Smart cards break through

After more than a decade of experimentation, smart card technology appears poised to break through the final barriers to broad deployment within the federal government.

Technical advances in the past two years have helped push smart cards to wider acceptance. The industry has settled on standard operating systems for vendors' cards, and Microsoft Corp. announced two months ago that it is developing a Windows operating system geared to smart cards. In addition, the industry has begun shipping cards with 16-bit microcontrollers, and there are plans to ship 32-bit cards in the future.

Some early adopters in the government are pushing the boundaries of the technology by integrating smart card applications with credit cards.

Despite recent advances, most agencies have been slow to adopt smart cards. Some users point out that the technology has been changing too quickly to permit them to settle on solutions for fear that their cards quickly will become outmoded. And the dearth of off-the-shelf applications for smart card platforms has dissuaded others from experimenting with smart cards.

Proving the Concept

Fiscal 1999 will see more agency pilot programs that will determine whether smart cards are a cost-effective tool for security applications and electronic commerce. Earlier tests showed the technology worked. Now, the government must establish the business case for smart cards, said Michael Noll, co-director of the General Services Administration's smart card initiatives team.

Agency officials and vendors believe they can make the best case for "access-control" applications, in which employees use smart cards to enter buildings or log on to their computers. The technology also appears viable for financial transactions within government, such as those between agencies or on military bases.

However, the use of smart cards for commercial credit transactions will have to wait. The new GSA SmartPay contracts offer smart cards in place of conventional credit cards for common purchases, but few stores, hotels or airlines support the cards.

"We have to find out where government makes purchases in any given area, and we have to sign [those vendors] up,'' said Jonathan Adams, director of emerging markets with smart card manufacturer Schlumberger Ltd.

For now, GSA is the only agency that has signed up for smart cards through SmartPay. Under a task order with Citibank, the agency plans to issue 1,000 Gemplus travel cards that will double as employee IDs. In pilot tests, card holders will use the cards to check in on American Airlines flights, eliminating the need for boarding passes.

Government and industry smart card experts said technological advances will make the cards more viable for wide-scale use. For example, in the past two years, card makers have adopted standard operating systems, so agencies can choose cards from multiple vendors much like the way they buy desktop computers. And although the most common cards available today have 8-bit microcontrollers and 8K of memory, more powerful chips— which agencies want for versatility and performance— have just come on the market.

Anthony Cieri, director of the Navy Smart Card Program, said these advances bode well for the Navy as it prepares to issue more than 100,000 cards to meet a congressional mandate to deploy smart cards to at least one carrier battle group, one carrier air wing and one amphibious readiness group next year. The project, together with pilots already under way, will evaluate how smart card-based ID cards can be used to carry medical records and access personnel-related data from legacy systems.

But Cieri is waiting until he can buy cards with 16K and 32K of memory. "We could take cards available right now...and we would get a certain utility out of that, but not the same that we would get if we wait for the cards coming out the first of the year,'' he asserted.

Faster 16-bit chips for smart cards are available from Siemens Microelectronics Inc. and Phillips Semiconductor, and 32-bit chips are expected soon. "Those cards will be more capable of executing high-level languages like Java [application program interface]," said Jonathan Cassell, senior industry analyst with Dataquest, San Jose, Calif., referring to the operating system and tools from Sun Microsystems Inc. that have been adopted by the major smart card vendors. "You can do these things with an 8-bit card, but you'd rather do it with a 32-bit card.''

Further hampering federal smart card efforts is the lack of shrink-wrapped applications for smart cards on the market, which means agencies that want to deploy the technology must custom-develop software.

"What is most critical is having packaged applications that work in plug-and-play environments," said Tony Caputo, chairman and chief executive officer of Information Resource Engineering, Baltimore, whose smart card products are used by 50,000 Internal Revenue Service and Financial Management Service employees for secure network access. "That's really the key to use of smart cards."

Microsoft announced in October that it is developing a Windows operating system for smart cards. The operating system would provide a platform for Visual Basic and C++ programmers to write smart card applications, said Sean Murphy, technology specialist manager with Microsoft Federal.

This step complements the company's effort to promote a standard interface between card readers and PCs that has resulted in several products that integrate card readers with desktop and laptop computers. "If smart card readers become ubiquitous and smart cards become much more prevalent to drive the cost down, think about all the applications you could do,'' Murphy said.

"Headless" Market

Smart cards are used widely in Europe, where the cards were invented, and they have spread to Asia and Latin America, but they have been slow to catch on in the United States. A recent study by Dataquest found that less than 1 percent of the smart cards sold worldwide last year were issued in the United States.

"Right now, the smart card market in the [United States] is kind of headless,'' Cassell said. "You don't see one application generating high volume.''

Nevertheless, the report predicts the number of smart cards issued in the United States to quadruple in the next two years and grow elevenfold by 2002. Network applications, starting with secure log-on, will become the primary use for the technology, with the United States leading the way, Cassell said.

Bruce Caswell, worldwide sales manager for pervasive computing at IBM Corp., thinks agencies will turn to access-control applications first because "the payback is pretty clear there." To many security experts, smart cards offer more assurance than some other technologies because they support multiple authentication methods, including digital signatures and biometric identifiers, such as fingerprints.

Caswell, who is working with GSA on its SmartPay pilot, added that the business case for using smart cards for security is much stronger than for e-commerce applications. "It's difficult to put a price on the security of your information resources, so I think there's a tremendous amount of benefit and peace of mind to boosting the level of security of people accessing [them],'' he said.

Peter Byrnes, program manager for systems operations with the State Department's Bureau of Diplomatic Security, said he hopes to test smart cards for building access with 200 employees in Washington, D.C., next year. Meanwhile, State is considering using the card to store medical records and foreign language certifications or to track equipment, such as laptops, signed out to employees.

Byrnes said the project has developed slowly as his staff assesses its technology options, including whether to adopt "contact" cards, which must be inserted in a reader, or "contactless" cards, which are read by moving them past a sensor.

"There's a certain amount of the rapid advancement of technology that is keeping us in kind of a rut," he said.

New "combi" cards, which combine the contact and contactless approaches on a single chip, are expected to make agencies' choices easier. But Bill Crowell, former deputy director with the National Security Agency and now president of Cylink Corp., Sunnyvale, Calif., noted that standards for contactless cards are not mature.

Agencies have reached few official conclusions about whether the time for smart card deployment has come, despite some shortcomings in the technology. But one piece of advice that has emerged from pilot projects is for agencies to focus on a specific problem.

The FMS has been testing whether smart cards can replace cash vouchers on military bases and in veterans hospitals and has learned that the technology can save money if agencies keep their applications simple.

"We've looked at one problem, chose a limited, achievable environment, and it is working extremely well,'' said Gary Grippo, program manager for electronic money at FMS. "Where we've tried to do multiple things on a card, it's taken a lot of time and money.''

Grippo said that at one military installation, new recruits received pay advances on smart cards instead of paper vouchers. The change resulted in eliminating two payroll employees, who earn between $27,000 and $39,000 a year. "That doesn't include time savings and reduction in trouble-shooting problems,'' he said.

But Grippo added that private-sector tests— such as a recent, highly publicized pilot in New York City— showed that such applications are not viable as a general substitute for cash.

As agency smart card pilots produce results and, where feasible, move toward deployment, the industry continues to depend on the federal government to point the way for private-sector applications. "I don't think the government can drive the commercial market,'' said Dan Cunningham, who heads the Smart Card Industry Association. "What they can provide is some leadership in terms of developing applications for down the road."


At a Glance

Status: Agencies are engaged in another round of pilots this year and hope to prove that smart cards are ready to be deployed for security and financial applications.

Issues: Standard operating systems, more powerful chips and integration with PCs mean smart cards are more versatile. But there are few off-the-shelf applications. A commercial infrastructure for smart cards is in its infancy, putting electronic commerce applications on hold.

Outlook: Good. A congressional mandate will put smart cards in the hands of thousands of Navy personnel, and other agencies are seriously studying the technology for access- control applications. Recent vendor announcements offer promise that technological shortcomings are being addressed.


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