August is usually a slow news month, and the technical trade press is no exception. In the RFID market, most of the buzz comes from corporate initiatives in the U.S. and Europe. This month, however, saw a few announcements from China with interesting potential for long-term growth of supply-chain RFID technology -- particularly the EPC Global UHF tags.
But before we get to that, a little background information is necessary to describe the current situation.
Background -- Three RFID Technical Specifications
Since the early days of radio, the nations of the world have recognized that radio waves cannot be contained within the borders of any particular country. In fact, the early history of radio is filled with stories of significant chaos as one station interfered with another. The ultimate solution to this problem was the formation of The International Telecommunications Union (ITU) to govern how the radio spectrum is divided up according to use in the different areas of the world. For our purposes, the relevant information is that the ITU defines the frequencies in the UHF spectrum that are available for RFID tags, but it doesn't specify how any given country should implement an RFID technology standard. That task is left to national and international standards bodies.
The UHF spectrum that is available for RFID ranges from 860MHz to 960MHz, but it is not a continuous allocation. In Europe, for example, the EU regulations restrict UHF RFID tags to 865 - 868MHz. North America uses the 902 to 928 MHz portion of the spectrum. Since RFID is a new technology, initial efforts to standardize the tag communications protocols originated in the U.S. at the MIT Auto-ID center (which formed the basis of what we now call EPC Global).
China has historically been reluctant to work to "foreign" standards. The Chinese government does not want Chinese manufacturers to pay license fees to foreign companies based upon a foreign technology standard. Up until this year, this has stalled adoption of an RFID standard in China and thus put a limit on the ultimate growth of the RFID supply-chain initiative.
But China is willing to work to ISO standards. I don't know if an ISO standard makes the royalty situation different, or if it simply places additional weight behind a technical approach. In 2006, the ISO issued an update to standard 18000-6 to define the bandwidth and communication protocol of EPC Gen 2 Class 1 UHF tags throughout the world. It essentially incorporates the earlier EPC standard.
This has led, in May of 2007, to China's State Radio Regulation Committee (SRRC) issuing a ruling to approve bandwidth in the 840.25 to 844.75 MHz and 920.25 to 924.75 MHz ranges for use by UHF RFID tags and readers in that country. These two bands allow the use of North American tags as well as European tags within China. The higher band overlaps the North American Standard, whereas the lower band is close enough to the European standard to allow tags to be read.
As things currently stand, China continues to work on its own version of an RFID communication standard. But the three standards that are now in place (EPC Gen 2 Class 1, ISO18000-6, and the Chinese bandwidth standing) effectively open the Chinese market to the technical leaders in supply-chain RFID.
The Chinese have been working on their RFID spec for years; articles on the subject date back to 2003 and earlier. The industry expected previous announcements from China (that never came to fruition) in 2005 and 2006. The question surrounding the SRRC ruling is, "why now?" The answer may be found in an announcement from yet another Chinese ministry.
Chinese Certification and Pilot Locations
In early August, China's Ministry of Information Industries (MII) announced the creation of RFID pilot programs in several regions, notably including the six Olympic host cities of Beijing, Shanghai, Tianjin, Shenzhen, Dalian, Chengdu and Nanjing. As reported by Chinatechnews.com, the areas chosen will be used to pilot RFID use in agriculture, public security, manufacturing management, supply-chain management and "modern service industry."
The timing of the SRRC and MII announcements suggest intent to make the 2008 Olympics a technological showcase for modern Chinese logistics practices. Chinese and foreign organizations involved in the massive logistics effort for the Olympics now have the technological leverage needed to use off-the-shelf UHF RFID hardware to manage their supply chain.
Regardless of the government motivation, the May announcement of the Chinese spectrum standard kicked off efforts by existing manufacturers to get certified to the new standard. In late August, Intermec announced that it was the first to achieve China State Radio Regulation Committee certification for their hardware --specifically their truck-mounted, fixed, and handheld readers for EPC Gen 2 tags. We can expect other manufacturers to quickly follow suit.
Market Outlook and Conclusions for China
According to research firm ITTechEx, the total size of the Chinese RFID market in 2007 will be $1.9 billion. Of this, $1.65 billion is for one program: electronic national ID cards. The remainder includes all other RFID uses, including UHF supply-chain RFID. The UHF market is obviously undersized given the position of China in the consumer supply chain worldwide.
The technology announcements and Olympics announcement discussed above lay the groundwork for significant new work in UHF RFID logistics within that country. Keep your eyes peeled for something big around RFID logistics in 2008 in China.
Paul Faber is a Principal with Raleigh, N.C.-based Tompkins Associates, a supply-chain-solutions consulting firm. As the chief manager of RFID equipment implementation at Tompkins Emerging Technology Center, he possesses extensive experience in material handling solutions, systems integration, and installation. Paul has managed field integration and operations activities at material handling sites around the world.
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