NTT DoCoMo, Sony team on IC cards for phones

Sony Corp. and NTT DoCoMo Inc. have reached a basic agreement to develop technology that will enable Sony’s Felica contactless smart card to be embedded inside cellular telephone handsets, they said Monday.

The two companies plan to form a joint venture, Felica Networks Inc., to develop both a version of the Felica chip for use in handsets and to develop applications that can be used with compatible telephones. The two companies hope to finalize an agreement and establish the new company by January 2004, they said in a statement.

Felica-based cards are already in the hands of millions of people in Japan and other Asian countries as the base for several electronic payment, travel pass and security card applications. The new company will work on getting the same technology and applications into telephones so that users won’t need to carry additional cards.

By embedding the chips inside cellular telephones, the system will also benefit from a link to the telecommunications network with potential applications including the ability to replenish prepaid cards through a wireless Internet service.

The first cellular handsets to include the cards will be issued in December as part of a trial, said Takuya Ori, a spokesman for NTT DoCoMo in Tokyo. Widespread availability of NTT DoCoMo’s second-generation and third-generation (2G and 3G) terminals with embedded Felica chips is expected during fiscal year 2004, which runs from April 2004 to March 2005, said Ori.

The technology developed by Felica Networks won’t be restricted to the two companies. Plans are already being laid to license it to other handset makers and other network operators, said Ori.

The agreement extends a relationship in the Felica area that the two companies have had since the establishment of BitWallet Inc. in 2000. The two are the largest shareholders in the company that operates an electronic money system, Edy, based on the Felica platform that is accepted in around 2,500 stores.

Other shareholders include major banks and credit card companies, which have announced plans to embed Edy in their credit and ATM cards, and telecommunication company KDDI Corp., which is a rival of NTT DoCoMo and operates a competing cellular network under the Au brand name.

The Felica card is also used by East Japan Railway Co. (JR East) for its Suica prepaid and commuter travel pass. Users just need to bring the card within a few centimeters of sensors mounted into ticket gates to gain entry to the railway and pay for their trips. Around 7 million Suica cards have been issued since its introduction in November 2001.

JR East is expanding the use of Suica to include an electronic money function that can be used to purchase goods at shops inside railway stations. Trails of the e-money service will begin later this year, said the railway operator. Felica-based cards are also used for prepaid travel by several private railway and bus companies in Japan and Tokyo’s private railway and subway operators have said they will adopt the system.

Outside of Japan the most notable use of Felica is as the basis for Hong Kong’s Octopus card. Launched in 1997 as a prepaid travel pass for the city’s transport services, its use has been extended to become an electronic money card that can be used in vending machines, parking meters and convenience stores. More than 9 million Octopus cards have been issued and around 7 million transactions are currently being serviced every day, according to the latest data from Octopus Cards Ltd.

Felica is also employed in Singapore’s EZ-Link system, which is a prepaid card for transport systems and is now being extended to non-transport applications. More than 5 million cards have been issued, according to EZ-Link Pte. Ltd.

Sony says 38 million Felica cards have been issued worldwide.