The Weekly Report Cornerstone

   WEEK 40 Sept 22nd to 28th 2003

   Radio Tag Debut Set for This Week

   By Mark Baard

   A consortium of retailers and consumer goods companies plan to unveil the replacement for the bar code next week. The upgrade will use a controversial radio technology that critics say will significantly expand the powers of retailers to track the whereabouts of their goods and the people who buy them. The Auto-ID Center at MIT will release the Electronic Product Code Network at a meeting of the center's sponsors in Chicago. With the EPC, retailers and suppliers will track not only product codes -- something bar codes already do -- but serial numbers for each individual item. Some of the tags can also send out signals when perishables reach their expiration dates.
   In addition, the group will demonstrate radio frequency identification tags that can be embedded in product labels. These so-called RFID tags can broadcast information about products, including their location, when exposed to a radio signal. With a quick scan, a retailer can take a complete, accurate inventory of its shelves, helping to cut costs. But critics of the technology say RFID tags would enable massive privacy violations by retailers, governments and crooks. Protesters from consumer groups and privacy advocates plan demonstrations in Chicago at McCormick Place, where the technology will be unveiled.
   The Auto-ID Center will not publish its plan for protecting consumers, however. A draft proposal recommends that retailers disable the RFID tags at checkout, but only when shoppers ask them to do so, said Kevin Ashton, a Procter & Gamble brand manager and the center's director. The Auto-ID Center also will advise retailers to alert shoppers to the presence of chips in the products they buy, and permit shoppers to opt out of attempts to combine their purchase histories with their customer loyalty card information.
   "Our goal is simply to make the supply chain more efficient," said Ashton. "Beyond the shelf, we don't see any need to track the items."
   But retailers testing RFID tags in their stores in the United States and Europe are not disabling RFID tags, according to the technology's opponents.
   "We're not aware of any cases in which the chips are being killed at checkout," said Katherine Albrecht, director of the anti-RFID group CASPIAN. Wal-Mart pulled RFID-tagged items off the shelves of its store in Brockton, Massachusetts, over the summer, but many other retailers are continuing to test the technology. Albrecht and a lawyer from the Electronic Frontier Foundation have testified about privacy and RFID tags before California state senators, and their cause has caught the interest of a handful of legislators in other states and the U.S. Congress. The activists say new laws may be needed to prevent organizations from tracking individuals through the radio signals emanating from the things they purchase.
   In Germany, consumers have little to worry about, according to Metro, the country's largest retail chain. "We are very conservative about privacy issues here, perhaps more so than in the United States," said Metro spokesman Albrecht von Truchsess. Metro is testing RFID tags and readers with pallets and shipping containers at one of its warehouses. The retailer is also selling RFID-tagged bottles of Pantene shampoo at its Future Store in Rheinberg, north of Dusselorf. Metro will only collect purchasing information from RFID cards from customers who opt in, asking to be included in a program that notifies them of specials on products they frequently purchase. And Metro is working with IBM in Germany to develop a device to disable the tags as shoppers leave the store.
   Long before consumers face serious threats to their privacy from RFID tags, however, Wal-Mart, the world's largest retailer, will force its suppliers to tag their warehouse pallets and containers with RFID tags. The retailer's largest 100 suppliers will have until 2005 to comply; the other 12,000 suppliers will be expected to follow by 2006, said a Wal-Mart representative.
   Suppliers are furious, said an analyst who works with many of the companies. Having already spent hundreds of thousands of dollars on the making of the EPC standard -- "the word 'extortion' has come up more than once," said Gartner Group analyst, Jeff Woods -- the suppliers will now have to pay for the development and deployment of RFID tags to satisfy Wal-Mart's mandate within two years.
   Suppliers may eventually save money by automating some of their inventory tasks, and by keeping better track of their returnable assets -- the pallets and containers. But the benefits to consumers are less clear, while the risks to their privacy are just coming into the picture.
   RFID proponents cite the tags' limited range, and say the tags transmit little more than item serial numbers. But with stronger signals and richer data streams, the tags may eventually become a powerful tool for tracking consumers' whereabouts, or the inventory of goods in their homes.
   "Every privacy-invading technology starts small," said EFF senior attorney Lee Tien. "RFID started small, too, but it will be buoyed by the release of EPC and other announcements." Tien cited Moore's Law, and the knack engineers have shown for cramming increasing processing power into tinier chips.
   "That's why you can't make privacy policies based on what the technology looks like today," he said.
   End of story.





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Entered 2003-09-22