More than legal ammunition

More than legal ammunition

Summary: I don’t doubt that Google’s purchase of Motorola is for the best radio patents around, but there might be a fringe benefit which will change my mind on something.It might be the single thing which will make NFC work.

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TOPICS: Mobility
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I don’t doubt that Google’s purchase of Motorola is for the best radio patents around, but there might be a fringe benefit which will change my mind on something. It might be the single thing which will make NFC work. I’m unusual in having worked in Mobile Money and in being a huge naysayer for NFC.

We’ve seen, to quote one senior Visa exec “more pilots than the RAF”. We know that the technology can be made to work but it hasn’t happened for one reason: business case. The people who make money, or at least save money, from NFC are the banks. They love internet banking because anything that keeps you out of a branch saves them money. This might even be why the branches are such unpleasant places to visit.

Unfortunately cash cannot be dispensed over the internet. Banks have managed to keep customers out in the rain thanks to the ATM but that still costs them money to run and as we all know, the only cost banks like to tolerate are large bonuses.

What makes NFC special is that it dispenses virtual money to your phone. Buy your Starbucks with a swipe and there is none of that faffing around with bits of paper and metal. It’s all dressed up as consumer convenience but it’s really about cost saving.

So banks love NFC in phones, unfortunately they don’t buy phones, operators do. Operators only buy phones with features which they think will make them money. So they want a slice of the transaction revenue if they are to pay extra for an NFC phone. That makes it unworkably expensive.

Banks don’t buy phones so they can’t subsidise NFC, there have been complicated models where banks and transport authorities pay the mobile operators to subsidise NFC phones, such as in Nice but as consumers don’t use the NFC feature it’s a chunk of money floating around where no-one sees a return.

What makes it worse is that the system the operators favour – and which gives them control – is the Single Wire Protocol (SWP), this puts the secure element in the SIM. A Good Thing because it is incredibly secure but A Bad Thing because it’s a java app running on a low power processor and so very slow. Far too slow to do the three transactions a second demanded of ticket systems and supermarket checkouts.

So operator politics and bank arrogance mean that NFC was never going to happen. A frequent response to my making this assertion is “but it does in Japan”, and the reason it does there is the same reason why Google Motorola might make it work: ecosystem. In Japan NTT DoCoMo has a major shareholding in a bank. There is an incentive for DoCoMo to have phones with NFC. If Motorola phones, and not just Android but whatever OS they use, have NFC tied to Google Checkout, it cuts both the roadblocks of the operators and the banks out of the loop.

I’ve long suspected that Apple is working on something similar using iTunes, and if both companies present their phones it will be very hard for operators to stand in the way.

Topic: Mobility

Simon Rockman

About Simon Rockman

Fuss Free Phones: Simon Rockman: Simon has been in the mobile phone industry since Motorola was the top dog closely followed by NEC.

He's been the owner and editor of What Mobile Magazine, the editor of PCW and a senior director at Motorola and Sony Ericsson.

Today he focuses on Mobile Money and his passion of mobile phones for older people. he runs http://www.fussfreephones.com/

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