a failure to communicate?

Human nature being what it is, when Wal-Mart announced in June that it would soon require its top 100 suppliers to begin using radio-frequency identification (RFID) technology (thereby giving a huge boost to the RFID industry), the talk naturally turned to the potential obstacles—namely, a lack of technology standards and the high cost of tags. But before long a much more serious threat to the wide spread adoption of RFID emerged: opposition from privacy groups. Members of these groups believe that such technology will enable corporate giants like Wal-Mart to peer into their private lives without their consent.

Some talk that emanates from such groups is hard to take seriously. Katherine Albrecht, a doctoral student at Harvard University, has formed a group called CASPIAN, or Consumers Against Shopping Privacy Invasion and Numbering (www.nocards.com). Albrecht has compared the risk of using RFID technology to that of nuclear weapons. She also charges that RFID holds the potential to morph U.S. society into something like Stalin's Soviet Union, where government attempted to monitor citizens' every move and conversation.

Such statements strain credibility, but still, it would be foolish to dismiss these groups' power. When Italian clothing manufacturer Benetton announced plans earlier this year to insert RFID chips into its products, CASPIAN called for a worldwide boycott of Benetton garments. CASPIAN said its members were concerned that Benetton's use of the chips could result in advertising that was targeted to individuals, as well as general privacy invasion because clothing could be "registered" to individuals via information collected through RFID technology.

Benetton quickly retreated. The company announced that no chips were present in the more than 100 million garments it has produced worldwide and that it would analyze all aspects of using RFID technology, "including careful analysis of potential implications relating to individua l privacy."

CASPIAN is now seeking a lawmaker to sponsor "The RFID Right to Know Act of 2003," proposed federal legislation that would require companies to label all products containing RFID tags. The legislation, drafted by a group of law students called the Boston University Legislative Clinic, also would make it illegal to link RFID chips with information that identifies individuals. Albrecht's group also is reportedly considering state legislation.

And CASPIAN is not alone. The Privacy Foundation (www.privacyfoundation.org) also opposes the use of RFID technology at the retail level.

Other retail companies appear to be paying close attention to the Benetton example. In July, Wal-Mart canceled plans for stocking Gillette razors bearing RFID tags on a "smart shelf " in its Brockton, Mass., store. That smart shelf would contain a low-powered radio scanner that could read data programmed into the tags, letting store managers know whenever razors were removed from the shelf. The official company statement says that RFID technology isn't ready for item-level tracking. But Albrecht of CASPIAN believes Wal-Mart's decision was based on other factors. In early June, Albrecht traveled to the Brockton store and photographed a store shelf containing RFID technology to track the Gillette products. She has said in published reports that Wal-Mart backed off from the program because it received hundreds of angry e-mails after she distributed the photo and other information over the Internet.

Whatever the reasons, Wal-Mart's decision to stop the smart shelf program is not good for RFID development. Chipmakers are sure to direct their research and development dollars at the biggest potential market. Anything that threatens that potential market could conceivably delay, or even kill, RFID development.

I have worked in—and written about—two different industries during periods of what can only be termed media frenzy. The first was the nuclear industry, which resisted debate with anti-nuclear groups in the 1970s. The industry's image still suffers from the way it handled legitimate questions about its technology, and nuclear energy never reached the wide spread use that most analysts had predicted. The second industry was the chemical industry, during the rapid rise of environmental awareness in the late 1980s and early 1990s. Having learned from the precedent set by nuclear power companies, chemical manufacturers and distributors reacted differently. They began an open dialogue with the public that continues today. They formed self-policing processes and welcomed public officials and average citizens who wanted to get involved.

Wal-Mart and leading consumer product goods manufacturers should start talking more with groups such as CASPIAN and, perhaps more importantly, with the general media about the use of RFID technology. If privacy concerns aren't addressed, RFID may never become a widespread tool to improve supply chains. It's conceivable, if not ironic, that a failure to communicate could derail what promises to be the communications advance of the decade. And that would be a shame.