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VeriSign to Manage Tags for Consumer Items
NEW YORK - The company that manages the Internet's core directory - and has been criticized for trying to take undue advantage of its position - has been hired to perform a similar role in the developing system for radio-frequency identification tags on consumer products.
VeriSign Inc. was selected as the directory manager by EPCglobal, a venture formed to administer the radio-frequency tagging network that is expected to begin replacing bar codes as product identifiers over the rest of the decade.
Financial terms of the deal, which is being announced Tuesday, were not disclosed.
But VeriSign executives said the deal is valuable primarily because it could give the company a leg up in providing Internet-related services to retailers and manufacturers that embrace the radio-frequency technology, known as RFID.
RFID is an efficient means of inventory tracking, because products and supply pallets with radio tags can be read quickly and wirelessly by a scanner that relays information directly into computer systems. A store with RFID tags in its milk case, for example, could be automatically signaled that it is time to reorder from the dairy supplier.
One big impetus for RFID is expected to come from Wal-Mart Stores Inc.'s demand that its top 100 suppliers incorporate the technology on supply pallets by early next year. The Pentagon also has embraced RFID.
Eventually, individual products will have RFID tags instead of bar codes, revealing instant data about the items and their route from factory to store. Privacy advocates, however, have questioned whether the tags could be used to track shoppers.
Each RFID tag broadcasts to a scanner a unique code that corresponds to data maintained by its manufacturer about the product.
When an item is scanned, the EPC network will send a query over the Internet to VeriSign's directory, which in turn will pass the request to the appropriate manufacturer's server.
VeriSign performs a similar function on the Internet as the key operator of the Domain Name System, the main directory for Internet addresses. It controls the master list of all the Internet's domain name suffixes, along with the entire directories for ".com" and ".net," the two most popular endings.
Mountain View, Calif.-based VeriSign has been accused of trying to unfairly profit from its Internet position - for instance, using its inside knowledge of domain names expiring to beat competitors to reselling lucrative names. VeriSign has insisted it keeps the directory and registration businesses separate and recently sold the latter.
And in September, the company launched a service that redirected Internet users who mistyped Web addresses to a new search engine that contained sponsored links that could bring revenue to VeriSign. Though VeriSign said its Site Finder was meant as a helpful addition to the Internet, it made other search services and network configurations stop working, and VeriSign suspended the service.
Sue Hutchinson, product manager for EPCglobal, said VeriSign was chosen for the RFID contract because of its worldwide reach and ability to handle millions of Internet transactions at once.
EPCglobal is a standard-setting group jointly run by EAN International and the Uniform Code Council, the same entities that manage the network of product bar codes. For now, the RFID network has only about 100 members, including consumer giants Gillette Co. and Procter & Gamble Co., but is expected to gain tens of thousands more as RFID use becomes widespread.
"We view this as very much analogous to the Internet in the early days," said Brian Matthews, a vice president for VeriSign's directory service.
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