Mobile operators can make multi-billion-dollar savings by allowing their customers to part-exchange their old handsets when they upgrade to a new device, according to one handset refurbishment specialist.

U.S.-based eRecyclingCorps (eRC) began a pilot project with its first operator customer, Sprint, in July 2009. It committed to saving the telco US$100 million in the first year of their partnership, a target it exceeded. ″We saved them $150 million in the first year,″ eRC chief executive David Edmondson told Total Telecom earlier this week.

Since they started working together Sprint has saved more than $1 billion, he added.

The model is fairly straightforward. When a customer goes to their operator for an upgrade, the operator allows them to trade in their old phone in return for credit that they can spend as a discount on their new phone or on accessories. There is no outlay for the operator though: eRC finances the trade-in then refurbishes the old phone to be sold on elsewhere.

The average residual value of old mobile phones worldwide is $75 per unit. ″That's somewhere over $100 billion of value,″ in total, Edmondson said.

Many of the refurbished handsets end up in emerging countries, although there is a market in the developed world among young or cost-conscious consumers, particularly in the current economic climate.

When someone in the developed world hides an old device away an in drawer, ″we deprive a person...in the developing world of a prize,″ that is, a smartphone that they would not otherwise be able to afford,″ Edmondson said.

eRC works solely through the operator channel and in addition to Sprint its customers include Verizon and AT&T in the U.S. and Telus and Rogers in Canada. ″We came to Europe last year...[and] we're in the rollout stage...with very large operators here,″ Edmonson said, although he was unable to name them.

″The next place we will be going into will be Asia-Pacific,″ Edmonson said.

In total the company has completed 10 million mobile device trade-ins, 7 million of which came in 2012 alone. Sprint now does a part-exchange on 40% of all handset upgrades.

For operators the cost savings come through reduced handset subsidies, since essentially the customer is paying for a greater portion of the device with the credit from eRC. In addition eRC claims the scheme reduces churn, boosting the customer's loyalty to the operator.

″When the customer accessorizes their phone, churn goes down,″ Edmonson claimed.

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