From the June 2005 Southern Stakeholder brief (bottom of page 2):
http://southernrailway.com/pdfs/stak...e-05-Brief.pdf

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Oyster cards on Southern

We are often asked when Oyster Pre-Pay will be available on our
network. The answer is as soon as possible; unfortunately this is
unlikely to be before 2007.

Oyster card season tickets are already accepted on the railway across
London. Oyster Pre-Pay is a much more complex product designed for a
fully gated system and TfL fare structures. As the rail system is
different in this respect there are significant issues to overcome to
ensure that passengers don't get overcharged and to minimise the
opportunity for fare evasion. One example is the high cost of
installing gates or Oyster card readers at stations. There are also
issues around the compatibility of Oyster with the alternative smart
card standard called ITSO (see: http://www.itso.org.uk/about.asp). The
various issues will take some time to sort out - TfL planned Oyster for
4 years before the cards were made public.

Southern is committed to introducing this technology as soon as
possible and will continue to work with the industry and other partners
to that end.
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