What's New in Technology for February 2009

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Technology: New Functions And More Security Challenges For Cell Phones

As hand-held mobile phones continue to evolve –we’ve seem them go from simple cell phones to mini-PCs accessing the Web via WiFi—people have continued to enjoy the convenience and value of their new, expanded functions and services.

The cellular communications industry is constantly exploring new value-added opportunities for hand-held devices. Their next step is likely to involve technology now in use in Japan, where mobile phone subscribers are able to make purchases and manage their bank accounts using their cell phones. Introducing this technology here will require substantial cooperation between cell phone vendors, credit card companies, point-of-sale equipment manufacturers and banking systems—to name but a few— and substantial investment in the necessary infrastructure.

The GSM Association, a global trade group for the mobile communications industry, is at the forefront of efforts to take cell phones into this new arena. In order to function as credit or debit cards, mobile phones require some fundamental enhancements. There are two key changes. First of all, the process requires the integration of Near Field Communication (NFC) capabilities rather than WiFi or Bluetooth for short-distance wireless exchanges. NFC can support transmission speeds of up to 212 kilobits per second and is cheaper (at least 10 times less expensive) and requires about one-third less power than alternative systems. NFC can transmit only for a few feet, which advocates of the new technology believe is a strong positive because it will make data thefts difficult and highly unlikely. Secondly, the GSM Association has also developed the Single Wire Protocol (SWP) interface which allows hand-held devices to exchange information with point-of-sale equipment. Nine mobile phone companies are currently testing prototypes with these new enhancements. These product trials are underway in the U.S. and seven other countries.

Issues Pending
Obviously, the cellular communications industry must fully address concerns regarding the security of the new cell phone hybrid before any product launch. Business owners will be reluctant to shoulder the additional burden of safeguarding confidential and sensitive data conveyed by the new devices. Hand-set vendors will need cooperation and support from telecommunications carriers and from the big credit card companies. Questions regarding possible banking fees for electronic transfers and e-commerce via a mobile device have yet to be answered. And, without a doubt, significant investment will be needed to ensure inter-operability between all the players. Despite these issues, industry observers believe that we’ll see cell phones with credit/debit card capability in the U.S. within the next 12 months or so. Opinions vary on timing of their entry into the market and the rate of adoption among key cell phone users.

Whether small business owners will embrace this cutting-edge technology or play “wait-and-see” probably will depend on resolution of data security issues and cell phone service charges. Business people and consumers who are interested in more information on the cellular communications revolution should stay tuned for the GSM Association global forum in Barcelona in February 2009.


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