Sprint, Radioshack ex-CEOs go into phone recycling

Tue Mar 23, 2010 12:01am EDT

* Ron LeMay, David Edmonson turn to phone recycling

* Says consumers need incentives to return old phones

* U.S. recycles 10 pct of 130 mln retired cells -research

* Aims to boost phone returns for recycling to 30 mln/year

LAS VEGAS, March 22 (Reuters) - Former heads of Sprint Nextel Corp (S.N) and RadioShack Corp (RSH.N) have launched a company aimed at refurbishing or recycling the estimated 65,000 tonnes of old cellphones U.S. consumers ditch every year and named Sprint as its first customer.

Ron LeMay, once Chief Executive for Sprint's wireless business and David Edmonson, former CEO of electronics retailer RadioShack founded eRecyclingCorps to set up phone trade-in schemes for operators to encourage consumers to return old phones to carriers instead of putting them in the trash.

Under its plan, consumers would turn up at their network operator's store with their old phone and get credit for the value of that device to be put toward a new phone.

The carrier stores, which sell about 60 percent of U.S. cellphones, would then send the phones to eRecyclingCorps. It pays the carrier for the phones and sorts out which devices should be recycled and which ones can be refurbished. It would then sell the revamped phones to consumers in emerging markets.

The company's Chief Executive David Edmonson said he expects this system to work much better than current recycling programs where consumers either donate their phone or wait weeks to be reimbursed after mailing the device.

"The trick here is to provide a meaningful incentive to consumers," Edmonson said in an interview on Monday ahead of the CTIA annual U.S. wireless show in Las Vegas.

Sprint has asked eRecyclingCorps to handle phones returned to 1,100 of its own stores and 1,400 of its third-party dealers as part of its own aim to have nine phones out of 10 recycled or reused for every phone it sells by 2017.

Edmonson said he hopes his company can help it reach that goal sooner.

Dallas, Texas based eRecyclingCorps said only 1 percent of the world's 4 billion mobile phone users recycle their old phones, while 10 percent of the roughly 275 million U.S. wireless users recycle their handsets. It cited research from the U.S. Geological Survey and the Environmental Protection Agency.

Edmonson said that after proving that the concept can work at Sprint, he is in active talks with other carriers and aims to convince consumers to return 20 million to 30 million of the 130 million phones they retire each year.

"I'd call that a good start," he said.

Edmonson said he feels a responsibility to help deal with the issue of cellphone waste because he helped create the problem by being instrumental in developing the U.S. mobile phone market during his time at RadioShack.

However the company is still hoping to profit handsomely from the endeavor.

He estimated that it can achieve profit margins of about 35 percent on recycling and refurbishing phones that are traded in, of which roughly 80 to 85 percent have some value.

And once the consumers of the refurbished phones in places such as Brazil, Russia, India and China are ready for their next device, the company is looking into whether it can work with the governments of those countries to get involved in recycling or cleanly disposing of the devices again. (Reporting by Sinead Carew; Editing by Lincoln Feast)