Other emergency services have not as yet joined Airwave

8  Although the Home Office saw the Fire Service as part of the procurement from an early stage, the Fire Service itself considered that features of Airwave, such as encryption and roaming, were not needed to meet the operational requirements of fire brigades and were likely to add significantly to the cost. This was a key consideration in 1996, when a decision was taken in consultation with the Home Office, that the Fire Service should not be part of the initial procurement but should be included, with other emergency services, as a potential future sharer. In 2001, a review of Fire Service needs concluded that a regional rather than a national approach to procurement would be pursued. In conducting a series of regional procurements, it was also recognised that open competitions should be held to comply with procurement rules.

9  The review noted the need to specify a requirement for interoperability with other emergency services regardless of which radio systems are procured at a regional level. Individual fire services formed consortia, based on geographical proximity, to determine local radio communications needs and to procure suitable systems. In March 2001, a consortium comprising Devon, Cornwall, Avon, Dorset Gloucestershire Wiltshire and Somerset fire brigades requested tenders for the provision of wide area radio communications and mobile equipment. Although O2/Airwave was one of the bidders, the consortium has since entered preferred bidder negotiations with a supplier of an alternative technology. The decision of the Fire Service not to be part of the initial procurement of Airwave represents a lost opportunity for joined-up working by the emergency services and a loss of economies of scale. Quantification of the loss is problematic, although O2 has told us that it considers any figure would be substantial.

10  Current radio systems used by ambulance services are old and frequently of poor quality. As a result, the Department of Health is planning a national procurement for a new national radio network for ambulance services and other NHS radio users. Unlike the Fire Service, the Department of Health rejected a local or regional approach to procurement because it would not ensure a common standard of communications across all Ambulance Trusts and would necessitate up to 32 separate competitions. Interoperability with the local police forces and fire brigades will be a key requirement of the new ambulance radio system. The procurement will be an open competition and it is anticipated that Airwave will be one of the bidders.

11  The Fire and Ambulance Services are not, however, the only potential sharers of Airwave. The licence for Airwave allows others to join the service provided they are predominantly public safety organisations whose primary function is to respond to emergencies. In negotiating a deal, O2 assumed that sharers would join Airwave and estimated that additional revenues of between £1.8 million and £5.5 million a year might result. These estimates assumed between 3,500 and 12,500 extra radios on the system. As the number of potential users ranges up to 50,000, the additional revenues estimated by O2 appear low. PITO did not succeed in securing a provision for the police to share in the benefits from the take-up of Airwave by sharers. O2 considers that, as no sharers were delivered up-front, it is in effect taking all the risk on this aspect of the deal and should reap all the benefits, if it is successful.