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Taiwan’s five mobile operators and its major contactless payment provider plan to sign a memo of understanding tomorrow with the goal of forming an Isis-style joint venture to help them roll out NFC services, NFC Times has learned.

The agreement will include the island nation’s three major telcos, Chunghwa Telecom, Taiwan Mobile and Far EasTone, along with fare-collection and retail-payment provider EasyCard Corp., sources told NFC Times. Two smaller mobile operators, Vibo Telecom and Asia Pacific Telecom, are also expected to join in signing the agreement.

Update: The parties signed the memo of understanding Thursday evening, NFC Times has learned. End update.

As NFC Times reported in May, the parties first met last spring to discuss a possible alliance or joint venture. Thursday’s memo of understanding formalizes those discussions and adds momentum toward possibly forming a joint venture by the end of the year, according to one source with knowledge of the talks.

Like the Isis joint venture, formed last year by Verizon Wireless, AT&T and T-Mobile USA, the Taiwanese telcos aim to set up a JV to help them implement a common platform they can use to roll out NFC payment and other services.

That would likely include choosing a single trusted service manager, or TSM, to handle the loading and management of the secure applications. The Taiwanese group would also likely set rules for service providers, including banks, to ensure a consistent experience for consumers when they use NFC phones on the island.

And they are expected to make the SIM card either the preferred or required secure element for their NFC services.

Promising NFC Market
The planned joint venture in Taiwan would be one of latest among mobile operators worldwide, which are gearing up to offer NFC services and are also trying to ward off competition from new mobile-commerce players, such as Google. Besides Isis, telcos in the United Kingdom, Germany, the Netherlands, Denmark and Hungary have disclosed plans to form joint ventures.

But the JV in Taiwan is not a sure thing, and among other things, the telcos will have to deal with government regulators. Planned joint ventures in the United Kingdom and the Netherlands have already come under government scrutiny. The planned venture in the Netherlands, called Travik and dubbed the “Six Pack,” includes the country’s three largest banks.

Taiwan is a promising market for NFC, with a relatively well-developed infrastructure of contactless terminals and a growing penetration of smartphones among the more than 27 million subscriber accounts. 

EasyCard, which has been one of the driving forces for the joint venture, has issued more than 25 million cards for its popular contactless transit card scheme in the capital, Taipei, since launching it in 2002. More recently, cardholders have also been able to use EasyCard to pay for low-value purchases at convenience stores and other types of merchants, with more than 12,000 locations throughout the island able to accept the contactless cards as of last spring. There are also some merchants that accept MasterCard PayPass and Visa payWave in Taiwan.

Observers predict the Taiwanese telcos will launch NFC rollouts in 2012, when more NFC-enabled phones hit the market.

EasyCard, Banks to Introduce iPhone 4 Attachment
But Chunghwa Telecom, Taiwan’s largest telco, is not waiting for that. It’s coming out with another NFC bridge device, this one likely to have more market pull than its NFC-enabled Bluetooth dongles, which it introduced late last year to meet commitments for a government grant.

The new device is an NFC-enabled sleeve for the iPhone 4, which the telco designed and had Taiwanese contract device maker Foxlink produce. EasyCard will introduce it next week, enabling users to tap their iPhones to ride the metro or pay for low-value purchases at 7-Eleven convenience stores and other outlets that accept EasyCard.

EasyCard is calling the device Easy NFC, and is putting an initial 1,000 of the sleeves on sale at 7-Eleven stores for NT$1580 (US$51.45), starting Oct. 19, according to Taiwan’s United Daily News.

An EasyCard application, which uses Mifare technology, will be preloaded on a secure chip in the contactless cases. Users will be able to download an iPhone app, which will help them manage the application, including showing their last six transactions.

The app has an auto-load feature when the user’s balance falls below a certain limit. It would then recharge the e-purse from a preregistered credit card. And users will be able to tap to pay a fare or make a purchase even when the phone’s battery is dead, since the attachment draws power from the reader.

NFC Times has learned that three Taiwanese banks, Taishin, Cathay United and E.Sun, also plan to introduce payment applications for the iPhone add-ons. Their applications would support MasterCard PayPass as well as EasyCard. Assuming they get approval from financial regulators, the banks will roll out up to 6,000 units starting next month, sources said. 

If fully commercialized, the attachment would compete with the NFC-enabled iCarte from Canada-based Wireless Dynamics, which is being rolled out by South Korean telco KT Corp and is being trialed in Europe.

With Apple declining to support NFC in its recently introduced iPhone 4S, there likely will be more demand for these types of attachments, though the vendors will have to design versions for the 4S and get certification from Apple and such payment networks as MasterCard Worldwide.

Still, Taiwan's telcos and its other mobile-commerce players are eager to offer services on full NFC phones. Though the operators compete in a saturated mobile market, they believe that working together will avoid fragmentation and enable them to roll out NFC faster.