*The watchdog will rule on the monopoly of police, fire and ambulance services secure communications system as excess profits being made by US operator head towards £1.1bn*
A US telecoms company could make “excess profits” of more than £1bn from a deal to operate the secure communications system used by the UK’s emergency services.
Motorola Solutions has been overcharging the Home Office for operating the UK’s secure mobile system used by police, fire and ambulance services since 2000, according to an investigation by the Competition and Markets Authority (CMA).
The CMA found the Home Office is being charged more by Motorola to use the Airwave Network than it should be.
The price set under the original 2000 agreement included the capital costs of building the network.
Under the deal, that cost should have been recouped, and the price should have fallen substantially by the end of the contract, “in the same way consumers can get cheaper mobile deals after they have paid off their handset,” the CMA said.
The regulator added: “This did not happen, and prices remained at substantially the same level. Unlike consumers, the emergency services have no choice of an alternative supplier.”
The watchdog’s provisional report found Motorola’s monopoly position meant it had been able to charge the Home Office “prices well above competitive levels”.
Martin Coleman, head of the CMA inquiry, said: “It is vital that the market for critical mobile radio network services used by our emergency services works well and provides an excellent service at a fair price.
“Our current view is that the Home Office and our emergency services are locked in with a monopoly provider which can charge much more than it could in a properly functioning market, while taxpayers foot the bill. Unlike consumers, the emergency services have no choice of an alternative supplier.”
The original contract was due to end in late 2019 or early 2020 and the network was expected to be shut down and replaced by a new secure communications system using a commercial 4G mobile network, the Emergency Services Network (ESN).
However, because the new network, which Motorola is also involved in building, was not ready for switchover as planned, and is not expected to be ready until 2026 or even later, the emergency services continue to rely on the Airwave Network, which is a monopoly provider of these essential communications services – adding to Motorola’s profits.
If the roll-out of the new ESN continues to be delayed, Motorola could make around a further £160m excess profit each year after 2026, the CMA believes.
The CMA inquiry team is considering price controls on Motorola. It also said the Home Office should ensure that the new network or more competitive arrangements are in place by the end of 2029.
The company refuted the CMA claims. “Motorola Solutions entirely rejects the CMA’s unfounded and incorrect calculation of ‘excess’ profits, which is based on an arbitrary time period of the Airwave project,” a spokesperson for the US company said.
The Chicago headquartered company, which bought Airwave network in 2016, said it would continue to work with the regulator but would also consider its legal options to safeguard its contracts.
Bonus info:
When the Airwave contract was due to expire the government started a new tender to run the network. Airwave and Motorola were competitors that both bid on the tender. Airwave won, probably because it had just finished building the network and were best placed to manage it at a reasonable cost.
When Motorola lost their bid they immediately bought Airwave. Then they pushed for the network to be upgraded to be more in line with modern Motorola technologies rather than the now dated Airwave network.
So although the government chose the cheaper, existing Airwave network, they were eventually forced into the more expensive Motorola system even after originally refusing said system.
There was a competition inquiry when Motorola proposed the Airwave takeover, but the sale was allowed to proceed.
Fucking civil servants! Why not look for cheaper solutions?
Ah so we’re gonna delay the shit out of the new cheaper solution so we can make bank on forcing them to use the older outdated system. way to go.
no wonder more and more emergency services personnel are using mobile phones more than the radios.
It’s odd that this is outsourced. Secure comms is something that should be kept in-house.
Wow, 22 years of fraud from Motorola Solutions, well played.
Fun fact about airwave. Everytime a cop presses the push to talk button it costs money.
Whoever signed us up for it originally back in 2004 needs shooting for it.
Whaaaaaat? Tories profiteering by selling National institutes to the American monster? Despite checks and balances?
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*The watchdog will rule on the monopoly of police, fire and ambulance services secure communications system as excess profits being made by US operator head towards £1.1bn*
A US telecoms company could make “excess profits” of more than £1bn from a deal to operate the secure communications system used by the UK’s emergency services.
Motorola Solutions has been overcharging the Home Office for operating the UK’s secure mobile system used by police, fire and ambulance services since 2000, according to an investigation by the Competition and Markets Authority (CMA).
The CMA found the Home Office is being charged more by Motorola to use the Airwave Network than it should be.
The price set under the original 2000 agreement included the capital costs of building the network.
Under the deal, that cost should have been recouped, and the price should have fallen substantially by the end of the contract, “in the same way consumers can get cheaper mobile deals after they have paid off their handset,” the CMA said.
The regulator added: “This did not happen, and prices remained at substantially the same level. Unlike consumers, the emergency services have no choice of an alternative supplier.”
The watchdog’s provisional report found Motorola’s monopoly position meant it had been able to charge the Home Office “prices well above competitive levels”.
Martin Coleman, head of the CMA inquiry, said: “It is vital that the market for critical mobile radio network services used by our emergency services works well and provides an excellent service at a fair price.
“Our current view is that the Home Office and our emergency services are locked in with a monopoly provider which can charge much more than it could in a properly functioning market, while taxpayers foot the bill. Unlike consumers, the emergency services have no choice of an alternative supplier.”
The original contract was due to end in late 2019 or early 2020 and the network was expected to be shut down and replaced by a new secure communications system using a commercial 4G mobile network, the Emergency Services Network (ESN).
However, because the new network, which Motorola is also involved in building, was not ready for switchover as planned, and is not expected to be ready until 2026 or even later, the emergency services continue to rely on the Airwave Network, which is a monopoly provider of these essential communications services – adding to Motorola’s profits.
If the roll-out of the new ESN continues to be delayed, Motorola could make around a further £160m excess profit each year after 2026, the CMA believes.
The CMA inquiry team is considering price controls on Motorola. It also said the Home Office should ensure that the new network or more competitive arrangements are in place by the end of 2029.
The company refuted the CMA claims. “Motorola Solutions entirely rejects the CMA’s unfounded and incorrect calculation of ‘excess’ profits, which is based on an arbitrary time period of the Airwave project,” a spokesperson for the US company said.
The Chicago headquartered company, which bought Airwave network in 2016, said it would continue to work with the regulator but would also consider its legal options to safeguard its contracts.
Bonus info:
When the Airwave contract was due to expire the government started a new tender to run the network. Airwave and Motorola were competitors that both bid on the tender. Airwave won, probably because it had just finished building the network and were best placed to manage it at a reasonable cost.
When Motorola lost their bid they immediately bought Airwave. Then they pushed for the network to be upgraded to be more in line with modern Motorola technologies rather than the now dated Airwave network.
So although the government chose the cheaper, existing Airwave network, they were eventually forced into the more expensive Motorola system even after originally refusing said system.
There was a competition inquiry when Motorola proposed the Airwave takeover, but the sale was allowed to proceed.
Fucking civil servants! Why not look for cheaper solutions?
Ah so we’re gonna delay the shit out of the new cheaper solution so we can make bank on forcing them to use the older outdated system. way to go.
no wonder more and more emergency services personnel are using mobile phones more than the radios.
It’s odd that this is outsourced. Secure comms is something that should be kept in-house.
Wow, 22 years of fraud from Motorola Solutions, well played.
Fun fact about airwave. Everytime a cop presses the push to talk button it costs money.
Whoever signed us up for it originally back in 2004 needs shooting for it.
Whaaaaaat? Tories profiteering by selling National institutes to the American monster? Despite checks and balances?