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Korean Telco Signals Move To NFC
KT Freetel, South Korea’s second largest mobile network operator, will move ahead with plans to test phones that support Near Field Communication technology, according to France-based chip supplier Inside Contactless.
Inside announced today KTF has chosen its NFC chip, Microread, for phones the telco will use to test contactless mobile payment and other services. Subscribers in the test will tap the phones on readers to make low-value retail purchases and pay transit fares. They also will be able to touch the phones to “smart posters” to download data.
NFC allows phones to emulate contactless cards and also to act as contactless readers. While other telcos and financial institutions in Europe, North America and Asia have tested mobile payment with NFC phones, KTF and its chief rival, SK Telecom, are expected to be among the most aggressive in pushing the technology out to consumers. They hope to widely roll it out next year, putting the payment and other applications on the subscriber identity module cards they are issuing to subscribers of the extra-fast 3G networks they launched early this year.
It was unclear, however, when KTF will launch the NFC test. It is already is piloting non-NFC phones that contain contactless chips for retail payment, transit fare-collection and loyalty programs. The payment service, which uses a credit feature from LG Card, launched last month and is part of the global “Pay-Buy Mobile” initiative backed by the GSM Association, a large mobile operator trade group. SK Telecom also launched a contactless mobile-payment service last month with LG Card, now part of South Korea’s largest credit card company, along with Visa International.
Both telcos said in February they would move these projects to phones that support NFC when handsets become available with a standard connection between the SIM card and NFC chip. Telcos want to use the SIM as the secure token to store applications in the phones because they believe it would help them collect revenue on NFC-based services. KTF and SKT are already using SIMs to store applications in their non-NFC contactless phones. They are downloading the applications over the air to cards in the handsets of subscribers. They would do the same in the NFC handsets. The telcos have offered contactless mobile payment in their second-generation CDMA handsets, issuing SIM-sized miniature credit cards to subscribers. But the service is not used often by subscribers.
While it wasn’t clear from yesterday’s announcement when KTF would begin piloting the NFC phones, Inside said it had already delivered 200 NFC chips to two South Korea-based handset makers that will supply phones for the KTF project, Samsung Electronics and LG Electronics. Another 500 chips could follow. The chips support the standard connection to the SIM card, said Inside. That standard is expected to gain final adoption soon by the European Telecommunications Standards Institute.
Moving to NFC would cut equipment costs and eventually increase availability of phones and other components for the Korean telcos, compared with the custom-built contactless phones they now use.
Some French operators also are testing NFC-based payment on SIM cards, and network operator Orange recently announced plans for a commercial launch of the technology early next year in the southwest French city of Bordeaux. But NFC likely will take longer to roll out in France than in South Korea, where telcos have much control over the infrastructure of phones, as well as point-of-sale terminals to accept the payment.
SK Telecom and KTF have predicted they will have at least 150,000 readers available at convenience stores, restaurants, department stores and other merchant locations throughout the country by the end of this year. (2007-07-16)