Editorials

April 5, 2014

EDITORIAL: Motorola's near monopoly

Since the 9/11 attack, the nation has spent billions to upgrade radio systems so that police, firefighters and other first responders can communicate seamlessly in emergencies.

The ambitious taxpayer-funded undertaking has afforded rich business opportunities, particularly for Illinois-based Motorola Solutions.

As McClatchy reporters detailed last week, Motorola Solutions has solidified its position as the leading provider of emergency communications gear in the United States by using shrewd business practices, hiring top law enforcement insiders, and spending heavily on campaigns, lobbying and charities favored by its customers.

Motorola sells a vital service. No tools are more important in a disaster than reliable communication devices.

But the investigation led by McClatchy Washington Bureau reporter Greg Gordon, which ran in The Bee last Sunday and Monday, raises basic questions: Is Motorola's equipment so much better than competitors' radios that cities and counties are justified in granting it no-bid contracts worth tens or hundreds of millions of dollars?

Motorola sells communications equipment used in New York, Los Angeles, the Bay Area, the San Joaquin Valley and many points in between. But how has Motorola come to control 80% of the market?

In Sacramento County and in other locales, Motorola effectively shut out competitors by embedding proprietary features so its equipment cannot interact with radios made by other companies.

Motorola Solutions offers a case study in how big business gets bigger. It surrounds itself with rainmakers, many of whom are former top law enforcement officials.

Its board has included former CIA and National Security Agency chief Michael Hayden and, until recently, William Bratton, the former chief of the Los Angeles and Boston police departments, who has returned to New York City for a second stint as police commissioner.

The company spends $2 million to $3 million a year on lobbying in Washington, and more in state capitals. The nonpartisan National Institute on Money in State Politics has identified 310 lobbyists registered to represent Motorola in the states.

Motorola is a significant campaign donor to federal and state politicians, and law enforcement and firefighter foundations, spreading goodwill to its customer base by, for example, pledging $15 million to the National Law Enforcement Museum, due to open in Washington in 2016.

It works out well for Motorola Solutions. Thanks to government contracts and taxpayer money, Motorola Solutions' net income grew to $1.1 billion last year, from $747 million in 2011. Its stock price hovers at $65 a share, after falling to below $15 a share in 2009.

Building two-way radio networks is lucrative. But it's not rocket science. Federal, state and local policymakers need to ask hard questions. The first is, why do contracting officials award sole-source agreements that benefit the industry Goliath and freeze out the competition?

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