Framework Service contract ENTR/2008/006/Lot 1 Study on the Impact of the MoU on Harmonisation of Chargers for Mobile Telephones and to Assess Possible Future Options Final Report (Main Report) prepared for DG Enterprise and Industry 22nd August 2014 Study on the Impact of the MoU on Harmonisation of Chargers for Mobile Telephones and to Assess Possible Future Options August 2014 Final Report (Main Report) Quality Assurance Project reference / title J829/Mobile Chargers Report status Final Report (Main Report) Main authors: Daniel Vencovsky, Dave Fleet, Yvette Le Crom, Scott Marshall, Pete Floyd, Clare Bowman Author(s) With support from: Hayden Postle-Floyd, Vania Simittchieva, Jenny Miller, Esther Reeve, Shaun Da Costa, Anna Heinevetter Approved for issue by Pete Floyd, Director Date of issue 22/08/2014 Document Change Record Report Version Date Change details Draft Final Report 1.0 23/05/2014 Incorporates revisions following Final Report 2.0 25/06/2014 comments on the DFR and associated meeting Final Report Incorporates revisions following 3.0 02/08/2014 (revised) comments on the Final Report Final Report Incorporates minor corrections of 3.1 22/08/2014 (revised) the Executive Summary Disclaimer The information and views set out in this study are those of Risk & Policy Analysts Limited and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the Commission nor any person acting on the Commission's behalf may be held responsible for the use which may be made of the information contained therein. Executive Summary Background to the Study In the past, mobile telephones were only compatible with specific mobile telephone chargers. Apart from causing inconvenience to the consumer, this created unnecessary electronic waste. In response to this, the European Commission facilitated an agreement among major handset manufacturers to adopt a common charger for data-enabled mobile phones sold in the EU. In June 2009, a Memorandum of Understanding (MoU) was signed in which mobile phone manufacturers agreed to harmonise chargers for new models of data-enabled handsets coming onto the market as of 2011. The MoU expired at the end of 2012 but it has been effectively extended by a number of its signatories through two subsequent ‘Letters of Intent’ (LoI), signed in 2013 and 2014. The objective of this study is to evaluate the impacts these initiatives have had on the harmonisation of chargers for mobile telephones and indirectly on the markets for other portable electronic devices, and to assess the potential for further harmonisation. The study comprises three parts: Part I: assessment of the impact of the MoU on the market for mobile phones and their chargers; Part II: evaluation of the possible indirect impacts that the MoU has had on the EU market for other small portable electronic devices; and Part III: ex-ante assessment of the potential impacts of different policy options for further harmonisation of charging of mobile phones and other portable rechargeable devices. Summary of Market Data and Charging Requirements In 2009, 227 million mobile phones were sold in the EU28, increasing to a high of 239 million in 2010 and then declining to 206 million in 2012. Sales for 2013 are estimated to have been around 213 million. During this time, the share of data-enabled mobile phones increased significantly, with estimates suggesting they represented 90% of the European market in 2013. The popularity of smartphones is expected to continue increasing and in 2020 they are projected to account for 98% of all handset sales in Western Europe and 80% in Eastern Europe. This study has utilised three approaches to estimating the market share of MoU compliant handsets (i.e. those with a Micro-USB socket or for which adaptors have been made available for purchase). These include the consideration of the market shares of MoU signatories, information collected through consultation and a market model which utilises data on handsets launched in Europe since 2008. All three approaches indicate that compliance rates are very high, with results from the model presented in the table below. Percentage share of MoU compliant mobile phones 2011 2012 2013 Phone type Sales Stock Sales Stock Sales Stock Data-enabled mobile phones 80% 63% 95% 79% 99% 91% All mobile phones 66% 49% 81% 65% 93% 80% Mobile phone chargers are either sold ‘in the box’ with new handsets or supplied on a ‘standalone’ basis, for example as replacement for lost or damaged chargers. No phones were sold without a charger in 2010 but over the past few years, three schemes have emerged that sell handsets without chargers. Currently, the UK network carrier O2 is selling a number of handsets without a mains charger, only including a USB/Micro-USB cable. Fairphone supplies its smartphones without a Harmonisation of Chargers for Portable Electronic Devices RPA|i charger or data transfer cable. Both of the above-mentioned companies, however, offer consumers the possibility to purchase a mains charger separately. Finally, in some markets, Motorola sells its Moto G smartphone without a charger but includes a USB/Micro-USB cable. This study has estimated that approximately 0.05% of mobile phones were sold without a charger in 2013. This is a slight increase from 0.02% in 2012. Annual sales of standalone chargers (2011-2013) range from 18 to 30 million units, which respectively accounts for 9% to 14% of all mobile chargers supplied in any given year. The MoU is estimated to have resulted in six to 21 million fewer standalone chargers over the period 2011 to 2013. European sales of tablets in 2011 are estimated to have been in the region of 13 million units, increasing to 24 million units in 2012. It is estimated that Europe accounted for around 20% of global tablet sales in 2010; however market analysts are expecting this proportion to decrease as the European market becomes saturated. A model of the tablet market suggests that between 2008 and 2013, 69% of models were supplied with a proprietary charger but the Micro-USB charger has become more common place, rising from 17% of sales (9% of stock) in 2011 to 47% (and 21% of stock) in 2013. Global shipments of e-readers peaked in 2011 at 23.3 million units, dropping to 11 million units in 2013, with this trend expected to continue as tablets and phablets become more popular. Estimates published during the market peak in 2011 put Europe’s share of sales at 20% in 2010 and 16% in 2014, although these are likely to be over estimates. The percentage of e-readers sold in Europe which use a Micro-USB charger has been estimated by the market model developed for this study at 60% in 2009, 77% in 2010 and 97% in 2011, remaining consistent in subsequent years. The stock of e-readers which use a Micro-USB charger is also high, ranging from 60% in 2009 to 91% in 2013. Market analysts are expecting the global sales of laptops to decrease in the coming years. This trend is already apparent, with sales in Europe decreasing from 69 million units in 2011 to 67 million units in 2013. The power requirements of laptops can vary greatly depending on the size and internal components, with most charging in the range 40W to 90W, although this is can be as low as 15W and as high as 240W. Therefore, Micro-USB is not suitable for charging many laptops. One notable exception is the Chromebook 11, which charges via Micro-USB at around 15W. In 2011, Europe was one of the largest markets for digital cameras, with sales reaching 46 million units. As with many other devices covered by this study, sales are expected to drop as smartphones become more capable and widespread. The situation is mirrored for camcorders; in the first half of 2011, sales declined by 12% in Western Europe to approximately 3 million units. In terms of charging requirements, only a small number of models use Micro-USB, despite its suitability. In most cases the battery is removed from the device and charged separately in a proprietary charger or the battery is charged in the camera through a proprietary cable. European sales of portable media players peaked at 44 million units in 2007, equating to €3.8 billion, since which time sales have decreased. Apple has been the dominant manufacturer and its range of devices use a proprietary charger. Worldwide sales of sports and activity monitors have been estimated at 44 million units in 2013 and are expected to increase to 56 million units in 2017, mostly a result of wearable fitness devices. The Americas, Europe, and Middle East regions account for over 80% of global sales. Only a handful of sports devices have been identified which use a Micro-USB charger. Sales of personal navigation devices (PNDs) in Europe peaked at 17 million units in 2008 and by 2012 fell to less than 10 million units. A review of PND models released onto the European market show that the first incidence of a Micro-USB charger was in 2010; however there is no evidence linking this to the MoU. The percentage of sales with a Micro-USB port for charging increased noticeably from 14% in 2010 to 70% in 2012 (as estimated by a market model). However, owing to a change by Garmin to Mini-USB, this dropped to 27% in 2013. Over this period, the stock of PNDs that are compliant with the MoU has ranged from 10% in 2010 to 31% in 2012/13. Harmonisation of Chargers for Portable Electronic Devices RPA|ii Sales of portable handheld games consoles reached 46 million units in 2008, however this decreased to approximately 25 million units in 2012.