Just What is NFC, Or Near Field Communications?

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You’ve probably been hearing at least a little about near-field communications (NFC) over the past year or so. This somewhat unusual wireless technology is often misunderstood and not yet widely available, and it’s got some potential competition in its core target market areas. But the key features of this technology may very well lead to its finding a place in most handsets, and perhaps other devices, over the next few years.

NFCNFC has its roots in radio-frequency identification (RFID) technologies that have been used for many years in manufacturing, logistics, transportation, and other applications involving short-range, low-bandwidth, point-to-point communications and the tracking of physical objects. Designed for low cost, NFC is generally effective over a distance of only a few (four is a commonly-noted number) centimeters. The current standard, ISO 18000-3, operates at 13.56 MHz. (very low relative to the 2.4 and 5 GHz. of Wi-Fi, for example) and at a data rate of up to 424 Kbps (also very low relative to most other contemporary wireless technologies). Since NFC is based on RFID technologies, one side of any given connection can be passive – no batteries or other power required, but both sides can be powered (this is called “Active Mode”) for improved reliability and enhanced utility. Not requiring power is a big plus in such applications as NFC-equipped credit cards. NFC is often referred to as a “contactless”, as opposed to “wireless” technology, but there really is sophisticated radio technology at work here. And an argument can be made that the limited range of NFC enhances (but, of course, does not assure) both reliability and security.

Where Is It?

Google WalletNFC is appearing now in at least a few mobile handsets, and there is great interest, particularly in Europe, for the use of NFC in credit-card-replacement, access-control, identification, and related transactions. The minimal range of NFC is a big plus here, especially if privacy is concern (and when is it not?). An industry trade association, the NFC Forum is guiding the evolution of NFC in a manner analogous to that used in successful marketing-oriented wireless trade associations, like the GSMA and the Wi-Fi Alliance. And the Forum has attracted big-name supporters, including Google, HP, and Qualcomm, to their ranks. The Forum site includes a wide array of marketing materials, as well as free availability of technical specifications. As an analyst, I’d have to say that the sponsors of this effort are doing everything right and that success would seem to be only a matter of time.

And yet, there are powerful interests at work in many application areas, most notably consumer financial transactions, so the adoption of NFC has been slower than many assumed would be the case. The appeal is obvious – use your phone as a credit card, the second factor in the authorization and authentication of financial transactions, and even as the keys to your home, office, and car. Goggle supports NFC as part of Google Wallet, and a number of Android-based handsets include the technology. Uptake has been greater in Europe and even Africa than in North America, where, once again, we suspect entrenched interests are still deciding how and perhaps if they will support NFC. And, of course, the “infrastructure side” of NFC would need to be installed at retailers on a large scale before usage could grow, so overnight success is not a possibility here.

More Radios

An additional concern is that NFC is indeed yet another radio that has to be included in a handset or similar device, meaning subscriber products would have at least four radios (LTE, Wi-Fi, Bluetooth, and NFC), increasing costs and complicating designs. Couldn’t Bluetooth (especially Bluetooth Low Energy) do this job? Or even Wi-Fi or a 3G or 4G technology, using apps and a different transaction scheme? This is why it’s so difficult to predict the future of NFC – yes, it’s a proven technology, and yes, it can indeed address a number of important applications, and yes, there is some support in the marketplace. But NFC is far from a slam-dunk.

I know this is controversial, but I think NFC will become ubiquitous in smartphones over the next few years. The question is primarily when it gets adopted, and this is a function of establishing the infrastructure required, and that is a function of (primarily financial) industry embracing NFC. Progress will likely remain slow in this country, but I can see NFC replacing the physical credit card eventually (as two-factor authentication is an inherent benefit of this solution) and perhaps even being used for other functions such as physical security, M2M, information kiosks, and more. So, as much as I’d like to see us get down to just LTE/LTE Advanced and 802.11n/802.11ac radios in handsets and tablets, it looks like Bluetooth survives at least for legacy reasons, and NFC ends up filling a distinct and valuable niche complementing the other three.

By Craig Mathias

Craig Mathias PhotoCraig J. Mathias is a principal with Farpoint Group, a wireless and mobile advisory firm in Ashland, Mass. Founded in 1991, the company works with manufacturers, network operators, enterprises and the financial community on technology assessment and analysis, strategy development, product design and marketing, education, training and the integration of emerging technologies into business operations.

Craig, an internationally recognized expert on wireless communications and mobile computing technologies, is a well-known and often-quoted industry analyst and frequent speaker at industry conferences and events. He is a member of the advisory board for Interop, chairs the conference’s wireless and mobility track and also co-chairs the 2012 Mobile Connect conference, plus blogs and writes columns for several publications and websites. Craig holds an Sc.B. degree in applied mathematics/computer science from Brown University and is a member of the IEEE and the Society of Sigma Xi.


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