Industry pundits like to say that radio frequency identification (RFID) is still in its infancy. But the fast-growing technology is already set to enter its second generation: In December, the long-anticipated "Generation 2" technical standards for RFID were ratified. The new specifications were developed through a collaborative process involving more than 60 companies that subscribe to EPCglobal Inc., a not-for-profit standards organization.

With the UHF (ultra-high frequency) "Gen 2" standards in place, vendors can now develop the standardized equipment needed to satisfy pent-up demand for products that are compliant with electronic product code (EPC) requirements, says Jack Grasso, director of corporate communications for EPCglobal U.S. in Lawrenceville, N.J. Electronic product codes, trademarked by EPCglobal, are unique identifiers that provide detailed information about the contents of a tagged item.

"It's the first royalty-free, global standard that will allow companies to harness the power of RFID to provide greater product visibility in their supply chains worldwide," says Grasso. "The ratification of UHF Generation 2 as a standard is an important step in the drive toward commercialization and mass adoption of EPC technology."

Despite that upbeat forecast, it's uncertain how well the new standards will fulfill their promise of promoting high-volume production of low-cost RFID tags. For one thing, not everyone is on board: The World Trade Organization (WTO), for one, doesn't recognize EPCglobal as the official RFID standards body. The standards themselves, moreover, aren't set in stone and are likely to remain in a dynamic state for years to come.

Finally, a lawsuit between two key equipment makers over patent infringements is casting another shadow over future RFID developments.

In spite of those challenges, groups like EPCglobal are making progress toward their goal of ensuring global RFID interoperability, international vendor support, and multiple read/write capabilities. Once those elements are in place, companies should see a quicker return on their RFID investments, says RFID Practice Director Michael Liard of research firm Venture Development Corp. in Natick, Mass.

EPCglobal says the new standards offer several improvements over Gen 1's performance. For example, Gen 2 allows for frequencies and power levels that comply with regional regulations while maintaining global readability. (See "An RFID Glossary" in the online version of this article at www.logisticsmgmt.com.) Security has also been improved, thanks to the new ability to "lock," or require a password to change, the ID fields on a tag. Another advantage of Gen 2 is that it allows users to automatically erase data from tags as they pass a reader.

The standards should also make RFID more affordable. Adoption will encourage manufacturers to mass-produce standardized products, which should bring prices down, says Grasso. Some analysts, he points out, believe the Gen 2 standards could reduce chip prices by as much as 80 percent.

Some observers expect that Gen 2 will also reduce overall system costs. "If we can agree on the data standards, it makes the enterprise applications cheaper to run," says Ann Grackin, CEO of Cambridge, Mass.-based ChainLink Research. "And if companies are complying with those standards, it also makes all the integration inside the enterprise cheaper to run."

By some estimates, cheaper, more reliable RFID solutions will boost the overall market to more than $4 billion by 2008. But before that can happen, a few bumps in the road to adoption must be smoothed out. Continued...

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