EMMA KELLY / LONDON
Europe will have to give up its satellite navigation ambitions unless the continent's transport ministers commit funds to Galileo at their crucial meeting this month
The future of Europe's Galileo satellite navigation system project is once more in the hands of the continent's transport ministers. Yet again they are about to meet - on 25 and 26 March - to decide whether to release funds for the development of the satellite navigation system. They must also decide on who will manage the programme and how it will be done.
But Europe has been in this position many times with the troubled project. The definition phase of Galileo was launched in a blaze of glory in June 1999. When it was first envisaged, the 30-satellite system was considered by the European Commission (EC) as vital in allowing Europe to escape from its dependence on the US military-controlled global positioning system (GPS), and to enable the continent to get a chunk of the €40 billion ($35 billion) global navigation satellite system (GNSS) market forecast to exist by 2005.
Europe's transport ministers were first expected to approve Galileo implementation and the release of funding for its development in December 2000, but when questions on financing and management of the project failed to receive clear answers, the ministers postponed their decision by four months.
Last April, transport ministers gave partial approval for the system, with the release of €100 million for limited technical work, but a number of European Union (EU) countries were still reluctant to give full go-ahead when questions on funding and management remained. The initial €100 million was only granted when the EC managed to secure a written commitment from Europe's space industry for an initial €200 million of finance for the system up to 2005. A decision on full release of funding was once again delayed - until last December - pending cost-benefit studies and further investigation of a public-private partnership to finance and manage the system.
Study results
But December came and went with no firm decisions, despite the EC having commissioned PricewaterhouseCoopers (PWC) to come up with the answers on cost-benefit and management issues. The PWC study - which showed a "strongly positive" benefit-to-cost ratio - failed to allay the finance concerns of a number of European states, including Germany, the Netherlands and the United Kingdom. The transport ministers' meeting ended with no more funds for Galileo, and a decision postponed to this month. European Space Agency (ESA) members decided to commit €528 million to Galileo at last November's ministers' meeting, on the proviso that transport ministers cough up their €450 million.
This really is decision time for Galileo as it is in danger of missing its vital 2008 in-service target, and could lose its hard-won frequency spectrum.
The EC, which has pushed for Galileo from the start, concedes that unless a positive decision is made this month the whole project is likely to collapse.
The commission believes it has answered all Europe's questions on Galileo, and that there are no financial, economic or technical arguments that can justify further delay. The EC stresses the "urgent need to launch the development phase" running through to 2005.
After securing radio frequencies for Galileo at the World Radio communications Conference in May 2000, Europe must launch a Galileo satellite before 13 February 2006. If it does not meet this deadline, Europe loses its Galileo frequencies. To meet this launch date, a test satellite will have to be launched by the end of 2003 or early 2004 to validate the technology.
Losing patience
The EC also acknowledges it is in danger of losing private-sector interest and, with it, vital finance. Europe's space and communication firms have already spent a great deal of money on the project with no promise of a return. Galileo Industries, which comprises Astrium, Alcatel Space and Alenia Spazio, estimated last year that it had already spent €3 million on Galileo and was running out of patience and shareholder backing (Flight International, 10-16 July 2001).
ESA contracts on technical work are due to expire by May, and the EC concedes that once these contracts end, "there is a risk that the industrial teams will have to be disbanded due to lack of financing".
PWC says Galileo must be in service by 2008, which requires launch of the development phase this year. By 2008, the GNSS market will be in "rapid growth", PWC adds, and it is one or two years before operational launch of the more advanced GPS III. "If that is achieved, we estimate annual sale of Galileo receivers will go from €100 million in 2010 to around €875 million by 2020, representing market penetration rising from 13% to 52%," says PWC.
The EC believes Galileo offers "unquestionable economic viability", but has failed to convince some member countries of this, with the UK in particular still wavering. Germany appears to have been won over, with the country's cabinet last week voicing support for Galileo development.
The commission estimates Galileo development and deployment costs, including construction and launch of the satellites and the ground infrastructure, at €3.2 billion. PWC put costs at €3.6 billion, of which €1.25 billion has already been budgeted for by the EC and ESA, leaving €2.35 billion to be sourced from the public and private sectors. It is this unaccounted-for amount which is concerning some EU member nations.
Allaying fears
The commission is trying to allay states' funding fears by stressing that, beyond the development phase, national budgets will not bear any of the public funding costs. In the deployment phase (2006-7), the EC says it will "make appropriate proposals in order to make the necessary appropriations available under future financial perspectives beyond 2006". Funding in this phase will include private sector participation. The commission also expects the cost of the deployment phase - estimated by PWC to be €2.03 billion - to come down due to increased competition in the satellite launcher market.
The operation phase, from 2008, calls for decreasing public participation until 2015, after which the system will require replenishment, at a cost of around €1.8 billion through to 2022, according to PWC. To win states over, the EC is stressing that Galileo is not expensive - equivalent to 150km (90 miles) of semi-urban motorway or a single track for the high-speed rail link between Lyon and Turin.
The EC, backed by the PWC study, is confident of good returns on Europe's investment. Operating profits are expected from 2011, with total benefits estimated by PWC to be in the region of €17.8 billion. Its report puts revenues at €66 million in 2010, rising to €370 million five years later, and €515 million by 2020.
Although the basic open-access service, providing positioning and navigation and timing signals, will be free to all users, other services, featuring additional encrypted data, will be charged for. In response to the US argument that GPS is free while Galileo won't be, the EC says Galileo applications subject to a charge will have a standard of service higher than GPS can currently provide, particularly in terms of integrity and continuity of signal received. "It is possible that the GPS of the future will offer high-quality services, but there is no guarantee that these will be provided free," says the EC.
Around 80% of Galileo revenues are expected to come from five applications, says PWC: commercial aviation; personal communications and location; police and fire; oil and gas rig positioning; and oil and gas land and transition zone seismic exploration. PWC estimates €20 million in revenues from commercial aviation users in 2015, rising to €100 million five years later. And in return, improvements in air traffic control, for example, are estimated to provide c5 billion in cost savings for airlines between 2008 and 2020, says PWC. The EC also believes that everything is in place for the project to go ahead under the direction of the Joint Undertaking (JU). If a positive decision is made this month, the JU could be up and running by June, the EC believes. The JU will manage and co-ordinate research and development work, and act as a single management body. Using public and private finance, it will establish management structures, draw up a business plan and, by year-end, should be working with the private sector on a finance plan. Any company willing to invest €20 million will be allowed to become a JU member, says the EC.
Joint undertaking
As the political arguments continue, Galileo technical work is proceeding. The project will consist of 30 satellites in medium Earth orbit at around 24,000km (15,000 miles). The orbits will be inclined at an angle of 55-60° to the equatorial plane to provide coverage of latitudes up to 75°N. A user with a Galileo receiver will be able to determine his or her position to within a few metres from signals broadcast by three or four of the satellites, says ESA. Since last year, ESTEC, ESA's technical centre in the Netherlands, has been working on Galileo technologies, including onboard clocks, signal generators to produce a variety of positioning signals, power amplifiers, antennas, timing units to correct the onboard clocks, and a system simulation facility to test strategies to cope with contingencies once the system is operational. ESA is also working on technologies for hand-held Galileo receivers. The space agency has developed the Galileo System Test Bed to validate control algorithms and procedures for predicting individual satellite orbits. It will also be used to test critical Galileo technologies. The agency will know in just a few weeks whether it has wasted its time on Galileo development work. Astrium's head of business development navigation, Mike Healy, who has been a participant in the Galileo pantomime from the start, is confident that this time a positive decision will be made, "but it will probably be a conditional yes with opt-out phases", he adds.
Source: Flight International
