Motorola appeal over £200M price cap for Airwave service rejected

Profiteering from emergency services comms network in Britain? Not anymore, says CMA

Motorola will not be allowed to again appeal a decision by the UK competition regulator to impose a price cap on the communications network it operates for Britain's emergency services.

The Competition and Markets Authority (CMA) put forward proposals for a price ceiling in October 2022, given that Motorola provides the existing Airwave network and had been set - until last month - to supply the delayed Emeregency Service Network (ESN) replacement system.

Airwave is currently used by 108 police, fire and ambulance services across England, Scotland and Wales to communicate between the field and control rooms.

The Court of Appeal (CoA) has once more unanimously dismissed Motorola's application for permission to appeal the decision by the CMA. The appeal claimed the CMA had made errors in assessing competition in the relevant market and in the profitability of the Airwave Network back in 2021.

Motorola had already appealed the CMA's decision on the same grounds with the UK's Competition Appeal Tribunal (CAT), a specialist judicial body that handles such cases, but that challenge was dismissed at the start of 2024.

This is now the end of the long-running saga, as Motorola cannot appeal the decision any higher than the CoA.

In a statement, the CMA said its price cap will ensure the UK's emergency services pay a fair price for Airwave's services, reducing the cost by almost £200 million ($248 million) per year.

George Lusty, the CMA's Executive Director of Consumer Protection and Markets, hailed the decision by the CoA.

"The CMA's investigations and legal decisions are carefully considered and evidence-led and we welcome today's decision by the Court of Appeal which endorses our reasoning in this case," Lusty said.

"Our investigation showed that Motorola had been charging emergency services in the UK £200 million a year more than they would if the market was working well. The Court's judgment today means that our price cap remains in place."

In January, a contract for the much delayed replacement for Airwave, known as the Emergency Services Network (ESN), was awarded to IBM. Airwave is based on the TETRA (Terrestrial Trunked Radio) standard, while its successor was set to be based on 4G cellular technology.

Back in 2015 Morotola won the contract to deliver the ESN, the company then proceeded to buy Airwave Solutions in February 2016, just months after getting the gig. This meant it had ownership of both the current system as well as being trusted with developing its replacement.

The CMA cleared that merger at the time as the Airwave service was scheduled, at that stage, to be replaced and decommissioned by the end of 2019. Yet due to project delays, Motorola's contract for Airwave to serve the emergency services was extended in 2020 for six years.

In 2021, the CMA started looking into whether the company was acting as a monopoly and abusing its position by holding up work on the replacement project so that it could stretch out its income from Airwave for as long as possible. It was estimated that Motorola was on track for projected profits of £1.2 billion ($1.49 billion) for the extension period.

The CMA concluded that Motorola was able to earn "supernormal" profits from the prices it charged the Home Office, meaning profits over and above what would be expected in a well-functioning market.

The Home Office and Motorola agreed to terminate the contract for ESN in January 2023. As mentioned, IBM picked up the agreement last month, and is to be supported by tech supplied by Ericsson and Samsung.

In response to the CoA's ruling, a Motorola SoIutions spokesperson told The Register: "While we continue to strongly disagree with the CMA's unprecedented decision, we are focused on moving forward and continuing to deliver this world-class emergency communications service for the UK's public safety users."

As we've said previously, the history of the ESN project should serve as a lesson in how not to run public sector procurement. It was repeatedly overhauled and review of work undertaken delayed. Less than two years ago, the Home Office confirmed that some just under £2 billion of taxpayer cash had been spent on ESN with nothing to show for that money.

Successive governments lack understanding of how to buy tech, a report by the National Audit Office ventured last month, and we suspect this problem won't be going away anytime soon. ®