In The Boardroom With...

Mr. Sebastien Cano
Senior Vice President
Gemalto, Inc.

SecurityStockWatch.com: Thank you for joining us today, Sebastien.  Please give us an overview of your role at Gemalto and background.

Sebastien Cano: Gemalto is the world leader in digital security. We are a B2B company with three business units that focus on Telecommunications, Financial institutions, and Government and Large Corporations. In Telecommunications, we provide operators with a vast range of solutions to address the increasingly complex mobile ecosystem that now serves nearly five billion subscribers worldwide.  I manage our activity in that sector for Gemalto North America.  Our customers are the wireless network operators, including all the Tier 1 operators in North America and many others. In my 16 years with Gemalto I have always concentrated on telecommunications.  In my previous assignments, I ran our convergence solutions business group in France, and prior to that managed our operations in Brazil and Spain. Gemalto’s global culture and worldwide presence gave me the opportunity to develop a real international experience of the telecommunications industry.

SecurityStockWatch.com: Describe your solutions for the Telecommunications sector.

Sebastien Cano : We have 450 mobile network operator customers and our solutions enable about 1.8 billion individuals all over the world to use mobile devices and services securely and conveniently.  Gemalto is the world’s leading supplier of secure personal devices to wireless operators, and we also provide software and services to the mobile industry. 

Approximately 90 percent of the world’s mobile networks are based on 3GPP networks, a.k.a. the GSM family of standards.  All of the mobile devices connected to these networks include a small microprocessor smart card, which many of your readers will know as a SIM card (Subscriber Identity Module) or a UICC (a next generation SIM).  In 2009, we made nearly 1.2 billion of them, and each one is a personalized, secure device.

In addition, Gemalto provides a full range of software platforms and solutions to help mobile operators deploy services like mobile payment, mobile content management, device management, enhanced roaming, and many more.  This activity represents about 10 percent of Gemalto's total revenue and is growing rapidly.  As of today, our platforms and solutions are already connected to more than 800 million subscribers around the world.

SecurityStockWatch.com: Two U.S. operators, Verizon and MetroPCS, both selected Gemalto as a key strategic partner in their plans to migrate their networks to LTE.  Tell us about Gemalto’s role and what this means to the industry.

Sebastien Cano: LTE, or Long Term Evolution, is a high-speed mobile network standard in the GSM family.  It is sometimes referred to as 4G, for fourth generation.  Winning the industry's first two commercial deployments of LTE in North America is a huge success for Gemalto, and for the industry.  In both cases, Gemalto is providing IP-based UICCs and the corresponding OTA platform. This provides carriers with an advanced IP based platform for more efficient communication with the device and opens the door for a broader range of services to be delivered to the end user.

This is significant for the industry for several reasons.  Today, a little more than half of the U.S. subscribers use devices without SIM or UICC cards because they are using CDMA. With the launch of LTE by the US CDMA operators, they will soon require all devices to carry a UICC before it can attach to their network. This brings the other half into the SIM or UICC market much sooner than anticipated.

Also this is a very competitive industry and the decision by Verizon to move to LTE and IP-based UICCs ratchets up the market pressure to keep moving aggressively to ever-faster network technologies.  It is giving GSM/UMTS  carriers reasons to move to LTE even earlier, like for instance AT&T who also announced various plans for a faster LTE deployment.   

The MetroPCS decision to support LTE signals something else to the industry.  As a leading prepaid operator, it indicates that this technology will quickly meet the needs of both ends of the market spectrum, from advanced, postpaid premium subscribers through prepaid phone customers.  This demonstrates the true cost effective nature and communication efficiency of LTE.

SecurityStockWatch.com: Gemalto is playing the role of a Trusted Service Manager in mobile payment projects in Canada, Singapore, France and other countries.  What does that involve?

Sebastien Cano: As a Trusted Service Manager, Gemalto plays a crucial role in bridging the wireless world with banks and other service providers. Using mobile phones for contactless payment, transit ticketing, loyalty and other exciting new services greatly interests mobile operators as well as banks, transit operators, retailers and, of course, end consumers (all pilots conducted around the world show a very high user acceptance of the service).  These contactless applications are based on a technology called Near Field Communication (NFC), enabling secure data exchange between a phone and a point-of-sale (POS) terminal, smart poster or other devices over a short distance (10 cm or less).  NFC is a marketer’s dream come true, opening up a world of new possibilities for “high touch” value-added services.  Think of smart posters that provide on-the-spot e-coupons and maps to nearby stores right to your phone, and you start to get the idea of its potential.

A central issue for large-scale rollouts, however, is: How do you create a mobile payment “ecosystem” that makes it easy for banks and mobile operators to work together?  That’s where Gemalto fits in as a Trusted Service Manager (TSM).  We act as an intermediary between the financial institutions and mobile operators, both of which are already our customers, and help banks or other service providers securely distribute and manage contactless services in their customers’ mobile devices using the wireless operators’ networks.

In addition to working with operators and banks, Gemalto is active on another very important front—standardization.  Standards are essential to the growth of large, global markets like mobile payment, because they provide industry stakeholders with interoperability, reliability, security and competition between technology partners.  We invest heavily in contributing to standards committees and organizations.  We are of course active in the NFC Forum, but Gemalto also works with all of the global standards organizations in telecom and banking, including the GSM Association, EMVCo, Global Platform and many others.

SecurityStockWatch.com: You said Gemalto would capitalize on new opportunities to enable value added services with IP-based UICCs and mobile broadband.  Can you give us an example?

Sebastien Cano: A good example is enabling a subscriber to back up everything on his or her multimedia smartphone, even pictures and videos, in the cloud, and to provide access to anything stored in the smartphone from your PC over the Internet as well as to share the information on social networks.

Thanks to Gemalto and its acquisition of O3SIS a year ago, mobile operators can now offer such services to their final customers  These are not future features.  They are an intrinsic part of our solution we call Digital Life Management.  With this platform, a subscriber can manage all aspects of his or her mobile digital experience, including social media profiles, in one consolidated location and with the added assurance that this personal information is secure and retrievable even if the handset is lost.

The Digital Life Management platform is an example of Gemalto delivering services over the Web via a secure cloud computing model. 

SecurityStockWatch.com: Another emerging telecommunications opportunity is machine-to-machine, or M2M.  What is the target market, and what are Gemalto’s solutions for that market?

Sebastien Cano: With the U.S. subscriber market becoming saturated, wireless operators are actively looking to put network connectivity into other types of devices and even machines.  The target market is all electronics manufacturers that want to add M2M wireless network services to their devices, and all mobile network operators and MVNOs that want to provide M2M mobile services. This includes potential applications in remote management, utilities, automotive, industrial data collection, intrusion control and healthcare.

Gemalto's solutions include SIMs or UICCs designed for unattended applications in different form factors, including conventional SIM cards as well as small, ruggedized SIMs or UICCs that are 1/10 the size of a normal SIM and can be directly placed on an integrated circuit board.  We also provide software platforms and services for use with M2M applications.

While M2M conjures up ideas of vending machines calling the warehouse when they are out of the top selling soft drink, many opportunities are with conventional SIM or UICC devices for new types of devices with built-in modems that have some limited form of Web-based service.  For example, when you are downloading books to your eReader, you are using an integrated M2M solution including a SIM card and a radio module in the device.

SecurityStockWatch.com: Apple recently announced that its new wireless mobile-ready iPAD will include something called a micro-SIM. What is a micro-SIM and how is it different from a normal SIM or UICC?

Sebastien Cano: Gemalto offers a smaller version of a SIM card, called a 3FF SIM card (or, as some put it: “micro-SIM”), which requires less than half of the area of the usual SIM card.  Micro-SIM cards offer all of the mobile services capabilities of a normal SIM, but its small form factor creates new design possibilities for mobile devices.

For example, the new Apple iPad includes a micro-SIM in its wireless-ready models.  Other device possibilities include a watch or a camera, or new micro-SIM smartphones that will leave more room to add other features or shrink the device size. 

SecurityStockWatch.com: Thanks again for joining us today, Sebastien, are there any other subjects you’d like to discuss?

Sebastien Cano: The telecommunications industry continues to be a strong, rapidly growing market.  I appreciate the opportunity in this interview to explain how pervasively Gemalto is positioned at the heart of this industry.  Gemalto leads in other digital security markets as well, including secure transactions for banking, e-credentials for governments and enterprise security.  I would really like to encourage your readers to learn more about Gemalto, and a good place to start is with our new 2009 annual report, available at http://www.gemalto.com/investors/

Another idea is to visit our digital lifestyle Web site, www.JustAskGemalto.com, where we answer consumer questions about how to better enjoy the conveniences of the digital world and how to secure one’s digital identity and information while surfing, buying, traveling and communicating. 

I want to thank SSW for this opportunity to tell your readers a part of our story today.