Friday, February 09, 2007

Gobby Coppers Meet PFI

Just one hello in future
BOM correspondent NW draws our attention to this hilarious report in the Northampton Chronicle and Echo:

"CHATTY constables will be handed a special CD encouraging them to use shorter words and sentences . . . as they are spending too much time on their police radios.

Officers are currently running up sky-high costs for cash-strapped Northamptonshire Police by spending too much time on their walkie-talkies, with a recent survey revealing bobbies had found more than 100 different ways of saying 'yes'.

A special CD called "Airwave Speak" will be introduced in Northamptonshire in coming months, to try to persuade officers to use shorter words to cut down talk time. Supt Bob Smart said: "In a recent survey of several forces they found 100-plus ways of saying 'affirmative' – all of which take considerable more air space than just saying 'yes'."

Ho, ho! How jolly rib-tickling. What would they do with the Laughing Policeman, eh?

Except of course, if you're a taxpayer you won't be laughing at all. Because this is just the latest reminder of the police radio saga, a £3bn plus tale of Simple Shopping for boys' toys.

Back in the nineties, the Home Office decided that the old analogue police radios were no longer up to the job, and the cops needed to move into the digital age.

Now, you and I might have gone down Carphone Warehouse, and done a deal on a couple of lorryloads of Nokias. But in time honoured tradition, the HO decided they needed a whole new dedicated comms network, with its own microwaves and 3000 dedicated masts across the land.

So they went to O2 and bought one. It is called Airwave.

We won't go into all the ins and outs here, but suffice it to say, the HO didn't get a great deal. When the National Audit Office investigated, they found that because O2 had been the only bidder (contrary to EU rules), there had been a "lack of competitive tension", so it was virtually impossible to say if the deal had been value for money (meaning- taxpayers got ripped off).

Moreover, although a key part of the original "business case" had been that the new bespoke network was to be used by the police, fire and ambulance services, both fire and ambulance actually went their own way. In a classic display of "not invented here"/non-joinedupedness, the Office of the Deputy Prime Minister opted out the fire service, and the Department of Health opted out the ambulance service. So potential economies of scale were missed.

Now the cost of this thing- in total money payments over the 19 year period of the PFI contract- was put at £2.9bn (see PAC report here). But that was only for the basic network provision. "Extras"- like buying the handsets and actually using the system- were all on top.

Now you may smell a teensy weensy problemette with that arrangement. Surely, you say, shhuuurrely once the police are committed to the monopoly Airwave system, the operator would have them over a barrel. They could pretty well charge what they liked, irrespective of how the price wars might be driving down tariffs in the commercial mobile market.

And guess what... that's pretty well what's happening. In fact, Northampton Deputy Chief Constable Davina Logan actually uses the term "over a barrel".

Moreover, now the network is up and running- paid for by us- O2 are able to sell the service to other public sector users and build revenue which they keep.
The police authorities are now putting understandable pressure O2 to cut their charges. BOM's correspondent suggests they might just be prepared to do that, but only in exchange for even greater freedom to sell the service to premium customers from the private sector. Since this is a superior network, with excellent 99% national coverage, that could work. But what would then happen in the event of a 7/7 style emergency with the police wanting other users barred? Who'd have to pay the thousands in compensation?
As things stand, Airwave is such a docile heavy milking cash cow, Telefonica- its current owner- has recently put it up for sale. Likely buyers include private equity players, who would gear it up to the udders and walk away with a nice juicy pile of cash. They could do that because as the Times commented:

"The business offers recurring revenue streams in the form of its long-term contracts with the Government and other parties. Analysts believe that at present Airwave — which in 2005 secured earnings before interest, tax, depreciation and appreciation of £72 million, up from £1 million in the previous year — could fetch up to £2 billion."

Those long-term recurring revenue streams? Well, that's us my friends.

PS On BOM we follow the money, but we should also note that the Airwave system is highly controversial for other reasons too. Quite apart from the erection of yet more landscape disfiguring masts, there are serious concerns about safety. Airwave uses a transmission technology called TETRA- Terrestrial Trunked Radio- and the organisation TetraWatch is dedicated to highlighting its risks and opposing its use. They reckon that "the system uses pulsed microwave radiation, at a pulse frequency of 17.6Hz, which is very close to a key frequency of electrical activity in the human brain at 16Hz (our beta brain waves are around 13Hz to 20Hz)". Which apparently makes it a serious health risk, both for police officers using the sets, and for those living near the masts.

PPS The whole Airwave project was driven through by an old friend of BOM's- Sir John Gieve, the ex-Perm Sec at the Home Office, who for obvious reasons was relieved of his responsibilities at the shambolic HO... but only to be rewarded with the post of Deputy Governor at the Bank of England (see previous blogs here).

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