RFID Gunfight at the CeBIT Corral

By Drew Robb

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The annual CeBIT technology show in Germany was almost the scene of a reenactment of “Gunfight at the OK Corral.” But, instead of Wyatt Earp vs. the McLaurys and Clantons, it was Robert Cresanti, United States undersecretary of Commerce for Technology, trading bullets over Radio Frequency Identification (RFID) with Viviane Reding, the European Information Society and media commissioner.

The stage was set a year ago at CeBIT when Reding announced a Europe-wide review of RFID tags. This occasioned a distinct worry about yet more European Union (EU) legislation and the prospect of major roadblocks to RFID expansion.

The EU had kept its research quiet and chose this year's show to announce the findings. Cresanti revealed ahead of the Reding press conference that he stood ready to go on the offensive if she revealed a series of RFID restrictions or burdensome legislation. But instead of a showdown, the audience heard good news—a firm stance against RFID legislation.

“We must not over-regulate RFID,” said Reding. “The Commission’s RFID strategy will seek to raise awareness, stress the absolute need for citizens to decide how their personal data is used and ensure that Europe removes existing obstacles to RFID’s enormous potential.”

RFID is a way to identify goods, components and even people via smart tags that emit radio signals but don’t require direct scanning as in a bar code. As well as being an international trade hotspot, companies like IBM and SAP are all abuzz about this growing market.

“RFID will bring significant savings in material and logistics costs,” said Cresanti. “If you care about commerce, you care about RFID.”

European market research firm IDTechEx states that over a billion RFID tags were sold worldwide last year. Within a decade, that number may well multiply by over 500 times. IDTechEx estimates that this could represent a $25 billion market by 2017.

RFID Hurdles

To achieve that, however, RFID faces significant hurdles. On the one hand, it is attacked by privacy advocates concerned that "Big Brother" finally has the ultimate tool. Car manufacturers, for instance, could track vehicles, nag owners every three thousand miles about an oil change, and perhaps even cancel the warranty because they were late taking the car for a service.

And what about tagging people? Some already use them to track pets, children and criminals. China just produced national ID cards with RFID inside and this opens the door to keeping an eye on the citizenry at large. Such uses of smart tags, therefore, could create a backlash from privacy groups. It already threatened to derail the EU program.

“We should stimulate RFID technology in Europe while safeguarding personal data and privacy,” said Reding. “When used in a consumer context, the individual must be made aware of the tag and must have the option of removing it.”

Technological barriers, too, include the problem of achieving some kind of global standardization to simply the many frequencies in which RFID is currently forced to operate.

Here is the situation: In most areas, the technology uses the ultra high frequency (UHF) range from 865-868 MHz. But Russia, EU, USA, China, and other nations operate RFID at various frequencies. To make matters worse, this UHF band is packed with many other users such as TV, microwave ovens, cell phones, wireless LANs, Bluetooth and various two-way radios.Let’s take the example of smart tags on luggage. What if the tags worked great in London but couldn’t be read in Los Angeles? Or they worked in Beijing but not Johannesburg? The current solution is to add more antenna to RFID tags so they can be read in multiple location. But that adds cost.

“RFID tags have to function on luggage in Berlin, Moscow or New York,” said Reding. “Therefore, we must have strong relations and must reach a world agreement on standards for RFID.”

But such a world agreement is still a long way off. Cresanti and Reding are doing a lot of traveling to find common ground that will simplify global implementation of RFID. It’s unlikely, though, that EU and the U.S. will agree upon a unified radio spectrum.

This barrier may well be an insurmountable as it is probably impossible now to have the USA, Europe, Russia, China and other nations alter their existing spectrum systems. Maybe a few will, but one global standard is beyond even the best diplomacy.

“It is vital to establish a set of international ground rules,” said Cresanti. “I am sure we can get it right trans-nationally and prevent RFID dislocation.”

This spectrum issue also ties in to perhaps the biggest challenge ahead: bringing the cost of RFID down to below one-cent-per tag; the level at which it becomes affordable for just about any product. This type of tag will have to be printed using special electronic inks. These might not be seen in widespread use for another five-to-ten years, though.

It takes more than a few tags and readers, though, to harness RFID in a business context. According to Wayne Kernochan, an analyst at Illuminata of Nashua, NH, tapping into the real value of RFID requires the right architecture, including hardware, software, and business processes.

“RFID can indeed pay off in the real world, but it also hints at the limits of today’s technology,” said Kernochan. “These limits make industries that involve large objects with relatively high prices, and strong inventory/distribution improvement needs, good candidates for RFID; other industries, not so much.”

Ongoing projects seek to combine business intelligence, enterprise resource planning (ERP), supply chain and other top level management systems in order to utilize smart tags along with high-level business processes.

“The real long-term value of RFID is using it to improve business processes,” said Kernochan. “With RFID, for the first time, you can track product components not only throughout your organization’s production process, but also outside the organization throughout the supply chain—and then analyze that data to improve the process, in part or as a whole.”

That work is already underway. IBM, for example, works in collaboration with the European Union (EU) on several major RFID R&D projects. In the pharmaceutical field, IBM is working on temperature-sensitive tags to monitor shipments in transit. IBM is also involved in IT FoodTrace to track food from the field to the plate in order to monitor its proper use and disposal, and reduce red tape in regulatory reporting.

This same idea is being applied to shipping containers to maintain security and reduce customs delays. Shopping, toll booths, banking systems, entrances to theme parks, home deliveries and inventory tracking are a few other possible uses. And SAP is with an RFID vendor on a system that ties smart tags to end-to-end business processes, united in an ERP-like framework.

“RFID is a major international commerce issue,” said Cresanti. “If we don’t get it right, it could put all kinds of kinks in the system that would seriously hamper trade.”