But what about phones?

NFC technology is also being widely used in Europe.  Italy will be conducting some experiments in the coming months.  A good example in the transport sector is the Trentino contactless payment system, which was launched last December in collaboration with Telecom Italia and TSF.  This system has proven successful, similar to the New York tap’n go initiative and the London Underground.  In these scenarios, a good handset manufacturer position has made a significant difference.

Telecom operators (and mobile virtual network operators) that want to open their SIMs to new applications want to protect their investments and value their assets in the hands of customers, not the handset itself.  Of course, the handset should be unlockable and unbranded, but the SIM.  Therefore, they push handset manufacturers to include antennas and RFID chips capable of interacting with SIM applications.  Conversely, handset manufacturers want to value their assets without any commitments or locks with telecom operators.

Each scenario has its advantages and disadvantages.  In one case, NFC could be used as a retention tool to reduce churn and application management would be seamless.  Alternatively, an independent telco provider solution could increase customer loyalty and fidelity.

The best approach will depend on the overall ecosystem that develops.

Implementing a mobile payment solution will almost certainly require involvement from banks and all major national mobile network operators in a country.  Therefore, any proprietary solution that only works with a customer base will be difficult to deploy in the near future.  Furthermore, NFC handset prices are still high (over 500 euros), and developing an ecosystem will require subsidies.  This is similar to the way video terminals were developed to support video calls, which was supported by telcos and banks in a geographically defined territory.

Therefore, a handset manufacturer’s position that is so closed-off regarding the SIM could only be justified if they began producing millions of terminals for under 300 euros.  Meanwhile, telco operators will deploy solutions that facilitate NFC adoption, ecosystem creation, handset manufacturer requests, and the reduction in NFC handset prices.