Used phones drive Third World wireless boom

By David N. Goodman

updated 5:44 p.m. ET Oct. 29, 2006

DEXTER, Mich. - With the number of cell phones in use worldwide hitting 2.5 billion and rising, recycled phones are playing a growing role in the spread of 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 more than half of them coming from a company named 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 national 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.

Charles Newman, 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 number 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, the number of 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," Mike 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.

Manufacturers are increasingly aware of the need to take responsibility for the growing mass of old electronic items, said Peter R. Muscanelli, president of the International Association of Electronics Recyclers. Mandatory electronics recycling laws in California and elsewhere also drive the business.

"It's a little bit of both," said Muscanelli.

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