NFC mobiles on track in Asia

The day you can pay for goods with a wave of your mobile phone is nearing, slowly but surely--and this will likely happen first in Asia, say NFC (near field communications) industry players.

According to chip-maker NXP Semiconductors, hardware cost is no barrier to integrating such chips in phones.

Chia Yong Choon, regional marketing director (Asia-Pacific and Korea) at NXP Semiconductors said in an interview with ZDNet Asia: "NFC is very affordable. The cost is comparable to designing other features into handsets, such as GPS, Wi-Fi, Bluetooth, FM radio, et cetera. Certainly, cost will not be a barrier."

The bigger barrier, say analysts, is the underdevelopment of the payment ecosystem around NFC-enabled phones.

According to a recent Strategy Analytics report, NFC relies on more players than just the hardware makers, and projects undertaken this year are expected to be limited to trial phases.

David Kerr, vice president, global wireless practice at Strategy Analytics said: "Unlike other personal area networks technologies like Bluetooth, the success of NFC in handsets is reliant on the ecosystem and the monetization opportunities present for all participants in this value chain."

Chia agreed: "The ecosystem for NFC includes transportation companies, the banking industry, telecoms companies, and so on."

He added that service providers can help bring the various elements together: "Most of the infrastructure is already in place, so the role that service providers can play is to bring all of the existing systems together."

In Singapore, two carriers launched NFC trials last year within days of each other. StarHub roped in EZ-Link for a public trial involving some 1,000 subscribers; SingTel announced a partnership with Nets for an internal trial of 50 staff.

Both trials were slated to end in 2007, with public trials expected to follow shortly after. These trials have yet to begin, but StarHub announced last week it would be working with Japanese mobile carrier, NTT DoCoMo to work on a "mobile wallet concept" similar to the one DoCoMo is running in Japan for a "near future implementation in Singapore".

Both carriers had remained coy on details earlier in January.

Chia of NXP Semiconductors, which was a technology partner in the StarHub-EZ-Link project, said he expects most NFC-enabled phones to be found in Asia eventually, adding that the "biggest trial up to last year" was the StarHub tie-up.

"There is huge potential for NFC to be rolled out globally, but the way it is adopted is likely to be different for each market...We see that the fastest adoption will take place in Korea and Japan, but the rest of Asia will not be far behind," said Chia.

A recent ABI Research study projected 6.5 million NFC-enabled phones will be sold this year--10 times more than in 2007. According to ABI, more than 20 percent of handsets are expected to be outfitted with NFC chips by 2012, representing more than 300 million NFC handsets per year by then, said Chia.