CMA plans to release Airwave price-control order by end of July, impacting Motorola Solutions

An order that would set price controls on the Airwave TETRA network that would cost Motorola Solutions more than $1 billion is expected to take effect within the next two month, although Motorola Solutions has indicated that its appeals likely will delay the effective date until next year.

Last month, the UK Competition and Markets Authority (CMA) released a timetable on its website that calls for the order—calling for price controls designed to remedy Motorola Solutions’ “supernormal” profits from Airwave—to be issued during the latter portion of June or in July. Under UK statutes, the CMA does not need to implement remedial action on the matter until Oct. 4, according to the timetable.

“The charge control will be applied from the commencement of the Order on a forward-looking basis,” according to the CMA’s draft explanatory note. “Airwave Solutions and Motorola Solutions will be required to comply with the charge control when setting relevant charges. The existing contractual pricing arrangements [associated with Airwave, including a four-year contract extension that began this year] … are amended and supplemented by the terms of the Order.”

This draft explanatory note was released last month in conjunction with the initiation of a public-comment process that is scheduled to conclude next Friday, June 16.

In April, the CMA concluded its 18-month investigation, issuing a final decision that called for the implementation of price controls on the Airwave TETRA system that provides mission-critical voice communications to UK public-safety agencies. As outlined in the final decision, the new pricing plan would reduce Motorola Solutions’ projected revenues from the Airwave system by more than 40% during the next several years.

The fact that Motorola Solutions continues to collect any revenues from Airwave TETRA operations is the result of the UK Home Office’s inability to complete the Emergency Services Network (ESN)—the promised LTE-based replacement for Airwave—by the end of 2019, when the original Airwave contract expired.

Instead, deployment of the ESN has proven elusive, with the UK nationwide public-safety broadband system currently not targeted to be complete until the end of 2029.

In the meantime, UK public-safety agencies need the Airwave radio system to continue providing land-mobile-radio (LMR) communications that deliver mission-critical voice services. As a result, the UK Home Office signed a three-year Airwave contract extension that expired at the end of 2022 and the four-year extension that took effect in January and will be supplanted by the CMA’s order.

In addition to being the owner of the legacy Airwave TETRA network, Motorola Solution served for several years as a primary vendor in the UK Home Office’s development of the ESN. Notably, Motorola Solutions was responsible for delivering the broadband push-to-talk application that would replace the Airwave PTT, as well as the critical interworking solution that would let Airwave users and ESN users talk to each other while UK public-safety agencies make the proposed transition from the Airwave TETRA system to the ESN broadband network.

But Motorola Solutions no longer is part of the ESN initiative, announcing last fall that it would not continue to have an active role in the ESN. However, Motorola Solutions still is supposed to provide an interworking solution and provide other transitional support to a new vendor that has not yet been selected by the UK Home Office.

Some UK officials have expressed concern that Motorola Solutions has delayed its delivery of key applications to keep UK public-safety agencies reliant on Airwave. The CMA expressed hope that its Airwave price controls would reduce the possibility of this scenario happening with the internetworking solution.

“To the extent they will no longer be earning supernormal profits, the charge control will also reduce Airwave Solutions’ and Motorola Solutions’ incentives to delay the delivery of an interworking interface solution—required to facilitate the transition of users from the Airwave Network to a replacement network—and thereby to prolong the operation of the Airwave Network,” the CMA’s draft explanatory note states.

Motorola Solutions officials repeatedly have expressed opposition with the CMA’s findings and expressed the company’s intent to appeal. In an SEC filing last month, Motorola Solutions stated that “the appeal process is expected to extend throughout 2023.”