To John Kendall, casino gambling will soon look like this:
A player sits down at a blackjack table and bets a stack of chips, which Kendall hopes are manufactured by his company, Chipco International of Raymond, Maine. Sensors trained on the betting area of the table scan tiny computer tags embedded in the chips, and electronically report the amount of the bet to a security control room.
"If at table 17, player 4 has been betting $5, and all of a sudden he bets $500, they want to be notified," said Kendall, whose firm is investing heavily in technology known as RFID -- radio frequency identification -- to make the tags work. "Our reporting will tell the casino manager that this person has just changed his betting habits," perhaps because he is cheating.
Chipco, which hopes to introduce its new chips late this year, is one of many companies placing bets on RFID these days.
The technology has been around for a decade -- including use in the E-ZPass system that helps speed drivers through toll booths on many East Coast highways -- but RFID is now robust enough, and getting cheap enough, that it is beginning to transform numerous sectors of the economy by allowing unparalleled tracking of products and people.
Early this month, Reston-based Accenture LLP won a contract worth as much as $10 billion from the Department of Homeland Security that will include using RFID at U.S. border checkpoints.
Delta Air Lines Inc. is testing RFID baggage tags on its service between Jacksonville, Fla., and Atlanta, to help with security and lost luggage. In Great Britain, officials are weighing proposals to embed tags in vehicle license plates. International Business Machines Corp. is seeking to convince banks that their best customers could be issued cards with the tags, allowing them to be immediately recognized when they enter the bank and given red-carpet treatment.
"If you know quickly who is in the area, you can customize their experience," said Paul McKeown, who heads IBM's global smart-card efforts. McKeown said he was inspired by an experience his mother had in her small town in England, where for years she was banking at the same branch and one day wasn't recognized and was challenged by a new teller.
The technology is moving fastest in retailing, where Wal-Mart Stores Inc. is wielding its market power to push RFID into the supply chain. It has told its top 100 suppliers that by January they are to begin putting tags on cases of products before they are shipped to several Wal-Mart distribution centers in Texas that are testing the system.
Unlike bar codes, which must be passed in front of a scanner, RFID tags can be read remotely by a device in the vicinity, sharply reducing time and labor needed to take inventory and letting stores more quickly recognize when stocks are low. By some estimates, retailers lose 4 percent in sales because they are out of what consumers are looking for.
But RFID initiatives alarm privacy advocates, as well as some federal government officials and state legislators, who understand the benefits but worry about the possibility of abuse in the tracking of goods and people.
For example, an RFID tag on a medication bottle might one day be used to alert a relative at another location that an elderly father forgot to take his pills. But electronic readers in office buildings might detect the types of medicines being carried around by employees, which many would regard as an invasion of privacy.
The Food and Drug Administration is in fact encouraging adoption of RFID in the pharmaceutical industry to attack counterfeit drugs, pushing for widespread tagging of medicines by 2007.
Other uses are proliferating as well. One California company has developed a soap dispenser capable of reading employee tags to let restaurant managers know whether their workers washed their hands while in the bathroom. A charter school in Buffalo uses tags on its students as a way of taking attendance in the mornings.
"RFID has tremendous potential for improving productivity and security, but it also will become one of the touchstone privacy issues of our times," said Sen. Patrick J. Leahy (D-Vt.), who foresees congressional hearings on the issue. "Before RFID becomes ubiquitous throughout our society and economy, we need to start paying more attention to the privacy side of the equation."
That view is shared by the Federal Trade Commission, which held an all-day seminar on the issue Monday to examine the tradeoffs.
Privacy activists have not waited, conducting high-profile boycotts in the past two years against such firms as Benetton Group SpA and Gillette Co. after learning they were considering, or testing, tags in their products.
A consortium of more than 40 public-interest groups has called for strict public-notification rules, the right to demand deactivation of the tag when people leave stores, and overall limits on the technology's use until privacy concerns have been better addressed.
Their fears were particularly stoked by the early ambitions of leaders of the RFID movement, who envisioned a world in which every product had a unique identifier that could be electronically tracked.
Kevin Ashton, former executive director of a joint corporate and academic RFID research center at the Massachusetts Institute of Technology, said in a promotional video that the organization's mission was to "create a single global technology that will enable computers to identify any object, anywhere, automatically."
The MIT center has disbanded, but its work is being carried on by EPCGlobal Inc., a corporate-funded organization that later this summer hopes to announce uniform worldwide technical standards for the technology. The group is also issuing privacy guidelines.
Privacy activism, and economic realities, have tempered the expansive rhetoric of the RFID industry, which now is focused on tagging cases or pallets of products, rather than individual items. At a price of between 25 cents and 50 cents for each tag, it is not yet worth it to put them on every can of soda or tube of toothpaste.
"A lot of people are making crazy statements" about how fast the price of a tag -- which typically contains a tiny chip and an antenna -- will fall, said Jeff Woods, an RFID analyst with the market research firm Gartner Group.
Woods said the technology also is still plagued by inaccuracies in reading the data. Certain metals can interfere with the signals, as can moisture on the tags. Woods said many suppliers are telling him that, unlike retailers, they are not likely to reap savings from moving to RFID systems until it is cheap enough to tag individual items.
Even consumer product giant Procter & Gamble Co., an aggressive early tester and booster of the technology, is not yet certain about its near-term financial benefits. The company is participating in the Wal-Mart tests, tagging cases of Pantene shampoo, while testing tags on individual bottles in Germany.
But Wal-Mart is pressing ahead, announcing last week that it was expanding the program to its top 300 suppliers by 2006. Target Corp. and Albertson's Inc. have announced similar initiatives, as has the Department of Defense, which will affect hundreds of suppliers.
"RFID will revolutionize . . . the way we do business around the world, and deliver unimaginable benefits," said Simon Langford, Wal-Mart's global director of RFID.
That is music to the ears of a burgeoning sector of large and small companies making RFID tags and readers, and providing hardware and software integration services.
"I think this will be a single-digit, billion-dollar market in three years," said Piyush Sodha, chief executive of Matrics Inc., a 75-employee Rockville firm that manufactures its tags at a plant in Columbia.
But it is those same unimaginables that worry Katherine Albrecht, a Boston area privacy activist who is leading the charge against RFID. Albrecht, who is working on a doctoral dissertation at Harvard University, founded Consumers Against Supermarket Privacy Invasion and Numbering in 1999 after studying how grocery chains were using loyalty cards to develop marketing data about their customers.
"Who controls the data" collected from RFID tags? Albrecht asked. She worries that companies putting tags into consumer products might forge alliances with the makers of carpeting, for example, to embed sensing devices that could develop intelligence about how consumers use the items.
Industry dismisses those kinds of scenarios as paranoia, but Albrecht and other activists have forced companies to pay attention to them. A store in Rheinberg, Germany, took RFID tags out of its loyalty cards after protests. Many large firms working with RFID now have extensive disclosure statements on their Web sites.
"Anonymity is an important issue that must be handled very thoughtfully," said Elliot Maxwell, who heads an international committee that advises EPCGlobal on privacy and other policy issues.
But he also recognizes the RFID paradox: "In order to have the most value to both individuals and society, the infrastructure [to read tags] needs to be widespread," he said, citing medical monitoring and the ability to track toxic products, or stolen guns, as examples. "And yet it is just that widespread infrastructure that raises the most questions."
Tags cannot be read at more than about 20 feet, but many say that reading capability will rapidly advance. And given RFID's potential to track stolen goods, privacy activists wonder how long it will be before tags are embedded in money.
But few applications raise more eyebrows than RFID tags implanted in people, a business pursued by Applied Digital Solutions Inc. and its subsidiary, VeriChip Corp., of Palm Beach, Fla.
The company has for years provided rice-grain sized tags for implants into pets and cattle. But it made waves two years ago when a Boca Raton man, his wife and 14-year-old son agreed to let the tags be implanted in them.
The company and the family hoped the tag would speed patients through frequent hospital visits or in the case of an emergency by quickly alerting doctors to a person's identity and medical history. But the FDA quickly stepped in and deemed medical uses of the technology subject to government approval, which is still pending.
Scott R. Silverman, Applied Digital's chief executive, said he hopes the FDA will provide clearance by the end of the year.