Embedding Their Hopes In RFID
Tagging Technology Promises Efficiency but Raises Privacy Issue
By Jonathan Krim
Washington Post Staff Writer
Wednesday, June 23, 2004; Page E01
http://www.washingtonpost.com/wp-dyn/articles/A62061-2004Jun22.html?referrer
=email
To John Kendall, casino gambling will soon look like this:
A player sits down at a blackjack table and bets a stack of chips, which
Kendall hopes are manufactured by his company, Chipco International of
Raymond, Maine. Sensors trained on the betting area of the table scan tiny
computer tags embedded in the chips, and electronically report the amount of
the bet to a security control room.
"If at table 17, player 4 has been betting $5, and all of a sudden he bets
$500, they want to be notified," said Kendall, whose firm is investing
heavily in technology known as RFID -- radio frequency identification -- to
make the tags work. "Our reporting will tell the casino manager that this
person has just changed his betting habits," perhaps because he is cheating.
Chipco, which hopes to introduce its new chips late this year, is one of
many companies placing bets on RFID these days.
The technology has been around for a decade -- including use in the E-ZPass
system that helps speed drivers through toll booths on many East Coast
highways -- but RFID is now robust enough, and getting cheap enough, that it
is beginning to transform numerous sectors of the economy by allowing
unparalleled tracking of products and people.
Early this month, Reston-based Accenture LLP won a contract worth as much as
$10 billion from the Department of Homeland Security that will include using
RFID at U.S. border checkpoints.
Delta Air Lines Inc. is testing RFID baggage tags on its service between
Jacksonville, Fla., and Atlanta, to help with security and lost luggage. In
Great Britain, officials are weighing proposals to embed tags in vehicle
license plates. International Business Machines Corp. is seeking to convince
banks that their best customers could be issued cards with the tags,
allowing them to be immediately recognized when they enter the bank and
given red-carpet treatment.
"If you know quickly who is in the area, you can customize their
experience," said Paul McKeown, who heads IBM's global smart-card efforts.
McKeown said he was inspired by an experience his mother had in her small
town in England, where for years she was banking at the same branch and one
day wasn't recognized and was challenged by a new teller.
The technology is moving fastest in retailing, where Wal-Mart Stores Inc. is
wielding its market power to push RFID into the supply chain. It has told
its top 100 suppliers that by January they are to begin putting tags on
cases of products before they are shipped to several Wal-Mart distribution
centers in Texas that are testing the system.
Unlike bar codes, which must be passed in front of a scanner, RFID tags can
be read remotely by a device in the vicinity, sharply reducing time and
labor needed to take inventory and letting stores more quickly recognize
when stocks are low. By some estimates, retailers lose 4 percent in sales
because they are out of what consumers are looking for.
But RFID initiatives alarm privacy advocates, as well as some federal
government officials and state legislators, who understand the benefits but
worry about the possibility of abuse in the tracking of goods and people.
For example, an RFID tag on a medication bottle might one day be used to
alert a relative at another location that an elderly father forgot to take
his pills. But electronic readers in office buildings might detect the types
of medicines being carried around by employees, which many would regard as
an invasion of privacy.
The Food and Drug Administration is in fact encouraging adoption of RFID in
the pharmaceutical industry to attack counterfeit drugs, pushing for
widespread tagging of medicines by 2007.
Other uses are proliferating as well. One California company has developed a
soap dispenser capable of reading employee tags to let restaurant managers
know whether their workers washed their hands while in the bathroom. A
charter school in Buffalo uses tags on its students as a way of taking
attendance in the mornings.
"RFID has tremendous potential for improving productivity and security, but
it also will become one of the touchstone privacy issues of our times," said
Sen. Patrick J. Leahy (D-Vt.), who foresees congressional hearings on the
issue. "Before RFID becomes ubiquitous throughout our society and economy,
we need to start paying more attention to the privacy side of the equation."
That view is shared by the Federal Trade Commission, which held an all-day
seminar on the issue Monday to examine the tradeoffs.
Privacy activists have not waited, conducting high-profile boycotts in the
past two years against such firms as Benetton Group SpA and Gillette Co.
after learning they were considering, or testing, tags in their products.
A consortium of more than 40 public-interest groups has called for strict
public-notification rules, the right to demand deactivation of the tag when
people leave stores, and overall limits on the technology's use until
privacy concerns have been better addressed.
Their fears were particularly stoked by the early ambitions of leaders of
the RFID movement, who envisioned a world in which every product had a
unique identifier that could be electronically tracked.
Kevin Ashton, former executive director of a joint corporate and academic
RFID research center at the Massachusetts Institute of Technology, said in a
promotional video that the organization's mission was to "create a single
global technology that will enable computers to identify any object,
anywhere, automatically."
The MIT center has disbanded, but its work is being carried on by EPCGlobal
Inc., a corporate-funded organization that later this summer hopes to
announce uniform worldwide technical standards for the technology. The group
is also issuing privacy guidelines.
Privacy activism, and economic realities, have tempered the expansive
rhetoric of the RFID industry, which now is focused on tagging cases or
pallets of products, rather than individual items. At a price of between 25
cents and 50 cents for each tag, it is not yet worth it to put them on every
can of soda or tube of toothpaste.
"A lot of people are making crazy statements" about how fast the price of a
tag -- which typically contains a tiny chip and an antenna -- will fall,
said Jeff Woods, an RFID analyst with the market research firm Gartner
Group.
Woods said the technology also is still plagued by inaccuracies in reading
the data. Certain metals can interfere with the signals, as can moisture on
the tags. Woods said many suppliers are telling him that, unlike retailers,
they are not likely to reap savings from moving to RFID systems until it is
cheap enough to tag individual items.
Even consumer product giant Procter & Gamble Co., an aggressive early tester
and booster of the technology, is not yet certain about its near-term
financial benefits. The company is participating in the Wal-Mart tests,
tagging cases of Pantene shampoo, while testing tags on individual bottles
in Germany.
But Wal-Mart is pressing ahead, announcing last week that it was expanding
the program to its top 300 suppliers by 2006. Target Corp. and Albertson's
Inc. have announced similar initiatives, as has the Department of Defense,
which will affect hundreds of suppliers.
"RFID will revolutionize . . . the way we do business around the world, and
deliver unimaginable benefits," said Simon Langford, Wal-Mart's global
director of RFID.
That is music to the ears of a burgeoning sector of large and small
companies making RFID tags and readers, and providing hardware and software
integration services.
"I think this will be a single-digit, billion-dollar market in three years,"
said Piyush Sodha, chief executive of Matrics Inc., a 75-employee Rockville
firm that manufactures its tags at a plant in Columbia.
But it is those same unimaginables that worry Katherine Albrecht, a Boston
area privacy activist who is leading the charge against RFID. Albrecht, who
is working on a doctoral dissertation at Harvard University, founded
Consumers Against Supermarket Privacy Invasion and Numbering in 1999 after
studying how grocery chains were using loyalty cards to develop marketing
data about their customers.
"Who controls the data" collected from RFID tags? Albrecht asked. She
worries that companies putting tags into consumer products might forge
alliances with the makers of carpeting, for example, to embed sensing
devices that could develop intelligence about how consumers use the items.
Industry dismisses those kinds of scenarios as paranoia, but Albrecht and
other activists have forced companies to pay attention to them. A store in
Rheinberg, Germany, took RFID tags out of its loyalty cards after protests.
Many large firms working with RFID now have extensive disclosure statements
on their Web sites.
"Anonymity is an important issue that must be handled very thoughtfully,"
said Elliot Maxwell, who heads an international committee that advises
EPCGlobal on privacy and other policy issues.
But he also recognizes the RFID paradox: "In order to have the most value to
both individuals and society, the infrastructure [to read tags] needs to be
widespread," he said, citing medical monitoring and the ability to track
toxic products, or stolen guns, as examples. "And yet it is just that
widespread infrastructure that raises the most questions."
Tags cannot be read at more than about 20 feet, but many say that reading
capability will rapidly advance. And given RFID's potential to track stolen
goods, privacy activists wonder how long it will be before tags are embedded
in money.
But few applications raise more eyebrows than RFID tags implanted in people,
a business pursued by Applied Digital Solutions Inc. and its subsidiary,
VeriChip Corp., of Palm Beach, Fla.
The company has for years provided rice-grain sized tags for implants into
pets and cattle. But it made waves two years ago when a Boca Raton man, his
wife and 14-year-old son agreed to let the tags be implanted in them.
The company and the family hoped the tag would speed patients through
frequent hospital visits or in the case of an emergency by quickly alerting
doctors to a person's identity and medical history. But the FDA quickly
stepped in and deemed medical uses of the technology subject to government
approval, which is still pending.
Scott R. Silverman, Applied Digital's chief executive, said he hopes the FDA
will provide clearance by the end of the year.

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