March 15, 2007 / 1:37 PM / 12 years ago

UPDATE 1-CEBIT-EU sees no need for radio chip regulation now

(Adds U.S., industry comment)

By Sabina Zawadzki

HANNOVER, Germany, March 15 (Reuters) - The European Commission will minimise any regulation of a chip technology widely used by supermarkets to track their products and by subway commuters, the EU’s telecoms chief said on Thursday.

Businesses say radio frequency identification (RFiD) helps them cut costs by simplifying their operations, but its capability to track products and people has raised data protection concerns among consumer groups.

After a year of looking into the industry, Information Society Commissioner Viviane Reding acknowledged data security is an issue but said current EU rules could be adapted to offer protection while the industry regulates itself. “I don’t want to regulate,” Reding told reporters before attending the world’s largest technology fair, CeBIT.

“I believe that the problems here can be solved really if the industry goes for it by self-regulation and by looking at what we got already (in terms of legislation),” she said.

The EU has rules that govern people’s data privacy when using mobile phones or the Internet. The rules will be reviewed later this year and the Commission could suggest amendments to make sure they also apply to RFiD use.

The move was met with relief from the United States, which wants to work with the EU on standardising the technology and had feared “future growth of the industry would be dictated by politicians”, if the Commission advocated strong legislation.

“Overall, it’s a very good announcement. It is in line with what we hoped for,” Under Secretary of Commerce for Technology Robert Cresanti told reporters.

Both Reding and Cresanti will go to Asia in the coming weeks to talk about the possibility of a global agreement on standardising the chip technology and the radio frequencies it uses.

The RFiD market was worth half a billion euros ($660 million) last year, and the Commission expects it to grow to billions in the next ten years. The figure does not include the millions companies can save on cutting costs.

German retailer Metro MEOG.DE began rolling out the technology in 2005 to help monitor its supply chain of the products it gets from some 40,000 suppliers and sells in 30 countries.

“This is really a change. It is a turnaround for the supply chain,” Metro Corporate Communications Officer Antonia Voerste said.

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