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Governments Influence RFID Adoption

In the United States, private investment is advancing RFID adoption. But in Asia—and even more so in Europe—government funds are jump-starting RFID research and pilots, and helping the regions stay competitive.
By John Edwards
Dec 01, 2007—Adam Adgar is a member of a research team that's working on an exciting RFID project, one that promises to help businesses better monitor the condition of routinely used mechanical systems, such as pumps and electric motors. But the parties behind Project Dynamite (Dynamic Decisions in Maintenance) don't expect private investors or corporate partners to foot all their expenses. Instead, most of the money that's energizing Project Dynamite is coming from the European Commission, the European Union's executive branch.

Project Dynamite is one of several RFID-related projects being funded by the EC, reflecting the EU's commitment to be on the leading edge of RFID adoption. "RFID is seen as a key technology for enhancing competitiveness of economies and for improving the life of citizens in tomorrow's information society," says Joao da Silva, director of converged networks and services for the EC's Information Society and Media Directorate-General. "Most experts agree that this technology will become pervasive in the long term."

The EC's dedication to RFID funding stands in stark contrast to the United States, where government-funded RFID is almost exclusively limited to projects with direct military or national security potential. Asian governments, including those in China, Japan and South Korea, are enthusiastic RFID supporters, but lack the EU's regional focus. With dozens of projects and trials completed, planned and in progress, Europe leads the world in government RFID involvement and arguably has the most cohesive vision for future development.

The EC's robust funding of RFID projects is rooted, at least to some extent, in a feeling of insecurity. As EU leaders anxiously view a steadily growing number of commercial RFID deployments in North America and Asia, they worry that Europe may be falling behind in a pivotal technology. "In Europe, increased funding means more trials, and more trials leads to the possibility of real-world deployments," says Tim Payne, supply-chain management research director for Gartner, a technology research firm based in Stamford, Conn. "This means that Europe doesn't get seen as something of a backwater from the point of view of modern supply-chain management."

No matter which government is handing out the cash, public-funding proponents claim that taxpayer dollars poured into RFID ventures represent seed money that will begin paying sizable benefits at some future point. "The EC, for example, is trying to encourage the use of RFID," says Raghu Das, CEO of IDTechEx, an RFID and smart-packaging consulting firm located in Cambridge, England. "The idea is that this is the initial funding to get over the RFID pain barrier."

But public-funding critics contend that governments often lavish money on projects with social and political ties that do little but waste time, drive up costs and blur the technology's focus. They believe that private investors tend to keep a sharper eye on the bottom line, remorselessly pulling the plug on projects that fail to prove their worth. "The U.S. offers more of a free reign," says Jonathan Collins, former RFID Journal European editor and now a senior RFID analyst at ABI Research, a technology research company headquartered in Oyster Bay, N.Y. "It lets companies work things out in the market."
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