NEW YORK-Wave Systems Corp., San Jose, Calif., may possess some important answers to
questions wireless carriers have about reducing customer-service costs, promoting prepaid calling and data
communications and capitalizing on electronic commerce, while also preventing fraud.
The company, founded in
1988 by Peter J. Sprague, a former chairman of National Semiconductor Corp., has developed a computer chip-based
system for secure e-commerce transactions.
“The original patent was strictly for wireless applications. We
focused first on putting all the technology into a small device. That was the hard part,” Sprague said Feb. 3 at The
Wall Street Forum’s Institutional Investor Conference.
“Everything we’ve done since then is to get the nickel
back to the content provider.”
Wave Systems has developed the Embassy E-Commerce System, which the
company describes as “a trusted-client system, (which is) an open, programmable device that creates a fully
exportable, secure and encrypted environment within a personal computer.”
Expanding on that definition,
Gerard T. Feeney, chief financial officer, said the chip, which costs about $10 to embed, enables the transmission and
receipt “of any content by any device over any network, (using) any (form of) payment.”
Embassy E-
Commerce enables companies to move user verification and security functions from centralized computer servers into
consumer electronic devices. As a result, it can protect consumers from identity theft and protect providers from theft
of services, including piracy of content, according to company executives.
Telecommunications carriers, for
example, could reduce customer-service overhead because subscribers would be able to pick and choose via the
Internet what and how much they want when they want it and pay as they go electronically, said Lark Allen, vice
president of secure networks.
Embassy E-Commerce also “provides some interesting provisions for a
universal prepaid (e-purse) card that is like buying (anonymously) with cash instead of credit cards,” he
said.
Wave Systems’ goal is to act like an invisible bank, a middle man between service providers and end users that
takes orders and payments, distributes services and maintains transaction records.
“Our business model is to
subsidize our technology with content distribution,” Allen said.
“We are a lot like a cellular phone
business, which subsidizes the phone because it wants customers to use its network.”
