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May 16, 2023
Supply chain problems are undoubtedly a headache for the telecom industry, but it has produced a silver-green lining for the circular economy. Data from a white paper by TXO – a company focusing on telecom equipment sourced from the circular economy – shows that 46% of operators have turned to the secondary market and refurbished equipment because of lengthy waiting times for new equipment sourced directly from OEMs.
According to TXO data, 38% of operators say they already rely on the circular economy to overcome supply chain disruptions, while 32% would consider doing so. Yet only about 55% of companies cite sustainability as an important metric when selecting new suppliers. In a world hovering on the edge of a catastrophic climate-change abyss, that seems like a low number.
Figure 1: (Source: TXO)
Speaking to Light Reading via Zoom, TXO's CEO Darren Pearce noted, however, that there is a commercial drive towards TXO's market. With many telcos seeking to reduce spending, lower equipment costs are a strong argument in favor of the circular economy.
"What we actually see is customers reviewing and reengineering what they already have, so instead of putting new parts into the network, they are choosing our market to make their existing network last longer," he says.
And while some companies may have been pushed to the secondary market out of necessity, Pearce notes that these customers are not going away. He points out that telecom equipment is designed to be very robust in terms of technical capability, and tends to be very well looked after, meaning it is still of high quality when it reaches his market. The main obstacle to companies relying more on the circular economy, he argues, is tradition and an inertia in purchasing habits.
Waste not, want not
Of course, to get the latest technology, a company will need to go directly to the OEM. According to the white paper data, about 18% of operators say they cannot find the products they need in the circular economy. Presumably, this means a sizeable chunk of telcos' needs could be met with refurbished equipment.
Speaking about the customer base, Pearce stresses that it is a misconception that most equipment is sourced in developed countries and resold in developing nations. "I would say 80% of our product comes from first-world economies and goes back into first-world economies," he says.
While he points out that smaller network operators are often most affected by supply chain problems because they do not source enough equipment to make them a priority for OEMs, TXO's customers include some of the biggest names in the sector. A look at the company's website shows it has worked with the likes of AT&T, BT and Telefónica.
At the moment, TXO is working with a large – unnamed – operator, which decided to rely on the circular economy to source replacements and repair parts when its contract with an OEM expired. Otherwise, this would have meant ripping out a part of its network.
Go green or go bust
It seems that conversations about sustainability in the telecom sector often boil down to the issue of energy efficiency. While this is, without a doubt, an important subject, there is no silver-bullet solution for addressing it. Scope 2 emissions – those caused by direct energy use – correspond to only about 27.6% of the operators' emissions, according to 2019 Oliver Wyman analysis.
Figure 2: (Source: Oliver Wyman)
Most emissions fall under the much less straightforward Scope 3 bracket, which includes indirect emissions generated both downstream and upstream. The biggest share here – or 28.9% of all operator emissions – comes from capital goods used by the industry. In terms of sustainability, one might therefore argue that sourcing equipment more responsibly is just as important as reducing energy use.
The industry seems to have taken notice. The GSMA, which has set a 2050 target to become net-zero, has put forward a strategy paper, in which it stresses that refurbished equipment should be given the same consideration as new in business proposals to curb the trend of shortening lifecycles and increasing waste.
At a time when European telcos are becoming increasingly weary of the ten-year technology cycles dictated by the evolution of the Gs, this idea might be more attractive than ever. Besides, increasing revenues will not get any easier if most of humanity is turned into dust.
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