Galileo - involving Europe in a new generation of satellite navigation services

This consultation paper seeks your views on the European Commission's communication 'Galileo - involving Europe in a new generation of satellite navigation services'. The paper briefly explains the Commission's proposals for Galileo and sets out the UK Government's concerns about them. Any comments should be sent to the Department of the Environment, Transport and the Regions:- at address detailed in paragraph 32.

Background

1.The Transport Council, in March 1998, endorsed a European satellite navigation strategy which required the Commission to explore with the US, Russia and others, the possibilities of co-operation on a Global Navigation Satellite System (GNSS) based on the US-controlled Global Positioning System (GPS) and/or the Russian Global Navigation Satellite System (GLONASS). The Commission was also asked to investigate the possibility of developing an independent European system and to bring forward proposals to the Council in early 1999.

2.The Commission has now come forward with proposals recommending an independent European global navigation satellite system - Galileo. The system would be compatible and interoperable with GPS, consist of 24-45 satellites, cost at least £1.7-£2 billion and be funded by the public and private sectors through some form of public-private partnership. A copy of the Commission's communication is available from European Information Centres in major cities of the UK and, we understand, will be published on the European Union's web site. .

Summary of the Communication

Existing Problems and the Challenge to be Faced

3.The Communication states that there are problems of sovereignty and security if Europe continues to place reliance on the US and Russian Federation controlled satellite navigation systems, GPS and GLONASS respectively, for the future development of its safety-critical navigation systems and intelligent transport infrastructure. The US/Russian systems, designed originally for military purposes, cannot fully meet civil users' requirements in terms of performance (accuracy, integrity and availability) unless augmented. As satellite-derived services become central to manufacturing industries and the service sector for positioning and/or precision timing, this reliance raises important questions of a strategic nature, including in respect of the Common Foreign and Security Policy (CFSP), especially if the core systems are not under European control or influence.

4.Hence, there is a challenge to guarantee Europe's strategic needs without excessive cost or risks. The Commission considers that failure by Europe to act would strengthen the present US market dominance and leave Europe entirely dependent on the US for many security-related matters. Additionally, the Commission believes that there is a need to ensure that European users are not at risk from changes in service or excessive future charges or fees (the US and Russia provide a free service at present). Faced with US dominance and near monopoly (particularly if the Russian system fails because of the country's economic/political situation), the Commission considers that it would be difficult for Europe to resist such charges and perhaps impossible to develop alternatives quickly.

International Co-operation

5.The Communication states that the US is not willing, for military reasons, to share control of GPS, although it is positive about technical co-operation. The US does acknowledge that two complementary systems, GPS and Galileo, will allow greater use in safety-critical applications and in urban areas.

6.On the other hand the Russian Federation appears keen to develop a partnership in developing a new system. This would offer Europe the shared use of GLONASS frequencies and Russian know-how in satellite operation and control. However, a gradualist approach would need to be pursed, and any agreement would need to take full account of Community security interests and the objectives of the CFSP.

Rejecting the 'Zero Option'

7.The Commission's so-called 'zero option' would be to continue to rely on GPS/GLONASS, with regional augmentation such as the European Geostationary Navigation Overlay Service (EGNOS). This would mean taking a decision to abstain from having a European presence in the core space segment of future generations of a Global Navigation Satellite System (GNSS). The Commission believes that this would leave Europe without adequate assurance that its political, strategic, economic, employment, industrial, security, space and transport interests are preserved.

Galileo

8.The Commission is convinced that Europe must go ahead with Galileo but recognises that public spending will have to be carefully estimated, planned and controlled, and the private sector would have to bear part of the risk. Although the European Space Agency (ESA) is continuing to examine options for a second- generation GNSS, Galileo is likely to be based on a constellation of between 21-36 medium earth orbit (MEOs) satellites and 3-9 geostationary satellites (GEOs) because of the low technical risk and known performance capabilities of MEOs (GPS/GLONASS are based on MEOs). The ground network would include most of the EGNOS network.

Financial Aspects

9.Currently, ESA is evaluating the detailed costs and macro economic benefits. The Communication indicates that from earlier work, estimated costs are put at e1.6-2.2 (£1.1-£1.5 ^[1] ) billion over 1999-2008, plus e600-750 (£414-517) million for controlled-access service. Operations and replenishment costs on an annual basis from 2008 are put at e140-205 (£97-141) million. The Communication suggests that costs savings could be made if Russia and other states, such as Japan, participate in Galileo. It also suggests that further cost savings could be made when current navigation aids are decommissioned.

10.The Communication recognises the difficulties in generating revenue streams from Galileo whilst the civil GPS signal (and GLONASS) is provided free of charge. In the Commission's view, this rules out Galileo being provided exclusively by the private sector. The Commission therefore proposes a three point financing plan:

• substantial funding through Community budgets such as TENS (Euros500 (£345) million) 5th and 6th Framework R&D Programme (Euros240 (£166) million), and ESA (Euros500 (£345) million);
• establishment of revenue streams (likely to require regulatory action); and
• developing a public-private partnership (PPP - private funding making up the shortfall of Euros950-1700 (£655-1172) million).

11.The Commission suggests that the creation of revenue streams will reduce the need for public subsidy and facilitate PPP. Although there would be free access for the mass market to the basic system (level 1 service - equivalent to the GPS service), higher levels of service (levels 2 and 3) would be controlled and available only to subscribers in return for certain fees. The Commission considers that level 2 and 3 services might be made mandatory for such uses as electronic fee collection for access to infrastructure, monitoring fishing activities, freight and coach transport and road safety services. It also considers that levels 2 and 3 could be made even more attractive if liability cover was provided for the services which subscribers received. Additionally, the Commission considers that these levels of service could be certified for safety-critical and similar high-performance tasks, in a way that GPS could not, and that this would constitute a marketable asset.

12.The Commission considers that levies on receivers and operating licence fees are further possibilities for revenue. These would need to be introduced throughout the European Community.

13.Additionally, the Commission believes that the private sector could generate revenue through wide-ranging applications, facilitated by the integration of communication and positioning, including dedicated navigation-related commercial and high accuracy services and integration of safety-related payloads.

PPP

14.The Commission considers that public funding should be largely replaced by private funding by the operational phase (beginning 2008). It proposes early exploration with the private sector of PPP and revenue-stream possibilities and that a 'vehicle company' (to design, build and operate) be set up before the deployment phase (beginning 2006).

Employment

15.The Communication states that proceeding with Galileo will help to secure and augment employment in this high and expanding technological area. It estimates that the development of Galileo would support 20,000 jobs, its operation 2,000 permanent jobs, and create considerable new employment opportunities in applications so that, by 2008, there would be in the region of 100,000 jobs in direct, indirect and induced employment.

Organisational framework

16.As part of the proposals, the Communication proposes that throughout the project the Commission should take the political lead and, with the GNSS High Level Group (an Advisory Group to the Commission consisting of officials from Member States), should steer the project. A Programme Management Board (PMB ^[2]) consisting of the Commission, ESA, national space agencies and other investors should be established to put in place, through public tender, the 'vehicle company'. At the operations stage, the PMB would be succeeded by a Galileo Administration which would manage Galileo services, guarantee performance and ensure peacetime defence and security co-ordination. A European GNSS Regulatory co-ordinator would develop mandatory standards.

Recommendation

17.The Communication invites the Community to:

• take firm decisions to develop Galileo;
• endorse the three-point financial strategy;
• recognise the need for negotiations and technical discussions with third countries; and
• agree the organisational approach.

It suggests that a major milestone will be reached by the end of 2000 (the end of the definition stage) which will allow a review of the direction that Europe should take.

UK Interests

18.As part of the UK Government's support for the development of GNSS, it has contributed approximately £13 million to the development of EGNOS. The UK National Air Traffic Services (NATS) has also provided £15 million for EGNOS. These contributions have ensured that the UK has been able to influence the development of GNSS in Europe, and that part of the ground infrastructure of EGNOS will be located in the UK. To protect this investment, and as the Government recognises that it is in the UK best interests to influence future developments, it is contributing £5 million to ESA's GNSS - Second Generation Preparatory Programme.

19.The Government, acknowledging the importance of GNSS to Europe, supported the Conclusions adopted at the Transport Council in March 1998 (see paragraph 1 above). Hence, the Government welcomes the progress made on satellite navigation by the Commission. However, it has a number of concerns about the Commission's proposals.

UK Government's View on the Communication

20.The Galileo proposals maintain the objective of global co-operation, but propose that Europe should proceed to develop a second-generation GNSS, independent of GPS but fully interoperable and compatible with it. Hence, there would be co-operation with the US on technical issues and use. It would also be open to others e.g. Russia (possibly a significant contribution) and Japan to participate in the development of Galileo.

21.The Government accepts that there will be a need to replace some of the EGNOS infrastructure (for example, the geostationary satellites used as part of EGNOS have a 13-15 years life expectancy and would need to be replaced before 2010). Because of the long lead times for the implementation of projects of this nature and the need to ensure that replacement systems are, at least as safe and effective as existing navigation systems, the Government appreciates the need for early decisions. However, the Government takes the view that a number of important issues need further investigation before decisions can be made. These are set out in paragraphs 22 to 28 below.

The Commission's Zero Option

22.The Commission has rejected this on political, commercial and security grounds. However, this is by far the cheapest option and the Government believes that there is a need for further analysis of its advantages and disadvantages.

Funding and Private Sector Participation

23.The Government believes that any solution must maximise private-sector participation and funding of the project. Hence further work is needed to explore how this private sector participation can be achieved. In any event, the levels of public sector financing of the project proposed by the Commission are substantial; and the Government believes that it is important to ensure that these are minimised through the alternatives of private-sector finance.

Institutional Issues

24.The Commission's proposals appear to depend largely on the early development of a public-private partnership. As indicated above, the Government believes that this must be examined in more detail.

Timetable

25.The Government believes that the Commission's overall timetable for this project is optimistic, particularly in view of the complex public/private funding arrangements which have to be in place before the 'Development Stage' starts in 2000. The timetable may need to be reconsidered.

Security and Defence

26.The availability of accurate and reliable navigation and positioning information from Galileo to potential aggressors is of concern to the Government. Hence, further work on the implications of this is required.

User Benefit

27.The Government believes that users will pay for a service only if it meets their requirements and if no cheaper alternative is available. The Government understands that the maritime community sees little need for a new satellite navigation system at present and that a need will continue to exist for conventional aids to navigation such as lighthouses, buoys and beacons. Therefore the possibility that certain uses of Galileo may be made mandatory to generate revenue and to make savings through the withdrawal of conventional aids is of concern. Aviation and other users may have similar concerns. Hence, the Government considers that users' requirements and benefits need greater investigation and cost-benefit analysis.

Conclusions

28. It is the Government's view that considerable work is required to be carried out to clarify a number of important issues. Hence, the Government considers it important for Europe to take the time to explore properly the best way to achieve the development and operation of a second generation of satellite navigation services.

Position of other EU States

29.Mainly on political grounds, there is widespread support for the Commission's views that the zero option is unacceptable. The Government understands that France, for example, is supportive of Galileo, and will argue that the wider political and strategic concerns of Europe outweigh the costs involved. But others have voiced concerns about costs and funding.

Legislative and Subsidiarity Issues.

30.The Communication does not propose any legislation and subsidiarity is not an immediate issue. It is expected that the June Council will be asked to adopt a Resolution endorsing the recommendations based on Chapter 8 of the Communication. If a decision to proceed with Galileo is taken, further proposals are likely (during 2000) and these may raise issues of subsidiarity and have regulatory and legislative requirements.

Timetable

31.The Commission wants to be in a position to obtain political endorsement of the proposals at the June Transport Council. The Commission is stressing that a decision in June will not involve the need for a large capital outlay: that will come in early 2000 when a decision to proceed with the development stage of Galileo will be required. The Commission agrees that such a decision to proceed would make sense only if substantial private investment through a public/private partnership could be guaranteed.

Comments and Contact Point

32.We would welcome your comments on the European Commission's communication on Galileo. Any comments should be submitted by Friday 7 May 1999 to Richard Mackie, Department of Environment, Transport and the Regions, Civil Aviation Division, Zone 2/28, Great Minster House, 76 Marsham Street, London, SW1P 4DR, ((+44 (O)171890 6372;2 +44 (O)171 676 2191) or, alternatively, e-mail Civil Aviation Division).

1 - £1 = Euro1.45: as at 26/2/1999
2 - In Chapter 6 this is referred to as the Project Management Board but in the diagram at Annex 1 as the Project Development Board.