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The Honolulu Advertiser
Posted on: Sunday, October 29, 2006

Old cell phones find new life in poorer nations

By DAVID N. GOODMAN
Associated Press

ReCellular gets some 75,000 used cell phones a week, and resells them or recycles them as parts and scrap.

Photos by PAUL SANCYA | The Honolulu Advertiser

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Christina Liddell erases data from a used cell phone at the ReCellular plant. Many of the company's refurbished cell phones end up in the pockets of consumers in Bolivia, Jamaica, Kenya, Ukraine or Yemen.

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DEXTER, Mich. With the number of cell phones in use worldwide hitting 2.5 billion and rising, recycled phones are helping spread wireless communications across the developing world, where land lines can be costly or unavailable.

While most used phones in this country still land in a drawer or the trash, a rising number are finding their way to places like Bolivia, Jamaica, Kenya, Ukraine or Yemen, with many of those coming from ReCellular Inc.

Based in small-town Michigan, ReCellular gets 75,000 used phones a week most collected in charity fundraisers and refurbishes more than half of them for sale around the world. The remainder are salvaged for parts and reusable raw materials.

ReCellular executives say they are doing well for themselves as well as for the March of Dimes and other charities, which collect used phones to raise money by selling them to ReCellular.

"The fact that you can combine a business a profitable business with a useful service and a charitable good is a win, win, win," said ReCellular vice president Mike Newman, 32.

Mike's father founded the company in 1991 after decades as an entrepreneur in the retail computer business.

That year, there were about 16 million cellular subscribers worldwide, according to the International Telecommunication Union. By 2005, that had grown to 2.14 billion, outstripping the world's 1.26 billion land lines, the group said.

Wireless use is nearing ubiquity in the United States, Europe and several Asian nations, so the next phase of rapid growth is expected from emerging markets. In Africa, cell-phone subscribers rose 20-fold over five years, from 3.58 million in 2000 to 76 million in 2005, the ITU says.

When ReCellular opened for business 15 years ago, it handled 300 to 400 cell phones a month.

"If we're not doing that many in a few minutes (now), we're having a bad day," Newman said.

With Americans trading in their phones for fancier models every 18 months on average, the supply of used but perfectly functional phones is enormous, Newman said. Millions, however, end up sitting in drawers or closets because people don't know what to do with them, he said.

"Most people would be glad to donate them if they knew they could," he said.

Mandatory electronics recycling laws in California and elsewhere also drive the business.

ReCellular processes about 53 percent of the used cell phones resold in the U.S., said Michael Blumberg, president of D.F. Blumberg Associates Inc., a consulting firm in Willow Grove, Pa.

Other major players include RMS Communications Inc. in Ocala, Fla., and PaceButler Corp. in Edmond, Okla.

ReCellular outgrew its home in Ann Arbor in 2003 and moved to an industrial park in nearby Dexter. The village of 1,700 is 40 miles west of Detroit.

The company has a work force of 250, and again finds itself bursting at the seams. Revenues of the privately held company, about $40 million last year, are shooting higher as well, Newman said.

"We're on track to jump 67 percent this year," said Newman, who found himself drawn to the family business after working as a Washington lobbyist for the Sierra Club and then for Al Gore's 2000 presidential campaign.

ReCellular's loading dock gets a flood of phones in packages large and small. Some come in individual mailers that charities give out to their supporters. Others come in large shipments from collection bins at electronics chains and wireless stores, including Sprint, Verizon Wireless and T-Mobile locations. The charities generally get $2 to $10 per donated phone, depending on its value, Newman said.

The phones are sorted, tested, fixed and packaged by model for resale. About 60 percent of the phones that come in are reusable. The rest are used for parts or sold as scrap.

"We squeeze out as much value as possible," Newman said.

The refurbished phones sell wholesale for about $17 to $18. Retailers sell them for $40 or less, he said.

Newman said 55 percent to 60 percent of the refurbished phones it sells to wholesalers end up outside the U.S., and that about a quarter of the refurbished phones sold worldwide come from ReCellular.

Refurbished cell phones are opening doors to wireless communication in much of the developing world, where a new cell phone might be prohibitively expensive, Blumberg said. "Sometimes, you have someone in a village who has a cell phone and rents out time," he said.