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NFC standards makers remain split over a piece of software that controls how NFC chips talk to other chips in NFC phones. The issue could eventually cause interoperability problems, warns one of the standards groups involved in the dispute.

Others say the standards issue will not cause fragmentation or delay the introduction of NFC phones to the market. But they point out that the dispute highlights continued political tension in the NFC ecosystem, in which some large mobile operators, such as France Telecom-Orange, and the largest provider of SIM cards, Gemalto, again find themselves opposite world No. 1 handset maker Nokia and some in the banking industry.

At issue is the software that connects the NFC chip to SIM cards or to other secure chips in phones that can store payment and ticketing applications.

Prior Battlefield
Observers say the latest dustup is just a continuation of the fight for control over standards for NFC phones. The two sides had already fought the battle two years ago on the Smart Card Platform committee of the European Telecommunications Standards Institute, which sets standards for SIM cards.

Mobile operators, which hold sway at ETSI, pushed through a standard with called the host-controller interface, or HCI, in a vote on the smart card committee in February 2008. Most observers agree the HCI reserves a stronger role for the SIM card in communication in NFC phones than a competing option pushed by Nokia.

The HCI lays the groundwork for how chips communicate within NFC phones. It controls how the SIM card, which could store payment and ticketing applications, will talk to the NFC chip, which provides the contactless interface for the phone. But the HCI potentially gives the SIM card a say in all communication the NFC chip has with all the other secure elements of the phone, including embedded secure chips and SD cards, which could also store applications, and with the phone baseband. Some believe this "multihost" or "multipoint" architecture that ETSI adopted for the HCI would give the SIM the authority to reject the download of applications to other secure elements on the phone.

It's unclear just how much control the HCI would confer to the SIM, but Nokia, with backing from MasterCard Worldwide, NFC co-creators NXP Semiconductors of the Netherlands and Japan-based Sony Corp., U.S.-based Microsoft Corp. and Japanese mobile operator NTT DoCoMo, voted against the proposed standard on the ETSI committee. They were outvoted by Orange, UK-based Vodafone group and other mobile operators, however.

Nokia, which has been a strong backer of NFC but no cheerleader for empowering the operator-controlled SIM cards, took its option to the NFC Forum last summer over the objections of ETSI. Joined by handset makers Samsung Electronics and LG Electronics, Nokia proposed the option to the forum's NFC Devices Working Group. In voting that ended in August, the committee agreed on a standard called the NCI, short for NFC-controller interface. It establishes communication between the NFC chip and other secure elements, such as embedded chips. It also communicates with the phone baseband, reportedly. But it does not provide a role for the SIM in the communication with the NFC chip.

NFC Times has learned that besides Nokia, Samsung and LG, MasterCard and Visa Inc. also supported the NFC-controller interface standard. SIM-card maker Gemalto opposed the new option, submitting a proposal similar to the HCI standard adopted by ETSI, said sources. A source said handset maker Motorola did go along with Gemalto in the NFC Forum, but chip makers, NXP, Inside Contactless and STMicroelectronics, preferring not to offend either side, abstained or did not vote, said sources. Gemalto, as only an associate member of the NFC Forum, did not get a vote.

Technically, both the HCI and NCI could exist in the same phone and handle communication to either the SIM or other secure chip, depending on where the application is stored.

Potential for “Fragmentation”
Nokia and the NFC Forum are characterizing their NFC-controller interface–at least publicly–as a natural complement to ETSI's HCI. The forum said it designed its standard to let the NFC chip communicate with other chips in the phone should the SIM not host applications. The forum's NCI standard also is needed for the variety of other devices that might carry NFC chips but not SIMs, from PCs to game consoles.

“HCI refers to the ETSI standard for the logical layer between the SIM card and the NFC modem,” Jeremy Belostock, head of NFC at Nokia told NFC Times. "NC(I) is the logical layer between the NFC modem and other secure elements specified by the NFC Forum.”

But that is perhaps what Nokia wishes the HCI to be. In fact, it is broader, say most observers. And some see it as key evidence of mobile operators trying to assert their authority over NFC applications in phones.

“Adopting (only) HCI could have led to a situation where the SIM would control the other secure elements,” said Liisa Kannaiinen, executive director of  Finland-based Mobey Forum, an industry group led by banks that “supports enabling market choice” for secure elements. “In my opinion, forcing the market to one option
only would really stall the ecosystem development.”

For its part, ETSI said it also sees possible problems ahead. The ETSI SIM committee sent a letter to the NFC Forum in August warning that the forum’s standard “could lead to fragmentation in the market and interoperability problems,” and holds the potential to "lead to a delay" in NFC rollouts.

“The problem, we might have two solutions in the phone, one supported by operators and some supported by handset makers,” Klaus Vedder, chairman of the ETSI Smart Card Platform committee, told NFC Times.

His group and the NFC Forum signed a memorandum of understanding last year, agreeing to work together on NFC standards. ETSI said it sent its August letter as part of its obligation under the MoU to notify the NFC Forum of “duplication of work.”

But one source called the letter a political move on the part of ETSI, hoping to get the NFC Forum to back down. Members of the ETSI SIM card committee in the past have questioned the forum's standing as a true standards body.

"They (ETSI committee members) wanted to demonstrate their power to the NFC Forum by saying, 'We have spent a lot of effort developing the HCI, and you are the tiny NFC Forum.' "

NCI Not Market Ready
In any case, the NFC Forum was bound to act because it represents a range of companies, not just those engaged in mobile commerce involving phones and SIM cards, said Paula Berger, the forum's exectutive director. 

"A SIM-centric solution would never be adequate to meet all of the needs of the NFC Forum," she told NFC Times. But the NCI is designed to coexist with the HCI, she added.

The potential for conflict between the two standards is overstated because mobile operators could insist in their orders to handset makers for NFC phones that the devices support ETSI’s HCI standard only, not the NCI, said Holger Kunkat, chairman of the NFC Forum’s Devices Working Group. In any case, the NFC Forum standard is not ready for the market, he said. Moreover, the forum doesn’t plan to require vendors to implement it to receive forum certification.

“I do not buy the argument of market fragmentation,” Kunkat, also vice president of  product management and marketing for Germany-based SCM Microsystems, told NFC Times. “This is simply not true. The SIM as a secure element in NFC phones will hit the market within the next year, and NCI is not ready.”

Still, eventually phones could make their way to stores supporting both standards, creating possible problems for application developers and headaches for mobile operators.

Most observers agree the standards rift is only the latest example of the power struggle being waged for control of NFC phones. Mobile operators have been successful in gaining general acceptance–including among most NFC Forum members–of the SIM as the preferred secure element for banking and other secure applications.

Vodafone, Orange Snub Forum?
And the standards dispute may be costing the NFC Forum relevance among mobile operators, at least those that insist the SIM card store the payment, ticketing and other secure applications in NFC phones. Vodafone declined to renew its membership and France Telecom-Orange downgraded its membership level. Neither telco responded to requests for comment.

Berger points out that these membership changes occurred well before the NFC Forum vote to approve the NCI. Koichi Tagawa, NFC Forum chairman and general manager of Sony’s global standards and industry relations department, also downplayed the defections. He noted that mobile operators AT&T of the U.S. and Japan’s NTT DoCoMo had both renewed their memberships . He also countered criticism from ETSI that Nokia had used its weight in the NFC Forum to push through the NCI standard. Nokia co-founded the forum in 2004 with NFC co-creators NXP and Sony.

“As a founder, Nokia does have a lot of influence,” he told NFC Times. “(But) we have procedures, very strict, by which we operate. By increasing the membership fee amount, you can’t get more votes.”

Each sponsor and principal member of the NFC Forum gets one vote apiece. That is not the case at the ETSI Smart Card Platform committee, which has weighted voting rules that enable large mobile operator groups, which have massive revenues and pay big fees, to call the shots when consensus breaks down and the SIM committee calls for a vote, as it did to approve the HCI.

ETSI’s Vedder, who is also head of the telecom department at Germany-based SIM card maker Giesecke & Devrient, said the Smart Card Platform group would soon adopt a second set of test specifications for the HCI, which follows work on other test specs and on the standard. It had earlier adopted a standard and test specifications for the single-wire protocol, the hardware connection between the NFC chip and SIM over which the HCI software standard works.

The NFC Forum, in response to ETSI letter’s letter warning of possible fragmentation, said it, too, would continue to work on its own standard, but did ask for ETSI’s help in ensuring the two standards can “coexist” on the same devices.

It remains to be seen just how closely the two groups will work together, though both have the incentive to ensure any clash between the two standards do not hold up availability of NFC phones. NT