Monday, January 13, 2014

A Bad Month for Near Field Communications

It hasn’t been a terribly good month either for mobile wallet business or other applications using near field communications, as the U.K.’s O2 has shuttered its mobile wallet application, while France’s Bouygues Telecom apparently has ended its NFC program  entirely.

You might argue the O2 move was motivated more by inability to gain scale rapidly, while the Bouygues Telecom move was motivated by an even more difficult problem, namely identifying reasonable candidates for apps requiring NFC that could create a new revenue stream for Bouygues Telecom.

While neither move necessarily indicates that NFC itself is destined to fail, each initiative shows how difficult it is for mobile service providers or telcos to launch new services, based on new technology, when there is no clear end user understanding of a “killer feature” or “killer value proposition.”

As sometimes happens, new technologies and capabilities do not automatically translate into obvious business opportunities, as much-touted next generation networks have in the past failed to gain widespread traction.

In fact, few telco next generation network platforms have succeeded wildly. ISDN had modest success. It’s successor, broadband ISDN (asynchronous transfer mode) likewise has failed to gain widespread traction.The current network--Internet Protocol--wasn’t even a telco proposed next generation network, but a sort of accident.

Now we also are seeing other proposed next generation network protocols, including IMS and RCS, for example, work to become widespread. A realist with a sense of history might retain a sense of skepticism. 

Mobile networks arguably have done better with each successive generation of mobile air interfaces, perhaps because each successive generation featured at least one clear new advantage. The second generation added digital transmission, enabling new signaling features and leading to text messaging as a byproduct.

The 3G network created the foundation for mobile email and mobile Internet. The 4G network allows mobile operators to lower the cost per delivered bit, and enables video services with satisfactory experience for the first time.

Also, mobile networks get replaced about every 10 years, so perhaps there is no confusion about any single next generation network being “the last upgrade.” Practitioners know they will upgrade again, perhaps allowing a bit more focus on the one or two big new opportunities to be grasped over a decade’s time.

Whether NFC will be a really big deal, or not, remains unsettled. That isn’t so unusual for telco “new technology” efforts.

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