Trusted Service Manager (TSM) for NFC Market 2011
Smart Insights Report “Trusted Service Manager (TSM) for NFC Market 2011" provides readers with a thorough understanding of the complexity of the NFC (Near Field Communication) ecosystem, and the need and positioning for Trusted Service Management.
In 2011, many positive signs demonstrate NFC is finally about to become successful. Numerous mobile network operators (MNOs), handset vendors, mass-transit operators, financial institutions, and other players are on the verge of launching NFC wide-scale projects. The multiplicity of stakeholders trigger complex ecosystems, where companies have divergent interests, but need to find common grounds to support the technology take-off and commercial rollout.
There comes the need for Trusted Service Management, which stands at the crossroads between MNOs and service providers. Trusted Service Managers, as technical enablers, are responsible for the secure provisioning and management of the NFC applications issued by the service providers to the end-users. TSM operators run the whole lifecycle of applications as diverse as payment, transport, enterprise security, government identity, etc. For these reasons, TSMs have to establish strong relationships with all stakeholders in the NFC environment.
Trusted Service Management platforms also play a role in making all services accessible to end-users. For this reason, TSM operators, as service aggregators, are in a central position to manage the customer relationship, and build a business case by bringing this added value to service providers.
This “Smart Insights Report” provides answers to the following questions:
• Why are TSMs needed to ensure a balanced NFC ecosystem?
• What are the multiple roles of Trusted Service Management Platforms?
• How to ensure interoperability between all players? And what is the role of standardization bodies in this regard?
• What are all the options in terms of business models to implement NFC programs?
• Who are the major TSM platform vendors? What is their offer, and where are they positioned in the NFC ecosystem?
• Who are the major TSM platform operators? What are their positioning and business models?
• What will be the major opportunities and threats all stakeholders will meet in the upcoming years?
If any of these questions is crucial for your strategic decision making process, then you need your copy of "Trusted Service Manager (TSM) for NFC Market 2011", a just published “Smart Insights Report”.
"Trusted Service Manager (TSM) for NFC Market 2011" provides an elaborate analysis of future developments of the TSM market. This Smart Insights Report includes market forecasts covering the development of the NFC ecosystem (handsets, MNOs, financial institutions, …). It also includes specific market forecasts for TSM platform vendors and TSM operators.
"Trusted Service Manager (TSM) for NFC Market 2011" encompasses information about all major TSM platform vendors and TSM operators, and about their products, services, and market position.
NFC (Near Field Communication) technology allows to perform secure transactions (typically payments) on a mobile phone benefitting from its user interface (keyboard and display) as well as from its communication capabilities. The industry has been developing NFC technologies for years, and has set up multiple pilot projects around the world.
NFC allows to bring together customer needs in their relation with from Mobile Network Operators (MNO), financial institutions, transport operators, and other Service Providers (SP).
Now, early 2011, all the NFC stakeholders are coming together, evolving from a multiplicity of pilots to the roll out of large-scale multiple-partner nationwide projects. These projects involve many separate entities, thus need a separate entity to manage the user services and rights. This is the role of the Trusted Service Manager (TSM).
Transport is to play a leading role in the adoption of NFC services as transport payments bring frequency of use, along with an infrastructure that generally already accepts contactless transactions. At the same time, banks will develop huge efforts in pushing for the adoption of NFC as it brings a natural extension to their contactless infrastructure development along with the opportunity to propose additional payment-related services.
Trusted Service Managers operate the interface between all stakeholders in a NFC project: they run the technical and commercial relation between Mobile Network Operators, financial institutions, and other Service Providers to download, provision, and maintain applications in the end-user handset.
The secrets (keys, codes, user-related data, …) necessary to perform secure transactions are kept in a Secure Element in the customer handset. This Secure Element may have different form factors: it may be included in the SIM card, be removable (microSD card), or be embedded in the handset. The Secure Element form factor has important implications in terms of business. The entity controlling the Secure Element is in a prominent position to actually control the customer relation. Secure Elements in the form of SIM cards give Mobile Network Operators a better control on the NFC application, whereas Secure Element in the form of microSD cards give control to their issuer, generally a bank. Also, embedded Secure Elements bring power to the handset manufacturers.
The TSM operator is in charge of downloading application, and all security related data into the Secure Element. For this reason Trusted Service Managers are at the center of the NFC ecosystem. Several entities are vying to become the preferred option for a Trusted Service Manager. In NFC applications, Mobile Network Operators, or MNO groups, often run TSMs, as they are in control of SIM-card based Secure Elements. In some other applications, banks, or bank consortia, run Trusted Service Management operators as they are the major stakeholder in the project, and control the Secure Element. Trusted Service Managers are also often run by Trusted Third Parties providing technical operation to manage the applications and their security in the Secure Element for each customer as well as ensuring a clear role separation between all stakeholders. In all cases, Trusted Service Management Operators operate platforms delivered by Trusted Service manager platform vendors.
Major TSM players come from a variety of backgrounds: major smart card vendors have developed a TSM offer, as their natural set of customers is composed of MNOs and banks. Mobile network operators, as they manage the customer relationship with their subscribers, are developing a TSM offer. Also payment processors see in the TSM business an opportunity to develop their services. Having developed the right skill combination to serve all stakeholders in the NFC ecosystem, several companies are positioning themselves as TSM specialists.
Smart Insights anticipates a breathtaking development of NFC markets with close to 800 million NFC devices sold in 2015, and about 450 mobile network operators worldwide proposing NFC services. At the same time, more than 4000 Service Providers will be involved in NFC projects.
This fast NFC adoption rate will trigger a EUR 1.83 billion business for TSM platform operators, as most of their revenue will come from per-user fees, which will grow with the general public adoption of the technology. TSM operators will also benefit from fees linked with the number of Service Providers. On the other hand, TSM platform vendors will benefit less from the wide adoption of the technology. Globally, Smart Insights anticipates combined revenue of TSM platform vendors and TSM operators will reach EUR 2 billion by 2015.
Executive Summary 5
Table of contents 8
Table of illustrations 10
1. Overview 11
1.1 Background. 13
1.1 NFC technology 14
1.2 Mobile payment scheme 15
1.3 TSM role in an NFC project 16
1.3.1 Technical roles 17
1.3.2 Commercial roles 18
2. Global TSM industry 21
2.1 NFC landscape 23
2.1.1 France 24
2.1.2 Japan 25
2.1.3 Korea 27
2.1.4 Turkey 28
2.1.5 UK 28
2.1.6 USA 29
2.2 Standardization 30
2.2.1 GlobalPlatform 30
2.2.2 EPC GSMA 31
2.2.3 AFSCM 31
2.2.4 NFC Forum 33
2.3 Principles for Service management 34
2.3.1 Security 34
2.3.2 Multi- application 34
2.3.3 Portability (churn) 35
2.3.4 Certification / Type Approval 35
2.4 Building a NFC business ecosystem 35
2.4.1 Mobile Network Operators 35
2.4.2 Service Provider 36
2.4.3 TSM 37
2.5 Security mechanism 37
2.5.1 OTA technology 38
2.5.2 Secure Element and its issuers 38
2.6 Who will play the role of TSM 41
2.6.1 TSM centric approach 41
2.6.2 TSM split approach 46
2.7 TSM business model 47
2.7.1 TSM operators 47
2.7.2 TSM platform vendors 48
3. NFC & TSM market analysis 49
3.1 Market triggers 51
3.1.1 Smartphone and NFC-enabled mobile phones 51
3.1.2 MNOs and Service Providers 52
3.2 Market threats and opportunities 54
3.2.1 MNOs vs. SPs 54
3.2.2 Contactless card infrastructure 56
3.3 TSM market revenue forecast 57
3.3.1 TSM operators and TSM platform vendors 57
3.3.2 TSM operator revenues and TSM platform sales 58
4. TSM platform vendors 61
4.1 Atos Worldline 65
4.2 Bell ID 65
4.3 Cassis International 66
4.4 Ericsson IPX 67
4.5 First Data 67
4.6 Gemalto 68
4.7 Isis 70
4.8 Oberthur 70
4.9 Orange Business Services 71
4.10 SK C&C 72
4.11 Venyon (Giesecke & Devrient) 73
4.12 ViVotech 73
Glossary of terms 77
Table of illustrations
Illustration 1 Mobile payment scheme. 15
Illustration 2 The role of a TSM in an NFC project. 17
Illustration 3 Global NFC projects map. 23
Illustration 4 Different types of Secure Elements. 39
Illustration 5 Comparison of different types of Secure Elements. 40
Illustration 6 Who will be the TSM in the NFC ecosystem? 41
Illustration 7 MNO to be the TSM. 42
Illustration 8 Service Provider to be the TSM. 44
Illustration 9 Trusted third party to be the TSM. 45
Illustration 10 Government to be the TSM. 46
Illustration 11 TSM split approach. 46
Illustration 12 Smartphone and NFC devices shipments table. 52
Illustration 13 Smartphone and NFC devices shipments chart. 52
Illustration 14 MNOs and Service Providers involvement table. 53
Illustration 15 MNOs and Service Providers involvement chart. 53
Illustration 16 Number of TSM operators and TSM platform vendors. 58
Illustration 17 TSM platform sales. 58
Illustration 18 TSM operator revenues table. 59
Illustration 19 TSM revenues sales table. 59
Illustration 20 TSM revenues chart. 59
Illustration 21 TSM player landscape. 64