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May 30, 2011

Imagine a street somewhere that invites visitors to tap an Android smartphone or tablet against any business in the vicinity to be given more details about a specific product or service, as well as its price. That's exactly what the State of Texas has done to one of its streets. Call it a tourist attraction if you want, but the initiative is creating a lot of buzz in the wireless industry.

The project promises a memorable, one-of-a-kind learning and buying experience to its visitors. The Android tablets and smarphones utilize NFC (near field communications) technology to work. NFC is a short-range (up to 10 cm or 4 inches), high frequency wireless communication technology that wireless carriers hope to employ in their aspirations for a nationwide mobile banking network. The technology allows devices such as smartphones and MIDs to collect or transmit data to another NFC-enabled device without manual configuration to identify mobile devices.

Wireless carriers hope to see the technology eventually integrated with POS (point-of-sale) systems across the U.S. The street, which is already under construction and scheduled to open sometime next summer, consists of 12 large show homes and a visitors' centre. The homes are designed to be visited by the public but most importantly, all the fixtures bear NFC tags for reading with the Android tablets.

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About 800 of the Android tablets – or Technological Educational Devices (TEDs) as the street likes to call them – will be available to its visitors. Initially, they will be using USB-connected readers but users will be able to tap any tag to get more information about the product beside it, and to create a wish list that can guide sales representatives in better assisting the visitor.

The street isn't much different from walking around Wal-Mart or any another large retail out store.

More on NFC technology

The new implementation of the Open NFC (Near Field Communications) API will be available for download in a few weeks, with Inside Secure claiming that its abstraction layer makes the stack more hardware independent than its competition.

And it's also compatible with Android version 2.4.

That claim is more surprising when you consider that Android 2.4 has yet to be announced, however. Given that Android version 3 (dubbed Honeycomb) seems to be a unit aimed at higher-powered devices, it's not surprising to see some confirmation that there will be a new incremental version for mobile handsets, nor that the Open NFC API will support it.

The Nexus S handsets, running Android 2.3 (dubbed Gingerbread) already offers programmers very limited access to the NFC hardware, providing a public API limited to reading tags. Undocumented APIs have been discovered to allow writing tags as well, but interacting with the secure element (essential for the more interesting applications of NFC) is still impossible until Google and Samsung release a software update.

The Nexus S uses an NFC chip from Inside Secure's competitor NXP, and Inside says the supplied software stack is insufficiently abstracted from that hardware. Perhaps the company is concerned that such an integration will make its competitors' hardware more attractive, but some wireless industry observers disagree.

Android developers don't yet care about such small details, but just want to be able to do more with the hardware. At least they can already do something, unlike those touting Nokia's NFC handset, the C-7, which has no exposed NFC API at all. So an NFC-enabled mobile handset makes a lot of sense for now.

That upgrade will almost certainly expose an Open NFC API, or the Java equivalent (JSR257), the industry having coalesced around the standard which we all welcome. Once mobile app developers start being able to work properly with the hardware, we should finally get to see if NFC really does open up loads of new capabilities.

In December, Samsung announced a new NFC (Near Field Communications) chip with embedded flash memory that wireless handset makers all over the world can now integrate in their smartphones and MIDs (mobile Internet devices).

Some wireless industry observers are now saying that Samsung could be getting in on the NFC action recently stirred by the Isis joint venture between Verizon Wireless, T-Mobile and AT&T.

"As traction increases for adoption of NFC technology in next-generation/upcoming smartphones, we look forward to securing a competitive footing in NFC-based solutions with our new NFC technology," said Tae-Hoon Kim, vice president of DDI and C&M marketing, System LSI Division for Samsung Electronics, in a statement.

Samsung's new NFC chip uses flash for the embedded memory, which allows wireless device makers to more easily upgrade software or firmware. Samsung says it also provides a software protocol stack and technology services for antenna design and tuning, which the company says will decrease time to market.

Verizon Wireless, AT&T Mobility and T-Mobile USA have already created a mobile payment system designed to help wireless users easily pay for certain items at physical stores using their mobile phones and MIDs (mobile Internet devices), the three wireless carriers have said earlier today.

Dubbed 'Isis', the three companies are building the new payment network with the initial goal of setting up a system in which people can use smartphones to easily pay for products or services directly at a retailer, known as PoS (point-of-sale) purchases. A similar system has already been in place for the past two years in many Asian countries.

The new solution will use a technology called NFC (near-field communication), which provides short-range and encrypted wireless communications between different mobile devices. The three carriers say the system will include strong security and privacy protection.

Isis is expected to be available around April or May 2012, the three have said. In Japan, China and other Asian countries, a similar system has been in place for about two years now. It was only a question of time before a similar payment solution would be implemented in North America, some wireless industry observers have said.

In fact some are asking what's taking carriers so long in implementing a working and secure solution, and why will it take them another 18 months for it to be completed.

On Tuesday, Google CEO Eric Schmidt presented an upcoming Android smartphone with a near-field communication chip. Some say it could be the Nexus S, but it's still too early to tell at this time. More is expected from Google in the next few weeks, however.

Isis has already recruited two major financial players to participate in the new joint project. Discover Financial Services will work with Isis to develop the overall infrastructure for the mobile payment network, while Barclay Card U.S., a Barclays Bank subsidiary, will be the first credit issuer on the network.

Meanwhile, Isis is leaving the door open to other banks, financial institutions and other wireless carriers that want to be part of the new venture, and that wish to commit their own expertise and invest in the project.

Additionally, former GE Capital executive Michael Abbott has been hired as Isis CEO. The decision was well received in the wireless community, since Abbott has a lot of experience in the field of corporate finance and related topics.

And beyond the large amount of work that Isis is initially planning, Abbott has sublime goals for the new payment system.

"Through various relationships with merchants, our new mobile commerce network will provide an enhanced, more convenient, more personalized shopping experience for for wireless users. While mobile payments will be at the core of our offering, it's only the start. We plan to create a 'mobile wallet' that ultimately eliminates the need for consumers to carry cash, credit and debit cards, reward cards, coupons, tickets, transit passes, etc, etc," said Abbott in a prepared statement.

Isis marks the first time AT&T and Verizon have worked on a joint venture since the breakup of the AT&T monopoly in 1984, according to a Verizon spokeswoman.

The initiative will change the way people buy products and services. Consumers will no longer have to carry around multiple credit cards in a bulging wallet if they can use a smartphone instead. And since most people have smartphones today, it won't be a problem for most of them.

"Consumers are looking to do more and more with respect to simplifying their lives," said Ryan Hughes, vice president of new business development for Verizon Wireless and a member of Isis’ steering committee.

"What we’re trying to do is, as we’ve seen in many industries that go from analog to digital, is lead the transition from plastic to mobile and simplify the way you shop and pay for the product."

To make a purchase, all a shopper needs to do is to log in to a secure, password-protected application on an Isis-ready phone and hold the phone near an electronic reader at the checkout counter. The microchip allows the customer to transfer encrypted information to a bank or credit card company. Consumers would sign for the amount and receive a bill much like a traditional credit card each month.

Account holders would sign up for these digital credit, debit or prepaid cards through Barclays. Wireless handset makers will create cell phone microchips that consumers will need for wireless payments, and to build point-of-sale phone readers for stores.

Isis purchases will run through Discover’s payment network. A Verizon Wireless spokeswoman declined to comment on whether Discover would charge merchants less per transaction under the program. But merchants have been complaining for many years about the high fees they have been charged by credit card companies, and they are now hoping that Isis will help them pay lower fees on each sale.

In October, Visa and MasterCard settled a U.S. antitrust suit that alleged the companies’ contracts unfairly prevent retailers from steering customers to other cards.

In may, Visa introduced a product that can transform most smartphones, including Apple’s iPhone, into payment devices that can store multiple card accounts in an "e-wallet."

Chip-activated smartphones already exist in Japan, the U.K. and Turkey, while other U.S. companies are working on similar contactless payment technologies. In December, Google is expected to release its newest version of its Android mobile phone operating system, codenamed GingerBread, which will include special chips and could be used in eCommerce, the company announced yesterday.

Bank of America began testing similar technology more than six weeks ago, while JP Morgan Chase and Wells Fargo are developing their own pilot programs, according to Visa. Additionally, U.S. Bancorp will begin testing the technology in multiple states in the next two weeks and plans to offer it to select customers in January 2011.

Some industry observers are confident Isis will work where other attempts have failed in the past because of the scale of its partnership, amounting to more than 200 million potential customers between the three largest wireless providers in the U.S.

However, Jeff Kagan, a wireless industry analyst based in Atlanta, Georgia, is only cautiously optimistic about the new initiative. "This is the right idea and the right direction to go into, but we’ve already seen other similar announcements in the past that sounded just as good, but they never worked. In fact, back in 1997, Microsoft tried to implement its own 'e-wallet' solution but it never took off," added Kagan.

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Source: The State of Texas.

    This article was featured on Business 5.0 and on Tech Blog.