ATandT, T-Mobile and Verizon Scale Back Isis NFC Plans: Report

AT&T, T-Mobile and Verizon are reportedly scaling back their hopes for the NFC-based Isis network. With MasterCard and Visa on board, the struggle now is over customer data.

AT&T, T-Mobile and Verizon Wireless are reportedly scaling back their hopes for Isis, the mobile commerce network based on near-field communication technology that they introduced in November.

Instead of setting up a payment network and collecting fees on every transaction, the trio now have the more modest goal of setting up a "mobile wallet" that can store and exchange the account information on a users' existing Visa, MasterCard or other card," The Wall Street Journal reported May 4, citing people familiar with the matter.

The initial plan was to use Discover's national payment infrastructure, and tap Barclaycard US's experience in contactless and mobile payments. However, according to the report, the trio found it difficult to get merchants on board without the inclusion of industry giants MasterCard and Visa.

"The embrace of the major card companies was needed to avoid falling further behind in the race to establish a standard way for letting consumers pay for products with their cell phones," the Journal reported, again citing sources.

However, an Isis executive has disputed the Journal article, disagreeing with the idea that the company is scaling back. Instead, CMO Jaymee Johnson told Computerworld, the move to open it up to other payment platforms has been in the works for a while, and is an "acceleration" of Isis' game plan rather than a scaling back.

"We [Isis carriers] were never going to be the bank, and that may be an important clarification," Johnson told Computerworld.

With the major payment networks now welcome into the fold, the report added, the new struggle is regarding who will control what's known as the "secure element"-each user's private information that's for now stored on the magnetic strip of credit cards. Motivating the struggle is that such information would offer details about each customer that companies could use to extend customized offers: a.k.a., more money.

"The phone companies want to store the credentials in the phone's SIM card [while] device makers such as RIM and software providers such as Google want to store the credentials on an NFC [near-field communication] chip or the phone itself, potentially cutting carriers out of the loop," the Journal reported.

At the November 2010 Web 2.0 Summit, Google CEO Eric Schmidt showed off an Android-running smartphone with an NFC chip and explained to attendees: "The theory of the case is that you'll be able to take these mobile devices from everybody, and you'll be able to walk into a store and do commerce and be able to figure out where you are, again with your permission. It could eventually literally replace your credit card."

Last summer, Apple hired an NFC expert and published a number of NFC-related patents, giving rise to rumors that the Apple iPhone 5 would include an NFC chip.

Research In Motion did away with the need for any similar speculations, announcing May 2 that its new BlackBerry Bold 9900 and 9930 smartphones will include built-in support for NFC. With the United States still lacking a payment system for the technology-as countries such as Japan have enjoyed for years-RIM was forced to downplay its capabilities, explaining in a statement that NFC "will enable many rich and exciting experiences. Through NFC, users will be able to, for example, pair the BlackBerry Bold to an accessory or read information such as a Web link from smart tags by simply tapping their BlackBerry Bold to an NFC tag [on, say, a Smart Poster]."

Isis plans to stage its first pilot program for the technology in mid 2012, in cooperation with the Utah Transit Authority, according the Journal. Instead of purchasing the traditional fare, participants will be able to access Utah's mass-transit systems by tapping an electronic fare reader with an Isis-enabled phone containing an NFC chip.