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End of the Line

At a non-descript industrial building southwest of downtown
Los Angeles, workers take their positions on the line.

One worker scans the bar code on a cable set-top box, which is tracked as it makes
its way to the latest stop through the 100,000-square-foot facility. The next man,
working quickly at the metal-topped
workbench, opens the case to remove
the circuit board. A third worker grabs
a mallet. In three powerful whacks, the
case is smashed flat and tossed unceremoniously
into a large cardboard box.

The circuit boards are handled most
gently, destined for resale and reuse. Finally,
the box itself, a steel casing, is sent
to the jaws of a beast nicknamed the
“Grinder,” a 400-horsepower shredder
that slices the metal into smaller pieces
to be more easily and cheaply shipped to
their next stop in the supply chain.

Welcome to the world of “demanufacturing.”


The pace of technological change is accelerating the obsolescence of all types of technology.
For instance, where a simple digital converter box would once suffice, consumers now want
HD set-top boxes with DVR functionality.

And these days, cable boxes have an estimated eff ective life of seven years. Box swap-outs —
necessitated by changing service trends, paired with external and internal pressure for businesses
to go “green” — have been a boon to the electronics-recycling industry.

According to the Institute of Scrap Recycling, 3 million to 4 million tons
of electronic equipment are recycled each year. Cable’s percentage
of contribution to that stream is in the low single digits, but
growing, recycling firms said.

Cable providers say there is a resale market for
used set-tops, but operators such as Comcast now
choose recycling over resale by selling outmoded
boxes at a vast discount.

In short, there is gold, literally and figuratively,
in outmoded and irreparable
cable technology. Obsolete electronics
contain marketable scrap commodities
that are traded in the global market
at increasingly higher prices.

That market is so volatile
that recyclers rely on weekly
industry reports to determine
the going price of everything
from precious metals to plastic
and glass cullet. Domestic
remanufacturers and refurbishers snap up that material.

“Companies have found that it’s cheaper to mine products already in the field than to mine
from the ground,” Derek DiGiacomo, senior director, information systems and energy management
programs for the Society of Cable Telecommunications Engineers, said.

According to the Institute
of Scrap Recycling, 1 metric
ton of electronic scrap contains
more gold than can be
recovered from 17 tons of
gold ore. The return on the
remanufacture of a set-top box
is “a few dollars,” according to

Gold is not the only precious
metal that’s recovered: Circuit
boards also yield palladium,
copper and silver. Actually,
all the metals are precious
— even the steel and aluminum
is recovered and resold.
According to major recyclers
contacted for this article, most businesses in this sector are 100% landfill free. Even the non-recyclable,
petroleum-based products that are scrapped aren’t trashed: they are sent to waste-toenergy
plants and burned to generate power.

Recycling, like the cable industry, has consolidated in the last few years,
leaving approximately five power players including companies like Sims
Recycling Solutions. Competing recycling firms were loath to discuss specific box-acquisition prices and commodities revenue for this
article. Most recyclers have nondisclosure agreements
with the companies from which they buy, they said.

Steve Skurnac, president of Sims, one of the nation’s
largest recycling outfits, said cable is a small but growing
part of the recycling supply chain. Sims’ North
American regional office is in Chicago, but the firm
has 14 facilities around the U.S., including the Los Angeles-
area operation.

At the Sims facility visited for this story, not only is the
scrap recycled, but components such as the hard drives
in DVR set-tops are recycled whole. Access to the diskdrive
recovery zone is a secured area with entry to authorized
workers validated via a fingerprint scanner. Workers
there clear the drives of any personally identifi able information
before shipping them out to domestic repair and refurbishment

Parts of those DVRs could end up back in subscriber homes
as part of a customer’s next computer tower, laptop or new settop

Disc drives that don’t make the cut are destroyed and their
base components recycled. Since each piece of hardware is
tracked through the recycling process, client companies can
ask for a “certificate of destruction” for any individual piece
of hardware.

The Sims facility outside downtown Los Angeles does not
just handle cable hardware: the line is populated with shrinkwrapped
towers of everything from hundreds of VCRs from a
local school district, to computer components and big-screen
TVs, to mobile computer stands now seen in the corridors of
hospitals that are virtualizing their patient charts. So much
recycling is being done that it may take 35 days for a pallet of
hardware to make it to the front of the demanufacturing line.

Commodities are so valuable that fi rms have entry monitored
by third-party security firms. Employees enter through
airport-style metal detectors and have a strict “no beep” policy
(no metals in or out).

Cable operators typically get rid of their hardware in one
of two ways: electronics sellers can market their broken hardware
to recyclers on a pennies-per-pound basis, ranging from
10 cents to 50 cents per pound. Less risk-adverse sellers may
bet on increases in the commodities resale market, and cut a
deal to share in the sale profi ts of the scrap commodities after
the hardware has been broken down, according to recyclers.
The cost paid for hardware includes the price for the recycler
to pick up the unwanted technology.

Recycling is a component of the SCTE’s Sustainability
and Energy Management Initiative (SEMI), which has
drawn recyclers to the cable industry. The SCTE sponsored
its first Cable Show “green pavilion” in 2009, working to attract
appropriate service providers to the cable industry.
The drive is to recycle routers, switches,
cable-modem termination systems
(CMTSs), encoders, decoders, “anything
that can plug in. Topologies are different
but at the end of the day, the need is still
the same,” DiGiacomo said.

Two years ago, recycling by the cable
industry was almost zero, Skurnac said, a
level which has increased to less than 10%
for his business, but one that’s growing.

“We’re seeing growth across all categories
(of electronics),” he said, with cable
“notching its way up our food chain.”

“Recycling has a positive value to (cable
operators). Source separation pays for itself,”
Skurnac said.

With cable penetration at about 100
million basic and digital-cable households,
and an average of two converters
per home, there is the potential for very big
churn of material, Skurnac added. ”Cable
companies pay very close attention to the
(hardware) value.”

Another firm, Round2 of Austin, Texas,
has recognized 100% year-over-year
growth in set-top box recovery and recycling
programs since it got involved with
the cable industry through the SCTE in
2009, according to the company.

“Recycling is not only green for the industry,
it’s green for the MSO. It puts green back into their
pockets,” Peter Muscanelli, vice president of sales and marketing
for Colt Refining & Recycling, which has facilities in
New Hampshire, said. “We’ve done hundreds of waste audits
in the cable/telecom space and they’ve been amazed
how sustainable the industry can become.”

Hardware buyers aren’t the only ones thinking about
“end-of-life” issues for equipment. Manufacturers are also
enhancing the ability of their products to have value beyond
the cable home.

For instance, since 2008 Cisco Systems’ Service Provider
Video Technology Group ha made sure that its set-top boxes
are Restriction of Hazardous Substances (RoHS)-compliant.

RoHS compliance is required for hardware used in European
Union countries, but the technology giant has voluntarily
applied that standard to U.S. production as well.
Even the packaging for new products is made from recycled
molded paper pulp, the company noted.

Recycling is not the only green initiative pushed by the
industry. The SCTE is working on a standards program
that would actually minimize the need for recycling by
nudging manufacturers toward longer usability by nextgeneration
boxes (i.e. feature upgrade via software download).

A benchmarking project is also underway to find ways
to make set-tops (often painted by politicos as “power
hogs”) draw less electricity.

In the meantime, “demanufacturing” continues to increase
and you never know where the recovered commodities
will surface.

Here’s a clue to one destination: next time you are in Las
Vegas for the Consumer Electronics Show, Round2 advises
taking a closer look at those lions reigning over The Strip
in front of the MGM Grand.

That golden patina? Recycled gold recovered from consumer