Industry Backs Proposed EC Takeover of Galileo GPS, But Govt. Support Unclear
The EC moved Wed. to take control of flagging satellite navigation system Galileo, proposing that its infrastructure be funded with public money because no industry consortium charged with building and launching most of the satellites coalesced. Transport Comr. Jacques Barrot brushed aside suggestions the multibillion euro project isn’t economically viable, telling a briefing that industry’s “chomping at the bit” to develop applications for Galileo once its structure is in place. Inmarsat, Galileo’s operator, questioned whether EU countries will ante up as needed to get the project off the ground, but industry said generally it’s pleased with the EC proposal.
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The original proposal, for a public-private partnership (PPP), would have put 30 satellites into space, Barrot said. Industry would underwrite launch of 26 satellites; 4 were to get public funding. But, he said, the consortium wanted the public sector to assume all design and marketing risk. Now, he said, if the private sector is to play a role, it will be in developing and deploying environmental monitoring, surveillance of critical communications or energy infrastructures and other downstream uses.
In adopting its communique, the EC stressed it needs the satnav system but can’t continue with the PPP, Barrot said. The public sector -- the EC and member nations -- now will be responsible for launch of all 30 satellites under EC leadership, with contracting authority held by the European Space Agency (ESA).
Barrot denied reports taxpayers would be stuck with higher costs to bail out the program. The overall cost to the public won’t rise, he said, because the plan is to buy the system outright rather than having industry front the costs and seek refunds with interest. Galileo needs 2.4 billion more, whether from the EC or from EU countries, he said. Full funding requires 400 million per year for 6 years, he said, which equates to around 400 km. of highway.
The EC is “determined to assume the full responsibility for this major project” to have the architecture in place to speed development of applications, Barrot said. If the signal is available in 2012, as planned, small and mid-sized firms will have a better chance to plan for new uses, he said.
Asked if industry stalled out of fear that Galileo won’t be profitable, Barrot said the project has undergone lengthy research. The PPP hasn’t been able to craft a viable business plan, but that doesn’t undermine Galileo’s viability, he said. The system is clearly in Europe’s interest and the EC is aware of a large market for it. Business may be unwilling to take the risk at this stage, but it’s awaiting construction of the infrastructure “with impatience,” Barrot said.
Who let Galileo fall into this position? “It’s not a failure as such,” Barrot said. The consortium couldn’t answer questions he put to it on naming a lead negotiator and creating a formal entity, so Barrot made the decisions needed to get things moving, he said, adding he’s certainly not to blame.
One reason for industry’s reluctance may be some EC countries’ “state of mind,” Barrot said. Some may want immediate return on investment, but that can’t happen until the project is complete, he said. The real issue is making Galileo a success, he said; the money will follow.
The EC proposal, to be vetted next month by transport ministers, came as no surprise to industry. It’s been clear for some time that bringing northern European and southern European bidders into a single consortium was a challenge, one industry source said. Northerners wanted the project funded privately; Southerners wanted public funding, the source said. The main challenge was a demand by Spanish partner Hispasat for an additional ground station to which it’s not entitled, the source said.
The EC decision makes things simpler, an Inmarsat spokesman said. The company remains enthusiastic about working on the program, but recognizes that the U.K. and other govts. Must review funding arrangements before any public financing activities can take place, he said.
The U.K. wants “value for money and affordability,” a Dept. of Transport spokesman said. The EU needs to be aware of Galileo’s cost implications and potential risks, he said. Neither is the U.K. keen on the system’s military aspects; it wants assurances Galileo will be commercial and civilian, he said. (Barrot stressed it would be so but didn’t rule out use by military entities for civilian activities such as search and rescue).
Most of industry welcomes the shift as a way forward, said Pat Norris, who chairs the satellite committee of high- tech industry group Intellect UK. Norris, of Logica CMG, which is developing computer software for Galileo, said the company wants the U.K. to take advantage of the opportunity to let the EC and ESA to get on with their jobs.
The consortium created trouble with its 8 shareholders, each having equal veto power on decisions that had to be unanimous, Norris said. A U.K. military satellite project with financing similar to the original plan for Galileo -- private financing until the satellite was in orbit, when the govt. bought services from the private sector -- worked well only because it had only one shareholder, he said.