The competition watchdog has said it will cap the price Motorola charges for the radio network used by all of Great Britain’s emergency services, but the company said it plans to appeal against the decision.
The Competition and Markets Authority said the business could charge “prices significantly above competitive levels” because emergency services had no choice but to use Motorola’s airwaves network.
The CMA said this was costing the taxpayer almost £200 million more than it should have been spent each year.
The watchdog said it would cap the amount Motorola charged “to a level that would be applicable in a well-functioning competitive market”.
The cap will run until 2029, although there will be a review every three years.
Martin Coleman, who chairs the CMA’s inquiry group, said: “Our emergency services have to use the airwaves network to protect the public and themselves.”
“We are generally reluctant to impose price controls, but the particular circumstances of this case mean that a price cap is the only effective way of ensuring emergency services, and the taxpayers who fund them, do not pay significantly over the odds. are doing.
“The cap would eliminate the extraordinary profits that Motorola is making by allowing it to make reasonable returns.”
But Motorola said what the CMA calls a “reasonable return” would be an “unprecedented overreach (that) will have a chilling effect on long-term investments”.
“Motorola Solutions strongly disagrees with the CMA’s final decision and believes it cannot be justified on competitive, economic or legal grounds. We will appeal the decision.”
It was argued that the CMA had found no shortfall in the airwave service and that the Home Office had negotiated the current price.
Airwave Networks was established in 2000 through the purchase of Home Office. The original contract was set to run until 2019 or 2020, when it was expected to be replaced by a new system using commercial 4G mobile networks.
But the new system was delayed and wasn’t expected to come online until 2029, leaving the airwaves with a continuing monopoly.
The CMA stated that the original annual price was to cover up-front costs to build the network, but these costs should have been recouped by the time the contract was renewed, and the price should have been reduced.
Instead, emergency services continued to be charged the same amount.
Mr Coleman said: “When the original contract for the airwaves network expired, there was no alternative provider, so Motorola held all the cards when it came to pricing.
“As a result, emergency services are locked down to a monopoly provider who has no choice but to pay a much higher price than if the market were functioning well.”