The growing case for network equipment recycling

• Operators are increasingly focused on the circular economy and how they can repurpose their used infrastructure as they seek ways to make their networks more sustainable
• Refurbished telecoms equipment supplier TXO believes the market for second-hand technology is already worth more than £1bn and growing
• The reuse of hardware varies across the world, with multiple factors impacting demand

As telcos face increasing pressure to become more sustainable, refurbished telecom equipment supplier TXO believes demand for pre-used hardware will increase and drive the value of the market up to £2bn globally.

Talking to TelecomTV, TXO’s group CEO Darren Pearce (pictured above), said a conservative estimate of the current value of the refurbished telecom equipment sector is more than £1bn, but as used network infrastructure becomes an increasingly attractive option for some operators, some market watchers have suggested the sector could be as large as £2bn, noted Pearce.

Currently, the company claims to trade with hundreds of operators globally, including with 80% of the top 100 telcos. Its customer list includes the likes of AT&T, Vodafone, Orange and BT, which is working with TXO on its Exchange Clearance Operation (ECO) programme – see BT Group embraces circular economy as catalyst for sustainability.

TXO’s aim is to achieve a market share of more than 20% in the coming years, a target that it plans to hit through organic growth and potential acquisitions. 

As might be expected, market adoption of refurbished equipment varies across different geographies and Pearce suggests this is largely due to market maturity.

The market is biggest across well-developed countries and regions, including the US and Europe, where complex telecom networks have been developed and run for the past 40 to 50 years and still partly comprise some legacy technology that operators need to maintain, Pearce explained.

“If you move across to newer, faster developing markets like the Middle East and Africa… their networks haven’t been running so long – they’ve only been in-country for 10, 15, 20 years, so these markets move at different paces”, he added.

Another factor at play is mindset. What TXO has seen is that the Scandinavian region is “hugely proactive” in the refurbished equipment market, as companies based there “don’t think twice about it – they don’t have any preconceptions or concerns”.

Driving factors behind reusable equipment market growth

Pearce highlighted a few factors driving the greater adoption of second-hand equipment by telcos. The primary one is the potential lifespan of a communications network, which tends to be between 20 and 30 years, a lot longer than in a datacentre environment, for instance.

“It’s no different than if you own a 20 or 30-year-old car that you want to keep running – you can’t always go back to the original manufacturer and get your spares, you have to go to an alternative market. And that’s the same in our telco world – we have hundreds of customers globally that have infrastructure that is perfectly fine and is critical to their networks. But to expand or maintain those networks, they have to come to the refurbished market to source their product”, Pearce argued.

Usually, operators would turn to the original equipment manufacturer (OEM) for “their new shiny 5G [infrastructure]”, for instance, but according to Pearce, when it comes to older technology, the OEMs “quickly move on and stop support for a lot of these networks, leaving operators with a problem that TXO and our market solve”.

TXO has also witnessed more and more telco customers putting an increasing focus on sustainability goals and the circular economy in particular, which is why they are now considering the reused equipment market as a sourcing option.

Pearce couldn’t provide figures about carbon emission savings enabled by the refurbished equipment it sells, but noted that the company is investing into delivering “full transparent calculators for our customer base in terms of every piece of product that they put in or take out of our system in terms of buying and selling”.

Another market driver is vendor market consolidation, as OEMs that have previously supplied network technology are “slowly disappearing or merging”.

“If you went back 20 years, there might be 20 to 30 big OEMs producing products across [the full] spectrum of technologies for the customer base,” noted Pearce, but now there’s an increasing danger of market concentration and the sector becoming dominated by too few companies. “The Ericssons and Nokias of this world have gone through multiple acquisitions and mergers,” Pearce noted.

In the past few decades, the potential for market concentration had been kept at bay by the fierce competition that Chinese vendors Huawei and ZTE brought to the international market, but now “the brakes have firmly been put all in and that’s in reverse”.

“So, you leave an almost monopolised market in the form of Nokia and Ericsson, and then you have the likes of Ciena, Juniper and Cisco in their sectors as well. So, if you’re an operator somewhere in the world, and you have a shopping list, you don’t have many supermarkets to go to anymore. It’s a very limited shopping environment”, according to Pearce.

He outlined a trend of “an ever-growing customer base that just can’t source what they need from the new markets [and] the OEMs, and [they] have to therefore come to our market to source” what they need. 

• In the second part of this article, we’ll find out about the impact that trade sanctions have had on the global telecom equipment market, how TXO engages with the operator sector and what leading industry analysts think of the refurbished telecom technology market.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV