologies, standards, and protocols such as FeliCa (Sony) and Mifare (Philips). NFC-enabled devices are interoperable with contactless smart-cards and smart-card readers conforming to these protocols. NFC range is approximately 0-20 cm (up to 8 in.) and communication is terminated either by a command from the application or when devices move out of range.

Relevant NFC applications NFC opens up myriad new opportunities. It will enable people to effortlessly connect digital cameras, PDAs, video set-top boxes, computers and mobile phones. With NFC it is possible to connect any two devices to each other to exchange information or access content and services—easily and securely. Solution vendors argue that NFC’s intuitive operation makes it particularly easy for consumers to use, while its built-in security makes it ideal for mobile payment and financial transaction applications. However, NFC-enhanced consumer devices are also targeted at applications that exchange and store personal data such as messages, pictures, and MP3 files.

Applications for NFC are broad reaching, and the potential to support multiple applications via NFC exists. Consequently VDC has grouped NFC-related applications into three basic categories:

Short-range, near-contact mobile transactions—applications such as access control or transport/event ticketing, where the NFC-enabled device storing the access code or ticket is presented near a reader. Mobile payment—so-called m-commerce—applications where the customer must confirm the financial transaction by entering a password or simply accepting the interaction. Also included are applications requiring simple data capture such as picking up an Internet URL from a smart label on a poster and advertisement;

Short-range, near-contact linking transactions–connecting two NFC-enabled devices to enable a P2P transfer of data such as downloading music, exchanging images or synchronizing address books; and

Short range, near-contact discovery transactions—customers are able to explore a device’s capabilities to find out which functionalities and services are offered as NFC-enabled devices may offer more than one possible function.

In order to provide a more complete understanding of the real-world potential for NFC, here are some example applications for NFC-enabled devices to consider:

In addition to facilitating contactless smart-card-based transactions, emerging cell-phone multimedia capabilities could be leveraged to support NFC transactions such as the purchase and download of games, music, MP3 files, videos, software, and other files to NFC-enabled handheld devices by touching NFC-enabled computers;

Consumers are able to make online travel reservations using a PC and download reservations and/or tickets to a cell phone or PDA by bringing the mobile device in close proximity to the computer and checking-in for the trip or hotel stay by touching the handheld device to the terminal or kiosk at the departure gate or check-in station. No printing of documents, such as tickets and hotel receipts, is required;

Posters, signs, and advertisements with RFID transponders can be scanned/read using an NFC-enabled device to download more information, make a purchase, such as paperless event tickets, and store other pertinent electronic data;

Pictures can be taken using an NFC-enabled cell phone with an integrated digital camera. The device could then be presented/touched to a NFC-enabled television, kiosk, computer, and others, to transmit images for display and/or printing; and

In conjunction with another wireless technology that may provide longer range and greater bandwidth, large files can be transferred between two devices, such as a laptop and a desktop, simply by touching the two NFC-enabled devices together.

Moreover, the increased use of mobile services benefiting from synergies with NFC is becoming more apparent. By integrating NFC applications with existing mobile services, mobile operators could secure new revenue opportunities by:

Charging customers subscription fees;

Charging retailers/service providers fees to use the system; levying fees for individual purchases or other transactions; or

Applying service charges for adding value to the electronic cash value stored on a mobile phone via a mobile service.

What about NFC and the potential for‘theft by RF?’ First, the relatively short read range gives customers control over NFC and the applications. NFC-enabled devices add another level of security over the traditional smart-card, as it can be powered on/off or include a passcode or voice biometric code for higher-volume transactions. For applications that require tighter security and perhaps anti-counterfeiting measures, chips can be used to store biometric information for identification.

NFC role in contactless smart-cards Based on the ISO-14443 and ISO-15693 standards, high-frequency (13.56MHz) contact-less smart-card solutions for access control, transit fare cards, and payment/m-commerce have advanced over the last few years in the U.S., Europe, and Asia. VDC believes the recent introduction of NFC-enabled cell phones that support RFID and contactless smart-card technology will foster market development and growth across vertical and application markets. However, the adoption of NFC-enabled solutions may be restricted by investments in legacy IT infrastructure and wireless communication. Access control, transit fare cards, and cell phones with smart-card “subscriber information modules” are all relatively new technology platforms without worries of legacy infrastructure. So NFC is a viable, attractive solution for these applications. However, in terms of mobile payment/m-commerce, the challenge for contactless smart-card applications in the US has been the need to overhaul the existing hardware infrastructure.

The magstripe/dial-in combination dominates the U.S. payment processing market, yet remains costly by adding communications overhead and security vulnerabilities to every transaction. In contrast, the United Kingdom totally overhauled its infrastructure over the last 10 years to migrate from magstripe to chip-based cards, issuing an estimated 80 million cards to date.

Over the last 10 years financial contactless smart-cards have worked against the payment processing and wireless infrastructure roadblock. Meanwhile, a new de facto wireless communications infrastructure has, in effect, been built: the cell phone. Through NFC-enabled cell phones, e-commerce can be easily integrated into the wireless world. These devices provide secure storage for data, including confidential personal data, such as credit card numbers, coupons, membership data or digital rights.

However, one of the critical success factors of NFC in mobile phones will be the support of a common standard by the major mobile manufacturers—a process that is in full swing. The top three mobile vendors in the world, Nokia, Motorola and Samsung, as well as by NEC, Panasonic and Sony have already joined NFC Forum. Members of the NFC Forum also include MasterCard, Microsoft, Texas Instruments, and Visa.

Will NFC challenge Wi-Fi and Bluetooth? Although there is always room for more wireless technology, on one hand, some argue that introducing a new standard, such as NFC, alongside 802.11 and Bluetooth may prove to be an uphill battle. On the other hand, some would argue that they do not think NFC really steps on Bluetooth or Wi-Fi. They simply do not see NFC being used to download pictures from digital cameras, or as a WLAN. NFC is demonstrably too slow. At 212 kilobits per second, NFC’s data rate is nearer a 55K modem than the 1- or 7-Mbps speeds of either Bluetooth or Wi-Fi.

And, both Sony and Philips have 802.11 and Bluetooth products, with each insisting the NFC standard would complement the more established wireless networks. Like VDC these market leaders believe there is room for a simple, less-expensive solution. In fact, with the ever-increasing complexity and cost of adding Wi-Fi and Bluetooth, price could become a major deciding factor for OEMs and manufacturers. NFC reportedly would cost 20

Along with affordability,‘power drain’ issues have become of utmost importance within 802.11 and Bluetooth markets. By using a chip, rather than a battery, NFC hopes to stand out against the rest. As a result, VDC sees NFC-enabled devices connecting myriad un-powered items such as RFID tags and smart-cards within the next three to five years.

Others, however, are quick to dismiss any notion of NFC being a giant killer. While Bluetooth and Wi-Fi have a range anywhere between 33-300 ft, NFC deals in inches

— Richard Phelps , senior editor, Control Engineering

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