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Competition Authority Probes Motorola’s Role in UK 4G ESN

Thursday, July 8th, 2021 (11:38 am) - Score 1,272
ee esn 4g mobile mast rural scotland

The Competition and Markets Authority (CMA) has announced that they intend to look at the role of Motorola’s existing Airwave network in delivery of the new 4G based Emergency Services Network (ESN) contract, which could result in the launch of a formal market investigation into the company.

At present the emergency services (police, fire etc.) interface via the Motorola-owned Airwave network, which is believed to cost the UK around £3bn and harnesses the TETRA (Terrestrial Trunked Radio) network technology. However, TETRA is slow (dialup / ISDN like data speeds, but it could technically go a bit faster) and expensive, although it does deliver excellent voice coverage (c.97% geographic reach).

NOTE: Mobile operator EE (BT) holds the main 4G based (mobile broadband) network contract, but the ESN covers a variety of different areas with other suppliers (e.g. handsets, software etc.). The ESN has its own separate setup alongside EE’s commercial 4G network. The two should not be confused.

The high cost of Airwave is often highlighted as one of the main reasons why the UK government, in 2015, decided to replace it with a 4G solution (the first country to do so). The Home Office originally expected that emergency services could start using the ESN in September 2017, allowing Airwave to be replaced by December 2019, but the contract ended up being billions over budget and years behind schedule.

As a result, it has become necessary to keep the Airwave network running for several years longer than planned. But at the same time Motorola, since 2016, has also adopted the dual-role as a key supplier for the ESN contract (i.e. they had previously entered into a contract with the Government to provide software for the ESN, but then later acquired Airwave in Feb 2016).

The Government, the National Audit Office and the Public Accounts Committee have thus expressed concerns regarding Motorola’s position and incentives to deliver ESN, particularly given the continuing high profitability of the Airwave network.

The CMA said they were concerned that Motorola could stand to make excess profits of about £1.2bn in the period from 2020 to 2026 – a cost which will ultimately fall to the British taxpayer. This issue has arisen because the planned replacement of the Airwave network with ESN has been delayed from 2019 to the end of 2026.

The CMA’s initial review of the evidence available indicates that the supply of the Airwave network in Great Britain is “not working well, resulting in significant detriment to customers and the taxpayer.”

Andrea Coscelli, CEO of the CMA, said:

“At the moment, Motorola is the only provider of critical mobile radio network services used by our emergency service workers and is involved in both the current and future set-up. We’re worried that the company could be cashing in on its position, while taxpayers are left to foot the bill.

The CMA is minded to launch a market investigation to dig deeper into its concerns and will now consult with a range of stakeholders, including the Government, on its plans.”

The probe is still in an early stage, but despite that the CMA has already identified two potential solutions in its consultation that may, in principle, be available should a market investigation confirm its initial concerns: regulate Motorola’s rate of return in relation to the Airwave network or require Motorola to sell the Airwave network. The current consultation is open until 2nd September 2021.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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7 Responses
  1. 5G_Infinity says:

    The CMA should have raised this in 2019, or even better in 2016, when Home Office announced (again) that cutover to ESN wasn’t happening and that Motorola’s contract was to be extended by 3 years. The contract is now due to be extended again, purists say the CMA should have engaged as soon as Motorola won Lot 2 in 2016 and acquired Airwave.

  2. Peza says:

    “billions over budget and years behind schedule.” Is ANY contract with the government and business anything else? They see public money they see massive profits to be made and take their sweet ass time over it.

    1. Mark Jackson says:

      Funnily enough, the BDUK Superfast Broadband programme managed to avoid that fate :).

  3. Graham B says:

    I’m surprised Motorola, a brand of Chinese owned Lenovo, are allowed to build such critical infrastructure for the UK.

    1. yeehaa says:

      You are referring to Lenovo owned Motorola Mobility which manufactures handsets, as opposed to Motorola Solutions (the legal successor company to Motorola Inc when it demerged its mobile business) which develops mobile network products. They share the same name, but they are separate companies.

    2. Graham B says:

      Oh, Ok thank you. My mistake.

  4. Observer says:

    “TETRA is expensive”: this is not exactly true. The Airwave system (based on TETRA) is expensive, absolutely, but that is a consequence of how it was procured (the original Airwave contracts) rather than the technology used. Namely, it is expensive for commercial rather than technical reasons. ESN (a 4G system) is proving to be just as expensive because the same commercial scenarios are being repeated.
    When Airwave was procured, TETRA was new and there were few suppliers of TETRA equipment (none with mature capability). Technical immaturity and lack of competition led to procurement difficulties and the resulting expense of the Airwave system. By 2016, TETRA was well standardised, mature and hardened to be truly mission critical (which is a broad-reaching and expensive requirement that 4G alternatives are still a long way from reaching). Further, the market was highly competitive with multiple suppliers offering mission critical-ready solutions. In short, 2016 was the perfect time to procure an inexpensive, high capability TETRA replacement to Airwave.
    Instead – because the expense of Airwave was blamed on TETRA rather than on the commercial execution of the Airwave procurement – the UKHO decided to again procure a technology that was new, proprietary (notably, without inter-system interfaces), and for which there were few suppliers (none with mature capability). So we are back in the same boat: the UKHO is beholden to a single supplier, capability is low, delays are long and expenses are already high.

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