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Gemalto Announces TSM Contract with Telecom Italia, as Italy Gears Up for NFC

France-based Gemalto has announced its trusted service management contract with Telecom Italia, as Italy's largest telecom gears up for the launch of its NFC mobile wallet.

Telecom Italia Mobile, or TIM, has held at least five NFC trials since 2009, including transit ticketing in Milan, a mobile corporate badge for employees in Milan, Rome and Turin, a payment interoperability trial for certain executives attending the Olympics in London last summer and a multiapplication trial launch last month in Milan that includes credit payment, transit ticketing and tag applications.

Rival Vodafone Italia has said it will commercially launch NFC in 2013, featuring its own branded payment application as part of its partnership with MasterCard Worldwide.

Like Vodafone, Telecom Italia is likely to commercially launch NFC next year, and also like Vodafone, it will host secure applications on its NFC SIM cards.

TIM, historically among the most SIM-centric of mobile operators, appears to be planning to carve out an especially strong role for the SIM with its planned NFC-enabled wallet, according to presentations by representatives of the telco.

But unlike Vodafone and other large telcos in Europe, TIM seems unlikely to be planning to roll out its own prepaid, open-loop, payment application on its NFC SIMs. It is expected, instead, to partner with banks for payment applications–especially large retail bank Intesa Sanpaolo, which is a major shareholder in the telco.

Other telcos, such as Vodafone, have said they would also open up their NFC SIM platforms to banks, in addition to introducing their own payment applications. But they see branded payment as both a revenue source and a way to enhance their brands and reduce churn.

All of the SIM-centric telcos, including TIM, are expected to charge fees to service providers, such as banks, to rent space on their cards.

Projects Ahead
Intesa Sanpaolo issued the payment applications for Telecom Italia’s payment trials, working with Visa. And the bank has told NFC Times that it would launch its Move and Pay NFC service commercially in coming months. That would probably be with Telecom Italia, though the bank has not yet disclosed its telco partner.

Telecom Italia also plans to roll out its NFC employee badge service to 25,000 employees, using an NFC-enabled Samsung Galaxy mini 2, Alessandro Ossoli, innovation and industry relations, SIM card research and development, told NFC Times. As with an NFC badge trial, launched in December 2011, employees would also be able to pay with their phones at vending machines and company canteens.

Ossoli, speaking at the recent Cartes trade fair and conference in Paris, mentioned a planned “TIM Mobile Wallet,” which would play host to applications from service providers–anchored to TIM’s SIM cards. The wallet also would be secured with a SIM-based wallet PIN code, suggested Ossoli.

“The SIM card can be manager of the identity of the user,” Ossoli told NFC Times. “We strongly believe in the digital identity stored in the SIM and enabled by NFC technology.”

He said the telco would like to store a key part of the wallet software or user interface on the SIM as well, using the smart card Web server, or SCWS, application introduced years ago by Gemalto and other SIM vendors.

SCWS would enable telcos to base the user interface for their wallets on their SIMs, drawing Web pages from the Internet quickly, and, they say, making it easier for consumers to move their wallet software, along with their services, to other phones by inserting their SIMs into the new phones. This also would tie the user more closely to the operator, to try to reduce churn. 

Ossoli said combining smart card Web server with the new version of hypertext markup language, HTML5, could reduce the memory space required on SIMs even further for the user interface and offer faster downloads of mobile Internet pages. But not enough NFC phones support SCWS to support a rollout, he said.

Despite being tied firmly to the SIM, Telecom Italia sees itself as an open “ecosystem enabler,” which along with other Italian operators, would provide a platform for banks, transit operators, retailers and other service providers to deliver their services to consumers, according to a presentation by Alfonso Mariconda, senior vice president for new projects development with Telecom Italia, who spoke last month at the GSMA NFC & Mobile Money Summit in Milan.

TIM’s model for enabling NFC services reserves an important role for the trusted service manager, or TSM.

Italy in ‘Third Wave’ of NFC Rollouts
Philippe Vallée, head of Gemalto’s largest business unit, mobile communication, had confirmed last month at the GSMA conference in Milan that the France-based vendor would be serving as TSM for Telecom Italia.

He noted that Gemalto was also serving as TSM at the group level for Vodafone and mentioned other NFC projects in Italy, though not all necessarily involving Gemalto, according to his presentation.

The projects include PosteMobile, a mobile virtual network operator owned by major postal service operator Poste Italiane, planning to launch next month what could be the first NFC service in the country. The service would put its BancoPosta prepaid card onto SIMs.

And telco Wind Italy, a major operator competing with TIM and Vodafone Italia, held what is apparently an internal trial in June, enabling employees to tap NFC phones to enter doors and pay at vending machines and canteens, said Vallée.

He added that yet another Italian operator, 3 Italy, is now “interfacing” with service providers.

Vallée placed Italy in the third wave of global NFC and contactless-mobile rollouts, following the first wave in Japan, South Korea and France, and a second wave in the U.S. Turkey, UK, Singapore and Canada.

Other countries gearing up for rollouts as part of the third wave, according to Vallée, are Russia, Poland, Spain, Germany, the Netherlands, United Arab Emirates, Brazil, Australia, China and Hong Kong.

Gemalto TSM Contracts
The rollouts in most of the first and second wave countries remain small and so far have relatively few users, and Vallée is likely spotlighting countries in all three waves in which Gemalto has contracts to supply TSM services, NFC SIMs or both.

For Gemalto, the contract to manage the secure elements on Telecom Italia’s SIMs gives the vendor TSM contracts with three of the top five mobile operator groups in Europe. Gemalto also has TSM contracts with UK-based Vodafone and Germany’s Deutsche Telekom. Rival TSM and smart card vendors Giesecke & Devrient and Oberthur Technologies have TSM contracts with each of the other members of the big five, Spain-based Telefónica and France Telecom-Orange, respectively.

It wasn’t clear from the Gemalto announcement of the Telecom Italia deal Tuesday whether the vendor is also providing TSM services on the service provider side in Italy. Vallée noted during this presentation last month in Milan that Gemalto is working with SIA, an Italy-based processor and service provider for banks. SIA is apparently building an interbank hub to manage NFC applications, and Gemalto might be providing SIA with TSM technology for this.

Among Gemalto’s other TSM contracts managing secure elements in SIMs are the Isis joint venture in the U.S. and Singapore’s Infocomm Development Authority, or IDA. Isis, made up of Verizon Wireless, AT&T Mobility and T-Mobile USA, launched a two-city trial late last month. IDA is coordinating an islandwide NFC commercial launch. Both projects have started out slowly.

Gemalto also is providing TSM services to Japan’s No. 2 telco KDDI, which has launched its first phones that support hybrid NFC and FeliCa chips. There are few standard NFC services available in Japan yet, however. Gemalto may also be serving as TSM for PCCW mobile in Hong Kong, which has said it would launch service with Hang Seng bank during the first half of 2013.

On the service provider side, among Gemalto’s contracts for provisioning and personalizing payment applications on NFC phones are with BNP Paribas in France, JPMorgan Chase in the U.S., Barclaycard in the UK, Hang Seng in Hong Kong and Itau in Brazil, NFC Times has learned.

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