UK Home Office seeks more Airwave measures against Motorola Solutions, including potential divestitures

UK Home Office officials support the Competition and Markets Authority’s (CMA) tentative decision to control prices for Motorola Solutions’ nationwide Airwave TETRA network, but they are also seeking a recovery of more than US$600 million Dollars to expose LMR provider giant potential divestiture requirements.

Those requests were communicated in the Home Department’s 53-page response to the CMA’s tentative decision, which was filed Nov. 22 but was first publicly released on Dec. 9 of the four-year Airwave renewal agreement signed by the Home Department less than a year ago was to be amended, which appears to cut Motorola Solutions’ revenue from the agreement by more than 50% – an expected loss of more than £800m (about US$1bn or more). ) over the next four years.

But this remedy proposed by the CMA would not be enough, according to Simon Parr, the Home Office’s senior responsible owner for the emergency services’ mobile communications program.

“While the remedies proposed by the CMA will go a long way towards mitigating the future harm caused by the unilateral market power of Motorola and Airwave Solutions, I do not believe they will address the very significant damage already caused and Motorola’s supernatural gains Shareholders and other investors have benefited and will continue to benefit until the fee control goes into effect next year,” Parr said in a letter accompanying the Home Office’s response.

“The Home Office is therefore keen to investigate how these above-average profits generated can be recovered for the benefit of the UK emergency services and UK taxpayers.”

Specifically, the Home Office is seeking to recover about £500m ($618.2m at current exchange rates) in “supernormal profits” made by Motorola Solutions from Airwave over the past three years

“While the Home Office understands the CMA’s proposed fee control approach, it is concerned that the measure would be worth over $0.5 billion to Motorola, its shareholders and other investors of UK taxpayers and citizens.”

Airwave was originally slated to be replaced by the LTE-based Emergency Services Network (ESN) by the end of 2019 as the mission-critical communications system used by UK security personnel. However, the ESN was not ready in time, which led to the Home Office agreeing to a three-year Airwave extension that began in 2020 and a four-year extension to take effect on January 1 and end in late 2026.

In its response, Motorola Solutions noted that the Home Office signed off on both Airwave network service expansions and agreed to terms that the CMA has described as monopolistic “supernatural gains” throughout its investigation last year.

“The Home Office must honor the long-term contracts that have been entered into voluntarily,” Motorola Solutions’ response reads. “There is no reasonable basis for intervening under the Enterprise Act 2002, even if there is political pressure for such intervention.”

Motorola Solutions also questioned the precedent the proposed CMA remedies could set for the broader UK government and business market.

“It is striking that in the 19 years that the current market investigation system has existed, neither the Office of Fair Trading, the Competition Commission nor the CMA have ever attempted to review a long-term, fixed-price commercial contract between two parties. ‘ is the response from Motorola Solutions. “It is hard to imagine that the CMA would do this when faced with such a request from two well-advised private sector organizations. The CMA does not have the authority to create a new category of government-protected customers alongside consumers.

“As this response and all previous submissions from Motorola make clear, the essence of the matter at hand is not a market issue, but a contractual one, and the 693 pages of the CMA’s preliminary decision and annexes do not change that.”

These written responses were provided to the CMA in preparation for the CMA’s oral hearings this month and January. Motorola Solutions said the hearing on the response is scheduled for January 10th. The CMA is scheduled to release its final decision in February.

Home Office officials publicly plan for the ESN to replace Airwave by the end of 2026, but numerous response references from both the Home Office and Motorola Solutions indicate that Airwave may be needed by 2029 and price control would remain in place during that time (although one review of pricing in 2026 is proposed). Meanwhile, the Home Office acknowledged the possibility Airwave might be needed beyond 2029.

“While the Home Office accepts that there should be a suspicion that the fee control ends in 2029, the Home Office would like to ask that a review be carried out at that time to see if that suspicion is refuted and the scrutiny for another Restriction should be extended period,” the Interior Ministry’s response reads.

Other key ESN notes in the Home Office’s response include a confirmation that the massive project will require a new procurement following Motorola Solutions’ planned exit from its role as provider of software and services for ESN, although CEO Greg Brown said so recently Terms of this separation have not yet been finalized.

Additionally, the Home Office’s response notes that it will seek collaboration from all four of the UK’s major mobile operators on the new version of ESN – a strategy being pushed in hopes of avoiding the creation of a new LTE-based monopoly, which some which could repeat the same problems that the Home Office had with the Airwave TETRA system.

Substantial portions of the Home Office’s response raise concerns about what Motorola Solutions might do after the CMA’s proposed remedies are implemented. The Home Office said it fears that Motorola Solutions could lower its quality of service to Airwave users if there is less profit to be made.

Motorola Solutions also sent a letter to the Department of the Interior on October 25 – shortly after the release of the CMA’s preliminary decision – that “the Department of the Interior is being treated as a clear warning from Motorola” that it may take three undisclosed actions arising from the publicly available have been removed answer.

With this in mind, the Home Office requested that the CMA remedial actions include measures to ensure Motorola Solutions meets required quality of service thresholds for Airwave users. It also asked the CMA to include wording that would allow the Home Office to adopt the Airwave system and hire a new firm to operate it if necessary.

“Should Motorola take more aggressive action, it may be necessary for the Home Office (as a last resort and only if all else fails) to attempt to terminate the Airwave network, acquire the transferable assets, and tender out the operation of the network to a third party.” , says the response from the Interior Ministry.

A key requirement of the Home Office is that the CMA include language that obliges Motorola Solutions and Airwave to provide an interworking solution to support interoperable communications when users move between the Airwave TETRA network and the LTE-based ESN migrate system. This is necessary because the Home Office believes that “Motorola still has incentive to delay ESN further,” even with the remedies proposed by the CMA.

Finally, the Home Office’s response expresses concerns that Motorola Solutions could use market pressures outside of Airwave and ESN – namely its Command Central Control Room Solutions (CCCRS) division – to influence the UK public safety communications sector. According to the Ministry of the Interior, the transition from Airwave to ESN cannot be completed without a corresponding upgrade of the control rooms.

“Control rooms are an essential part of the overall mobile land radio environment of emergency services as they allow police, ambulance or fire control rooms to communicate with individual police officers, ambulance or fire to manage deployments and incidents,” according to the Home Office response states . “Before the transition can begin, each control room must be upgraded to work with both the Airwave network and the ESN.”

Motorola Solutions has recently increased its market share in the UK control room sector by “winning the control room business by offering ‘cheap’ prices” – a development which has the Home Office worried. If this becomes problematic, the Home Office wants the CMA to look into the matter.

“As Motorola’s share of the control room business increases, so does its market power and its ability to significantly influence and delay the transition, allowing Motorola to use its incentive to delay,” the Home Office’s response said. “The Home Office continues to investigate these concerns with the Airwave user community and will have another filing in due course. However, the Home Office remains concerned that remedial action may be needed, for example to erect clear information and decision-making barriers between Motorola’s CCCRS business and other parts of Motorola, or possibly divest Motorola of its CCCRS business as a last resort .”