Recycled phones drive Third World wireless boom - East Valley Tribune: Business

Recycled phones drive Third World wireless boom

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Posted: Monday, October 30, 2006 2:55 am | Updated: 2:50 pm, Fri Oct 7, 2011.

DEXTER, Mich. - With the number of cell phones in use worldwide hitting 2.5 billion and rising, recycled phones are playing a growing role in the spread of wireless communications across the developing world, where land lines can be costly or unavailable.

While most used phones in this country still land in a drawer or the trash, a rising number are finding their way to places like Bolivia, Jamaica, Kenya, Ukraine or Yemen, with more than half of them coming from a company named ReCellular.

Based in small-town Michigan, ReCellular gets 75,000 used phones a week — most collected in charity fundraisers — and refurbishes more than half of them for sale around the world. The remainder are salvaged for parts and reusable raw materials.

ReCellular executives say they are doing well for themselves as well as for the March of Dimes and other national charities, which collect used phones to raise money by selling them to ReCellular.

‘‘The fact that you can combine a business — a profitable business — with a useful service and a charitable good is a win, win, win,’’ said ReCellular Vice President Mike Newman, 32. Charles Newman, Mike’s father, founded the company in 1991.

That year, there were about 16 million cellular subscribers worldwide, according to the International Telecommunication Union. By 2005, that number had grown to 2.14 billion, outstripping the world’s 1.26 billion land lines, the group said.

Wireless use is nearing ubiquity in the United States, Europe and several Asian nations, so the next phase of rapid growth is expected from emerging markets. In Africa, the number of cell phone subscribers rose 20-fold over five years, from 3.58 million in 2000 to 76 million in 2005, the ITU says.

When ReCellular opened for business 15 years ago, it handled 300 to 400 cell phones a month.

‘‘If we’re not doing that many in a few minutes (now), we’re having a bad day,’’ Mike Newman said.

With Americans trading in their phones for fancier models every 18 months on average, the supply of used but perfectly functional phones is enormous, Newman said. Millions, however, end up sitting in drawers or closets because people don’t know what to do with them, he said.

‘‘Most people would be glad to donate them if they knew they could,’’ he said.

Manufacturers are increasingly aware of the need to take responsibility for the growing mass of old electronic items, said Peter R. Muscanelli, president of the International Association of Electronics Recyclers. Mandatory electronics recycling laws in California and elsewhere also drive the business.

ReCellular processes about 53 percent of the used cell phones resold in the U.S., said Michael Blumberg, president of D.F. Blumberg Associates, a consulting firm in Willow Grove, Pa.

Other major players include RMS Communications in Ocala, Fla., and PaceButler Corp. in Edmond, Okla.

ReCellular outgrew its home in Ann Arbor in 2003 and moved to an industrial park in nearby Dexter. The village of 1,700 is 40 miles west of Detroit.

The company has a work force of 250, about 200 of them local. The privately held company’s revenue, about $40 million last year, is shooting higher as well, Newman said.

‘‘We’re on track to jump 67 percent this year,’’ said Newman.

ReCellular’s loading dock gets a flood of phones. Some come in individual mailers that charities give out. Others come from collection bins at electronics chains and wireless stores, including Sprint, Verizon Wireless and T-Mobile locations.

The charities get $2 to $10 per donated phone, Newman said.

ReCellular handles about 500 phone models. About 60 percent of the phones that come in are reusable. The rest are used for parts or sold as scrap.

‘‘We squeeze out as much value as possible,’’ Newman said.

The refurbished phones sell wholesale for about $17 to $18. Retailers sell them for $40 or less, he said.

Newman said 55 percent to 60 percent of the refurbished phones it sells to wholesalers end up in the hands of consumers outside the U.S.

Refurbished cell phones are opening doors to wireless communication in much of the developing world, where a new cell phone might otherwise be prohibitively expensive, Blumberg said.

Today, about 80 percent of the globe’s 6.5 billion people live in an area with cell phone reception, according to Newman and Blumberg.

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