Getting NFC to the mass market isn’t a question of “if,” but “when” and “with whom”

Humphrey Chen is an Executive Director at Verizon Wireless focused on New Technologies in the New Market Development area. He primarily works with venture capitalists and startups to proactively fulfill new opportunities in the 4G/LTE world.

Near field communication (NFC) — the technology that lets people pay for items in stores by swiping their mobile phone over a reader — was standardized almost eight years ago. So why is it that it’s still only being used experimentally in the U.S.?

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Quite simply, this technology has been the victim of the classic chicken and egg problem. People who buy an NFC-enabled device, such as Google’s Nexus S phone can “initiate”, but unless there’s a target that can “receive”, they’re just carrying cool technology with limited to no utility. For early adopters, the cool factor might be enough to justify buying an NFC-enabled device, but the masses won’t bite.

Now, though, we’re starting to see some signs of change. There are unconfirmed rumors that the Apple iPhone 5 will include NFC. And ISIS, the mobile payments consortium formed by AT&T, T-Mobile and Verizon is now leveraging NFC.

These two data points indicate the U.S. market may finally make NFC happen. However, unless this effort is orchestrated properly, we may still end up with nothing more than a bunch of mini experiments.

Here’s what needs to happen:

1. Identify key use cases. We need to identify the use cases that matter most to consumers across a few of the major industry verticals. Payments is one use case in this new mobile wallet, but there are many others.

2. Coordinate deployment. A critical mass of device manufacturers has to deliver and ship a new class of mobile phones across multiple platforms that conform to the latest NFC Device and Infrastructure related standards.

3. Educate the masses. We need to make the public aware of NFC’s capabilities and how they can make day-to-day improvements in the way people live, interact and transact.

4. Subsidize. We need to provide subsidies to merchants and enterprises that couldn’t possibly have planned in last year’s budget cycle that they would incur a bunch of extra capex to deliver and receive NFC-initiated activities.

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Google has reportedly started down this proactive subsidization path with the announcement of trials in New York City and San Francisco, and it’s spot-on given that merchants, for the most part, are cash-constrained and efficiency optimized. Unless the NFC community is prepared to grease their involvement, mass-market rollout of NFC is just not going to happen on the targeted timeline. And if we’re not able to deploy the technology widely enough in an orchestrated fashion, we’ll see pockets of regret beginning to emerge among the most early adopters.

Apple’s plans are the classic market “black box”. It’s anyone’s guess how it will move forward on NFC. RIM is the enterprise equivalent of that. Microsoft is a bit of an on-going wildcard but clearly more open. Nokia has been ahead of the curve so far.

The market player that achieves the four steps outlined above will make a difference in the marketplace and be able to successfully differentiate itself.
Our team at Verizon is ready to dance; will you join us? There are many commonly known use cases out there, but maybe you have a business/gov’t/education need that you’d like to realize with us? We’d like to achieve planetary alignment, but we certainly can’t do it alone.

Humphrey Chen is participating in VentureBeat’s inaugural Mobile Summit this April 25-26 in Sausalito, Calif. The invitation-only event will debate the five key business and policy challenges facing the mobile industry today, and participants — 180 mobile executives, investors, and policymakers — will develop concrete, actionable solutions that will shape the future of the mobile industry. You can find out more at our Mobile Summit site.  And you can follow Chen on Twitter at http://twitter.com/humphreyc.

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