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Near Field Communication and all contactless technology

BARCELONA – France Telecom-Orange has sold 500,000 NFC phones in France to date and is putting new models on sale at an increasing rate, said Thierry Millet, head of payments and contactless at Orange group.

But the France-based telco took two more months than expected to hit the 500,000-phone goal. Orange had predicted it would reach the half-million mark before the end of 2011. Millet said the telco did sell 500,000 phones before the end of last year counting phones sold by the Orange UK branch, site of the group's other NFC commercial launch.

Millet, speaking at the Mobile World Congress in Barcelona, said the operator had seven NFC phones on sale by the end of 2011 and has validated six new phones during the first quarter of 2012 alone, which would cover France and the United Kingdom. It currently has about 10 NFC-enabled phones on sale from six handset makers, Samsung Electronics, LG Electronics, Acer, Nokia, Research in Motion and Sony.

The handsets include the Samsung Galaxy S II, Acer Liquid Express and four BlackBerry models, such as the Bold 9900. It also includes the first two phones the operator put on sale, the Samsung S5230–a 2G feature phone known as the Player One in France and Tocco Lite in the United Kingdom–and the Samsung Wave 578, which runs Samsung’s bada operating system. Both support payment, though not all of the others do.

Millet said Orange recently hit a milestone by completing the testing to prepare an NFC phone for sale “in exactly the same time we validated a new phone without NFC.”

Among other things, the operator has blamed the failure to hit its earlier goal of selling 500,000 phones by the end of 2011 in France on the late arrival of NFC versions of such popular models as the Galaxy S II. The telco put this model on sale in the fall. All major French operators together had planned to sell 1 million NFC phones by the end of 2011, a target they also no doubt missed.

All New Subscribers to Get NFC SIMs
Orange, one of the most aggressive operators worldwide in rolling out NFC, plans to begin issuing NFC-enabled SIM cards to all new subscribers in France, whether they have an NFC phone or not, starting in April, according to Millet.

That is an expensive proposition, with NFC SIMs costing at least a few times more than conventional cards. Some estimates place the price differential at five times the cost of non-NFC SIMs or more.

Millet, who confirmed that Orange is buying its first NFC SIMs for the rollout from France-based Gemalto, said the cards will not cost five times as much as Orange’s conventional SIMs, though he declined to specify the price Orange is paying. Turkcell said it was paying €4 (US$5.33) apiece for NFC SIM cards from Gemalto for the Turkish operator’s NFC commercial launch.

NFC SIMs carry more memory than conventional cards, generally 512 kilobytes to 1 megabyte, compared with perhaps 64K to 256K for conventional SIMs in developed markets. And the NFC SIMs must support the single-wire protocol standard, as well as offering payment-grade security, contend SIM vendors. They also note the technology is new and volumes, thus far, are low.

Orange had planned to begin issuing NFC SIMs to new subscribers before the end of last year and later moved that launch back to early in 2012. It remains to be seen if it will hit the new April target.

“It will happen a few months later than expected,” Millet told NFC Times. “It’s a few more weeks to get through the technical work and do the validation.”

Orange is going to the expense of rolling out NFC-enabled SIMs and selling NFC phones to seed the market in advance of services, said Millet.

He predicted service providers will have launched NFC in about five or six French cities by the end of 2012, including Nice and Strasbourg, where some subscribers already can tap their phones to ride public transport, pay for purchases and tap smart posters for information on demand. The projects in these cities are considered large trials, however.

At least three other cities, Caen, Bordeaux and Marseille, will launch this year. These and other French cities are getting help from the French government to fund some of the infrastructure for the NFC services. 

In addition, large French bank BNP Paribas began running a national TV commercial this month promoting NFC mobile payments. At least two to three other French banks, including Crédit Mutuel, also plan national rollouts.

In the United Kingdom, Orange UK and issuer and acquirer Barclaycard plan to expand their Quick Tap NFC commercial service.

And Orange operators in Poland and likely Spain plan to commercially launch NFC in 2012, along with other operators in those countries.

But the services in France and elsewhere are not expected to get widely rolled out until 2013 or later.

Operators in South Korea, which have been getting NFC versions of some popular handsets earlier than telcos in other countries, have the largest rollout of NFC phones and SIMs to date.

All told, handset makers shipped an estimated 40 million standard NFC phones globally in 2011.