Internet technologies, through intranet and extranet applications, have proven themselves to be efficient and effective in streamlining existing processes from supply chain management to manufacturing logistics, from marketing to customer asset management, and by creating new value chains and businesses. Nevertheless, these changes and benefits signal only an evolutionary shift in the way we do business. The Internet-enabled economy resembles the conventional physical market in many aspects. Some of the new technologies and applications may even be unnecessary. American consumers, for example, regard smart cards as a redundant payment mechanism when checks, credit cards and ATM cards do an adequate job for current needs. What is the use of smart cards? Do we really need them? Will they ever take off?

Today, the SIM card’s basic functionality in wireless communications is subscriber authentication and roaming. Although such features may be achieved via a centralized intelligent network (IN) solution or a smarter handset, there are several key benefits that could not be realized without the use of a SIM card, which is external to a mobile handset. These benefits—enhanced security, improved logistics, and new marketing opportunities—are key factors for effectively differentiating wireless service offerings. This tutorial assumes a basic knowledge of the wireless communications industry and will discuss the security benefits, logistical issues, marketing opportunities, and customer benefits associated with smart cards.

The smart card is one of the latest additions to the world of information technology (IT). The size of a credit card, it has an embedded silicon chip that enables it to store data and communicate via a reader with a workstation or network. The chip also contains advanced security features that protect the card’s data.

Smart cards come in two varieties: microprocessor and memory. Memory cards simply store data and can be viewed as small floppy disks with optional security. Memory cards depend on the security of a card reader for their processing. A microprocessor card can add, delete, and manipulate information in its memory on the card. It is like a miniature computer with an input and output port, operating system, and hard disk with built-in security features.

Smart cards have two different types of interfaces. Contact smart cards must be inserted into a smart-card reader. The reader makes contact with the card module’s electrical connectors that transfer data to and from the chip. Contactless smart cards are passed near a reader with an antenna to carry out a transaction. They have an electronic microchip and an antenna embedded inside the card, which allow it to communicate without a physical contact. Contactless cards are an ideal solution when transactions must be processed quickly, as in mass transit or toll collection.

A third category now emerging is a dual interface card. It features a single chip that enables a contact and contactless interface with a high level of security.

Two characteristics make smart cards especially well suited for applications in which security-sensitive or personal data is involved. First, because a smart card contains both the data and the means to process it, information can be processed to and from a network without divulging the card’s data. Secondly, because smart cards are portable, users can carry data with them on the smart card rather than entrusting that information on network storage or a backend server where the information could be sold or accessed by unknown persons (see Figure).

A smart card can restrict the use of information to an authorized person with a password. However, if this information is to be transmitted by radio frequency or telephone lines, additional protection is necessary. One form of protection is ciphering (scrambling data). Some smart cards are capable of ciphering and deciphering, so the stored information can be transmitted without compromising confidentiality. Smart cards can cipher into billions of foreign languages and choose a different language at random every time they communicate. This process ensures that only authenticated cards and computers are used and makes hacking or eavesdropping virtually impossible.

The top five applications for smart cards throughout the world currently are as follows:

1. public telephony—prepaid phone memory cards using contact technology
2. mobile telephony—mobile phone terminals featuring subscriber identification and directory services
3. banking—debit/credit payment cards and electronic purse
4. loyalty—storage of loyalty points in retail and gas industries
5. pay-TV—access key to TV broadcast services through a digital set-top box

The benefits of using smart cards depend on the application. In general, applications supported by smart cards benefit consumers where their lifestyles intersect with information access and payment-related processing technologies. These benefits include the ability to manage or control expenditures more effectively, reduce fraud and paperwork, and eliminate the need to complete redundant, time-consuming forms. The smart card also provides the convenience of having one card with the ability to access multiple services, networks, and the Internet.

Smart cards provide secure user authentication, secure roaming, and a platform for value-added services in wireless communications. Presently, smart cards are used mainly in the Global System for Mobile Communications (GSM) standard in the form of a SIM card. GSM is an established standard first developed in Europe. In 1998, the GSM Association announced that there are now more than 100 million GSM subscribers. In the last few years, GSM has made significant inroads into the wireless markets of the Americas.

Initially, the SIM was specified as a part of the GSM standard to secure access to the mobile network and store basic network information. As the years have passed, the role of the SIM card has become increasingly important in the wireless service chain. Today, SIM cards can be used to customize mobile phones regardless of the standard (GSM, personal communications service [PCS], satellite, digital cellular system [DCS], etc.).

Today, the SIM is the major component of the wireless market, paving the way to value-added services. SIM cards now offer new menus, prerecorded numbers for speed dialing, and the ability to send presorted short messages to query a database or secure transactions. The cards also enable greeting messages and company logotypes to be displayed.

Other wireless communications technologies rely on smart cards for their operations. Satellite communications networks (Iridium and Globalstar) are chief examples. Eventually, new networks will have a common smart object and a universal identification module (UIM), performing functions similar to SIM cards.

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