Startup Sees Femtocells as a Bridge to NFC-enabled Phones

Jun 22, 2012Raging Mobile, a San Mateo, Calif., technology start-up launched by venture-capital company North Bridge Venture Partners, is developing kiosks intended to help pave the way for the adoption of Near Field Communication (NFC)-enabled mobile phones, by offering consumers the option of receiving discounts via femtocell technology, in the event that their phones do not support NFC RFID technology.

Two 7-Eleven convenience stores located on Long Island, N.Y., are currently testing early prototypes of the kiosk lacking femtocell functionality. The prototypes support only NFC RFID technology—either NFC-enabled phones, or NFC RFID tags attached to phones—while long-term plans, according to Raging Mobile, are to test kiosks that also employ femtocell mobile-phone technology as an alternative to NFC.

The femtocell and NFC solution is intended to solve a "chicken-and-egg" problem regarding the deployment of NFC-enabled phones and commercial NFC-based services, says Basil Horangic, a partner at North Bridge Venture Partners and founder of Raging Mobile. Most mobile-phone manufacturers are awaiting the adoption of NFC-based services before producing NFC-enabled phones, while NFC-based services (such as store loyalty programs) are not yet being adopted since there are presently few phones equipped with the NFC technology required to use them.

With the Raging Mobile kiosk, however, consumers can become accustomed to using their mobile phones to access personalized service or coupons at a store, with or without NFC technology, until such a time that the anticipated proliferation of NFC reader chips in handsets occurs.

During the past year, Horangic says, the company had been considering ways in which consumers who use NFC RFID technology could easily check in at a store upon entering, so that they could receive personalized service from the staff, or view coupons or promotions that could be personalized. Not all shoppers would want to identify themselves as they enter a business, Horangic notes, but if offered an option requiring minimal effort and providing such incentives as discounts, many would likely be willing to do so.

"NFC would allow you to easily check in," Horangic states. However, he notes, "it's not worth building a network" if the NFC-enabled phones are not yet in use. What's more, he says, some stores have tested NFC RFID stickers affixed to phones, though such stickers have not seen much long-term adoption.

To create a bridge between customers and stores even before many NFC phones enter the market, the company opted to take advantage of the femtocell technology. "One thing every phone has is the ability to talk to cell towers," Horangic explains. "So we're creating a mini cell tower"—a femtocell built into the kiosk. The femtocell device has a cellular antenna that can transmit signals to, and receive transmissions from, a cell phone, but only if the phone is situated approximately one inch from the unit.

To use the service, a customer must install an Android-based application, developed by Raging Mobile and software company Solekai Systems, and currently being tested at the 7-Eleven stores. The application enables communication via NFC technology, with an NFC sticker applied to the phone that communicates with a reader located within the kiosk. The Raging Mobile server then sends a confirmation and promotional coupons to that phone via SMS text message. The commercialized version of the system will utilize the same software, but will also enable users to communicate with the Raging Mobile server via the femtocell connection. This femtocell technology will operate with any phone, the company reports, as long as it is powered on. The prototype system was codeveloped by Raging Mobile and Solekai Systems.

"Raging Mobile is aspiring to go to market with devices using our proprietary technology in the future," says E.Y. Snowden, the firm's president and CEO. Solekai will participate in that development, but its specific role has yet to be determined.

With the commercialized solution in place, once a customer taps his or her phone near the Raging Mobile kiosk, as directed, the kiosk's built-in NFC RFID reader first seeks an NFC connection. If the phone has a built-in NFC RFID chip of its own, the kiosk will capture the RFID chip's ID number and forward that information to the store's back-end system, or to the Raging Mobile server. If the phone is not NFC-enabled, the solution will employ a cellular connection to capture the phone's electronic serial number (ESN), and then transmit that ID number to the back-end system via a wired or wireless Internet connection. In return, the cellular antenna sends a text message to that phone. If the user responds to the text message by indicating that he or she wishes to opt in to the service—and thereby receive messages, such as greetings or coupons, from the store—that person's phone number will be received and stored in the Raging Mobile software, through which text messages can then be forwarded every time that individual utilizes the kiosk.

In some cases, stores may wish to collect the name and spending habits linked to each phone's telephone number or NFC ID. In such a scenario, coupons could be personalized based on a particular customer's typical purchases, or employees could be alerted that a specific individual had arrived, and thus could greet that shopper by name.

Upon using the system for the first time, a customer receives an SMS text message inviting him or her to send personalized information, or to simply approve the receipt of coupons or other solicitations from the store. Shoppers who have previously used the system are simply sent a check-in confirmation on the kiosk screen, and thereafter may receive a text message containing coupons or other promotional materials from the retailer, or from an opted-in brand selling products within that establishment.

The process is completed almost instantly for an NFC reading, whereas a user would need to hold the phone in place for up to six seconds for a cellular reading.

The kiosk can be placed either on a countertop or on a freestanding pedestal, where signage can then instruct users as to how the device operates.

Customers will be invited to place their phone (or hold it for a cellular reading, once that capability becomes enabled) near the device, until the ID number is captured. A text message is then sent, along with coupons—for example, offering a reduced price for a large cup of coffee.

For a commercial deployment, Raging Mobile would provide a hosted service that could link data to a retailer's own back-end system. The company is presently considering a business model whereby the kiosk could be provided free of charge to a store or business using the system, with Raging Mobile charging a fee to other participating organizations, such as brand owners, social networks and deal providers.

"We still haven't decided on the business model for the readers," Horangic says. "Our goal is for them to be very low-cost or free."

An NFC-only version of the kiosk will be tested at the 7-Eleven stores over the course of several months. For stores, as well as for their managers, the technology provides a way for a business to communicate with its customers via their mobile phones, providing coupons, or simply greetings, each time that a patron chooses to interact with the kiosk. To date, the company does not yet have information regarding the immediate response from customers or store management. Raging Mobile plans to evaluate the results before launching a large-scale pilot including femtocell technology.