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A postage stamp-size device from Micron Communications Inc. may allow the Federal Aviation Administration to detect baggage placed surreptitiously on airplanes.

Micron Communications announced Friday it has a research and development contract to devise a security system for the FAA, called the Positive Passenger Baggage Matching system, using its MicroStamp technology.MicroStamp chips use a tiny microwave radio and integrated circuit to receive, process, store and transmit information. A tag embedded with a MicroStamp could be placed on luggage checked in at airports to match the bags to passengers.

Any bag or parcel without a tag would thus signal a security risk requiring investigation.

The system "is exactly the kind of common-sense answer we are looking for to improve airline safety and give us all greater comfort when we fly in the future," said Sen. Larry Craig, R-Idaho, who is chairman of the Congressional White House Task Force on Terrorism.

Micron Communications, a subsidiary of Micron Technology Inc., spent the past four years developing the technology used in MicroStamp units, which includes a wafer-thin battery, a central processing unit, memory chip and a microwave radio.

Besides the implications for airport security, Micron Communications believes MicroStamp devices could be placed on anything from shipping boxes to employee badges and smart cards.

Potential applications include taking inventory without opening a box, paying a toll without ever slowing down, keeping a building secure without guards and knowing a customer's buying habits without ever meeting him or her.

A business could, for example, have readers that scan a loyalty card in a customer's wallet as he or she walks into a store and then project welcome messages and sales notices targeted to that customer on in-store video screens.

In addition to its project with the FAA, Micron Communications is beginning beta tests with other entities, said John R. Tuttle, division chairman and president.

"They tend to be a mixture of Fortune 500 companies and those specializing in security," Tuttle said.

The beta test period will last six months to a year, which means MicroStamp chips won't be widely available until 1997.

Micron Communications won't disclose how much it invested in researching and developing MicroStamp technology, Tuttle said.

He said the MicroStamp is designed to provide high performance at low cost, filling a gap in existing products in the radio frequency identification industry.

Existing low-end products are inexpensive - less than $3 each - but have a limited radio range of 2 feet to 6 feet.

At the other end of the spectrum are tags that cost more than $25 each but can be read from a distance ranging from 20 feet to 300 feet. Besides their high cost, the tags tend to be as bulky as blackboard erasers, which makes them impractical to attach to many items, Tuttle said.

"What we have done is notice a big gap in size, and then in price and range," Tuttle said.

MicroStamp products will cost less than $25, be as small as a postage stamp, and have a radio "read" distance of 10 feet to 40 feet, he said.

The Radio Frequency Identification industry is projected to grow from $300 million now to somewhere between $1 billion and $10 billion by the year 2000, Tuttle said.

"What we have is a new wave of enthusiasm about Radio Frequency devices because of the size and scale of this technology," Tuttle said. "I don't think anybody knows how big this market is."