New York, NY – China Mobile will miss its goal of rolling out 10 million NFC phones and signing up three million users by the end of 2013, citing problems with handset makers implementing NFC on enough phones, among other issues.
Xin Liu, deputy general manager for China Mobile’s department of data service, speaking Tuesday at the GSMA’s NFC & Mobile Money Summit in New York, said the telco has deployed 2.5 million NFC-enabled phones and distributed 600,000 NFC SIMs to date since launching its NFC service in 14 cities in June.
He said the telco would take measures to bolster distribution of NFC phones and SIMs and said NFC phones from Chinese handset makers are on their way to the market.
But to date, there are only six NFC models available for China Mobile subscribers and all are high-end phones, such as the Samsung Galaxy S III, Galaxy S4, Galaxy Note 2 and HTC One, and most subscribers can’t afford them. And Chinese handset makers, among others, have had some difficulty implementing the technology.
“I don’t think we can make 10 million, it’s harder than we expected,” Liu told NFC Times. “The implementations, they have different interpretations of the standard. If they don’t implement it in the right way, it interferes with the connection between the SIM and NFC chip (and with the point-of-sale terminal).”
The problem appears to include differences in phone software and ways the network modem chip filters data.
Complicating matters is the fact China Mobile uses China’s domestic TD-SCDMA 3G network technology. The six NFC-enabled models account for only 4% of the 60 million TD-enabled phones the telco has rolled out or will roll out this year. This and other interoperability problems have created some problems, even for the NFC phones already on the market in China.
“The Galaxy S III, they had the NFC functions enabled; they cannot work with mobile wallet solutions we provide,” he said during his presentation. “We need to modify the software and do the tests and later update the customers’ handsets while they are already in customers’ hands.”
In addition, Liu said subscribers have to go to a China Mobile outlet to get a new SIM card supporting NFC, and that has discouraged some from adopting the service. In addition, NFC and 4G LTE technology were not combined on new SIMs, at present. This will cost China Mobile’s branch operators extra money, added.
“They (subscribers) need to change their SIM card for LTE, and they need to change the SIM card for NFC, as well,” Liu said during his presentation. “We think this is a process that is not actually attracting people, it’s pushing them away.
He said for SIM cards, since China Mobile is promoting the service, it can’t pass on the extra SIM card costs to subscribers, at least not yet. So branch operators have to pay the cost.
NFC SIMs cost several times more than conventional SIM cards. China Mobile pays only about US$.50 for conventional SIMs, Liu told NFC Times. He didn’t have a figure available for NFC SIMs, but a source told NFC Times that China Mobile is paying as much as 30 yuan each (US$4.91)–though this is for SIMs with much larger memory, since China Mobile has specified that it wants 500 kilobytes of memory available for applications.
The SIMalliance vendor group did not break out China in first half figures for NFC SIM shipments obtained by NFC Times. This indicates shipments to China did not account for a significant number of NFC SIMs for the period. Telco China Unicom also has launched a small commercial NFC project
China Mobile launched its NFC service in June, along with payment network China UnionPay and said payments would be available from nine banks. Other applications, such as transit ticketing and membership and loyalty cards are planned.
Packaging SIMs and Handsets
Liu said handsets from such Chinese device makers as Huawei, ZTE, Lenovo and Yulong were headed to market.
In addition, the telco was taking other measures, such as pushing for “unified” requirements for the handsets and handset testing in China.
“If you implement the NFC function in W-CDMA handsets, you have to do that correspondingly to TD-SCDMA handsets,” he said, referring to the global WCDMA 3G standard, which is also used in China.
China Mobile would also bundle sales of NFC phones and NFC SIM cards starting this year, though many phones in China are sold on the open market.
And the operator is now requiring all SIM card manufacturers of 4G SIM cards it will order to also support NFC. The telco is gearing up to launch 4G service.
This will “lower the barrier for customers so they don’t have to switch between NFC and LTE, so they can buy one card.” He did not mention any requirements for subscribers to pay part of the extra cost for NFC-enabled SIMs, but that is believed to be part of the plan.
And China Mobile also plans to launch a new promotional plan in China for NFC, perhaps aimed at payments and in an effort to add small and mid-sized banks. There are 1.4 million contactless point-of-sale terminals that support China UnionPay’s contactless application Quick Pass, in China, Liu noted.
The operator has an agreement with the Beijing transit fare-collection operator to put the contactless transit card application on its NFC SIMs, and the telco will target 20 municipal transport card operators in China, Liu said.