Q&A: 2011 a Breakout Year for NFC

There's been an abundance of predictions about when near-field communications (NFC) will make its presence felt in the handset market, but the technology has yet to ramp up in a significant way.

That could be about to change. To judge by announcements from key industry players like Google, AT&T and Verizon Wireless, 2011 is the year when NFC will finally secure a meaningful presence in the marketplace.

The NFC Forum has been absolutely crucial to advancing the technology's presence in the consumer electronics market. The forum has developed a variety of specifications and recently launched a certification program for NFC-capable devices, a critical step in getting device manufacturers to adopt the technology.

Paula BergerPaula Berger has been managing the NFC Forum for almost six years. She spoke with Wireless Week about the forum's new certification program, the recent announcements from Google and top U.S. wireless operators, and discussed what the forum expects from the NFC market over the next year. Below is an edited transcript of the discussion.

Wireless Week: What will the new certification program do for the adoption of NFC?

Paula Berger: The reason that the NFC Forum started was to allow us to develop NFC-interoperable devices that can be used anywhere in the world and would work with each other. The certification program ensures that any device which goes through it complies with our specifications, so you can have different devices that all have the same baseline set of specifications. That will be the basis for allowing them to interoperate. You'll be able to take the phone that you use to get on the train in Paris, use it to pay for your parking in Finland and then bring it to the U.S. and go to McDonald's with the same phone.

WW: Do you feel that there's been fragmentation within the NFC industry, or is it still too early for that to be a problem?

Berger: There would be no NFC industry if it was fragmented. The whole reason that the industry has been sort of waiting is to figure out how to make this work. NFC is a complex ecosystem that has to be able to work together. You can't bring out NFC for New York City and then have it not work anywhere else in the world. The whole point is to develop an interoperable, global network.

Many years ago, there were several different standards that the international standards organizations passed. The purpose of the NFC Forum was to harmonize those standards so they'd all work together everywhere. The market has been kind of waiting for that. Now, everyone believes that you can come out with an NFC device that will work everywhere. There really hasn't been fragmentation. There has been hesitation waiting for the standards. Now we're ready to go.

WW: Do you feel that you'll see more NFC devices come out because of the certification program? Will this be an impetus for manufacturers to include the chips?

Berger: Absolutely. There are very few NFC devices on the market. They're all waiting. This is the trigger. I heard two different numbers this week: 50 million and 70 million – that's the number of handsets that would be NFC-enabled by the end of 2011. That means that all the major phone manufactures, plus makers of eReaders and cameras and laptops - all of those devices are waiting to be able to work together. This is almost like the starting gun has gone off for devices.

WW: Speaking of that starting gun, we've seen some developments already. In the past few weeks we've seen an NFC-based joint venture, rumors about a NFC iPhone and Google has integrated NFC support into Android 2.3 Gingerbread. What's your take on these developments?

Berger: They've all been percolating for the last year, some longer, waiting for the right time, and it's now. It's not an accident in any way that all of these things are triggering at once.

WW: So is 2011 going to be a breakout year for NFC?

Berger: Well, considering that they're saying 50 million to 70 million handsets on the market by the end of next year, and the number today is measureable in the thousands, all of which are used in very specific implementations and trials, I would have to say certainly in terms of handset availability, yes. Once the handsets are out, it enables the rest of the ecosystem to move forward. 2011 is certainly going to be the year in which we start to see all of the devices. It's going to be a two-year process, 2011 through 2012, during which it grows, and it will be exponential from there.

WW: We'll see the handsets come to market en masse over the next year. What do you think some of the initial uses for NFC will be in those handsets – is this going to be mainly a mobile payment technology?

Berger: Actually, thus far the main use has been transportation. There are many, many cities and even countries have NFC-enabled transport systems. Transport is almost a guinea pig. Payments have been the area that gets all the publicity. It's very important and clearly is going to happen, it just has a much more complex value chain to resolve. What we're seeing now is that those issues are being resolved. The parties are coming to terms and working together well. They're all starting to see their place in it and come forward.

WW: What do you consider your biggest accomplishments over the past year?

Berger: It's been the goal of the NFC Forum to get to the point where we can start certifying devices. We have built up all of the basic specifications we need to be able to do that. Global interoperability is not a simple thing so we came up with specifications that would cover different use cases, and then built a certification program to make sure all those different things will work together. Those bring us to a real turning point. This is sort of the culmination of what we've been doing since we started. There's lots more to do, but it's a real accomplishment for us to do that.

We also have been building up our plugfest schedule, which is the other piece of the certification program. Our certification program tests conformance to our specifications, but plugfests allow devices to test directly against each other. It's a typical industry way to make sure that everything really does work, and allows people to tweak things so they work even better. Even though everyone works toward the specifications, sometimes there are little bits and piece that need to be cleaned up and plugfest allows them to do that.

WW: What are some of the top challenges you face in 2011 and what do you hope to achieve next year?

Berger: Our number one challenge is to make sure that the certification program works as best we can make it work. Like any massive program, there will be bits and pieces to clean up. It was a very large effort with many people from many different member companies and we'll be scrutinized and used by lots of companies. People will tell us where they've found little things that need to be fixed. We're expecting our focus, at least for the next six months, to be improving that program and making it as crisp and clean as it can be so certification runs smoothly when a device comes in.

After that, we'll be starting to look at how we can expand the program. Several of our specifications are not covered by the program yet, so we'll be expanding the program to include those. At the same time, the technical specification guys will be upgrading the original specs.

WW: How does the U.S. market compare to other international markets in terms of adoption and momentum for near-field communications?

Berger: The answer I would have given you a year ago is very different from the answer now. I think the U.S. market is ready. For many reasons, the U.S. was not fast to adopt mobile technology in general. For one thing, the U.S. has an incredibly sophisticated landline structure for phones compared to most of the rest of the world so they didn't jump into the mobile world as quickly as others. Also, a lot of the companies driving NFC were not U.S.-based. But in the past year particularly, we've seen a huge change in where the U.S. market is. We're seeing lots of trials and early implementations, and a lot of the big companies are behind it. The Isis announcement is really big because three of the primary carriers in the U.S. are working together.

We also see major companies like FirstData involved with several of the implementations that are coming. Broadcom is another U.S.-based company that just bought Innovision Research and Technology because it believed that Innovision has some of the critical intellectual property important for the NFC market. MasterCard and Visa, both based in the U.S., have been on our board of directors from the beginning and American Express has suddenly become far more active. We really do see a huge change in the U.S. market. 2011 is absolutely the breakout year in the U.S. market, no doubt.