Yahoo Finance How a bitter £11.3bn radio row turned into a 999 emergency
For the thousands of police officers standing guard or patrolling the state funeral today, maintaining close communication amid the throngs will be critical.
Strapped to the vest of every officer will be a personal radio, using dedicated mobile signals designed for the blue light services. For two decades, the technology company Airwave has operated a network keeping Britain’s police, ambulance and fire crews connected through terror attacks, protests and crises.
But Airwave’s ageing network, which is awaiting a long-delayed upgrade, is also at the heart of a Kafkaesque procurement nightmare costing the taxpayer billions and a bitter tussle between the Home Office and the network’s owner, Motorola, the US company behind the Razr smartphone.
Motorola, which acquired the network in 2015, is accused by the Government of undermining the replacement of Airwave. It is in the unique position of being a key contractor for the long-delayed upgrade, the 4G-capable emergency services network, while extracting profits from the old network.
Later this month the Competition and Markets Authority is to deliver its initial verdict of whether Motorola’s stewardship has been anti-competitive to the detriment of the taxpayer.
It could impose restrictions on the profits the US technology company can make from Airwave, or even force it to sell it.
Any finding of fault is likely to prompt a furious response from Motorola, which has lashed out at the Home Office and the City watchdog. “The CMA has failed to understand – or has simply ignored – the extraordinary contribution made by Motorola,” the company said in May.
What is undisputed is that efforts to replace Airwave have failed. It was due to be shut down in December 2019, but could be operational until 2026 after its contract was extended. That delay will, according to the CMA, allow Motorola to “extract” £1.2bn from taxpayers.
The cost could climb further. Motorola’s contracts are linked to the outdated retail prices index inflation measure. This means the revenues it generates could spiral further, with analysts predicting RPI could reach 18pc in 2023.
“The most significant cost driver is time,” Matthew Rycroft, permanent secretary to the Home Office, wrote in 2020, with continued delays and costs “rising with inflation”.
The project to replace Airwave and operate the new emergency services network is budgeted to cost the taxpayer an eye watering £11.3bn by 2036 – £6.2bn more than originally forecast.
Airwave costs about £450m per year, according to the Home Office, and that figure is rising with inflation. Shutting it down will represent a saving of £250m per year, says the Government.
Originally a BT project launched in 2000, Airwave was a Blairite private finance initiative. It was sold to Australia’s Macquarie. Airwave’s private, encrypted system replaced ancient radio technology in use since the Second World War and provided critical encrypted “push to talk” communications across the UK and on the London Underground.
By 2015, government efforts were underway to replace it. A new digital system reliant on modern 4G signals would be brought in. This would be cheaper since it could “piggyback” on the public mobile phone system, while also providing benefits such as enhanced data and video transmission for 300,000 emergency workers.
James Barford, a telecoms analyst at Enders Analysis, says: “Emergency services network offers far higher data bandwidth and in theory it should be much cheaper, because you are using an existing network.”
American telecoms company Motorola was among the successful bidders to work on the new emergency services network, with development of the 4G network led by EE and handsets made by Samsung.
Just months after Motorola was signed up, it announced it was also acquiring the old system, Airwave. The deal was ultimately waved through by the Home Office and the CMA.
‘Over-ambitious’ timeline
Despite a target to get the emergency services network live by 2019, delays quickly emerged. The National Audit Office warned the Home Office had set an “over-ambitious” timeline that had been impossible to meet. Motorola software that would allow “push to talk” functionality similar to that of walkie-talkie handsets was delayed. Other parts of the network, such as a London Underground service, had also not been completed.
The spending watchdog was scathing of the Home Office’s progress, but also warned of potential “conflict of interest” concerning Motorola’s role.
Sources close to the project say questions were privately raised over Motorola’s takeover of Airwave and its role on the emergency services network. A source says: “You look at it and ask: how can it be a supplier on both sides?”
Motorola is also being investigated by Ofcom, the telecoms regulator, for alleged price fixing of the handsets used by police and emergency services. The case remains open and Ofcom has yet to make a final ruling.
In April 2021, the Home Office, under Priti Patel, wrote to the CMA expressing concerns over Airwave’s profitability and Motorola’s apparent lack of “incentives” to replace the system.
The CMA launched an investigation into Motorola’s control of Airwave, warning it could force it to sell the business. A CMA spokesman says: “We opened this investigation because we were concerned that the market for the supply of the mobile radio network used by emergency services might not be working well, resulting in a more expensive service for customers and, ultimately, the taxpayer.”
The Home Office, meanwhile, has hit out at Motorola’s evidence. “Motorola has made submissions which contain information that the Home Office considers inaccurate, misleading, or deliberately selective,” officials wrote.
The CMA’s imminent decision on Airwave could see Motorola forced to sell it. Barford, of Enders, says: “The problem with divestiture is it could take some time to do.” Another option is price controls, which “are in some ways more straightforward”, Barford says, but notes both are “very significant interventions”.
Motorola, meanwhile, has continued to defend itself. It said: “CMA intervention could literally cost lives by taking key operational decisions out of the hands of Airwave and putting them in the hands of the Home Office,” Motorola said. “The CMA will interfere with this contract at its peril.”
Years late and billions of pounds over budget, testing on the emergency services network is now underway. In recent weeks, EE experts, Welsh air ambulance crews and fire, police and ambulance services made their way out to the remote area of Mwnt, in west Wales, to try out its kit as the 2026 deadline to shut down Airwave edges ever closer.
The longer it remains operational, the more millions are added to the bill for taxpayers and Britain’s front-line responders.
