Episode Transcript
[00:00:00] Speaker A: Welcome to Second Sense. I'm your host, Allison Mitchell. Every episode we explore the complex supply chain behind the mobile device industry, from data driven decisions to sustainable solutions and how smarter systems can give tech a second life.
Because when you trust your data, second life tech just makes sense.
Today's guest on the podcast is Flavio Rossi. Flavio is an advisor to App Kudo and a powered by AppCudo ecosystem partner. Welcome to the podcast, Flavio.
[00:00:36] Speaker B: Thanks, Alison. Happy to be here.
[00:00:38] Speaker A: Well, Flavio, before we get started, I wanted to have you give me a little bit of a background and your path to appkudo.
[00:00:45] Speaker B: I've been in the wireless industry for more years than I would like to count. The Graybeard kind of illustrates that a little bit. I started on the network side with an oem, manufactured a manufacturing company, then transitioned over to the carrier world, spent a few years with Altel, Verizon, Asurion, T Mobile for a long tenure. Then I left T Mobile in 2016, decided to take a little break and do some consulting work. I had been introduced to Apkuru and to Josh back in 2014 when T Mobile acquired MetroPCS. Apkuru was a vendor to MetroPCS and we onboarded supported Apcudo on the T Mobile side to help us solve some data problems that we were having around reverse logistics and the management of devices overall. That's when it started. In 2019, I partnered with Apgudo to start Rexy Resale and we've been going for the last six years going strong. We had a phenomenal growth in the last six years and we now run three separate facilities and cater to carriers and to OEMs alike in the US.
[00:02:00] Speaker A: Well, that's fantastic, Fabio. So you have seen quite a bit of the industry and makes you a very capable, insightful wealth of knowledge for the work that App Kudo does working around the device ecosystem. Today we're going to be talking about CTIA grading standards and what that means for the wireless industry and all of the folks in this industry. So I want to have you kind of tell me a little bit about the cellular telecommunications industry associ association and then we'll talk a little bit about the standards.
[00:02:31] Speaker B: CTIA is really the voice of the US wireless industry, right? Its membership base spans from regulators, OEMs, carriers, network infrastructure manufacturers, infrastructure deployment manufacturers like tower companies and things like that. Basically spans all aspects of the wireless industry overall in the US And CTIA has a group which is called the Reverse Logistics and Service Quality Group.
And that group has what is called a grading scales working group.
And that group came together in 2019. And the main objective was to figure out how to standardize how the parties in the industry communicate the condition of a phone in terms of the folks that are part of that group. Right? You have seasoned industry leaders around the OEM community. For example, you have Apple, you have Samsung, you have Motorola, who was a great contributor in the beginning. You have carriers, you have Ryzen, you have T Mobile, you have insurance companies like assurant, you have three PLs, you have traders. So it's a great representation of the industry that actually deals with mobile phones once they come back from their first life.
And one of the big challenges in the industry is when you're buying or selling a phone, how do you accurately communicate that condition of the device right to the next party?
Unfortunately, it is very disparate and distributed today. Every large asset owner or the majority of the large asset owners, like carriers and OEMs, they decided to come up with their own way to describe the condition of devices as they communicate those to the market when they're trying to sell them.
And then that led us to having tens of different, what we call grading criteria in the industry.
So they usually describe the condition of the device with letters, right? A, B, C, D.
So you could have company A describe their device as a grade A, while company B would describe that same device as a grade B.
So when you're in the buying side of it, you never know what you're getting. So it's a T Mobile A, it's a Verizon B, it's an Asurian DLS C.
Very, very confusing.
So what this group intended to solve was that proliferation of languages that were used to describe the condition of the device and try to standardize and have one language in the US So that when you said this device is a grade B, everybody would know what that meant.
The first revision of what we call the CTIA grading criteria was issued in December of 2019, and we're now on revision number five of that.
So originally we still had flip phones.
We had devices with wide bezels around the LCD with physical buttons in the front.
We really didn't have foldable devices at the time. The offering of wearable devices was kind of limited, and I think the group did a good job. However, they strived a little bit for perfection, which then caused the standard to be a little rigid compared to the other standards that were in the industry. And I think that made it difficult for folks to adopt it because they were selling a device that they were calling a grade B and maybe under the new CTIA grading criteria ended up being a grade B.
And they were afraid of losing the value of the device just because people wouldn't interpret correctly in terms of what it was. So that made it really difficult for the group to be able to drive adoption. Earlier this year, Kuro and Samsung partner up to try to drive some changes to the standard to allow for a little bit more defects and also to introduce definitions that are more relevant for the newer devices that the LCD goes edge to edge, there's no physical buttons, right. Introduction of foldable devices, the fact that we have a very relevant direct to consumer marketplace ecosystem where they added more complexity because they also call the grading something else. Right?
Some of them call it like excellent, good, fair, in which is not even a letter. So then now we have to correlate the CTIA letters with the DTC marketplace condition descriptions.
So the current. I would say that for the past year the group has really been working towards fine tuning the criteria to make it more industry friendly so we can really drive adoption to achieve the objective that the group started from the onset, which is create one language for device traders to actually communicate the condition of the devices that they were passing on so that the buyers could understand with confidence and accuracy what they were buying.
[00:07:52] Speaker A: That's a big deal in this industry, especially when you're thinking about the secondary market is the trust from the buyer. And the buyer here can represent many different people in the value chain, right? It can be the brokers that are selling it, you know, in large quantities, all the way down to the individual buyer. So having that consistency and that trusted kind of one standard for all seems like a huge win for improving the transparency and the trust that the buyers have. Question that I'm thinking about when you talk about this. Grading standards got started in 2019 until, you know, five different iterations to now. I'm just thinking about the phone that I used to have in 2019 versus versus the phone that I have now. And then you also mentioned wearables. There's been so much of evolution in this space in that short, relatively short amount of time. But in this industry that's a long amount of time for all of the changes that we experience in our everyday tech. You mentioned wearables. What other kind of devices are covered in these upgraded standards?
[00:09:07] Speaker B: They cover phones and they cover the flip phones, the bar phones, and now the introduction with wearable devices as well. To a certain extent, I think there's more opportunity to be more Prescriptive on the wearable devices, and we're working on that for the next iteration. They cover tablets and they cover watches as well.
So from a product category, I think that's kind of where it is. It still does not cover, for example, rings, does not cover, like VR headsets and things like that. And I think at a point you have to kind of. Yeah, glasses. Right. You have to kind of draw the line in terms of, okay, what are the devices that represent the most opportunity on the secondary market. Right. And kind of do the 8020 rule and prioritize there.
[00:09:50] Speaker A: Yep. Well, and it just. I mean, the wearables market has just expanded to many more products than it used to be. So I can imagine, you know, you said there's. They've had these different iterations over these years. I can imagine that's necessary, that pace just to keep up with the evolving innovation in this space.
[00:10:08] Speaker B: Yeah, definitely. The other piece around innovation of the industry that we are currently trying to tackle is the grading criterias are usually designed for humans to assess the condition of the device.
And when we're using humans, you're subject to the individual interpretation of that particular operation. There's assessing the device and you have a lot of subjectivity.
So we've done a lot of studies around accuracy of humans looking at a standard and then being able to assess a device consistently.
In all the studies that we've done, on average, humans are only about 50% accurate when they're assessing a device, which is, I would say, surprising. The first time that we actually did a comprehensive study and that result came back, I'm like, wow, I would have thought maybe 75, 70%, but no, it's 50% on a good day.
So with the introduction of automation Right. On the assessment of the device, we're also now working on how do we translate a standard that was written for humans to a machine to interpret it, and how do we leverage the machine to then remove all the subjectivity of the assessment so that if you put one device in the machine 10 times, the machine will say it's the same grade as opposed to putting that device through 10 humans and getting different answers 50% of the time.
And I think that's going to be a future iteration of the standard as well, is probably a portion of it that is more representative of how do you actually translate what we have today into a language that you can code into a machine to have the machine do the assessment?
[00:11:58] Speaker A: You mentioned automation that speeds things up. We know that. Right. From just the volume of devices that can go through this process of being graded and assessed for where it needs to go next. And that sounds like a cost savings. That's a known for us, right? When it comes to these standards and the change and the adoption of these standards, how does that impact cost or maybe even increased revenue? What's that? Is there been an evaluation of the, you know, the difference between the cost to implement the grading standard versus, like what it might produce in terms of value on the other side, when it comes to the resale of devices, I.
[00:12:40] Speaker B: Bundle all those in the definition of value, right. How can we maximize the value in the process so that the asset owner can get the most they can get and whoever's buying it is actually spending the money and doing an investment with high confidence that he's going to have a return.
So you mentioned cost savings with the use of automation, right? I think that's an obvious one. And I think when you start looking at automation, that's where people go first in terms of, oh, I have 50 people assessing devices today, right. If I put an UPCO RFA line, for example, that does 300 devices an hour, I can eliminate X number of humans and compare that to the investment of the equipment itself. How much money I save.
I would say that, yes, that is a factor. And companies that have significant volume will save money. But that's not where the value is created, right? The value is created by, like you said, increasing the confidence in terms of what is the state of that device. And if you have high confidence, you can then trade with high confidence, which then usually elevates the value of those devices. Because if I'm a buyer and I consistently buy out in the market, and 50% of the time, the grade that I'm receiving is different from the grade that was depicted to me during the auction. What am I going to do? I'm going to adjust that on my bidding and I'm going to bid lower and consistently I bid lower and that becomes the baseline. Now, if you have high confidence, the buyers don't need to do that anymore. Competition will start getting more fierce for the devices that have higher value. And that is like, it's like raising a tide, right? And it will increase the market value of those devices across the board, which then everybody benefits. There is no waste and it really streamlines the overall trade with a lot of value creation for all the parties. And in the interim, you're saving money because you're eliminating waste. You're being objective in terms of the assessment and the work you're doing. If you really trust the work that was done upstream, you might not need to do it again. Right. Because today a carrier will get devices from their consumers, they will go through triage, grade it and sell. Whoever bought them will do the same. They don't trust the results. So they will again go through triage, grade it and sell them again. So there's a lot of waste in the system where devices hop 3, 4, 5 times and they get the same work done to them every single hop that they get to, which is a tremendous waste that we see in this industry.
[00:15:21] Speaker A: Yeah, I didn't even think about the efficiency of removing those redundancies because you're right, that is one of the outcomes of the varying grade output from the process is that redundancy. So huge efficiency saver right there. You mentioned CTIA is really focused on the US telecommunications industry.
What's happening in other parts of the world as it relates to, you know, grading standards. And do these US based standards influence what happens in other parts of the world?
[00:15:53] Speaker B: They definitely influence because there's the US volume is very significant compared to the volume right in the rest of the world. Especially on the higher value devices, the more expensive devices, the mix of those in the US is much greater than in other parts of the world.
So there's a lot of buyers that come by into the US and they resell those devices overseas. So I would say it's a direct influence. If we're successful in the U.S. i think there's a great chance that we can actually drive a global standard here pretty soon.
[00:16:27] Speaker A: Oh, that's fantastic. That would be similar to other industries where, you know, you may have standards, but you have practices that don't. These phones and these devices, they are very fluid in their movement around the world. Other things, other different commodities or items may not have that same level of movement around the globe. I'm thinking, for example, cars. Cars don't tend to go back and forth quite a bit. Right. Because it's a major cost to do that. Whereas phones and those types of devices, they are moving globally all the time. So I can see where having a really robust standard in the US for a product that is very global in where it moves could have a major impact and it would be not a hard sell for other countries around the world to adopt this standard for a global purpose.
[00:17:25] Speaker B: Definitely. You mentioned cars. I think the other thing that's missing in the industry is, and I'll tag along with your analogy when you're going to buy a used car in the U.S. for example, right. The first place you look at is a Carfax report, which is someone third party made an objective assessment of that vehicle and the industry trusts that assessment. We need something similar. Right. In the cell phone industry. Apcuto is getting there. Right. With a product they launched this year called Device Passport. And that is going to be the intent. And I think once that gets adopted, it's going to be another huge win the industry because you then have something tangible that you can look at to increase that level of trust in terms of what the condition of that device is.
So you trust it enough that you don't have to reassess it. Right. You pay a fair price because you believe on the condition that you're getting. And in turn, you eliminate waste, you streamline the buy and sell. You speed the overall end to end process as well, eliminate some of the depreciation that we see today with those devices sitting around waiting to be triaged. And again, back to value. Right. It's significant value creation for all parties involved.
[00:18:44] Speaker A: That's fantastic. I'm happy to learn about this effort that's happening in the States that is likely to have a big impact globally for the entire industry. I can see where that would be really beneficial to everybody in the ecosystem to have greater trust all along the process. Flavio, is there anything else about these grading standards or this process of making these upgrades and changes that you want to share?
[00:19:12] Speaker B: No, I think we covered. I think the basis. I'd like to leave here my thank you to all the members of the Grading Skills working group. It's hard work. It's a difficult endeavor to come up with something that everybody will adopt because everybody has reasons not to adopt it. And it's very difficult to satisfy every party in the industry. But I think slowly we're going to get there. So my kudos to that team and for the leadership that they've embedded right. In the industry overall in bringing this to where it is today and continue to bring this to fruition so we can truly have a global standard fairly soon here, hopefully.
[00:19:51] Speaker A: Well, thank you, Fabio, for being a part of this group and to help advance this effort for the industry, which has benefits not only for App Kudo, but for all of our ecosystem partners and everybody that is in the value chain of these devices. And thank you for joining the podcast today. It was great to learn about these standards and about where this is headed and hopefully it's taking over the world.
[00:20:15] Speaker B: Yeah, hopefully. And thanks for having me. Appreciate it.
[00:20:19] Speaker A: Thank you for listening to this episode of Second Sense. Learn more at appcudo.com and catch future episodes wherever you listen to your podcast.
This has been second Sense because when you trust your data, Second Live Tech just makes sense.
