The Competition & Markets Authority (CMA) has made the decision to restrict the amount Motorola Solutions can charge emergency services for use of the UK’s Airwave network following an investigation into the provision of the TETRA-based system.
“A market investigation by the Competition & Markets Authority, conducted by an independent group of experts, has found that the market is not working well, and the emergency services have no choice but to carry on using the Airwave Network,” said a CMA spokesperson. “As a result, Motorola, which owns the company that operates the network, can charge the Home Office (which negotiates the contracts on behalf of the emergency services) prices well above competitive levels, resulting in higher costs which are ultimately paid by taxpayers.”
The CMA has subsequently imposed the price cap using its powers under the Enterprise Act 2002. Following the imposition of the cap which will apply until the end of 2029 and be reviewed in 2026, “Motorola can charge to a level that would apply in a well-functioning, competitive market, putting an end to the estimated £200 million per year of over-charging,” said the CMA spokesperson.
The organisation is also making a formal recommendation to the Home Office to develop a plan “so that when the charge control ends, the price of emergency communications network services is set competitively.”
The initial CMA investigation into Motorola’s provision of Airwave took place in the light of the company’s simultaneous involvement in delivery of the system’s planned replacement, the Emergency Services Network.
“Our emergency services have to use the Airwave Network to protect the public and themselves. When the original contract period for the Airwave Network came to an end, there was no alternative provider, so Motorola held all the cards when it came to pricing,” said chair of the CMA’s independent inquiry group, Martin Coleman. “As a result, the emergency services are locked in with a monopoly provider with no option but to pay a much higher price than they would if the market was working well. We are generally reluctant to impose price controls, but the particular circumstances of this case mean that a price cap is the only effective way of ensuring the emergency services, and the taxpayers who fund them, aren’t paying considerably over the odds. The cap will end the supernormal profits that Motorola has been making while allowing it to make a fair return.”
“Motorola Solutions strongly disagrees with the CMA’s final decision and believes it cannot be justified on competitive, economic or legal grounds. We will appeal the decision,” said a Motorola Solutions spokesperson. “In 2016, the Home Office negotiated and agreed to the fixed price Airwave contracts, which were also provided to the CMA as part of the CMA’s approval of Motorola Solutions’ acquisition of Airwave. Despite the CMA finding no shortcomings in Airwave’s exceptional service, the CMA intends to forcibly reduce the contractually agreed pricing going forward. We believe this unprecedented overreach will have a chilling effect on long-term investment and contracting with the UK government. Motorola Solutions is committed to vigorously protecting its contractual position in delivering the Airwave network, an essential service that operates at the highest levels and is relied upon by the 300,000 emergency services professionals who protect communities across the UK every day.”
