The linear business model long employed by the mobile device economy is slowly starting to shift, with a number of converging factors – consumer attitudes, pricing, and an industry-wide push for sustainability – leading to an increased focus on the idea of a more circular economy.
As upgrades to devices become ever more incremental, and consumers grow more aware of the issue of e-waste, many look to refurbished devices – often to reduce cost as well as environmental impact. Against this backdrop, a more circular device economy is not just appealing from a sustainability perspective – it also makes good business sense.
In 2019, the GSMA’s board set the ambition for the entire telecoms industry to meet Net Zero by 2050, and established the Climate Action Program (CAP) to facilitate this. The CAP helps members understand the carbon savings of a more circular economy in the context of mobile phones and other devices such as network equipment by providing them with a better understanding of how to measure savings using existing greenhouse gas protocol and technical standards. Steven Moore, who leads the CAP, argues that a circular economy is not only more materially and resource efficient, but more energy and climate efficient as well.
“The science-based carbon reduction targets in line with [a more circular economy] would amount to a 45%-50% reduction by 2030 – not just for network operations including electricity consumption, but also for Scope Three emissions (supply chain emissions). As an industry, this is where most of the carbon emissions sit.”
Spotlight off sustainability?
It may seem that the buzz around sustainability and the circular economy has died down within the industry, but Moore argues that this is because it is no longer perceived as novel and has become mainstream, claiming that there is a recognition that the second-hand marketplace isn't going anywhere. Leaning into additional business models – whether selling refurbished devices, offering leasing options, expanding into repair options etc, is where the business value can be derived – and for this reason, it’s where the market is heading. The buzz of attention around sustainability has perhaps died down, but this is because companies are now following the early adopters, normalising the process.
While Moore acknowledged that with the current geopolitical situation, sustainability is not so much topic of the month, companies are sticking to commitments – none are rowing back on environmental pledges, and indeed are generally looking to expand their activities in this area, with a particular focus on Scope 3 emissions. Understanding supply chain emissions is very data intensive, and historically this data has been difficult to obtain, although Moore notes that applying technologies such as AI has made it easier to collect and calculate data.
Carbon reduction is far from the only advantage offered by moving towards a circular device economy. E-waste and the scarcity of component materials is a huge issue – GSMA research indicates that there are around 5 billion unused mobile devices lying dormant. Moore estimates that this could amount to around US$20 billion worth of useful materials – potentially enough cobalt for around 10 million electric vehicle batteries. “It doesn't help anyone - definitely not the planet, but also the economy - if we've got huge amounts of materials effectively sitting idle that could be better used elsewhere.”
Taking carbon emissions out of the loop
The carbon savings of device circularity can be assessed and measured by contrasting them with the manufacture of new devices. Jan Stryjak of Counterpoint Research explains that a device’s carbon emissions can be segmented by life stage: around 80% is accounted for by manufacturing, with up to a further 5% on transport and logistics. This leaves around 15% accounted for by customer use. Therefore, refurbishing a device – effectively providing it with a second life – removes the initial 80% by avoiding the need to manufacture a new device.
“Of course it is not as simple as that, as one must also take into account the added impact of logistics, repair, refurbishing and/or recycling of the secondary market. But the more the secondary market grows, demand for new phones decreases, which reduces the impact of new smartphone production” says Stryjak.
Moore notes that the device replacement rate peaked around 10 years ago, with consumers replacing their mobile devices on average about once every couple of years. Since then, ownership periods have steadily increased, with people now holding onto their phones for at least three years. There are various reasons for this; hardware capabilities on mobile phones have plateaued somewhat, with development more on the software side, plus the form factor has become standardised. Additionally, devices are more expensive; repair services have increased a lot over the past 10 years as people prefer to repair damaged devices than replace them. The fact that this is more widely accepted has also fuelled the market for refurbished phones, allowing people to access a premium product at a lower price.
Sustainability as a selling point
Consumers are also becoming more environmentally conscious about the impact of replacing versus repairing their devices. Moore cites a recent large-scale GSMA consumer survey which interviewed more than 10,000 consumers in over 30 countries around the world, which provided a striking soundbite: around 70% of respondents claimed that they would be willing to pay a premium for an environmentally friendly phone.
“People can say these things – it doesn't necessarily translate into what they’d actually do when they go and buy something, but the fact that it's starting to enter into their consciousness, and it's a consideration now…there's an awareness that this is a complex product that's made up of lots of different components, materials, and those have to be sourced from somewhere, and they have the environmental impact.”
This is being reflected in branding – Apple have attempted to tout environmental credentials in their advertising, and while this may be exaggerated, their environmental program has strong credentials. Moore notes that Apple’s VP of Environment, Policy and Social Initiatives is Lisa Jackson, a former EPA Administrator in Obama's government in the US – and adds that she appears to be driving tangible environmental reductions in Apple’s products. These have included:
- Making commitments around having renewable energy all the way back into the supply chain,
- Helping their suppliers access that renewable energy, which can be difficult in countries like China, where Apple manufactures a lot of its devices
- Increasing the recycled content of their phones by not relying on virgin raw materials, and instead taking second hand materials, reprocessing these, and making sure that that makes up a substantial or significant increasing proportion of phones.
Manufacturers can flaunt eco credentials as a selling point, but Stryjak is unsure that they will be the deciding factor for consumers. “I think there is a big difference between intent and action. Many people say they are willing to pay extra for eco-friendly devices, but when the time comes, will they actually go through with it? I’m not so sure. The biggest drivers behind a smartphone purchasing decision are still (in no particular order) brand, camera, battery, price and display. If the device of choice happens to also be eco-friendly then great, but I don’t think it is yet a dealmaker or dealbreaker.”
Finding circular business models
In a more linear process, materials are extracted from the ground and made into components, usually using some kind of fossil fuel. This is then used for a certain period and discarded at the end of its life – it could be incinerated or sent to landfill, but typically nothing is recovered. The circular economy aims to move away from this completely so that nothing is taken out of the ground – materials that have already been extracted are idling within the economy, and these can be captured back and reprocessed using zero fossil fuels, entirely powered by renewable energy.
Stryjak notes that operators are pushing refurbished devices, displaying them more prominently on websites and offering them alongside new devices. Some operators are also investing in buy-back or e-waste compensation schemes too; for example, Vodafone’s One-for-one initiative (in partnership with Closing the Loop) collects one end-of-life device from the market for every new device bought, and sends it for recycling.
Moore explains that the GSMA is agreeing targets with its members for a take-back rate of around 20%. While this may sound low, currently most operators collect less than 10% of devices, so achieving 20% by 2030 would be a significant increase. When devices are reclaimed, nothing ends up in landfill or incineration – everything is either reused, refurbished or recycled. Moore notes that the GSMA has 16 operators with over a billion connections signed up to this target – and notes that a key reason for this is that the business case is now viable.
Prior to MWC25, the GSMA published a report on device circularity, which featured not just the aforementioned consumer survey but also a survey of more than 30 mobile network operators spread all around the world. Operators were asked which circular business models they were implementing currently, and which they were considering expanding into – refurbishment was the most widely used model, followed by e-waste processing. Repair, takeback and phone leasing were all mentioned too.
The key takeaway is that respondents were looking to expand their activities in all of these areas. Determining the added value of these processes is the next step for supporting the transition to a circular device economy.
