Driving towards consumer led device circularity

At Mobile World Congress 2024, speakers from Kingfisher, CCS Insight, Vodafone, Samsung, and Telefonica sat down to discuss strategies focussed on changing consumer mindsets with regard to device lifecycles.

There’s no doubt that AI was a clear focus of this year’s event, with sustainability taking more of a back seat than previous years - although many attendees still showcased their commitment to environmental responsibility in various forms.

However, on day three of the conference consumer-led sustainability was the topic of an insightful panel discussion, designed to seek answers to the crucial question: what should we do about the billions of mobile devices that are discarded every year and how can we as an industry empower consumers to lead the way?

Watch the full panel below or read on for the highlights.

A circular approach to the device lifecycle

The scale of the issue at hand should not be underestimated. According to the GSMA, over 5.3 billion devices ended up in drawers or landfills in 2023. At the same time, each time a new smartphone is manufactured, around 80kgs of carbon is introduced into the atmosphere.

This unsustainable cycle clearly needs to change, but to do so requires not only buy-in from the entire mobile ecosystem but also changing the mindset of customers.

For Kingfisher, a company that works with leading carriers and sustainable ecosystem partners to power the efficient circulation of new and second-life devices globally, the key lies in making ownership programmes more flexible and convenient.

“We allow customers the opportunity to return and upgrade their device at any time, in any condition, for any reason,” explained Georgiann Reigle, Co-Founder and CEO of Kingfisher. “The benefit of that is obviously that device has now been handed back in, so we’re able to take that phone get it back to a good condition through repair or refurbishment, and then get that device back out to another customer and begin a second life.”

This represents a fundamental shift from the typical customer journey, where a customer buys a phone and is trapped with it until the end of their contract, regardless of whether it becomes damaged, or a more desirable device becomes available.

Indeed, building on this concept of alternative ownership models and usage behaviours and integrating them into the very first steps of the customer journey is one of the main drivers for Kingfisher’s latest initiative, World Phone Amnesty, which aims to drive awareness of a more responsible and sustainable way to own and use our mobile phones.

“It’s a very simple concept: when you get a new phone, hand in your old phone,” said Reigle, noting that circularity rates are only at 5–10% on global scale. “We need to drive to a 1:1 future to make the industry truly circular and sustainable and we’re a long way from that right now.”

Changing the consumer mindset

Of course, while customers are increasingly aware of the environmental impact of their activities as a consumer, incentivising people to make more sustainable choices remains a challenge.

“The core hook for all of this of course comes from the planet and the sustainability agenda, but I think ultimately customers want value as well,” said Varun Krishnan, Managing Director – FinTech & Connected Devices Tech at Vodafone. “This ecosystem around trade-in, financing, and extending device lifetimes actually gives a lot of value back to customers.”

Vodafone itself has introduced more flexible 36-month contracts, helping to extend the life of purchased devices beyond the norm. In addition, Krishnan noted that Vodafone’s global footprint also plays a role in repurposing these devices; a returned three-year old device may not be particularly attractive to a customer in the European market, but in less developed markets like Africa these devices can still be a major upgrade for consumers.

The second-hand market is fraught with questions and ultimately, a mismatch of experiences for customers said James Kitto, VP, Head of MX Division at Samsung Electronics. A critical element of any secondary market has to be that it's clear what you're getting and what you're not getting,

But there is no secondary market without a really sustainable primary market. To Samsung, it is really important that products are sustainable from the outset, if you’re then to talk about giving those products a second and a third life. Samsung’s role is to bring innovation to market, but it has to start its journey being sustainable.

Meanwhile, Daniel Hernandez Ortega, SVP Devices & Consumer IoT at Telefónica, emphasised the importance of creating new ways to communicate the impact of device decisions to customers.

“We want to emphasise the use of the devices in a more responsible way,” said Ortega “We’ve launched very innovative solutions based on blockchain, Web3, and tokenomics, dealing with how people can compensate their carbon footprint.”

In Spain, for example, Telefonica’s Living Apps help customers track the carbon emissions from their device activity, allowing them to make more sustainable decisions. They also reward the customer with tokens for making these sustainable decisions, which can then be spent to support local or international sustainability programmes that the consumer is particularly passionate about.

Both of these approaches encourage customers to think, at the point of purchase, about what will happen to their device when they no longer need it.

Push and pull: New technology versus longer device lifecycles

At the core of this discussion around device sustainability is something of a paradox. Operators and device manufacturers, naturally, want customers to upgrade to the latest models so that they can take advantage of the latest services. On the other hand, a more sustainable device lifecycle would see customers stick with their existing devices for increasingly longer periods of time. How do you reconcile these seemingly disparate drivers?

For Reigle, the solution lies in making the latest devices more affordable, providing more choice and convenience for consumers, a quality that will see them kept in a circular loop for longer and living secondary and tertiary lives. Currently, devices being returned are three- to four-years old in typical exchange programmes. By contrast, Kingfisher’s programme in Australia, which has been running for three and a half years, is seeing one- and two-year-old devices returning to market.

“These are 4G and 5G devices, helping them meet the demand that the second-hand market has,” explained Reigle. “We’ve seen a 15x increase in the rate of returned devices by having a flexible ownership programme in the market – such as ‘Upgrade anytime’. We’ve seen the success of that programme without even telling people this is green, this is sustainable – we didn’t even communicate that. Customers were just 15x more likely to bring in that phone. If we can take that and scale it around the world, we’re going to be in a much better place.”

“It’s actually the supply that’s the challenge,” she added. “The demand globally dramatically outstrips supply.”

Original article published by TotalTelecom.