Excess profits on Motorola's Airwave estimated to be £1.3B

The UK's competition watchdog has estimated Motorola could make nearly £1.3 billion ($1.6 billion) in excess profits over a decade owing to its position as a supplier of the Airwave legacy blue light wireless comms network. As part of a consultation discussing "charge controls" over Airwave, which was founded in 2000, the …

[David M]

Market not working well

"...concerns that the market might not be working well."

I confess I don't understand much about economics, but it seems to me that if you have a single monopoly supplier for an essential emergency service, that's not a market at all, and it's hardly surprising that the customer is in a poor bargaining position.

Surely Airwave should just have been a set of open protocols, plus a compatibility testing regime. Then multiple suppliers of the actual equipment could have been appointed, giving some opportunity for a competitive market to operate. Or am I being naïve?

[Anonymous Coward]

Re: Market not working well

Multiple suppliers of what equipment?

The end user radios are only a small part of the network - the real cost is in maintaining a resilient RF network with very high geographical (not just population) coverage of the UK.

[Jellied Eel]

Re: Market not working well

Surely Airwave should just have been a set of open protocols, plus a compatibility testing regime. Then multiple suppliers of the actual equipment could have been appointed, giving some opportunity for a competitive market to operate. Or am I being naïve?

Nope. That's the job of the government. So Airwave's gone the way of pretty much every PFI job. First hook your customer, then milk them for everything you can. Problem, as always is the price controls should have been written into the contract at the beginning. There would have been stuff like open-book accounting and 'reasonable' price increases, but the bidders are usually smarter. Hence ending up with basic stuff like indexation. The price of cheese has gone up a lot lately, so therefore should your network charges.

Rest is whether some monopolies can be desireable. Airwave is a pretty critical service, so you want it to just work and be manageable. Downside is it has a diverse customer base, so keeping all the service users happy. Motorola probably does have 'competition' in it's solution, but for it's benefit, not the users.

[trevorde]

Re: Market not working well

ESN is also based on 'open standards' but, as with all open standards, there is some ambiguity eg web standards. Motorola are developing an implementation but switching to a another vendor would require a huge amount of development and testing*.

* worked for a company integrating Motorola's implementation into their main product

[gazzerdaman]

Re: Market not working well

It is based on an open standard - TETRA

You still need someone to operate/own the underlying RF network/infrastructure :-)

[Yet Another Anonymous coward]

Re: Market not working well

> it seems to me that if you have a single monopoly supplier for an essential emergency service, that's not a market at all, and it's hardly surprising that the customer is in a poor bargaining position.

For instance there is only one Met Police. Which severely limits the opportunities for local capital based Genuinely Autonomous Network GroupS to provide a service of beating up protesters, sexually abusing women and murdering minorities with a lower cost base and a wider range of options than the current hidebound nationalised industry

And for a small payment, of less than your council tax contribution to the fuzz, you can arrange with the thieves guild not to be mugged for a year

[Vincent van Gopher]

Macquarie . . .

the vampire kangaroo strikes again - well struck a while ago :)

[Roland6]

Excess profits of £1.3B

Given it was originally £200M pa. I assume this is the estimated excess for 2024~2029 ie. The remaining 6 years of the contract.

Now need an agency to perform similar to the various Tory mates who gained from the mates CoViD contracts…

[Anonymous Coward]

Re: Excess profits of £1.3B

This is a home office cockup, better to blame civil service incompetence than political greed.

[VoiceOfTruth]

Motorola should call their bluff

And walk away if the terms of the contract are altered in any way they disagree with.

The government (I mean the establishment no matter whoever is 'in power') has for far too long been in the hands of Oxbridge numbskulls who are well-educated but are also as thick as dunces. They are busy chasing gongs while they look down on the peasantry. Failure for them means an upwards promotion, and when they 'retire' it will be to a company which supplies services to the last department they worked for.

If emergency communications are so important the government should build it itself. What is GCHQ for? Apparently spying on grannies' Skype conversations. But actual work?

[Mike Pellatt]

Re: Motorola should call their bluff

I'm old enough (and in this case that's not a sarcastic phrase) to remember GCHQ demonstrating an analogue multi-channel HF Comms system they'd developed called "Piccolo". This was at the annual RSGB show In the late 1960s. Damn clever it was, and pretty much entirely analogue.

[s. pam]

and, how much will Crapita make from it?

just because Moto is supplying the frigging gear, where's Crapita in this?