The global mobile industry has become increasingly aware of its responsibility to drive green and sustainable working. I can recall so-called ‘green telecoms’ practices being discussed at Mobile World Congress back in 2006 and 2007. The large network vendors were investing in technologies that could deliver more throughput and more efficiency from less power. Back then, companies had the profits to invest in this broader thinking. And many recognised the CSR - and the PR - benefits of leading in areas of environmental responsibility and ethical, sustainable practice.
Sustainability rising up the priority list again
While the industry was full of good intentions, the global economic downturn in 2008 changed its priorities. Healthy revenues evaporated, operators became highly cost conscious and the green agenda was forced to take a back seat. The economic realities of running a profitable business meant a ‘needs must’ philosophy had to be adopted. Disappointing, short-sighted but also necessary.
The good news is that over the last two or three years, sustainable practice has risen up the priority list of companies operating in the global mobile industry. The GSMA has also thrown its weight behind a series of Sustainable Development Goals (SDGs). It released a report last year looking to galvanise the mobile industry and focus it on: expanding the global mobile network footprint and connecting more subscribers; improving the quality of connectivity; innovating mobile-enabled services to meet sustainable development needs; and contribute to sustainable development policy alongside governments and agencies.
Used device market leading the way
This is a worthy initiative and has to be applauded. It also helps draw attention to some of the current success stories that the mobile industry has been responsible for. One of the biggest is undoubtedly the aggressive growth of the market for used devices and the role it continues to play in achieving various SDGs.
What began as a worthy crusade to prevent old devices ending up in landfill, has turned into a lucrative global enterprise worth more than $17 billion in 2016 and expected to grow to $39 billion by 2025, according to Persistence Market Research. Deloitte, who were behind the original study that analysed the size of the market last year also predicted that around 120 million smartphones were traded globally last year, each one being worth around $140 on average. This growth shows no sign of slowing down this year. Repurposed devices account for roughly 7% of Smartphone sales by unit.
So how has such a sustainable practice flourished while costs pressures remain on operators, vendors, and OEMs? It’s quite simple, the global used device ecosystem benefits all the stakeholders involved. The economic and wider business benefits to operators, OEMs, and retailers, to name a few, are as compelling as the contribution to sustainable practice. This has led to major operators like AT&T advertising its device ‘Trade-in’ program on its website homepage, and Apple, Google and Samsung also running their own device collection services. Each stakeholder has its own motivation for participating but many of the reasons are extremely compelling.
Used devices: an ecosystem where everyone wins
Established carriers like AT&T realise the latent value in used devices to compensate customers and encourage them to upgrade to a new device. Not only does it retain the customer, it also puts extra money in the customers’ pockets and preserves a feel-good factor surrounding the operator’s brand. In hard revenue terms, US carriers alone are estimated to gain more than $1 billion per year in additional revenue by collecting used devices through various channels. Many of the devices operators collect are then retained and used to satisfy insurance and device warranty commitments – a huge cost saver versus purchasing new devices.
OEMs such as Samsung and Apple are starting to initiate their own device buyback programs. Historically devices were collected purely by the operators. However, OEMs are looking to do it themselves. It helps them to reap extra revenue and curb the rise of fake devices that continue to cannibalize revenues for new devices in some emerging markets and cause heavy brand damage. For the likes of Apple, providing a low-cost version of the iPhone can provide a precious opportunity for millions of new subscribers unable to stretch to the price of a new iPhone. Enabling them to live and experience the Apple ecosystem for the first time. It also helps Apple to go head to head with low cost smartphones in India and China – devices that are sub $100, typically have inferior components in them and lack the full feature set of a high-end Smartphone, thereby robbing the consumer of a good user experience.
Perhaps just as vital, is the OEMs’ wish to control the distribution of renewed devices. It is focused on minimizing the instances where a device might be launched in premium markets and has a ripple effect of cannibalisingnew device sales. It’s something it tries to avoid at all costs.
And then there’s the retailers. Leading names in the US for example - Best Buy, Walmart and Target -much like the market for used cars, recognize the stimulus offering money for used devices can have on new device sales, as well as increased foot traffic at retail locations. Retailers are therefore offering buyback programs to sell more phones and draw more people in-store where they will be subject to additional offers tied to a raft of supporting accessories.
Environmental benefits: the tip of the iceberg
The used device market started as a way of keeping old devices out of landfill. To date, the number of devices being collected around the world can be counted in the hundreds of millions. It has also been responsible for diverting vast quantities of e-waste away from landfills and avoided the generation of excess water pollution.
According to David Michaud of 911 Metallurgist, in order to produce a single phone, 34 KG of ore must be mined. 18 out of the 34 KG is mined to extract gold, which requires 100 litres of water and 20.5 grams of cyanide in order to extract the precious metal from it. Repurposing as many devices as possible, therefore protects these precious earth resources.
By repurposing millions of devices, the telecoms industry can divert 9500 tons of e-waste from landfills, avoiding billions of gallons of ground water from being polluted, and bring connectivity to millions unconnected consumers while still putting billions in the hands of consumers. These efforts can help to contribute to the Sustainable Development Goals adopted by the GSMA.
As you can see, this represents just the tip of the iceberg and one of the many reasons why the mobile industry remains committed to the ongoing success of the used device market in its pursuit of more sustainable working practices.
Source: HYLA Research. Approximately 40M devices are collected through various returns channels by the 4 large US Mobile operators with an ASP of approx. $100 per device. This amounts approx. $4B.
