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O2 pulls out of ESN mobile network bid process

O2 pulls out of the bidding process to supply the new Emergency Services Network 4G broadband voice and data network, leaving EE the presumptive provider

O2 has been forced to pull out of the bidding process to supply a 4G broadband network for the emergency services for commercial reasons. O2 was one of just two providers remaining on Lot 3 of the Emergency Services Mobile Communications Programme (ESMCP), the procurement process for the new Emergency Services Network (ESN).

Its exit from the framework means that EE, which is currently embroiled in takeover talks with BT, has now become the presumptive supplier-elect.

An O2 spokesperson said that the potential restructuring of the UK telecoms market as a result of current M&A activity raised too many questions over spectrum holdings and future access, and network sharing arrangements, as well as its potential acquisition by Three’s owner Hutchison Whampoa, for it to continue. 

“We are therefore unable at this time to provide the detail and commitments required to continue into the next stage of the bidding process. We have taken the decision to notify the authority that we will immediately withdraw from the bidding process so that the government can consider next steps before the award stage,” said O2.

“Throughout all of our activity in the ESMCP we have been acutely aware of the importance of acting with honesty and transparency and this decision is made with those same values at the heart of what we are doing,” added the spokesperson.

Citing insider sources close to the operator, the Financial Times also claimed that O2 has already dropped £10m on the ESN bid and Telefónica has now refused to cough up any more ahead of the sale to Hong Kong-based Hutchison Whampoa.

Mike Penning, minister for policing, crime, criminal justice and victims at the Home Office, said: “O2's decision to withdraw, for commercial reasons, from the procurement process to provide the UK with a new emergency services communications network is disappointing,” he said.

“However, the process to establish a more effective, flexible and affordable network for the UK's police, fire and ambulance services will continue,” continued Penning.

“Seven other bidders remain in the running for the main contracts and we look forward to receiving their best and final offers in June. We hope to sign contracts later this year.”

ESN will replace a current terrestrial-trunked radio (Tetra) communications network provided by Airwave in a gradual process over the next five years. It is supposed to start to go live in 2016 as Airwave’s contracts begin to expire.

Read more about emergency services communications

The government had wanted to move away from Tetra because the emergency services are increasingly using broadband data services of their own accord, something Tetra could not accommodate.

Sources close to the procurement have told Computer Weekly that the Home Office privately considers Tetra to be too old, expensive and inflexible.

Because of this, and the fact it was thought too expensive to procure a private mobile network, the government took the decision to enhance the commercial network with additional coverage, resilience, security and priority access for emergency services traffic.

This led to the Home Office being accused of moving away from the tried and tested two-way radio technology to mobile data without fully considering the full impact of what it was doing.

In 2014 Labour’s Jack Dromey, at the time the shadow policing minister, said the ESN project was moving with “unseemly haste” and that the implications of providing a priority emergency service on a commercial network had not been thought through.

Commenting on this, an Airwave spokesperson said: “A number of industry experts have raised concerns about the timetable for implementing ESMCP, in particular relating to the readiness of LTE technology for mission-critical voice communications, and we’ve already seen some customers extend their contracts with us until 2019/2020.

“In the long term we agree that LTE technology is the future of mission-critical voice communications for the emergency services, but it is essential that the desire to adopt emerging technologies does nothing to compromise this country’s public safety, resilience and security.”

Having now seen the contract essentially handed to EE’s intended new owner, BT, the Home Office will doubtless face more questions over whether or not the process, which was designed to be as competitive as possible by splitting it into multiple lots, was robust enough to stand up to the upheavals currently underway in the UK communications market.

A Home Office spokesperson said that the negotiated procurement process had been designed to produce the tenders that best meet the needs of the emergency services and offered best value for money, and that any best and final offer that did not meet those conditions would be rejected.

Read more on Telecoms networks and broadband communications

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