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What is NFC? What is the smartphone mobile payments technology known as Near Field Communications? March 6, 2011

Posted by HubTechInsider in Ecommerce, Mobile Software Applications, Telecommunications, Wireless Applications.
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It has been several years now that I have been reading and hearing about mobile phone toting consumers being able to purchase soft drinks from vending machines through the use of SMS texts to the vending machine.

The possibilities of a mobile digital wallet, a North American equivalent of European Smartcards and mobile SMS payments systems, to be used as a payments service for smartphones, certainly include the hypothetical future displacement of the cash register as the payment method of choice for consumers on the go.

NFC, or Near Field Communication, may perhaps have such a potential.

Since the middle of December, in and around Portland, Oregon, Google has been handing out hundreds of NFC kits to local businesses as part of an NFC trial they are calling “Hotpot”.

The Google Hotpot kits include special NFC-capable window decals. NFC is a low power technology that beams and receives wireless information from up to four inches away. When consumers with NFC-equipped telephones such as the latest models of Android operating system cellular phones, scan a NFC-equiped window decal, they will be presented with information on their mobile device such as business hours, reviews, and more.

The hope is that the increasingly mobile consumer will willingly engage with local merchants using this new technology, allowing merchants to interact with the generations of consumers growing up with texting and mobile smartphones in their pockets.

2011 is really shaping up to be the year of NFC, with Google considering building an NFC-based payment service in the U.S. that could make its debut later this year. The technology would let customers pay for items by passing their smartphone over a small reader. A single NFC chip would be able to hold a consumer’s bank account information, gift cards, loyalty cards, and coupons, say the two people, who requested anonymity because the plans aren’t public. Google’s NFC scheme includes an advertising component that would allow merchants to beam a coupon or other reward to customers while they are shopping.

Of course, advanced smartphone owners can already complete mobile transactions by downloading payment applications. Paypal’s iPhone iOS application, for example, lets PayPal users transmit funds to other PayPal account holders. But NFC technology could potentially streamline such transactions. Users of advanced smartphones equipped with NFC technology don’t need to launch an application; they simply wave or tap their smartphone against a small reader device and enter a PIN number on it to authenticate their purchases.

A Google NFC network offering would encounter stiff competition from the start from the likes of companies such as Verizon, AT&T and T-Mobile, the three of whom in November 2010 formed a joint commercial venture called ISIS that plans to launch an NFC-based payments service by 2012. Visa is also field testing several mobile payment technologies, including NFC, and plans a commercial rollout later this year. It is rumored that PayPal, a division of eBay, may test an NFC service in the second half of 2011 as well.

Silicon Valley is hard at work on NFC technology too, with Apple having filed a patent for a process to transmit money between cellular telephones using NFC. Apple recently hired NFC expert Benjamin Vigier away from mFoundry, a startup that helps banks build mobile payments applications. If the next iPhone does come equipped with an NFC chip, then perhaps Apple will process mobile payments through Apple’s iTunes store.

The increased competition and jockeying for position in the NFC space is undoubtedly due to the high stakes involved, as the prize for whoever wins the NFC race is a dominant position in a small but fast-growing market that could displace the cash register in time. A leading market research firm, IE Market Research, estimates that by 2014, NFC-based payment systems will account for a third of the $1.13 trillion in worldwide mobile transactions.

In mid-December, Google, whose former CEO, Eric Schmidt, has said that NFC will “eventually replace credit cards”, in December 2010 bought Zetawire, a Canadian startup with several NFC patents to its name, including a novel method for diners to split up and pay a restaurant bill using their smartphones. If Google does decide to launch an NFC payments network, they would have the built-in advantage of its very large and rapidly expanding installed user base of Android smartphone owners. Every single day, around 300,000 people activate Android telephones, and they accounted for more than 25 percent of the new smartphones shipped in the third quarter of 2010, according to the Wall Street Journal.

The latest version of Google’s smartphone operating system, Android, capable of reading NFC tags is dubbed Gingerbread. Later this year, software updates to Android will let Android smartphones transmit information using NFC as well. In December 2010, Google introduced its Nexus S smartphone, based on Android Gingerbread and carrying an NFC chip onboard. In January 2011, Starbucks announced that customers would be able to start using a bar-code application on their smartphones to purchase coffee in some 6,800 of its stores.

There are obstacles to widespread consumer adoption, however. For an NFC-based payments network to really work, Google needs to convince not just Android smartphone owners but also local merchants who must install NFC readers to process mobile payments. Hotpot, which Google has been promoting heavily, introduces merchants to the NFC technology. NFC is already in heavy use in parts of Asia and Europe.


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I’m Paul Seibert, Editor of Boston’s Hub Tech Insider, a Boston focused technology blog. You can connect with me on LinkedIn, follow me on Twitter, even friend me on Facebook if you’re cool. I own and am trying to sell a dual-zoned, residential & commercial Office Building in Natick, MA. I have a background in entrepreneurshipecommercetelecommunications andsoftware development, I’m a Technical PMO Director, I’m a serial entrepreneur and the co-founder of TwitterMiners.com & Tshirtnow.net.


Acton’s Azuki Systems, a provider of a mobile media communications platform, raises $4 Million December 9, 2010

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Acton’s Azuki Systems, a provider of a mobile media communications platform, raises $4 Million from a group of investors including Sigma Partners and Kepha Partners.

Waltham’s Red Bend Software acquires Santa Clara’s VirtualLogix, for undisclosed terms October 4, 2010

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Waltham’s Red Bend Software, a provider of mobile software management tools, acquires Santa Clara’s VirtualLogix, a provider of real-time virtualization technology for mobile handsets, for undisclosed terms.

Boston’s Mocospace, a provider of browser-based games for mobile devices, raises $3.5 Million from SoftBank Capital September 27, 2010

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Boston’s Mocospace, a provider of browser-based games, entertainment, and a social network for mobile devices, raises $3.5 Million from SoftBank Capital.

Get ready for high definition cellular and landline telephone calls November 3, 2009

Posted by HubTechInsider in Fiber Optics, Telecommunications, VUI Voice User Interface.
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For over forty years, the quality of telephone calls has changed very little. The shift in the 1990’s from analog to digital cellular technology promised crisper quality, but the results never panned out. Struggling with 30% annual increases in cellular traffic, cellular telephone companies used the improved technology to add capacity, not improved quality.

Today the demand for cellular minutes is nearing its zenith, with mature growth levels of only 3% in the past year. Now the relentless advance of digital technology advances in cellular communications can be used for purposes other than simply packing more telephone calls into the cellular airwaves.

To this point in time, the big U.S. carriers plan to use their growing capability to provide all sorts of data services, but eventually, the cost of better sounding voice calls will be too cheap to ignore. Today’s carriers convert telephone calls into 6,000 digital bits per second, a tight squeeze and the major reason telephone calls sound so poor today. In the tiny European country of Moldova, French wireless carrier Orange has now deployed the world’s first high definition cellular telephone network, which uses double the number of bits per second. The highs and lows of the human voice are not so badly mangled using the high definition cellular telephone system.

In the U.S., chipmaker Broadcom is working on new equipment that will allow even better-sounding telephone calls. 32,000 digital bits per second will produce voice quality that is virtually indistinguishable from face-to-face conversation. The technology portends a clear audible improvement over not just ordinary cellular telephones but also landline telephones, which chop off high frequencies, especially above 3 kHz, the frequency range in which much human speech falls into.

Another big problem with cellular telephone calls is the annoying apparent lag that occurs between the moment when one caller speaks and the time his voice reaches the other person’s ear. Many people assume that’s an inherent drawback of cellular telephones, but it is not. Wireless digital cellular signals fly through the air at the speed of light just as they do in optical fiber – the delays come from slow software and circuitous routing. The new Long Term Evolution (LTE) gear set for deployment next year should cut that lag by at least 75%, so much that most human ears won’t notice it anymore.

Landline telephones stand to gain from the same quality advances as well. Orange has already installed 500,000 high definition landline telephones in Europe that use voice over internet technology (VOIP). When this style of telephone connection first hit the scene, it was roundly criticized for its poor sound quality relative to traditional landline telephones, but Orange and other carriers, some of whom are in the U.S. like Vonage, have shown that better technology can close that quality gap and then some. Both cellular telephone and Internet landline telephone calls may soon sound terrific as a result.

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