EN Official Journal of the European Union C 107/44

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions — Action Plan on global navigation satellite system (GNSS) applications’

COM(2010) 308 final

2011/C 107/09

Rapporteur: Mr McDONOGH

On 14 June the European Commission decided to consult the European Economic and Social Committee, under Article 304of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Action Plan on Global Navigation Satellite System (GNSS) Applications

COM(2010) 308 final.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 2 February 2011.

At its 469th plenary session, held on 16 and 17 February 2011 (meeting of 16 February), the European Economic and Social Committee adopted the following opinion with 112 votes in favour and two abstentions.

1. Conclusions and recommendations

1.1 The Committee welcomes the Communication from the Commission on the ‘Action Plan on Global Navigation Satellite System (GNSS) Applications’. We believe that the success of the European GNSS programmes is vitally important to the future prosperity and security of the EU. We call on the Council, the Parliament, the Commission, and the member states to properly recognise the potential of this critical infrastructure, and to back it with sufficient funding and resources to succeed.

1.2 European GNSS is critical to achieving the vision of smart, sustainable and inclusive growth envisioned by the Europe 2020 strategy (1). European growth, innovation and wealth creation will be impacted by the success of the programme. In addition to the substantial benefits to transportation systems, GNSS is critical to the Digital Agenda (2) for applications like context-aware computing, smart grids and the Internet of Things.

1.3 The Committee regrets that the delay in delivering GALILEO has cost Europe the opportunity to position European GNSS as the dominant technology in Europe and beyond. The United States GPS system is now the clear global technology leader for GNSS solutions. This delay is continuing to cost Europe dearly in terms of lost revenue from the sale of the technology and services, but also in terms of public utility – smarter transport systems, smarter energy systems and better search and rescue services.

1.4 Europe needs to provide European GNSS services on its own infrastructure, which does not depend on the priorities of the US, Russian or Chinese military for its reliability.

1.5 Given the proliferation of GPS, the Committee calls on EU industry to focus on interoperability between Galileo and GPS, since the applications using both satellite constellations can benefit from an increased accuracy and a better availability of the signals.

1.6 EGNOS is already more than a year in service. Unfortunately, the EU is already late pushing this marketing and innovation agenda. The Commission needs to accelerate the pace of market development and innovation, especially considering the cost of GALILEO's delay (up to EUR 3bn/annum) and the increasing competition from the US, Russia, China and Japan.

1.7 The slow development of GNSS downstream applications means innovation, wealth creation and market position is being lost. The GNSS upstream and downstream economic, social and environmental benefits of a thriving market for European GNSS applications would be very substantial.

1.8 The Committee congratulates the Commission and the GNSS Supervisory Authority (GSA) on the work that has been done to-date with very limited resources. And in the context of those resources, the prioritisation of domains in the Communication is logical; and the strategies outlined for each domain are also well thought-out.

1.9 European GNSS currently has a low share of the global market for GNSS products and services. The Committee calls for the production of a detailed business plan for aggressive market share growth and the appointment of a first-rate team of skilled business professionals responsible for achieving targets. The Committee recommends that a contract should be placed with an expert firm, under the direction of the Commission and the GSA, to deliver the commercialisation of European GNSS.

1.10 The communication appropriately identifies the qualities of ‘Accuracy and integrity’ of EGNOS/GALILEO as big competitive differentiators in the market for global GNSS services; but this source of differentiation is eroding fast as competitors invest and upgrade their systems. The Committee believes that there is a need to continuously invest in the upgrading of the EGNOS and GALILEO systems to maintain technical superiority. The Committee requests the Commission to especially identify, additional sources of strategic differentiation and to invest in the development of sustainable competitive advantage.

1.11 The Committee believes that the surprising exclusion of GALILEO from mention in the Digital Agenda pointed to a lack of joined-up thinking at policy level within the Commission. The Committee would stress the need for the Commission to identify synergies between the European GNSS programmes, the Digital Agenda and The Innovation Union flagship initiatives, particularly around innovation, interoperability of applications, marketing and budgets. Substantial benefits could be found in working together to develop smart applications and services and to achieve mutual objectives with the minimum amount of spend.

1.12 The Committee calls on the Council to urgently address the challenge of funding EGNOS/GALILEO. The current situation undermines efforts to create a strong European commercial GNSS platform.

1.13 The Committee believes strongly that Europe should leverage the unique position of GALILEO as the world’s first completely non-military civil GNSS to build market share in non-aligned countries, especially in Africa and South America. Towards that end, the Commission should play a highly active leadership role in the Untied Nations International Committee on GNSS (3).

1.14 The Committee stresses the importance of a brand strategy and a quality mark (4) for EGNOS/GALILEO technology and services. The Committee calls on the Commission to develop both of these essential tools for market success. Resources and effort will be squandered if there is not a clear brand strategy underpinning the marketing efforts. And irreparable damage to reputation will be caused by the release of poorly designed, engineered or implemented EGNOS/GALILEO technology.

1.15 The Committee refers the Commission to previous opinions by the Committee on GALILEO, EGNOS, Europe 2020 and the Digital Agenda (5).

2. Background

2.1 We have become so dependent on services provided by satellite navigation in our daily lives that should a service be reduced or switched off, the potential disruption to business, banking, transport, aviation, communication etc. to name but a few, would be very costly (e.g. in terms of revenues for business, road safety etc.).

2.2 GPS (US), GLONASS (Russia) and the other systems developed by India, Japan and China are military systems under military control – indeed they provide a civil service but that civil service could be either switched off or made less precise when desired e.g. in case of conflict.

2.3 The EGNOS (European Geostationary Navigation Overlay System) and GALILEO programmes were initiated in the mid 1990s with the aim of establishing an independent European Global Navigation Satellite System (GNSS). EGNOS is a regional satellite based augmentation system for Europe that improves the signals coming from existing satellite navigation systems such as GPS. GALILEO is currently under development as Europe’s Global Satellite Navigation System.

2.4 The GALILEO Joint Undertaking (GJU) - a PPP body setup in 2003 and scrapped in 2006 - was given the task of supervising GALILEO's technological development activities but, according to the European Court of Auditors, the GJU ‘was seriously constrained by governance issues, an incomplete budget, delays and the industrial organisation of the development and validation phase’.

2.5 As a result of the failure of the PPP, the EU enacted a Regulation in 2008 to take full control and ownership of the EGNOS and GALILEO programmes. Under the Regulation, the Commission is responsible for the management of the programmes; all questions regarding the security of the systems; and the management of the funds allocated to the programmes. The European GNSS Supervisory Authority (GSA) is responsible for the security of the programmes; to contribute to the preparation of the commercialisation of the systems; and undertake other tasks given to it by the Commission relating to the programmes.

2.6 The budget for the implementation of the programmes between 1 January 2007 and 31 December 2013 is EUR 3 405 million. However, this ad hoc funding was inadequate and there has been no detailed commitment to future funding of the programmes. This funding problem has seriously hampered development efforts.

2.7 The Global Navigation Satellite Systems (GNSS) Applications Action Plan aims to place European industry in pole position to take full advantage of the global downstream market worth about EUR 100 billion by using GALILEO and EGNOS. The Commission believes that European industry should reap maximum benefit from the investment made in the programmes. Coordinated action by the European Commission among Member States will draw as much attention as possible to the necessity of investment in research, ensure the widest possible dissemination of vital information and optimise awareness raising activities. This will avoid a conflict of standards and a duplication of efforts if undertaken by individual Member States.

2.8 The GNSS Applications Action Plan is also important to maximise the value created in Europe by the Europe 2020 flagship initiative ‘A Digital Agenda for Europe’. For example, European GNSS could displace US, Russian or Chinese technology that might be used for the Internet of Things.

2.9 With GALILEO, Europe is also able to exploit the opportunities provided by satellite navigation to a much greater extent than otherwise possible. GALILEO will help Europe maintain and develop its know-how in the space, receivers and applications sectors, securing economic revenues and jobs. Independent surveys and market forecasting indicate that this and the externalities in terms of public utility (new applications making transport more effective, better road management, traffic less polluting, rescue operations more effective etc.) are worth up to EUR 90 billion over the first twenty years.

2.10 However, European GNSS is trying to establish itself in an industry already dominated by the US GPS system. Furthermore, the Russian GLONASS system is developing and upgrading its public services quickly and the Chinese COMPASS system is expected to be offering services from next year.

2.11 China is expanding its regional Beidou navigation system into the global COMPASS system with the explicit intent of offering competitive civil services worldwide. In pursuit of that ambition it has arrogated part of the radio spectrum allocated to GALILEO, claiming that Europe was not using it so they had a right to take it. The EU is trying to resolve the matter at the highest diplomatic level.

3. General comments

3.1 To secure the economic and quality of service potential of European GNSS, GALILEO and EGNOS must become the GNSS standard in Europe, interoperable with GPS, and preventing others (China, Russia etc.) from getting a foothold.

3.2 The interoperability between Galileo and GPS is an advantage that has to be grasped by the EU industry, since the applications using both satellite constellations can benefit from an increased accuracy and a better availability of the signals.

3.3 The EGNOS and GALILEO programmes need clear leadership and unambiguous, full support from the EU to repair the damage to market confidence caused by the collapse of the GJU PPP.

3.4 Creating and leveraging the competitive advantages of the European GNSS are critical to success. Including regulatory and other market measures the EU can leverage in its favour.

3.5 A successful market strategy must take account of a product/market/value-chain focus for each of the sectors comprising the European GNSS industry: electronics, software, mobile, radio, hardware, satellite, and services.

3.6 While respecting global competition laws, the EU should also define the sectors in which new regulations could be introduced to make use of the benefits brought by GNSS, in particular EGNOS and GALILEO: Perhaps the EU could legislate for special areas, like aeronautic navigation systems, which mandate the use of GALILEO receivers in applications and products (as the Russians have already done for GLONASS). Maybe the EU could also stipulate minimum accuracy and integrity standards for certain applications to make use of GALILEO's benefits and disadvantage competition.

3.7 Given the importance of receiver chipsets (6) to a market penetration and application development strategy, the development of low-cost dual receiver chipsets (GPS + GALILEO) is critical. R&D spend should be especially targeted at this objective.

3.8 Experience-curve-effects of high volume production are critical to low cost manufacture of receiver chipsets. Special study should be carried-out into how the EU can ensure that GALILEO receiver components can achieve sufficiently high manufacture volumes to compete with GPS-only receivers.

3.9 In considering how to develop the application industry for European GNSS, the Commission should give leadership in the creation and development of innovation clusters.

3.10 The Commission could help to stimulate the development of applications, products and services for GNSS by recruiting large corporate firms as project champions. These champions could perhaps lead the development of SME clusters in specific application domains or product/market spaces.

3.11 Encouragement and support for of entrepreneurship and innovation will be critical to the successful involvement of SMEs in the development of the market for GNSS Applications. The Entrepreneurship and Innovation Programme should be used to foster SME involvement.

4. Specific comments

4.1 Strategy

4.1.1 GALLILEO and EGNOS must become the underlying GNSS standard in Europe.

4.1.2 The EU should urgently take the opportunity to extend EGNOS to cover all significant airports in Africa. This would be an astute long-term strategic move, and it should be taken before our competitors act, especially China.

4.1.3 EGNOS is already more than a year in service. There should be more urgency in the marketing and innovation programmes.

4.1.4 The Commission and the GSA have done an excellent job with a difficult task and very limited resources. Perhaps an expert firm should be contracted soon to deliver the commercialisation of European GNSS. The commercial development of EGNOS and GALILEO is critical to long-term success, and too-little work has been done to-date on this vital, complex challenge.

4.1.5 The EU needs an aggressive market development strategy, led by a highly skilled team, with clear, measurable objectives.

4.1.6 Clear leadership and full support from the EU is needed to eliminate any uncertainty surrounding GNSS.

4.1.7 Confidence in the leadership and management of the GNSS programmes is critical to support within the EU and in the market. Current leadership and management structures should be examined to assess what if any changes need to be made.

4.1.8 Additional funding for the marketing and innovation programmes should be found by working creatively and synergistically with other initiatives, like the Digital Agenda and the Innovation Union.

4.1.9 A marketing and innovation strategy based on value-chain/product/market segments is needed for each part of the downstream industry: electronics, software, mobile, radio, hardware, and services.

4.1.10 The Commission should investigate the sectors in which new regulations could be introduced to make use of the benefits brought by the European GNSS applications and technologies.

4.1.11 Regulatory measures should be identified which favour the selection of EGNOS/GALILEO technologies over inferior technologies, especially for applications that demand confidence in continuity of service or high levels of accuracy and integrity, or for security.

4.1.12 EU should flex its muscles in European industry standards fora (transport, aviation, agriculture etc.) to get preference for EGNOS/GALILEO technology and to promote the existing interoperability between GALILEO and GPS.

4.1.13 Driving down the cost of EGNOS/GALILEO receiver chipsets below GPS-only chipsets should be a major strategic priority. Experience-curve-effects of high volume production are critical to low-cost manufacture of receiver chips, and thus their adoption by solution providers.

4.1.14 Strong efforts should be made to find synergies with the Digital Agenda and Innovation Union initiatives for collaborative innovation and marketing programmes.

4.1.15 Special attention should be given to the stimulation and support of entrepreneurship among SMEs so that they are mobilised to provide GNSS applications.

4.1.16 A deliberate programme of innovation cluster development should be undertaken to cover all product/market opportunities for EGNOS and GALILEO.

4.1.17 A value map should be created to show all the firms and organisations that could or should be involved in creating technology, applications and services for EGNOS/GALILEO. The value map would show existing and potential linkages between the multitudes of players. It would be a powerful strategy tool for identifying opportunities, analysing problems and developing plans.

4.1.18 Large corporate firms should be identified and recruited to formally champion and lead GNSS application development within Europe.

4.2 Innovation

4.2.1 The quality of EGNOS/GALILEO technology and services introduced to the market must be always of the highest standard. Strict quality control on technology development and implementation at end-user level must be maintained.

4.2.2 New sources of differentiation beyond accuracy and integrity should be found, perhaps by means of business model innovation that creates new enhanced offerings that combine with other technologies and services.

4.2.3 Smart products and services, using integrated technologies and service components should be encouraged in cooperation with Digital Agenda and Innovation Union programmes.

4.2.4 The Application Forum should look for participants outside the current technology and services domains. Such involvement would stimulate innovation and creative thinking beyond the currently identified sources.

4.2.5 The development of low cost dual GPS/EGNOS/GALILEO chipsets should be a priority.

4.2.6 A strategy is needed to sufficiently capture the experience curve effects of high volume production critical to low cost manufacture of receiver chipsets, so that EGNOS/GALILEO chipsets can compete on a cost-basis with GPS only chipsets.

4.3 Marketing

4.3.1 The job of developing the GNSS Application market should be in the hands of marketing professionals. Current structures and personnel should be reviewed against this requirement. Maybe an expert firm needs to be contracted to work under the direction of the Commission and GSA to do this work.

4.3.2 A thorough, well considered and full financed marketing plan is essential for the successful execution of the Action plan.

4.3.3 SMART goals should be set to grow global share of GNSS downstream revenues. Goals should be set by target market/value chain segment.

4.3.4 A Global brand strategy should be developed for EGNOS/GALILEO to align objectives, highlight the brand value, simplify market communications, and bring clarity to marketing priorities.

4.3.5 A well-funded and properly targeted public communications and education campaign should be launched to promote EGNOS/GALILEO to the citizens. This should only be done in the context of a proper brand strategy.

4.3.6 A quality mark should be developed for all EGNOS/GALILEO approved technology so that the EGNOS/GALILEO brand can be protected from reputational damage.

4.3.7 Evangelists (champions) should be engaged to spread the word and recruit SMEs to the development opportunity.

4.3.8 Champions and influencers should be identified and courted in all target markets, especially among large corporate firms.

Brussels, 16 February 2011. The President of the European Economic and Social Committee Staffan NILSSON

(1) EUROPE 2020 A strategy for smart, sustainable and inclusive growth - COM(2010) 2020.

(2) A Digital Agenda for Europe - COM(2010)245 final.

(3) http://www.oosa.unvienna.org/oosa/SAP/gnss/icg.html.

(4) By ‘quality mark’ the Committee means a trademark system of licensing approved EGNOS/GALILEO technology providers to sell technology and solutions that meet rigorous technical standards of excellence. For example, such a trademark system was used very successfully by the global WiFi Alliance to accelerate the market success of wireless LAN technology. See http://en.wikipedia.org/wiki/Wi-Fi_Alliance.

(5) OJ C 221, 8.9.2005, p. 28.; OJ C 317, 23.12.2009, p. 103–104, OJ C 54, 19.02.2011, p. 58.

(6) A chipset or chip set refers to a group of integrated circuits, or chips, that are designed to work together. They are usually marketed as a single product. A chipset is usually designed to work with a specific family of microprocessors. Because it controls communications between the processor and external devices, the chipset plays a crucial role in determining system performance.