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December: critical month for Galileo

By | November 20, 2001

      The ministers of the European Space Agency (ESA) members are meeting to discuss the funding and implementation of the 30-satellite European navigation project called Galileo. Europeans are currently working very hard to proceed with their own system because at present European satellite navigation users must take their positions from the U.S. Global Positioning System (GPS) or Russian GLONASS systems, even though both are operated by the military which provides no guarantee to maintain uninterrupted service.

      The European Union’s transport ministers will gather in early December to debate the same issues as the ESA ministers, and hopefully make the final decision whether to go forward by allocating more than 400 million euros ($358 million) for development of the programme. The European Commission is actively preparing reports about the financial and organisational structure and deliberating with member states so that the Transport Council can vote to allow this new project to literally get “up in the air” for full operation by 2008.

      The European Commission has been working with ESA on defining the Galileo system. The commission has handled the policy and definition of the system architecture, while the space agency has concentrated on the definition of the satellite constellation, ground segment and associated technology.

      The Transport Council will make the final decision based on information that they receive from the European Commission. In documents dated January 18, April 17, and November 5, 2001, the European Space Agency laid out this year’s dates, issues and decisions related to the project.

      TheTransport Council deferred its formal approval of Galileo from December 2000 until April 2001 to allow further deliberation on precisely how to implement the 3.2 billion euro ($2.9 billion) project. On April 5, 2001, the transport ministers decided to allocate 100 million euros ($90 million) to get the programme moving. An additional 450 million euros ($403 million) should be released at the Transport Council’s December meeting when the project’s management structure will also be approved.

      The ministers’ decision in April provided the framework for the long-term implementation of Galileo. The ministers also identified the issues to be resolved before their December meeting. Firstly, an effective political control must be established for the operation of Galileo. While this structure is created, a temporary structure will be implemented to manage the programme, with the commission taking charge of the general coordination and ESA guaranteeing the technical set-up. All parties must also agree on mission requirements, including interoperability with existing global navigation satellite systems. An official from Astrium, one of the companies that make up the prime contractor known as Galileo Industries, confirmed that the main definition phase of the project was successfully completed in the spring and led to a comprehensive definition of mission. Regarding the critical issue of long-term private sector involvement, a tendering process will be launched to give a perspective of all the phases of the project. This topic of public/private partnership is one of the outstanding issues causing great debate between the European Commission and the member states.

      As of early 2001, the plan to build Galileo included three stages using a mixture of public and private financing. The first stage, called the development and in-orbit validation phase, will cost approximately 1.1 billion euros ($980 million) equally financed by ESA and the EU. It aims to put a handful of satellites into orbit by the end 2005 to validate the system. This phase follows a preliminary definition phase started in 1999 and finished in 2000, costing ESA 40 million euros ($36 million) including technology development. The development and validation phase will be funded in two parts–the first, costing 53 million euros ($47 million), will cover the initial design work and the consolidation of the mission requirements. The ESA member states allocated this money with approval from the Transport Council in December 2000. The second part, costing 497 million euros ($445 million), must be allocated before the end of 2001.

      The 2.1 billion euro ($1.88 million) second, or deployment, phase is to be met from a mixture of public and private sources. The European Union and ESA are expected to share the public slice equally. During this phase, which will end in 2007 once all the satellites are launched, industry and service providers will be able to develop commercial opportunities using the satellite navigation system. The transport ministers have asked for further clarification on how much money the private sector would contribute and when. The third, or operations, phase will start after 2007 and will be financed by the private sector. By this point in time, the system will be fully operational and available for a variety of commercial and public service users.

      Galileo Industries, the joint venture company that will be the prime contractor for the Galileo system, explained some of its views in a recent paper. Since Galileo Industries is comprised of three European companies–Astrium, Alcatel Space and Alenia Spazio–this report encompasses a broad range of European ideas. Michael Healey, a director of Galileo Industries, began his discussion by saying that the decision taken in April by the Transport Council, backed by 100 million euros in funding, regained the very positive momentum of 2000. He agrees that much emphasis needs to be placed on public/private partnership, specifically to achieve binding private sector financial commitment by the end of 2003. Based on this one important issue, not everything is so rosy leading up to the December decision as Healey sees it.

      Fundamental differences exist between member states regarding the requirements for public/private partnership, especially in the areas of financing and control of the system. One popular view, although not formally stated in EU documents, is that there is no real prospect for attracting significant private funding. Galileo is seen as a strategic asset that should be under public control with limited private involvement.

      Alternatively, some see this programme as a business opportunity where downstream service providers will make substantial profit once Galileo is available. Because of this, private industry should accept early investment risk. Private participation at an early and increasing level will ensure a user-driven system that reduces public sector financial support.

      –Peter Warner

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