Posted: 01/1998
By Jennifer Knapp
What are smart cards? Who benefits from the technology and where is the money to be made? These are the questions more easily answered than the question, Why smart cards?
Service--The Simple Answer
Smart cards, credit card-shaped data carriers with thumbnail-sized central processing units, memory and storage, have teamed up with the telephone to make services available to consumers. According to Linda Hughes, Nortel's senior manager of North American marketing, Millennium, "What you are seeing in the evolution of smart cards is the evolution of a technology that will be driven by choice, convenience and need."
Consumers want a choice? Okay, they've got it. How about a card you stick in your phone, and on that card are programs you can activate through a visual interface? These programs can activate services with banks or, perhaps, ticket agencies or airlines. According to Philippe Martineau, director of Telecom Business Division, Americas, for Gemplus, California-based CellNet Data Systems and Barklay Bank took advantage of Gemplus' subscriber identity module (SIM) toolkit to offer value-added services through a SIM card and a phone. CellNet's smart card application coupled with Barklay's computer system gives its payphone users and wireless subscribers the choice of account access, fund transfers or any other automatic banking option.
Convenience
What about convenience, you ask? Well, our readers might remember the peek PHONE+ had of the Florida State University (FSU) smart card platform (September 1997, pg.108). The myriad services that FSU's platform already offers apparently was not convenient enough for its users. As a result, Martineau explains, PhoneTel Communications Inc., a Florida-based network operator, is running a trial on FSU's smart card platform that uses Motorola global systems for mobile (GSM) handsets, which Motorola donated to the university. When their smart card identification cards are plugged into the handset, students are able to reload their electronic purses for use in bookstores or cafeterias without having to locate a point-of-sale device.
At the heart of this convenient service option is over-the-air (OTA) smart card technology. While over-the-air sounds almost magical, it takes a lot of human brain power to make it happen. According to Paoli, Pa.-based ORGA Card Systems, its OTA Express gateway system has a database that receives and coordinates update requests from a billing and customer care system. OTA Express then creates the SIM vendor-specific coded message and forwards it to the short message service center for delivery to the SIM. Examined from that angle, OTA might not seem so convenient, but if consumers want the option, then technology must follow.
Beyond Wireless
There is a sense in the industry that smart cards are hiding behind the wireless mask. It cannot go unnoticed, however, that companies such as Mississauga, Ontario-based Nortel and the Schlumberger Electronic Transactions Division of Schlumberger, Ltd., Moorestown, N.J., are doing everything in their power to get smart card-accepting payphones out into the consumer world.
"In North America alone there are more than 140,000 Millenniums deployed," says Hughes about Nortel's smart card-accepting payphone. But Nortel cannot do it all alone. Rich Peck, director of telecom marketing and sales, North America for Schlumberger says, "Schlumberger has more than 200,000 smart card payphones worldwide, and we deployed 30,000 this year just to Mexico. We're watching North America very carefully."
Irving, Texas-based GTE Network Services also has taken the opportunity to lend a helping hand. Hughes says that GTE and Nortel have arranged Nortel's first Millennium sales agency agreement whereby GTE can represent Millennium to other payphone service providers.
One Bill
Of course, just because the technology is becoming available does not necessarily mean everyone's applications and networks are going to play nice together. In a joint marketing plan, Martineau says one bank and one network operator in Sweden agreed to make their SIM cards work on both the network operator side and the banking application side. They advertised a joint platform with which subscribers to the wireless service get banking and phone services on one bill. It will take far more than one bank and one operator agreeing in Sweden, however, to make a global smart card system work.
"On one bill" seems the most likely answer to the question, "Why smart cards?" Peck points out that smart card technology took a flip-flop so the SIM is no longer the slave to the handset; instead, the chip now contains a new layer of intelligence, known as Phase2+.
Phase2+'s extra memory and application space should seem quite valuable to anyone who has a service to provide in a global arena. But companies need to work side-by-side and be interoperable or the whole convenience-on-a-global-scale issue might go right out the window.
The Global Chip Card Alliance* (GCA), however, is making a push for interoperability. The GCA announced its intentions to institute a service mark plan to recognize GCA-approved smart cards and terminals. Marked cards will fulfill a strict global interoperability requirement to ensure service and protection levels worldwide.
This kind of service mark did wonders for the automatic teller machine (ATM) industry: ATM cards bearing a particular branch or network emblem ensured that cash would be available at a machine with a matching emblem.
"When did everyone start using ATM cards?" Hughes asks. "It was when it was easy."
Easy is what MondexUSA is touting in its electronic cash (e-cash) launch in Guelph, Ontario. Participants in the launch can download e-cash to a Mondex smart card over a Nortel Vista 360 residential screen phone (a.k.a., PowerTouch 360), a Millennium phone, or through ATMs. The Mondex smart card platform was made readily available with the help of Bell Canada, which deployed 250 Millennium phones and 2,500 Vista 360s in Guelph. And, because the chip's memory holds the e-cash on the card, the need for phone authorizations and personal identification number codes are eliminated, thus potentially making consumers' lives easier.
I Remeber When
As global interoperability and availability of smart cards take hold, we all will to be able to play the game of "remember when" with smart cards, just like we do with ATMs, computers and the Internet. Smart cards and telephones will bring a broad range of services to consumers' fingertips, but it will be up to all telecom players to identify and act on the need for increased air time, one-stop billing services and advanced software and hardware technology before smart cards secure a place in every American's wallet.
*The Global Chip Card Alliance members include: PTT Telecom Netherlands, US WEST Communications, GTE Telephone Operations, Bell Canada, Telekom Malaysia, Deutsche Telkom, American Express, Microsoft, IBM, Telstra, Northern Telecom, Landis & Gyr, Gemplus, SPT Telecom and Elcotel.
