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Ignoring what the government does in RFID is like being in the lumber business and dismissing Home Depot.
By Doug Farry
Aug 01, 2006—As with most emerging technologies, the government has been a follower, not a leader, in RFID use. But government use of RFID is expanding rapidly—led by the U.S. Department of Defense, which has been relatively active and innovative in its deployments. A study in May 2005 by the Government Accountability Office showed that dozens of federal departments and agencies have active plans to use RFID for a growing range of applications.

Yet many technology providers that have decided not to pursue the government market are not interested in the government's activities. And many private-sector businesses that are using RFID have dismissed the government's experimentation with RFID as irrelevant to their own efforts. But ignoring what the government is doing in RFID is a mistake for your business.

Why? The U.S. government is the largest purchaser of IT products in the world—more than $64 billion worth this year. Since price is influenced by volume, what the government buys—and how much it buys—can have a significant impact on products available in the private sector.

Some government RFID procurements can create de facto standards for certain private markets. For argument's sake, suppose the Department of Veterans Affairs announced a requirement that certain kinds of RFID tags had to be used on pharmaceuticals provided to all VA hospitals. That would certainly influence any drug company's decision about what kind of RFID system to use for private markets. Why invest in one system for sales to Walgreens if you are required to use another for the VA system?

Government decisions also can have an enormous impact on the public's perception of RFID. The announcement that the government planned to put tags in U.S. passports attracted worldwide attention. For many consumers, their first introduction to the term RFID was in the context of a debate over whether the technology could be used to invade their privacy.

Both RFID providers and users may have to deal with the consequences if that perception holds. Politicians are in the business of responding to public perceptions, and emotion always trumps logic. If their voters believe that RFID is a threat, those politicians will push legislation to ban, regulate or restrict its use—and they'll be praised for it. Educating politicians on how RFID works is of little value if their voters think the government is using RFID to invade their privacy.

But effective government use of RFID can position RFID as a tool that can help protect patient health, limit contamination of the food supply, get help to hurricane victims more quickly and reduce the cost of government services. What government does with RFID matters, and both providers and end users have an interest in developing a proactive, strategic plan to shape government decisions to the benefit of their industries. In the next issue (September/October), I'll discuss how RFID supporters can influence how the government affects their business.

Doug Farry is a managing director with the government affairs practice of McKenna Long & Aldridge. He provides strategic and tactical support for clients before the U.S. House of Representatives, Senate and White House, on technology and telecommunications policy. Illustration by Michael Morgenstern.
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