Motorola faces price controls over UK emergency services radio contract

theguardian.com:

The UK competition watchdog is to introduce price controls on how much Motorola can charge the government for running the communication network used by police, fire and other emergency services, after finding it will make £1.1bn in excess profits by 2026.

The Competition and Markets Authority (CMA) said a lack of competition meant the US company, which runs the Airwave radio network that allows emergency services to communicate securely, is making £160m in excess profits annually.

The CMA estimates that in total Motorola will make £1.1bn in excess profits – those that are over and above what would be expected in a well-functioning market –between 2020 and 2026, when the much-delayed new emergency services network (ESN) is meant to come online.

Airwave was commissioned in 2000 by the Home Office under Labour, and was meant to be shut down in December 2019 with a total predicted cost of £1.5bn.

The provisional assessment found Motorola’s monopoly position meant it had been able to charge the Home Office “prices well above competitive levels”.

“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,” said Martin Coleman, the chair of the CMA’s independent inquiry group.

“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 CMA said Motorola’s financial filings suggested that while the Airwave Network accounts for only about 7% of the company’s global revenues, it makes up about