What’s driving the circular economy in European telecoms?
Capacity explores the factors behind circular economy adoption, and investigates why more granular data on network components is key to driving adoption of the principles
The fundamental principles behind a circular economy have been around for a long time. As has an acknowledgement that our classic approach to making and using things is simply unsustainable.
Reducing human consumption and waste is imperative to preventing environmental, social and economic disaster in the decades to come.
Repurposing materials and equipment when it reaches the end of its usefulness in its current context, the circular economy model, has also been available to telecoms companies for a number of years. Second-life kit provider TXO for example, has been in business for 17 years.
“We’ve been promoting the circular economy since we started, but it’s been in the last 5 years that it’s attracted much more attention from the IT and telecoms industry” Kieran Crawford, director of sales at TXO says.
“The IT and telecoms industry is a significant contributor towards C02 equivalent (C02e) emissions, and everyone is now working on reducing their impact.”
But why is circular economy becoming so important to how European telcos do business?
What is driving the circular economy?
One of the major factors encouraging action on climate and driving the circular economy are the ESG goals that have been deployed by mobile network operators.
Swedish operator Telia, for example, have concentrated on climate and circularity as one of their three sustainability pillars. With targets of carbon neutrality by 2040 and halving their C02e emissions by 2030, head of group sustainability Sara Nordbrand believes that “applying circular principles is key to achieving the industry’s climate goals and minimising other environmental impacts.”
This is true for both the devices that MNO customers are using to access their networks, and the network itself.
Various studies by industry groups such as the GSMA and JAC (Joint assembly on CSR) have illuminated why reducing waste and reusing materials where possible is essential to the long-term viability of the telecoms industry.
“Currently, the global economy is using natural resources at a rate faster than can be regenerated. In the telco industry alone, natural sources for six of the elements found in mobile phones are predicted to run out in the next 100 years,” Mark Redmond, chief people officer at Three UK tells Capacity.
While ESG targets have had a significant impact on encouraging the telecoms industry to focus more on circular economy, they are not the only factor.
As consumers become more sustainability-aware in their purchasing decisions, choosing a mobile provider that can offer a refurbished handset, or at least repair and replace it while they are a customer, is becoming more of an influencing factor.
This has led Three UK to introduce its Three Recycle and Reconnected programs, which are aimed to reduce the social and environmental impact of the products it sells, and to support the retrieval of the precious components within them.
“The circular economy represents an untapped opportunity to develop new innovative business models whilst also making a positive social and/or environmental impact,” Redmond says.
Supply chain disruption caused by the COVID-19 pandemic, war in Ukraine and silicon chip shortages have driven circular economy as well.
“We were seeing customers with up to 200-day lead times for certain equipment” Crawford says.
“The problem with this is two-fold. Firstly, for a new network, you have to wait to turn on the network until this part has been sourced, which delays your time to revenue and monetisation of the network.”
“Secondly, knowing you have parts in your network that will take 200 days to replace if they fail is a massive risk that no telco wants to take.”
These factors are driving people towards the secondary market, where this equipment doesn’t need to be made new, and can therefore be sourced in a more reasonable timeframe.
The Circular Economy has its strengths from a financial standpoint as well. BT Group’s head of circular economy, Matt Manning, provides an example.
“As part of our transition from the public switched telephone network to digital networks we are evaluating the legacy technology housed in our exchanges,” Manning explains.
By partnering with technology lifecycle management company N2S, BT can identify cards and switches that are no longer required on the new network.
Rather than simply disposing of the unnecessary equipment, partnering with the like of TXO or other secondary market vendors to resell the equipment can unlock a new revenue stream for BT.
It can also use the opportunity to reduce costs, by immediately decreasing the power consumption through removing unnecessary equipment, but also by repurposing it elsewhere in its network, avoiding the need to buy new.
“If there isn't an opportunity to reuse, then it gets sent to recycling where any value recovered from the material is shared back with us,” Manning says.
Better data is key
While the various reasons to buy into the circular economy seem clear and defined, putting it into practice is not as easy.
Like Telia, BT Group have targets in place for 2030 and 2040, seeking to create a “circular BT” and a “circular technology ecosystem” by each date respectively.
Manning believes one of the most significant barriers in BT’s way to achieving these goals are securing granular data from suppliers.
“Pretty much every decision you make in sustainability should be ultimately linked to good quality data,” he says.
“Getting better visibility through environmental declaration reports or product carbon foot printing data can allow us to track its impact over the course of its life, which can help us identify any hotspots.”
For example, if BT find a product where 80% of its carbon impact occurs during its use phase, it can look at how it is operating to see if they can make it more efficient.
Or if 80% of the impact is in the manufacturing phase they can investigate if this is caused by a certain material, where the product is made, or how it is shipped, and take action accordingly.
Unfortunately, a lot of this data is not currently available.
“Some suppliers will have access to this data, but they are incentivised to withhold it, as they make more money from selling new products,” Crawford explains. However, that appears to be changing.
“There are some studies for certain products/areas but [Telia] constantly look for better and updated calculations,” Nordbrand agrees. “We contribute to collaborative initiatives aiming for standardisation of calculations and we ask all our suppliers to set science-based climate targets. To achieve such goals, most companies need to start working with circularity.”
While some suppliers may be nefariously withholding data, this is an unviable long-term strategy, as pressure is building for access to information through groups such as the GSMA and JAC.
In addition to lobbying for the provision of this data, industry groups can help to provide more standardised reporting templates, which make data more useful for operators, and easier to supply for vendors.
“From a competitive tender point of view, we’re much more likely to choose a vendor that can provide you all the data you've ever needed in the world from a sustainability point of view, over one that can't provide data or seems to be unwilling,” Manning says.
With this in mind, Three UK have launched a project to gain transparency and better identify risks and improvement opportunities across its supply chain. Partnering with Ecovadis to use their supplier assessment tool, “we define a number of sustainability-related criteria (including adherence to relevant standards) in our RFPs which inform our decisions,” Redmond explains.
This project runs alongside Three’s updated supplier code of conduct, which include new provisions on circular economy, climate impact, environmental impact of goods and services, and the protection and restoration of biodiversity.
Telia also rely on their supplier code of conduct to ensure they receive the right information from companies they work with. “In practice this means that we try to ‘prevent, reduce, reuse and recycle’ waste, in that order. This logic is increasingly applied in different parts of our operations,” Nordbrand says.
In addition to capturing data on a product’s lifecycle while it is being manufactured, understanding how it will be used is equally important, and this extends to the devices that are being used by Telia and other operators’ customers.
“Certain new products replace physical products – the mobile phone is a great example replacing both cameras, cd-players and answering machines. Today it can be about an app replacing a TV set top box or cloud services replacing more physical products at customers’ own premises,” Nordbrand expands. Capturing this information
Furthermore, regulation is playing its part. “European regulations will affect BT and mean that we have to report material inflows and outflows across our business, as well as whether those materials are virgin, or recycled,” Manning says. “For us to be able to report on this properly, the data availability on supply chains needs to be scaled up.”
While the principle of circular economy has been around for a long time, there is clearly a revitalised interest in adopting it. Time is of the essence, and if the most impactful areas of telecoms business operations are to be addressed, data to help identify what they are, and what needs to be changed is essential.