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UK operators band together for NFC revenue

Gang of three (not including Three)

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Vodafone, Telefonica UK and Everything Everywhere have banded together to create a clearing house for NFC applications, providing a single point of contact for cross network applications.

The unnamed joint venture should launch before the end of the year, providing banks, merchants and advertisers with a single point of call if they want to start offering, accepting or exploiting proximity payment systems - as long as they don't want to offer the service to Three's customers.

The idea is very similar to the Isis project being pursued by the US operators, only on this side of the pond operators plan to make money selling cross-network advertising and promotions, with the ability to pay for stuff being peripheral to the project.

Once the joint venture is in action it will be able to certify (SIM-based) NFC applications, allowing the same application to be downloaded and used on phones from different mobile operators without requiring the supplier to jump though any more hoops.

A bank deciding to deploy a proximity-payment version of its services will first develop the application, then take it to the joint venture for approval. Once approved the application should be available to customers of any mobile network operator, except Three.

But it's not just about payments - the operators are very keen to promote the advertising potential of sending out electronic coupons and other applications made possible with NFC. In presenting the joint venture O2 pointed out that its offer-based advertising service, O2 More, now has 2.5 million customers who've already opted in to receive special offers and other promotions direct to their phone. Having a standard, and secure, platform should expand that business.

So the joint venture won't just be a platform; it will also sell advertising based on that platform. That advertising will be based on tokens, electronic ticketing and so forth, but more importantly it will be delivered across network operators to end customers based on their demographic information - subject to suitable measures to protect customer privacy.

The joint venture doesn't lock out Three, or anyone else. Everything Everywhere, Telefonica UK* and Vodafone will be equal partners in owning the joint venture, but they will also be customers buying into the service, and say that Three is welcome to become a customer too, though Three's CEO Kevin Russell isn't very impressed.

"[We] are more than a little concerned that – as a core competitor – we have been excluded from this joint venture", he said in a statement.

The others argue that Three has never shown any great interest in NFC payments, which is why it wasn't invited to the table.

All the operators have been struggling to work out how to make money from NFC, given the number of players involved in processing electronic payments which are often expected to provide revenue. The UK plan is that by making it easier for advertisers to buy NFC-based advertising more of them will buy such campaigns, bringing in more money for all the operators involved.

The venture will need regulatory approval, and even the most optimistic estimate says it will be 12 months before we see any real applications deployed, but if there really is a driving desire for advertising (and payments) delivered direct to one's pocket then this joint venture will help it happen. ®

* O2 is just a brand these days: the company is called Telefonica UK.

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