What does Brexit mean for the UK's two-way radio industry?
Written by: Philip Mason | Published:

With the pre-Brexit political wrangling continuing to roll on, Philip Mason talks to some major players in the communications technology industry about the expected impact if and when the UK eventually leaves the EU

This article is being written on the first day back after the Easter holidays, following – quite frankly – a good, long rest. This year, however, it wasn’t just work from which the United Kingdom was taking a break, but also the ongoing machinations around its exit from the European Union, with Parliament finally getting to embark on its traditional spring recess in the middle of April.

As followers of the supposed Brexit ‘process’ will know, MPs’ annual spring sabbatical was actually in jeopardy up until the last minute, with the UK and EU still in discussions as of 10 April due to the possibility of our crashing out with ‘no deal’ two days later. The aforementioned 12 April deadline, meanwhile, was in itself the result of a previous extension, again decided on the fly two days prior to the original cut-off point of 29 March. We now find ourselves with a further period of grace, this time potentially lasting – and who said the gods of politics don’t have a sense of humour – until Halloween.

Whatever you might think of Brexit as an idea, it’s clear that the current level of uncertainty around its implementation (or not) doesn’t really do UK business any favours. Naturally, this is something which is as apparent in the communications technology sector as it is anywhere else, whether in regard to two-way radio or the development of ‘new’ technology such as 5G, IoT and so on.

So, what exactly does the industry think of the situation the UK currently finds itself in? Furthermore, what are the implications of Brexit, whatever form it ultimately takes, and how do we prepare for it in the meantime?

Keep calm and carry on
Turning our attention first to Land Mobile’s bread-and-butter two-way radio, it turns out that the sector is actually relatively sanguine when it comes to the potential outcome in terms of our trading relationship with the EU. This is a point of view expressed by both industry organisation the Federation of Communication Services (FCS), as well as one of the largest manufacturers in the market, Sepura.

According to the former’s head of business radio Tim Cull, there is a very simple reason for this, something which can essentially be boiled down to the fact that companies will always need business-critical radio whatever happens. More to the point, however, contracts between supplier and supplied within the sector also tend to stretch across multiple years, often as part of wider initiatives to weatherproof the business in question.

This latter fact in particular seems to negate in one fell swoop fears regarding the impact of hold-ups at the border, unlike in relation to more time-sensitive supplies such as food and medicine. It also offers a certain amount of reassurance that overseas businesses probably won’t miraculously decide to change supplier should they get a better offer from outside the UK.

“We were asked some weeks ago by the Department for Digital, Culture, Media & Sport about what the impact of a hard exit might be on the business radio industry,” says Cull. “Having put it to the FCS members, I’m now not convinced that it will actually make that much of a difference to us at all.

“It’s very important to remember when talking about this that we trade in goods which are essential to support operational requirements. That being the case, what’s likely to be most important to those on the operational side is what they’re going to need to get the job done, rather than anything to do with Brexit. It’s the potential loss of efficiency which will ultimately impact a business, not any potential change in price, which they’ll be able to cover long-term.”

He continues: “Another thing to bear in mind is that business radio is by definition a global concern, which it has to be in order for manufacturers to take advantage of scale. Companies will likely have manufacturing facilities and offices across the continent, which enables the client or distributor options when it comes to the supply route.”

As relatively bullish as Cull appears when it comes to the financial impact of a worst-case-scenario Brexit, he does foresee potential disruption when it comes to checks at the border. This, he says, will likely be due mainly to changes in required documentation, while at the same time rationalising that “paperwork, tax situations, and so on… these never stay the same anyway. That’s one of the negatives of operating in the international market.

“Where these things really do matter is in any temporary disruption when it comes to companies receiving vital components. Some very big organisations – and little ones too – have already taken the management decision to get in excess stock in advance of that kind of situation. That said, I would foresee that any hold-up would only be in the order of a few months – or, more likely, weeks.”

Addressing the question of what exit from the EU would impact in terms of product standardisation (and standards), meanwhile, once again Cull believes that everything is likely to be fine. This is due, first, to the aforementioned global nature of the business, coupled with the fact that it would be incredibly self-defeating for manufacturers to suddenly start making things up as they go along.

“To get the price down, global volumes are needed,” says Cull. “That being the case, for a very long time we’ve adopted a global approach to standards, and that will still need to happen. The drivers on which the industry is based won’t change once we leave – why should they?”

He continues: “Before Brexit, our standards for market access have consistently been aligned with those of Europe, and we’re certain we’ll carry on in a similar vein afterwards. We’ll continue to obey the spectrum plans because they’re region-wide, we’ll continue to honour mutual recognition agreements... things will just move forward as normal. And if a European country decides it does want to do something else, we’ll simply take a step back and go through a type-approval process, which we’ve done many times in the past.”

As a member of the European Union, the UK is currently able to trade with other member states under what is referred to as EU ‘schedules’. This means that, among other things, it can take advantage of ceilings on tariffs on goods being exported to the continental mainland. (It clearly also works the other way, with goods from the EU being imported into the UK).

By contrast, under the conditions of a – let’s say – no deal Brexit, the UK would likely have to revert to what’s known as WTO (World Trade Organization) rules until separate free trade agreements have been signed with individual European nations. This will mean – according to the Institute of Export & International Trade’s rather ominous-sounding description – that EU states treat the UK “in the same way it treats countries like Russia or Brazil”, at least in the interim.

With that in mind, another reason for the radio industry not to be too concerned, at least according to Sepura operations manager Duncan Crouch, is that WTO rules have already been proven to work in regard to trade outside of the EU.

Speaking of this, he says: “In terms of the mechanics, it’s not something that’s overly worrying us because we already export to up to 50 countries worldwide. Quite a few of those are under WTO rules, so we are quite used to doing that. It’s the same principle when it comes to imports, as we have a global supply base.”

Echoing Cull, if Sepura does have concerns – at least according to Crouch – it is around how things might change when it comes to transporting goods across the border. Again, this apparently all comes down to paperwork, something that the industry giant is as eager as everyone else to get steer on.

“In terms of the process, the likelihood is that other layers of documentation will be added, for instance in relation to commercial invoices, certificates of origin and so on. All we need is some idea of what might happen next, and we’re positive that we can continue to thrive as a business. It’s an annoyance rather than anything else.”

Going back to a point made earlier in the article, Crouch also doesn’t foresee any knock-on effect when it comes to money spent on handsets themselves by customers. Again, this is due to people investing in “their long-term future in relation to their networks. If they need to replace their equipment, they will do it, because they can’t allow their users not to have the right technology or failing technology.

“There’s also a question of trust, which is a crucial factor when it comes to things like public safety in particular. We’re very much a trusted supplier, and I’m not hearing anything from our customers saying that they’re going to deal with someone else for their mission-critical equipment.”

Analysis of paralysis
Since the beginning of the Brexit process there has been a, let’s call it somewhat pessimistic, vibe coming from many in the UK business sector in relation to the prospect of leaving the EU. Indeed, such has been the weight of remainer expert opinion on this subject, the leave side has had to manufacture a meme – the quite spectacularly counterintuitive notion of ‘Project Fear’ – to try to offset all the negative press.

Needless to say, this has also continued in the run-up to the above-mentioned aborted leave dates, with the likes of the CBI (Confederation of British Industry) recently predicting economic disaster if the UK were to ride into the sunset without a deal. This has in turn been mirrored by certain sections of the UK communications technology sector, particularly those for whom the business ecosystem – unlike two-way radio – is still in the process of being fully formed.

As reported by Land Mobile at the time, a recent example of this can be found in a statement released by the Society of Motor Manufacturers and Traders (SMMT) earlier in the spring. Echoing the CBI, this claimed that the UK’s burgeoning connected and autonomous vehicles industry would be placed at a considerable disadvantage should the UK crash out without any kind of agreement.

Speaking of the report’s findings, SMMT chief executive Mike Hawes said: “A transport revolution stands before us as we move to self-driving cars, and the UK is in pole position in this £62bn race. Government and industry have already laid the foundations, and the opportunities are dramatic – new jobs, economic growth and improvements across society.”

He continued: “Brexit has [however] undermined our global reputation for political stability, and it continues to devour valuable time and investment. We need the deadlock broken, with ‘no deal’ categorically ruled out, and a
future relationship agreed that reflects the integrated nature of our industry and delivers frictionless trade.”

This in turn brings up another issue in the form of the UK’s long-term standing abroad in light of these events, something which unfortunately stands outside of the scope of this discussion. Suffice to say that currently, we appear either desperately confused at best, and at worst like the nation state equivalent of a spoiled child having
a tantrum.

Deal or no deal?
The period just before Easter witnessed weeks of extraordinarily intense debate taking place in the Houses of Parliament, culminating in a six-month extension to the Brexit deadline (as ratified by European Union leaders on April 10). The primary reason for prolonging the process was to avoid a so-called ‘no deal’ Brexit, the potentially disastrous economic effects of which seem to be agreed by all but the most vehement of anti-European politicians and campaigners.

Summing this up in a possibly unprecedented joint statement released at the time, the CBI and TUC (Trades Union Congress) said: “The current ‘deal or no deal’ must not be the only choice. A Plan B must be found – one that protects workers, the economy and an open Irish border, commands a parliamentary majority, and is negotiable with the EU. We cannot overstate the gravity of this crisis for firms and working people.”

Opinions relating to Brexit, both in and outside of the business communications industry, are clearly wide-ranging, depending on to whom you talk and what their interests are. What the people consulted for this article all seem fairly certain of, however, is that things would generally be less disruptive if we simply keep as we are.

Despite being comparatively relaxed about the future of the industry Brexit or no Brexit, for instance, the FCS’s Cull still wants “hard data” before deciding whether or not we will be better off as a nation.

Duncan Crouch, meanwhile, is unequivocal: “From our point of view, there’s no type of Brexit that will actually be beneficial to us or to the UK. All our European customers are disappointed that the UK is leaving, and are asking us basically the same questions that you did.”

Unfortunately – for businesses, if not leave voters – the ship taking us away from mainland Europe sailed a long time ago. That is unless in this endlessly protean/tedious of political processes, there is still room for yet more surprises in the run-up to 31 October.



This material is protected by MA Business & Leisure Limited copyright.
See Terms and Conditions.


Twitter

Land Mobile is the only monthly publication exclusively dedicated to wireless communications for businesses. Launched in 1993, this leading industry title provides practical advice, expert opinion and commentary and insightful, informative, truly authoritative editorial.

St. Jude's Church,
Dulwich Road,
London,
SE24 0PB,
United Kingdom

MA Business is part of the Mark Allen Group.