CCM SECTOROPTICS
WITH MICHAEL SONI

Border and Transportation Security—It’s All About Technology

Monday, August 29, 2005

Technology has always been an important aspect of society’s evolution, now it is playing an integral role in protecting borders. It has taken several years but we are now seeing certain technologies currently used by the government to safeguard the entry and exit of individuals and cargo. 

The initiation of the US-VISIT program, The United States Visitor Immigrant Status Indicator Technology Program Office, was an early manifestation of this trend with the introduction of biometric screening at border entry points such as airports and seaports, and recently DHS began testing RFID technology to more efficiently record the entries and exits of visitors who are currently issued an I-94 at land borders. The testing will evaluate the ability of US-VISIT equipment to read information from RFID “tags” embedded in Customs and Border Protection (CBP) Forms I-94A; the standard arrival and departure record issued at ports of entry. The RFID tags contain a unique serial number where U.S. government officials may link the tag number to the visitors’ biographic and biometric record. RFID technology reads the tag and records the visitor’s entry and exit by securely transmitting the tag’s serial number to the US-VISIT reader and database.

We are now seeing other technologies, currently used by the military; trickle down for everyday societal uses.  We can expect to see technologies like biometric iris scans, chemical sensors, RFID for human/cargo tracking, and traffic mapping systems becoming rather ubiquitous. 

James Northrup, a 3-D modeler for Newtec, a government contractor at White Sands Missile Range stated that “everything we do for the military, we can do for border security.”  Newtec makes the Real Time Advanced Graphics Engine, or RAGE; a computer program linked to surveillance cameras and motion sensors that could help authorities visualize crossings of undocumented immigrants and drug planes.

Biometrics and RFID seem to be the leading technologies as it relates to human identification and tracking.  The State Department has started to test “electronic passports” that contain a small computer chip that holds a digital photograph of the owner.  This program however, is in its infancy and is far from perfect, for example, officials at border checkpoints will merely get a bigger photograph to compare with the person seeking entry- instead of a computer-based biometric analysis that could determine with certainty whether the passport holder was the legal passport owner.

According to the International Biometrics Group (IBG), the biometric market was estimated at $1.2 billion in 2004 and is expected to be one of the fastest developing sectors, growing by approximately 40% annually to an estimated $4.6 billion by 2008.

Venture Development Corporation (VDC) estimated the total RFID market at $1.5 billion for full year 2004 and expects it to grow at a compounded annual growth rate of just under 50% through 2007. Allied Business intelligence (ABI) expects global RFID spending to reach just over $3.0 billion by 2008 while Frost & Sullivan expects the total global market to reach just under $12.0 billion in size by 2010. Sector growth is in its infancy and expected to accelerate substantially through the end of the decade.

The important point here is that the trend towards the increased use of Biometrics and RFID, as a solution for Border and Transportation Security, is in place and is poised to continue into the future.

There are several companies operating in the Biometrics and RFID markets that will benefit from this trend. Some of the leading companies are listed below. 

Biometric Companies

Identix                (IDNX– NASDAQ)
ActivCard            (ACTI – NASDAQ)
Viisage Corp       (VISG – NASDAQ)
Cogent Systems  (COGT – NASDAQ)

RFID Companies

Infosys            (INFY – NASDAQ)
Zebra Tech      (ZBRA– NASDAQ)
Symbol Tech    (SBL– NYSE)
I.D. Systems    (IDSY – NASDAQ)

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Disclaimer

Michael Soni, is President & CEO of Cronus Capital Markets- a firm specializing in sector research, intelligence, and media. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time. CCM transforms “Top-Down” research into intelligence by identifying sectors within the capital markets that, in addition to their inherent strengths, will benefit from participation in larger trends and cycles.

CCM enhances SectorOptics, by deconstructing and filtering the capital markets, in order to identify sectors experiencing a higher frequency of opportunities. By enhancing SectorOptics, CCM focuses the lens with which capital market sectors are viewed, resulting in greater clarity.

Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback – click here to send him an email.


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