Could a circular economy business model transform the telecoms industry?

Klaus Grobe
People building recycle sign

Take, make, use and dispose. For decades, that’s been the standard business model in technology as well as in many other industries, with companies leveraging raw materials, manufacturing a product, and then selling it to the end customer. After that, it’s only a matter of time until the manufactured item reaches the end of its life, the customer no longer has any use for it, and it finishes up as waste.

Now, though, that traditional paradigm could be starting to change, as companies and customers switch on to the idea that fresh ideas and processes are needed that promote circular economies. This is part of the thinking behind the Activating Circular Services in the Electric and Electronic Sector (C-SERVEES) project, a four-year EU Horizon 2020 initiative that uses case studies to develop toolboxes and policy guidelines for business model innovation.

Rethinking business models

C-SERVEES consists of an international consortium of 16 partners from the tech industry, public bodies, think tanks and research institutes, representing 11 different countries. It focuses on developing circular economy business models, which prioritize keeping raw materials and substances in closed loops for as long as possible to reduce raw material intake and waste generation. When they can be made to work, circular economy business models are better for the environment and put less stress on the supply chain.

For us at ADVA, this project felt like a natural fit, and we’ve been a part of it from day one. Moving towards circular economy business models right across our product line is one of our long-term aims. It’s part of our drive to be at the forefront of sustainable practices in all aspects of our business.

Rethinking our business models aligns with other strategies such as our eco-optimized design approach, which means more of our technology becoming reusable, recyclable, and long-life. The value of this was highlighted in 2018 when we won BT’s Game Changing Challenge for sustainability using a combination of innovative design and AI to reduce the end-to-end carbon footprint of our Carrier Ethernet demarcation solution. 

A new approach

One key idea for enabling circular economics involves moving away from pure product offerings towards value-added services. This concept, in which a vendor provides bundled product/service solutions while retaining full ownership of equipment, is known as a product service system (PSS). We see huge potential for both growth and sustainability using PSS principles.

Right now, we’re preparing for our role in one of C-SERVEES’ large-scale demonstrators. As one of the participating organizations who are already on the journey towards developing circular economy business models, we’re involved in Work Package 4. For this, we’re collaborating with our partner Stöbich Brandschutz to show how our ALM fiber assurance solution can be deployed as a PSS in a real-world network. The demo will highlight how the ADVA ALM could be harnessed even more sustainably than it is today as part of an infrastructure monitoring service.

In many ways, our ALM is the perfect candidate for such a business model. Its design has been enhanced for long life with each unit operating for at least ten years and its sensors for up to half a century. If we were to own and maintain the technology then customers could rapidly benefit from the latest innovation with immediate updates in the field.

It will certainly be interesting to explore the PSS approach with our ALM and to envisage similar strategies across other parts of our technology portfolio. With its whole new set of incentives and responsibilities to maximize material use, it’s entirely possible that the PSS model will lead to a fundamental rethink in our industry and further afield.This latest demo could well be the blueprint for the future.

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