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A Conversation With NXP's Tony Sabetti and Steve Owen

Two of the RFID chipmaker's top executives talk about the RFID market, chip security and NFC phone applications.
By Mary Catherine O'Connor
RFID Journal: Gas prices and a rising concern over carbon emissions have led to a surge in ridership in many mass-transit systems. Are you seeing growing demand from transit agencies for RFID products as a result of this?

Sabetti: I think the answer, generally, is yes. We are working with some younger transit agencies, and we are working with some of the more mature agencies who are looking to refresh what they're doing with system upgrades. I live in Dallas, which is in the middle of installing two new transit lines—something that, a few years ago, I never thought would happen.

Owen: We see an increase in urban transit systems, and are working with government agencies that are looking for bright alternatives to cars. This started around two years ago. There are three key issues: How do you get people out of their cars? How do you deal with payments? And third, how do you ease those people through the system? And of course, there is the issue of dealing with fraud. So the beauty of contactless technology is that you can prepay, you can reload value onto your card in many locations, and you can speed people through gates. Having less cash is less of a burden for the transport authority, and you can offer discounts [for using the cashless system].

RFID Journal: And you can turn cell phones into fare payment devices, using near-field communication (NFC). In regard to NFC, the technology has so much potential, both in terms of a business and as a tool of convenience for consumers. But so much more cooperation between the stakeholders—the handset makers, the tag makers, the banks—needs to happen first. How can NXP push along the process? What are you doing to get NFC phones into consumers' hands, to get retailers to embrace the technology, and so forth?

Owen: We helped form the NFC Forum to address that conundrum of how to get businesses to use it. There are already a number of [RFID-enabled] payment cards that can be used for transit applications. But when it comes to how to get that technology into a phone, the challenge is: Who does the client belong to? Is it the bank? Is it the telecommunications company? That's a part of the business model that needs to be resolved in every situation. What we are doing is bringing the parties together. We engage with telecommunications companies, banks, credit card companies and transit agencies. There have been more than 200 NFC trials taking place—with many of them involving the use of the technology for transit applications. What I've seen is that a number of these banks and telecommunications companies now are taking a pragmatic view that we have to move this thing forward and solve some of those problems later, and just first see what works.

So it's a shift from saying, "I don't do anything and I'm happy" toward seeing what the issues are and then working out how to deal with them later. I'm pretty optimistic now—based on discussions we're having with other stakeholders—about a timeline with rollouts of more than just trials, starting around mid-2010, with more serious rollouts in 2011. And that's actually quite a short timeframe.

Toward the end of this year, a number of companies will announce new handset models with NFC. Nokia recently announced plans to include NFC functionality in many of their handset models. That is a major shift and a signal to other handset manufacturers that they need to finish their design program. So we are engaged. There are some business problems to be solved, but they will be solved deployment by deployment, major city by major city.

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