SIM-Centric or not?

According to the post on NFCNews, Nokia release its first NFC handset which holds the NFC application on the SIM card, rather than the handset itself.

Well, let’s go through the concepts first. We can say that the heart of an NFC system is the secure element. Secure element refers to the IC (integrated circuit) which hosts the application, which stores the data and communicates the NFC reader. The data stored in the secure element can be financial balance, cardholder data, ticket contract details (on a transport ticketing application), etc and it’s protected by at least DES or TDES keys. The physical communication layer is actually an antenna attached to the handset. In the first generation NFC handsets, both the secure element and the antenna was integrated into the handset.

The place of the secure element actually directs us to the party who controls what application to install or what application not to! If you define the secure element as the SIM card, that means that the owner of the SIM card -which is the mobile network operator- decides what applications will be installed for using with the contactless interface. Before the introduction of the Single Wire Protocol (SWP), this was almost impossible. And there was no business model, either. Now it’s quite clear. Thanks to ETSI, now there’s a standard for this and I think that this will eventually lead to a SIM-Centric NFC world.

On an NFC event held in Istanbul, Turkey on May 27-28, product manager from Nokia (I can not remember his name, sorry) told that at least half of the Nokia phones would have NFC capability in 2-3 years. (I can not remember the exact figures either, but it was something around this, maybe even more) This means that a lot of people will have a contactless device in their hands -even if they don’t want to- and there will be a huge battle for installing an NFC application on a phone. I asked him if Nokia would have both SIM-Centric and handset-centric phones or not. He responded in a very politically correct manner that the market will decide on this.

Just imagine what can you do with this power: You can top-up your transportation card, use it with your phone, check the balance any time from your phone. You can display the last 2-3 transactions from your phone, which bus or tram did you take last time and how much did it cost. You can even top-up by using your airtime. It opens a whole new world, things are shining on the bright side. And this is all happening by using OTA services provided by the network operator.

However, there is a dark side of course. Third party application owners and developers need to negotiate with the mobile network operators. They can not do anything that the operator is not happy with. Let’s say you have a distribution channel and you have a project for adding NFC support so that people will have the chance to use their NFC enabled phones for downloading content. Well, you need to deal with the operator(s) and try to find a way to find a business case for the operator. Good luck.

Briefly, it seems we will have a SIM-Centric NFC world coming and need to prepare for this.

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