Can independent Trusted Services Managers (TSMs) flourish?

The concept of Trusted Services Managers (TSMs) has always intrigued me. The need for industries, as diverse as, telecom, transit and payments, having to work together is a daunting prospect. A neutral third-party, aka TSM, seems like a natural fit to facilitate interactions between these industry players, each of whom have different approaches to the same problem.

As we extend the concept of TSMs to reality, some wrinkles appear.

An observation that is common across NFC trials is about the number of partners (last count there were 6-8 partners) that need to be coordinated with. The complexity resulting from the number of partners is a hurdle, especially as one goes past trials and plans for commercial deployments.

TSMs also provide OTA services. Traditionally, OTA services have been provided by the card issuer, among others. In the telecom world, the telecom service provider (telco) have provided OTA services themselves, using OTA platforms from third-parties, such as, SmartTrust.

Reading between the lines of what telcos are saying and doing (around NFC trials), it appears that in the brave new of world of NFC, the telco will continue to provide OTA services. From a telco's perspective, this reduces the number of interfaces/participants to work with. Additionally, as ETSI has adopted the Single-Wire Protocol (SWP) as the standard, the SIM has become the secure element of choice, and the telco the issuer of the secure element. At the least, the telco would like to paint such a picture. Against this backdrop, the telco has a vested interest and a supporting business model (managing the secure element real-estate) to manage the relationships with third-parties, including banks and transit operators.

Alternatively, the SIM card vendor (G&D, Gemalto...) are better positioned to work with telcos to manage the SIM/secure element real estate, and have good relationships (both business and operational) with payment card issuers.

While TSMs (Venyon, Cassis...) would continue to be in the news for the next 3-5 years as the NFC ecosystem ramps up, it is uncertain whether independent TSMs (TSMs that are not part of SIM card vendors, telcos, financial services providers [e.g., First Data] ) would be able to succeed thereafter.

A question to ponder: What kind of business and usage models would enable independent TSMs to flourish as the NFC ecosystem ramps up and consolidates?

ITSO mobile phones

It was heartening to read about the field trials of ITSO compliant phones (Consult Hyperion) in UK. ITSO is an industry organization to promote interoperability between UK Passenger Transport Authorities / Operators and related organizations.

ITSO was formed to build and maintain a specification for secure 'end to end' inter-operable ticketing transactions, utilising relevant ISO and emerging CEN standards.
[From ITSO - About Us ]

In the contactless space, UK seems to be speeding ahead of the traditional smart card leader, France. The payments cards deployment and now a standardized inter-operable transit solution, UK is putting in place the basic building blocks

It is interesting to note that both the payments space and ITSO provide support for loyalty. However, there is no standard, that I am aware of, for loyalty on smart cards (at least for applet interaction between 'card' and 'reader'). Support for loyalty by both standards recognizes the valuable grease for the wheel. However, lack of standards in the loyalty space might indicate a choke point for commercial scalability.

O2 is the operator who is the common thread for both the payments field trials in London, and the ITSO trials with the NoWcard. It would be interesting if Venyon, the OTA service provider for the London payments field trials, is also involved in the ITSO field trials (though not mentioned in the CHYP website). Finally, it would not be surprising to find out that the O2 SWP phones (SIM as a secure element) used in the payments field trials is being used in the ITSO trials as well.

Trusted Services Manager (TSM): Does somebody have an edge

Gridlock in the NFC ecosystem is about the telco/MNO (e.g., Verizon) and the issuer/bank (e.g., BofA) jostling for control over 'their' customer. On the mobile device, the two verticals (telco and banks) clash. Until the control issue is resolved, NFC deployments will not make progress past the many well-publicized trials. Trusted Service Managers (TSMs) are seen as a way past this impasse. Much has already been written about this issue.

The usual suspects in any TSM discussion are Cassis, Venyon and Vivotech (in alphabetical order). There are others in this space as well. The question for today is, is there any one vendor or approach that has an obvious edge, and why?

Cassis comes from a SIM / OTA background, with a lot of their management coming from Gemalto and the like. Venyon is a JV between Nokia and G&D. Vivotech seems to have a more POS / retail merchant proclivity given their presence in the contactless reader space. From this 50K foot view of the landscape, there seem to be at least two approaches to address this space. One is to approach this from the mobile operator space. Given Cassis's and Venyon's background, they seem to be establishing the telcos as their beachhead. Given Vivotech's background and investors, acquiring banks (POS vendors) and retail merchants seems to be Vivotech's beachhead. It appears that the above divide seems to be extending into the TSM space as well.

In deployments where the telco drives the business case, folks like Venyon and Cassis might win the day. In deployments where the acquirers/merchants are pushing the business case, folks like Vivotech might win the day.

Not withstanding a simplistic two variable view of the world, what are your thoughts? Are there any other factors that will influence the TSM space? Which other vendor/industry might enter the TSM space?

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