COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 10.02.1999 
COM(1999) 54 final 
COMMUNICATION FROM THE COMMISSION 
Galileo 
Involving Europe in a New Generation of Satellite Navigation Services 
EXECUTIVE SUMMARY iv 
1. Introduction 1 
2. The challenge facing Europe 1 
2.1. The issues at stake 1 
2.2. Timing considerations 4 
3. Recent Developments and Preliminary Conclusions on the Strategic Choices for 
Europe 5 
3.1. Joint development of a system: potential for co-operation with the US 5 
3.2. Joint development of a system: the Russian Federation 6 
3.3. Japan as potential partner for a joint development of a system 6 
3.4. Other countries and regions as potential partners for a joint development of 
a system 7 
3.5. GNSS-2 Forum 7 
3.6. The European Parliament 8 
3.7. Rejecting the 'Zero Option' 8 
4. System Architecture and Technical Features 9 
4.1. Performance requirements 9 
4.2. Security issues 11 
4.3. Requirements of GNSS Ground Network 12 
4.4. Signal structure 12 
5. Financial Aspects 13 
5.1. Estimated costs 13 
5.2. Sources of public funding for Galileo 14 
5.3. Potential revenue streams enabling public-private partnership 16 
5.4. Establishing a public private partnership 17 
AiU 
6. Organisational Framework 19 
6.1. Designing, building and operating Galileo: basic principles and immediate 
decisions 19 
6.2. Strategic Aspects 20 
6.3. The development phase 20 
6.4. The Operation phase 21 
6.4.1. Galileo management 21 
6.4.2. Galileo operation 22 
6.5. Securing Radio Spectrum 22 
6.6. Regulatory Co-ordinator 24 
7. The feasibility of, and possible partners for, a joint development of a system: 
concluding agreements 25 
8. The Way Forward: Implementing the Strategy 26 
Annex I Galileo Development Scenario 
Annex II a) Main Characteristics of Orbits Considered for Galileo 
Annex II b) Acronyms 
Annex III a) Financial Statement 
Annex III b) Galileo - detailed breakdown of costs 
Annex IV Market analysis and economic benefits 
44 
EXECUTIVE SUMMARY 
This Communication sets out a strategy to secure a full role for Europe in the development of 
the next generation of Global Navigation Satellite System (GNSS) and so full opportunity in 
the related market. The central recommendation is that Europe should develop a new satellite 
navigation constellation, combined with appropriate terrestrial infrastructure: Galileo. 
The EU is faced with a formidable challenge but also with a major opportunity in respect of 
global satellite navigation which is becoming central to all forms of transport and many other 
activities. These systems will play a crucial role in creating the integrated European transport 
system that is crucial to support the single market. Further, EU Member States have public 
obligations to provide safe navigation services and other public services (for example, search 
and rescue) and GNSS can be the most cost-effective means of achieving this. 
The issue is not, therefore, whether Europe should rely on satellite navigation systems for the 
future, but what economic benefits, including jobs, it would gain from playing a full role in 
development of the system, and what degree of control it will have over the systems on which 
its safety critical services will depend. 
Last year, the Commission identified the following problems with continued reliance on third 
countries' systems1: 
• There are serious problems of both sovereignty and security if Europe's safety critical 
navigation systems are out of Europe's control. Furthermore, the present systems cannot 
fully meet civil users requirements in terms of performance. 
• There is a need to ensure that European users are not at risk from changes in the service or 
excessive future charges or fees: faced with a dominant position or virtual monopoly, it 
would be difficult to resist such charges and perhaps impossible to develop alternatives 
quickly. 
• The capacity for EU industry to compete in this lucrative market (a potential global market 
of €40 billion by 2005) would be seriously constrained. (Europe's capacity to compete in 
the market for services could be undermined if it did not have equal access to the 
technological developments in the system itself). 
The strategic choice 
Work by the Commission over the last year has focussed on two key areas: identifying the 
scope for joint approaches with the US, the Russian Federation and others, and clarifying 
what a European system would look like, and how much it would cost. With a clear view on 
both these points, the EU is now in a position to make the key choices. 
As the communication makes clear, an urgent decision is needed: the US is committed to 
developing GPS and reinforcing its global dominance. They already have a head start. Unless 
Europe gives a firm political commitment now to developing a European system, to be in 
place at the same time as the next generation of GPS, it will simply be too late. 
1 Communication 'Towards a Trans-European Positioning and Navigation Network - including a European 
strategy for Global Satellite Navigation Systems (GNSS),' COM (98) 29 final of 21 January 1998 
HL 
The shape of Europe's 'best buy' is now relatively clear: 
• It must be an open, global, system, fully compatible with GPS, but independent from it, 
with a significant role for the Russian Federation. 
• It should be based on medium Earth orbit (MEO) satellites and will cost between €2.2 and 
2.9 billion; 
• It should be developed as a public private partnership, with significant funding at European 
level, and reliance on creating new revenue streams. 
The Commission considers that this option provides a means of achieving Europe's strategic, 
commercial, transport and employment objectives at an acceptable cost. It is therefore clearly 
preferable to the 'zero option' (relying on the existing military constellations). 
Scope for international co-operation 
In last year's communication, three broad options were identified: 
- a joint global system with all the major players; 
- the EU developing a GNSS with one or more international partners (particularly, the US or 
Russia); 
- independent development by the EU of its own system. 
The Commission recognised that, in principle, joint development of the next generation 
GNSS was likely to be the most cost-effective option, but made clear that co-operation would 
need to satisfy certain conditions: firm guarantees against disruption, full participation in the 
future design, development and operation of GNSS, a full EU role in the control of the 
system, and an opportunity for European industry to compete in all segments of the market. 
The Council endorsed this approach and requested the Commission to intensify contact with, 
in particular, the US and the Russian Federation. Following extensive contacts, the 
Commission has now reached the following conclusions on the scope for joint development. 
The US is not willing to share control of GPS (primarily for military reasons) though it is 
positive about co-operation in certain technical areas. They also recognise that two 
complementary systems (GPS + Galileo) will increase overall robustness, allowing satellite 
navigation and precision timing to be employed in more critical applications (e.g. as sole 
means of navigation for certain operations) or more difficult areas (e.g. in cities). It is 
proposed that this co-operation should be pursued. 
The Russian Federation is offering, effectively, full partnership in developing a new 
international civil system from the basis of the present GLONASS. The principal advantages 
of this approach would be that Europe could, through use of Russian know-how in satellite 
operation and control, develop a robust Galileo more quickly than otherwise. This would also 
allow shared use of the valuable GLONASS frequency allocation. 
The recommended approach is, therefore to develop a Galileo which is global in coverage 
from the outset and independent from the US GPS, but fully interoperable with it. This would 
be open to participation by other partners. In particular, there could be major advantages for 
Europe from Russian involvement, if this can be established on a satisfactory basis. Within 
the constraints of interoperability with GPS, it would exploit new, state-of-the-art capabilities, 
U 
allowing the development of new applications, making the overall GNSS robust and 
remedying certain shortcomings of the present GPS (e.g. poor availability in urban areas and 
the northernmost latitudes, unpredictable temporary gaps in coverage, including over the 
European continental landmass). 
What system to choose 
The proposal for Galileo is based on a core constellation of MEO satellites, combined with 
appropriate infrastructure and terrestrial systems to provide the integrated service required 
from the Trans-European positioning and navigation network. This approach represents 
minimum technical risk, since existing systems use this technology, particularly if co­
operation with the Russian Federation can be established on a satisfactory basis. The approach 
would need to be global from the outset if Europe is to reap the benefits of a global presence 
and provide a global market for the system and its applications. 
Finance 
The key question is how Europe should finance a system. As long as the US continues to 
provide its basic GPS signal free of charge, it is clear that European public spending would be 
needed for the development of Galileo. A three point financing strategy is proposed: 
• substantial financing at European level, through the EU Budget, notably the Transport 
TEN, and through ESA; 
• establishment of revenue streams, which is likely to require regulatory action ; and 
• developing a public private partnership (PPP), to deliver complementary finance and value 
for money. However, firm political decisions are required to give industry the confidence 
to invest. 
As far as EU funding is concerned, it is suggested that around €500 million (10% of the total 
budget for transport TENs proposed by the Commission in Agenda 2000) could be made 
available from the TENs Transport budget (ESA envisages being able to contribute a similar 
amount). A further €120 million or so for research and development activities could come 
from the 5th Framework Programme, with further funding possibly available from a 6th 
Framework Programme. 
A number of possible revenue streams have been identified, notably the idea of a levy on 
GNSS receivers, together with charges for a restricted access service which could provide 
guaranteed levels of performance, liability cover, etc. These could contribute significantly to 
financing Galileo if the Council is minded to put the appropriate regulation in place. 
A PPP for Galileo could provide complementary finance, improve project design and ensure 
overall value for money. Crucially, it would confirm private sector commitment to the project. 
In particular, the need to encourage take-up of the service in order to generate income and 
reach profitability would provide a powerful mechanism for ensuring users' needs are given 
central importance, while a PPP structure will help keep costs under control since much of the 
risk of construction cost over-run would normally fall on the private sector. It would also 
reflect the fact that Galileo combines public service and commercial aspects. The aim would 
be for the project to approach self-financing in the operational phase when recurring costs 
(operations and replenishment) would amount to between €140 million and €205 million per 
year. 
/\JL 
The ideal approach would be to set up a full PPP as soon as possible. This would be the 
design-build-operate model. But this will require a significant amount of further work on 
performance requirements, risk allocation and revenue streams. Each of these areas needs to 
be explored in co-operation with the private sector. This would be a central part of the 
Definition phase of the project. 
Organisational issues 
Galileo would be a unique project, involving a wide range of political, economic, security and 
commercial interests. It will need an organisational structure that reflects this unique 
character. A number of issues affect the organisational structure. A PPP carries implications 
for organisational structure: the aim will be to establish a 'vehicle company' to carry out the 
deployment and subsequently operate the system. However, some central aspects of Galileo 
fall firmly within the public domain. Involving international partners in Galileo would imply 
that they would need to be part of decision-making structures. 
Three basic levels are identified: 
• Political/strategic, providing overall direction, and handling main international 
negotiations. It is recommended that the EU institutional framework would be used for 
strategic decisions. The Commission should then lead the international negotiations, 
initially with the US and Russian Federation, on the basis of guidelines adopted by the 
Council. 
• The Programme Management Board which would be responsible for ensuring the project 
is completed, with financial decisions, and for establishing the terms of any tender, and 
have the contractual relationship with the PPP vehicle company. In the operation phase, 
this would become the Galileo administration. 
• The PPP vehicle company. 
But not all decisions need to be taken now, and the project should now pass to the definition 
phase, financed by public money, in which the work necessary to put in place the final 
structures, especially the PPP, is carried out. 
Recommendations 
The Community institutions are, therefore, invited to: 
- take a firm political decision to develop Galileo, as described above, which represents 
minimum technical risk and best value for money, in order to guarantee Europe's strategic 
interests; 
- endorse the three point financial strategy: substantial European level financing, 
development of revenue streams, and a PPP approach. In particular, endorse Galileo as a 
key priority under the TENs, to benefit from funding on a multi-annual basis (estimated 
€500 million over the period 2000-2006) 
- recognise the need for negotiations and technical discussions with third countries. The 
Commission should be requested to negotiate suitable agreements on GNSS on the basis of 
guidelines to be adopted by the Council. 
- agree the organisational approach for the project definition phase, with urgent efforts to 
establish the permanent structures identified. 
A' 
1. INTRODUCTION 
In its conclusions of 17 March 1998 on the European Commission's communication 
'Towards a Trans-European Positioning and Navigation Network - including a European 
strategy for Global Satellite Navigation Systems (GNSS),' the European Union (EU) Council 
of Ministers requested the Commission to present recommendations on the future European 
approach to global satellite navigation. 
The Commission was requested to intensify its contacts with important international partners 
such as the United States of America (US) and the Russian Federation, so as to assess the 
potential for joint development of a system that meets the Community's requirements. The 
Commission was also asked to accelerate its work to examine the option of developing an 
autonomous European satellite navigation system. 
In January 1999, the European Parliament adopted a Resolution on the Commission's 
Communication2. This, inter alia, called upon the Member States of the EU to convene a 
European Space Council at the Head of State or Government level and requested the 
Commission to present as soon as possible a coherent strategy for the development of a Trans-
European positioning and navigation network. 
Since March 1998, an unprecedented number of meetings of the major actors of a future 
satellite navigation system has taken place, involving several hundred of the most important 
players in the field. Equally, a dense schedule of meetings with international partners has been 
followed. This Communication reports on the results of the work carried out this last year and 
proposes a European strategy for the medium term, together with an implementation 
programme. 
The intention is to enable the Community institutions to take the necessary decisions on 
implementing a European contribution to the next generation GNSS. In this Communication, 
the European project that will result has been provisionally called Galileo. 
The Communication therefore includes a set of policy conclusions, and the list of 
supplementary actions that need to be accomplished over the next few months. The 
Commission will also soon produce negotiating guidelines in order to have the appropriate 
international agreements in place in time. The three key points are to agree that Europe should 
develop Galileo as soon as possible; to agree the general architectural design of Galileo; and 
to establish an appropriate financing framework, with maximum private sector involvement as 
early as possible (Public-Private Partnerships) and earmarking of the necessary public 
funding. Developing an adequate regulatory, operational and project management structure 
will be a major priority for the next stage. 
2. THE CHALLENGE FACING EUROPE 
2.1. The issues at stake 
The EU is faced with a formidable challenge but also with a major opportunity. 
A4 - 0413/98, 13 January 1999. 
^ 
Strategic considerations: At present, there are two core Global Navigation Satellite Systems 
- the US GPS and the Russian Federation's GLONASS - and GPS currently dominates the 
market. GNSS is becoming central not only to all forms of transport, but also to many other 
activities. For example, manufacturing industries and the service sector increasingly depend 
on GNSS for positioning and/or precision timing. This reliance raises important questions of a 
strategic nature, including for the Common Foreign and Security Policy, especially if the core 
systems are not under European control or influence. 
Europe is now in a position to decide whether to develop a new system. The challenge is to 
guarantee Europe's strategic needs without excessive cost or risk. By contrast, failure to act 
would strengthen the present US market dominance and leave Europe entirely dependent on 
the US for many security-related matters. 
Galileo gives Europe clear opportunities for strengthening political ties with other countries. 
The US and Europe have already recognised that co-operation could be mutually beneficial, at 
least in the field of civil applications, and co-operation with the Russian Federation could also 
have considerable mutual benefit, strengthening the Partnership and Co-operation 
Agreement3. Other countries may also become partners in the venture, increasing international 
co-operation and supporting global market development and both inward and outward 
investment. 
The transport dimension: It is clear that satellite navigation will increasingly play a 
fundamental role in transport in the future. GNSS will be part of an intelligent infrastructure, 
helping to ensure safety4, streamline traffic operations, reduce congestion and environmental 
damage and support multi-modal development. Advanced navigation systems are a 
prerequisite for efficient transport management and sustainable mobility which are themselves 
critical for economic growth. 
Further, under different international Conventions, EU Member States have public obligations 
to provide safe navigation and certain other public services (for example, search and rescue). 
A coherent Galileo programme, integrating, as appropriate, other systems, can ensure cost-
effectiveness and potentially allow considerable economies to be made in public spending. 
Galileo could also remedy shortcomings of the present GPS and GLONASS constellations 
which cannot guarantee the reliability and availability which is indispensable for transport and 
vital economic operations. Further, one potential advantage of having two independent but 
compatible space navigation systems (GPS + Galileo) is that each system acts as a backup to 
the other, so that it becomes possible to base safety-of-life applications solely on satellite 
navigation. The satellite service can thus supersede certain terrestrial infrastructure, resulting 
in further substantial savings on operation and maintenance. 
Agreement on Partnership and Cooperation, signed on 24 June 1994 by the European Union and the 
Russian Federation. It represents a commitment from both sides to promote and encourage political, 
economic and scientific partnerships. 
The GNSS Strategic Study, carried out for the Commission in April 1998, noted, for example, that 
combined transport-related communication and GNSS navigation data could be directly beneficial to rail, 
assisting in train control and collision avoidance, especially where it is uneconomical to provide the 
electrical power needed for passive sensor beacons or track-side vandalism is a problem. 
The economic/industrial dimension: The Commission Communication of January 1998 
outlined the vast array of potential applications for a satellite timing, positioning and 
navigation system and the economic opportunities these offer (a potential global market of 
€40 billion by 20055). Almost every day new applications are being added to the list of 
services which are based on GNSS. The challenge is to ensure that Europe can take a fair 
share of the global market, and the related jobs. User demand for GNSS-based goods and 
services is increasing quickly. The GPS hardware market in Europe was estimated in 1997 at 
$228.7 million and is anticipated to grow to $960 million in 20046. Annex IV gives further 
detail on future market prospects. Further, establishing a fully robust GNSS infrastructure 
would accelerate the development and introduction of a wide variety of value added 
applications for all transport modes over large geographical areas, thus bringing the socio­
economic benefits which result from these services much earlier7. In this respect, Galileo can 
contribute significantly by bringing new levels of performance, increasing GNSS service 
availability and providing guarantees and liability cover which will both support the general 
market growth and attract particularly those customers requiring high standards. 
The Galileo debate over the last few months has demonstrated the project's potential for 
developing interest and increasing awareness for commercial applications. The European 
Parliament has emphasised the advantages of creating a 'general culture of using space 
applications technologies' which could be ensured through the European participation in the 
development of GNSS. 
It is recognised that, with European involvement in the evolving signal structure and the 
possibility of adapting the programme to users' future requirements, Galileo should help 
industry stay at the leading edge of the development of future applications. Moreover, the 
existence of a competitive system to GPS would ensure that no unilateral decisions on 
charging could be taken which would destabilise industrial planning. 
Over the last decade, space has increasingly become an area for commercial exploitation. 
Telecommunications and broadcasting are two examples. There is fierce competition in the 
deregulated fields and major players are increasingly joining forces to generate economies of 
scale. In Europe too, the space industry is restructuring to take on the challenge that it faces in 
global competition. Giving a political direction for Galileo would support the space and 
defence industries in their restructuring. The political lead could bring added value, helping 
ensure Europe's position in this strategic sector. 
The ESA-funded GNSS-2 Comparative System Studies have identified a number of important political 
benefits from a Galileo over and above a GPS-only baseline, in part due to the improved performance of a 
joint GPS/Galileo system. These include an additional €40 billion from sales of equipment, and €40 billion 
from value added services for European firms over the period 2005-2023. Other analysis has focused on 
benefits to transport users, although the increasing integration of navigation and communication services 
will fuel the already significant growth in non-transport applications. Between the major transport modes, 
expected total benefits are in the region of €18 billion over the first five years of operation of Galileo. 
Report by Frost and Sullivan, quoted in Global Positioning System Market Projections and Trends in the 
Newest Global Information Utility, International Trade Administration, Office of Telecommunications, US 
Department of Commerce. 
The implementation of many value added mass market applications, most notably for road transport, would 
be accelerated, with market saturation reached 10 years earlier (GNSS-2 Forum Technical and Financial 
Group Report, December 1998). 
There is also an increasing need to develop synergies between the existing national space 
agencies and with ESA and to establish the right co-ordination with the wider European 
political institutions (EU, WEU8). Galileo could provide the catalyst to allow an exemplary 
division of labour between the different actors and institutions to develop. 
Employment: The presence of European industry in this high technology field, which is 
beginning to develop exponentially, will help to secure and augment employment. It is 
estimated that putting the satellite navigation infrastructure into place would support 20,000 
jobs; its operation would create 2,000 permanent jobs with considerable new employment 
opportunities in applications (hardware and services) 9. 
Regulatory issues: Increasingly, European regulatory requirements could envisage the use of 
information systems relying on positioning and/or timing signals. This could, for example, be 
the case in the future for electronic fee collection10, in the environmental field or in 
agricultural or fisheries surveillance. A Galileo would allow for the necessary certification to 
take place (something which is not possible with current systems), thus ensuring regulators' 
and users' confidence in the adequacy of such systems. Regulatory action could thus underpin 
Community objectives. 
2.2. Timing considerations 
An early decision is important, as a rare window of opportunity is open. The US has taken its 
basic decisions on the design of the next generation of GPS satellite (block IIF), including the 
definition of a second civil frequency, and will be deploying the new satellites in the next 
decade. If Europe waits, the new block IIF will reinforce the present GPS dominance and the 
market will have adopted GPS as the standard. Realistically Europe could then play only a 
supporting role. 
By contrast, action now would permit Europe to develop an improved service (signal 
structure, power levels, etc) which, though interoperable and fully compatible with GPS, 
would give Europe a real possibility to penetrate the market. Galileo could be deployed 
considerably quicker than otherwise, making it more competitive, if Europe's approach were 
to build on GLONASS, provided that serious attention is given to building confidence in the 
system and promoting it globally. The challenge is to act decisively and in time. 
A decision has to be taken as early as possible in 1999, establishing a medium-term 
policy for Europe's involvement in the next generation satellite-based positioning, 
navigation and timing systems. No decision is, by default, a decision to exclude Europe 
10 Western European Union, composed of Belgium, France, Germany, Greece, Italy, Luxembourg, 
Netherlands, Portugal, Spain and UK. It also has a number of Associate Members (Iceland, Norway, 
Turkey), Associate Partners (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, 
Romania, Slovak Republic, Slovenia), and Observers (Austria, Denmark, Finland, Ireland, Sweden) 
Current estimates within the ESA GNSS-2 comparative study suggest a Galileo project would also increase 
employment in equipment production and sale from less than 25,000 (based on GPS alone) to around 
70,000 (GPS + Galileo) in 2008. In total, therefore, it is anticipated that, by 2008, in the region of 100,000 
jobs in direct, indirect and induced employment depend on going ahead with Galileo. 
Commission Communication on electronic fee collection, COM (98) 795 final of 21 December 1998. 
from the development of a strategic sector and the definition of new global standards, 
with serious consequences for strategic, economic, industrial, employment and transport 
policies; a deferred decision will also mean that US dominance will be further 
consolidated, so Europe will find it considerably more difficult, and probably 
impossible, to enter the market, and will essentially have to accept the standards set by 
the US. A long-term EU commitment needs to be given to generate the development of 
market applications and support private investment in the system. 
3. RECENT DEVELOPMENTS AND PRELIMINARY CONCLUSIONS ON THE STRATEGIC 
CHOICES FOR EUROPE 
In last year's communication, three broad options were identified: 
- a joint global system with all the major players; 
- the EU developing a GNSS with one or more international partners (particularly, the US or 
Russia); 
- independent development by the EU of its own system. 
Extensive contacts with our international partners have made it possible to narrow down these 
options considerably. 
3.1. Joint development of a system: potential for co-operation with the US 
In view of this considerable challenge facing Europe, the March 1998 Council requested the 
Commission to explore with the US the possibility to develop a common system. Three 
sessions of discussion took place with the US (in May, July and November 1998). It rapidly 
became clear that the US could not consider future joint ownership and a full role for Europe 
in the control of the basic 24-satellite GPS constellation (primarily because of military 
considerations). Co-operation with the US would therefore need to be based either on reliance 
on the existing US-controlled GPS or on developing a GNSS based around two 
complementary satellite navigation systems, one GPS and one European/international. 
Besides clarifying and reducing the number of options, the useful discussions with the US 
administration allowed progress to be made towards establishing principles which could form 
the basis of a future co-operation agreement. 
Baseline for US-EU co-operation 
From the US perspective, in both cases, fruitful co-operation with Europe would only be 
possible if Europe accepted the GPS standard positioning service (SPS) and signal structure as 
a basis for all civil applications of the future GNSS. This would avoid proliferation of 
different systems and also ensure the policy stability which is important for industrial reasons. 
If Europe committed itself to GPS as a global standard, the US would consider European 
participation in the process of developing and modernising the GPS system, as well as an 
appropriate EU role in civil operations and management. The US would also consider making 
a statement of intent to provide continued access to the GPS signal, free of direct user charges, 
to discontinue Selective Availability and to observe an agreed notice period prior to any 
planned withdrawal of the GPS signal. If the EU decided to invest in developing and 
implementing a constellation which complemented GPS, the joint EU/US objective could be 
to establish a fully interoperable, global system consisting of two independent components. 
There is consensus between the US and Europe that two independent systems would improve 
the robustness and the possible performance of the overall GNSS system and might 
potentially allow sole use as a means of navigation for certain safety-related activities. Such 
an orientation could have considerable implications for the way Galileo develops and for its 
cost-effectiveness. 
3.2. Joint development of a system: the Russian Federation 
Discussions with the Russian Federation took place in May, July and October 1998. The 
Russian Federation has proposed a joint approach to develop a state-of-the-art global navigation 
satellite system and appears willing to meet the requirements outlined in the Commission's 
communication of January 1998, and endorsed by the Council, allowing for joint ownership and 
management of the future constellation. The Russian authorities have developed a transition 
plan for GLONASS which would include its transfer to civil control and its promotion as a 
system for civil use11. It would initially be an independent complement to GPS and would 
gradually evolve into Galileo (progressively improving the robustness and performance of the 
overall GNSS system). 
The principal advantages of this approach would be that, if co-operation developed 
satisfactorily, Europe could, through use of Russian operational know-how, develop Galileo 
in a much shorter time than otherwise, and that it would allow the valuable GLONASS 
frequency band to be used, despite the present strong competition for access to scarce radio 
frequencies, especially for commercial telecommunications. It would not limit options for the 
future. 
In this scenario, a gradualist approach would be pursued, beginning with a political 
framework to facilitate initially the exchange of know-how between industrial actors, while 
possible operational arrangements are explored. This would be set in the context of the 
Partnership and Co-operation Agreement, taking full account of EU security interests, and the 
objectives of the Common Foreign and Security Policy. 
3.3. Japan as potential partner for a joint development of a system 
Japan has issued a joint statement with the US to recognise GPS as a global standard. This is 
designed primarily to encourage a market-led development of applications based on satellite 
navigation. However, it does not undermine possible alternative approaches to GNSS-2 or 
preclude R&D efforts. Although Japan is thus concentrating at this stage on GNSS-1, they are 
increasingly showing interest in Europe's attitude to a possible GNSS-2. Building on the 
constructive dialogue which has developed to ensure interoperability between the respective 
GNSS-1 space-based augmentations (EGNOS and MS AS), Japan may become interested in 
being involved in a Europe-led development of a Galileo space segment. This could thus help 
reduce calls on the European public purse. A decision to go ahead with Galileo should be 
accompanied by continuing discussions on the possibility of Japan taking a significant role in it. 
Exploratory discussions should therefore rapidly take place with appropriate ministries and 
11 The launch on 30 December 1998 of three new satellites demonstrates the Russian Federation's 
commitment, despite economic pressures, to maintaining GLONASS. A further launch is being planned. A 
modernised GLONASS satellite with longer life expectancy has been designed but further improvements 
are foreseen through integration of Western standards. 
agencies on possible future co-operation. Industrial co-operation appears to provide an early 
opportunity to develop the relationship. 
3.4. Other countries and regions as potential partners for a joint development of a 
system 
As regards other countries, several have indicated interest in co-operating with the EU to obtain 
benefits from GNSS-1 and to consider GNSS-2. Such co-operation could remedy deficiencies in 
present navigation infrastructure, create the full global market opportunities that have been 
recognised and support effective development of industrial co-operation. It should, however, be 
clear that the nature of this co-operation is unlikely to reduce significantly the cost of building 
Galileo but could contribute to global interoperability and potential market opportunities and 
revenue streams. 
Initial contacts in this framework have been made with the Central and Eastern European 
countries, Turkey, Switzerland, Iceland, countries in the CIS, Africa and South America, as well 
as Canada, Australia, India, China and Korea. For industrial, strategic and political reasons, as 
well as for the safe, effective and efficient transportation of goods and people, it is vital to 
promote Europe's GNSS approach with third countries, not least the candidates for accession, so 
that they are able to contribute to its success. Europe can then develop and export a new global 
standard. 
3.5. GNSS-2 Forum 
In order to fulfil the March 1998 Council remit, the Commission set up the GNSS-2 Forum12 
which mobilised most of the relevant European actors in the field (over the period July to 
December 1998). The work of the GNSS-2 Forum, as well as the results of a number of 
studies, and in particular the preliminary findings of the ESA GNSS-2 Comparative System 
Studies, have contributed to shaping the opinion and recommendations of the Commission. 
The most relevant conclusions of the Forum suggest that the future GNSS system should be 
based on a combination of GPS and a global European-led component (Galileo). The latter 
should be open to the inclusion of complementary contributions from third countries and 
organisations (subject to industrial, political, military and security considerations). The 
analysis of the different criteria for GNSS-2 points strongly towards the need to develop a 
system that can provide at least two levels of service. These should include a basic public 
service, provided free of charge as long as the equivalent US GPS service is free, and a 
service designed for users who require a high level of service guarantees (for example in 
terms of the availability and integrity of the signal). The development of a public-private 
partnership (PPP) approach was seen as a priority: the Forum recommended analysing more 
concretely how best to attract private investment. It was felt that the system should be global 
from the start in order to allow full development of the global market, to meet the needs of 
global industries (e.g. aviation and the maritime sectors; financial institutions and others 
12 The GNSS-2 Forum included leading experts from industry, European institutions and organisations, radio-
navigation service providers, user communities and academia and supported the development of the 
Commission's thinking on institutional and legal matters, technical and financial evaluation of different 
approaches, civil/military and security issues and user requirements. The Forum met in plenary and group 
sessions and produced a final report in December 1998. 
dependent on precision timing) and because no partners were identified wishing at this stage 
to develop matching regional contributions. 
3.6. The European Parliament 
The Commission Communication of January 1998 was considered by the Parliament which, 
on the basis of a comprehensive report, adopted a Resolution on 13 January 1999. This 
recognised that European industry had previously suffered from a lack of clear political 
direction and commitment in the space sector by the European institutions and welcomed the 
Commission's paper, considering that a strategy had been needed for years. Parliament called 
on the Member States to give clear decisions at Heads of State or Government level on 
strategic, technical and budgetary guidelines and on the timetable for GNSS-2. It equally 
asked the Commission to conduct in-depth negotiations with international partners, to lead 
European negotiations in the international fora for satellite orbital positions and frequencies 
assignment to satellite navigation services and to provide a regulatory framework for the 
creation of an internal market for applications of European space technologies, whilst 
stressing that GNSS should, as far as possible, be financed through models of private/public 
partnerships and user contributions. 
3.7. Rejecting the 'Zero Option' 
All scenarios need to be compared with the zero option: a conscious decision to abstain from 
having a European presence in the core space segment of the future GNSS. This would mean 
reliance on the US GPS system and, potentially, the Russian Federation's GLONASS or any 
new system developed by other states. 
Clearly, a European decision to concentrate on applications and augmentation systems and 
abstain from moving into satellite-based navigation would be welcomed by the US since this 
would confirm the present and ensure the future dominance of GPS. Moreover, European 
research and Trans-European Network money might be concentrated on GPS augmentation 
(including through systems such as EGNOS) and developing GPS-based applications in the 
intelligent transport sector and in other domains. 
The arguments outlined above in chapter 2 'The Challenge for Europe' speak against the 
abandonment of the European ambition to participate in the control of the space segment. 
However, it is clear that public spending would have to be carefully estimated, planned and 
controlled and that the private sector would have to take, where reasonable, part of the risk of 
developing Galileo. Besides looking at technical features and organisational issues, the main 
thrust of this Communication is therefore to make recommendations to ensure that Europe 
can afford to be present in the future Global Navigation Satellite System. 
Conclusion: The 'zero option' leaves Europe without adequate assurance that its 
political, strategic, economic, employment, industrial, security, space and, of course, 
transport and other interests are preserved. 
Drawing together the results of discussions with the US and Russian Federation, the 
recommendations of the GNSS-2 Forum and on the basis of the views of the Council and 
the Parliament, the Commission has concluded that a Galileo, having the following 
characteristics, should be developed: 
- It would be independent from the US GPS, but complementary to it, and 
interoperable with it. 
It would be open to other partners to participate. In particular, there could be major 
advantages for Europe from Russian involvement, if this can be established on a 
satisfactory basis. 
Within the constraints of interoperability with GPS, Galileo would exploit new, state-
of-the-art capabilities in a civil system, allowing the development of new applications, 
making the overall GNSS robust and remedying certain shortcomings of the present 
GPS (e.g. poor availability in urban areas and the northernmost latitudes, 
unpredictable temporary gaps in coverage, including over the European continental 
landmass). 
It would be global in coverage from the outset, to ensure effective independence and 
to provide a global market for the system and its applications. Galileo would include 
a restricted access service. 
4. SYSTEM ARCHITECTURE AND TECHNICAL FEATURES 
This chapter considers which architecture would be best suited to meet the demands of users 
in a cost-effective manner. It represents the first outline of Galileo. 
4.1. Performance requirements 
For aviation and maritime users, there are already international performance requirements for 
navigation systems. Essentially, a world-wide requirement of 10 metre horizontal accuracy is 
the minimum standard which Galileo would need to meet if it is to be accepted as an inherent 
component of a world-wide radio-navigation system13. 
Other users have not developed similarly precise demands which have the backing of 
regulation. There are also potential users whose needs have not been defined, although the 
market potential has been identified. 
The GNSS-2 Forum identified certain broad performance requirements for Galileo, including 
that it would need to provide approximately equivalent performance to the next generation of 
GPS (Block IIF) if it was to be regarded as a credible system14, that the space segment should 
not attempt to provide all navigation solutions15 and that additional navigation-related 
communications capabilities on board the satellites would be useful. 
13 
14 
15 Users can directly determine their navigation solution (three-dimensional position, velocity and time) in real 
time when receiving at least four signals from four different satellites, without referring to other systems.. 
This has been interpreted as meaning global landmass and coastal water coverage at not less than 9.1 metres 
horizontal and vertical accuracy, without local area augmentation, 95% of the time. Higher levels of service 
should be available from the system through integration with terrestrial augmentation. 
A comprehensive navigation network for Europe, with the required levels of robustness and integrating 
satellite-based and appropriate terrestrial technologies, will be designed and proposed by the Commission as 
a European Radio-Navigation Plan, once decisions have been taken on the European involvement in GNSS. 
During the project definition phase, the input of user groups, potential service providers and 
public authorities will be vital. Only after this can precise mission requirements be set and 
final decisions made on the required terrestrial and space infrastructure. 
The aim of the European radio-navigation strategy must be to meet set performance 
requirements with regard to security and safety cost-effectively. There will inevitably be 
satellite-based components and terrestrial elements, supporting overall system robustness. The 
indications from experts and accepted by the Commission in defining an approach to 
European involvement in GNSS are as follows. 
The definition of the architecture is based on achieving global coverage, providing access to 
mass market applications, with a good basic level of safety for European transport operations, 
but with a minimum space infrastructure (allowing for augmentations to be developed where 
required to meet more stringent safety demands or for dedicated commercial applications). 
There are four types of orbit for navigation satellites which could provide a homogeneous 
signal in space for a global service area (cf. annex II a)16. 
The optimal system definition should take into account the different strengths of the different 
orbits to ensure performance in line with safety requirements and user demands, including the 
provision of integrity data. Precise recommendations will be made through the ESA 
comparative study. However, at the present stage, it appears clear that the core constellation 
for Europe is likely to be a Medium Earth Orbit (MEO), representing low technical risk and 
known performance capabilities. 
The MEO approach was adopted by both the US and the USSR for the systems they 
developed. It has proved very efficient and has been retained for later generations of the two 
systems, including GPS Block IIF and GLONASS M. This option, therefore, represents 
minimal technical and industrial risk, in particular if Europe and the Russian Federation can 
build on each other's respective strengths and experience. 
The wide area augmentation services being developed by the US, Japan and Europe (WAAS, 
MSAS and EGNOS respectively) provide integrity checks and differential correction17 to the 
GPS signals; EGNOS in addition similarly augments GLONASS. They also provide a ranging 
signal. 
To date, the work led by ESA and with the close involvement of industry has focused on two 
broad options: 
• a core constellation of 21 MEO, which would come close to meeting European 
requirements. Integration of GPS and local area augmentation in a total system approach 
could guarantee the European requirements, and 
16 GNSS-2 Forum Technical and Financial Group Report, December 1998 
17 Integrity can be defined as the level of confidence given to users that the calculated position corresponds to 
the data provided - it is based on ensuring users are alerted to errors through a warning message provided 
within a specified time; differential correction means reducing the main sources of positioning error which 
result from the propagation of radio-waves through the ionosphere 
10 
• a core 36 MEO constellation, which would meet European requirements fully and 
independently. 
Users will require real time information on the health of the constellation (i.e. certainty that 
the signals are correct). The integrity message might, at least in part, be delivered from the 
core MEO constellation but it is considered at this stage that a complement of between 3 and 
9 GEO and/or IGSO satellites, which might include the EGNOS satellites, will be needed18. 
The optimal integration of ground networks, including those developed for EGNOS and, if 
suitable agreements are reached, GLONASS, is also foreseen. The Galileo work programme 
will also need to cover a strategy for the problem of space debris. 
While this is only a preliminary sketch of Galileo, the basic decision on European 
involvement in GNSS can already be taken since sufficient details of constellation parameters 
and fairly accurate budgetary implications are already known. In addition to positioning, 
navigation and timing, it is anticipated that hosting limited navigation-related 
communications capabilities on Galileo could make safety critical services more reliable and 
generate revenue streams19. 
4.2. Security issues 
There are clear security requirements relating to the physical protection of vital infrastructure 
(such as control centres and communication networks) as well as with regard to the provision 
of accurate navigation signals in times of tension or war. Further, protection against spoofing 
and other forms of misuse and interference with the signal in space needs to be ensured. 
Conversely, it must be possible to deny use of the system to enemy forces in a war situation. 
The system design will need to take these general requirements into account. In addition, an 
interference monitoring structure and an interface with the military will need to be 
established. The Commission intends to have further exploratory discussions with a view to 
identifying appropriate partners and structures for this interface, in accordance with the 
recommendations of the study carried out for the Commission20 and in the light of 
international discussions and negotiations, and will make proposals as soon as feasible in the 
framework of the Community common foreign and security policy. 
An approach favoured by experts in the GNSS-2 Forum was to develop a controlled access 
service. They envisaged that there would be universal access to a basic signal for mass-market 
applications. There would also be a controlled access service, using a second signal, with 
guaranteed availability and accuracy. It could also provide users with liability cover in case 
the system failed to meet performances specified. The controlled access could further satisfy 
18 
19 
20 To be confirmed during the definition phase of the ESA GNSS-2 comparative study. The GNSS-2 Forum 
Technical and Financial Group Report, December 1998, identified a 36 MEO + 9 GEO constellation as a 
baseline to meet user requirements (9.1 metres horizontal and vertical accuracy, without local area 
augmentation, 95% of the time). 
The technical and financial group of the GNSS-2 Forum considered these issues in depth. It was concluded 
that the options of hosting navigation payloads on communications satellites (i.e. 'piggy-backing') and vice 
versa were unrealistic. Limited navigation-related communications capability could, by contrast, be feasible 
and provide added value. 
Civil-military interface for GNSS, January 1999 
11 
international commitments such as for safety-of-life services. For example, search and rescue 
operations could depend on this service in any circumstances. The service is seen as key to 
attracting private sector involvement in GALILEO and generating revenue streams. In times 
of serious tension or conflict, this service would, however, be restricted to authorised 
categories of subscribers. 
All these security issues have implications for system design and need to be resolved before 
the test and validation (tendering and construction) phases of GALILEO can begin (altering 
the design and requiring re-deployment of satellites and modification of the ground segment 
need to be avoided). Preliminary costings for this are included in the financial section 5.1 
below. 
4.3. Requirements of GNSS Ground Network 
The function of the GNSS ground segment is to provide integrity monitoring, orbit 
determination and timing synchronisation and management of overall system operation. The 
ground segment for EGNOS, currently being implemented as part of the Trans-European 
positioning and navigation network, has been developed, to the greatest possible extent, to be 
reusable in a European GNSS-2 constellation. Additional ground stations may need to be 
deployed outside the EU to guarantee good global performance. In order to guarantee the 
system performance, physical security requirements must be taken into consideration. 
Examples may include restricted access to buildings, dedicated communications networks, 
suitable power levels and encryption of ground - satellite links. 
In addition to the basic Galileo infrastructure, including the related ground segment, the 
potential will exist to enhance the performance to attain higher precision and other dedicated 
services, in particular through use of appropriate terrestrial infrastructure. Together, these will 
contribute to the Trans-European positioning and navigation network, providing robustness, 
meeting special demands from particular categories of user in defined areas and providing 
service where satellite technology cannot provide a cost-effective solution. In essence, the 
intention of the proposed European involvement in GNSS is not to attempt to achieve sole 
means of navigation for all phases of navigation from the basic satellite system alone. Rather, 
the GNSS architecture must be seen as a prime component of the positioning and navigation 
networks and integrated for optimum cost-effective use. 
4.4. Signal structure 
The development of a new satellite constellation, designed for the twenty-first century, allows 
Europe to consider improving present signal structures to meet future user demands. The GPS 
signal is widely recognised by users as a satisfactory structure although it is not guaranteed 
and not always available. A European development would need, from the mass-market user 
point of view, to deliver a signal compatible and interoperable with GPS. Used together, the 
modernised GPS21 and enhanced European signals should provide a better service than is 
21 On 25 January 1999, US Vice President Gore announced a new GPS modernisation initiative in a 
programme costing $400 million. This involves adding two new civil signals to future GPS satellites. The 
initiative is seen by the US administration as part of an on-going public-private effort. The second civil 
signal will be located at 1227.60 MHz, along with the current military signal, and will be available for 
general use in non-safety-critical applications. A third civil signal, for safety-of-life applications, will be 
located at 1176.45 MHz, within the current aeronautical radio navigation spectrum. 
12 
available from GPS alone. In order to optimise the European signal and reduce susceptibility 
to jamming and spoofing, careful selection of frequencies22 and transmission power will also 
be required. While the subject is highly technical, the essence is that discussions are beginning 
with the US and with European industry to define the parameters within which Europe can 
develop an enhanced signal structure. This will include necessary work on global 
standardisation of timing and geodetic references. 
Conclusion: Galileo should provide, as a minimum, three-dimensional performance 
over landmasses, accurate to better than 10 metres horizontally, providing a 
universal independent time reference on a global basis. A core MEO constellation is 
considered to be the most cost-effective and technically proven approach for the 
initial deployment and provision of a basic service. The constellation needs to be 
fully integrated into a cohesive Trans-European positioning and navigation 
network. A good level of security and a controlled access signal are also key 
features. Adequate long-term spectrum allocation and full interoperability and 
compatibility with GPS are critical. 
5. FINANCIAL ASPECTS 
Given the present policy of the US to provide the basic GPS signal free of charge, it would be 
illusory to imagine that Galileo could be developed and provided exclusively by the private 
sector. As in a number of major infrastructure projects in the context of the Trans-European 
Networks, considerable public funding will need to be found. For Galileo, this would apply 
particularly for the definition and test and validation phases, when basic research, concept 
testing and development of the space segment would be carried out. 
This section of the paper sets out a three point financing plan: 
• substantial financing at the European level, through the EU Budget, notably the Transport 
TEN, and through ES A; 
• establishment of revenue streams, which is likely to require regulatory action ; and 
• developing a public private partnership, to deliver complementary finance and value for 
money. 
5.1. Estimated costs 
The cost of the space segment and the required ground infrastructure for a basic public service 
will depend on the satellite constellation. There is still a range of options to be evaluated 
before the optimum constellation to meet performance requirements can be defined. However, 
it is already possible to give a fairly accurate indication of the potential cost of Galileo23. 
22 Subject to agreements with the Russian Federation and the US, Galileo might transmit on two of the current 
GLONASS frequencies and one or more GPS frequencies. Use of frequencies covered by the European 
filings in the ITU will also be considered. 
23 The figures are summarised in Annex III b. 
13 
Work led by ESA and with close involvement of industry has focused on costing two broad 
options (cf. section 4.2) 24: 
• a 36 MEO and 9 GEO constellation, costing around €2.2 billion over the period 1999-
2008, and 
• a 21 MEO and 3 GEO constellation, costing €1.6 billion. Integration of local area 
augmentation25 in a total system approach could guarantee the European requirements. 
A satisfactory co-operation agreement with the US might, in principle, allow both sides to 
consider reduced satellite constellations which together would guarantee the levels of service 
required by each party. Further, co-operation with the Russian Federation in design and 
implementation of Galileo could reduce costs. 
Estimates for the introduction of a controlled access service, together with security and safety 
certification, suggest a need for an additional budget of between €600 million and €750 
million. 
Thus the total cost of Galileo over the period 1999-2008 is currently estimated at between 
€2.2 and 2.95 billion, depending on extent of joint operation with GPS and use of terrestrial 
systems. Not all of this needs to be public funding if a PPP approach is adopted. 
Recurring costs (operations and replenishment costs corresponding to the options described 
above) amount to between €140 million and €205 million p.a., beginning in 2008. However, 
some cost savings should be possible when current alternative navigation aids can be 
decommissioned. 
5.2. Sources of public funding for Galileo 
The case for a public contribution to Galileo has been made above. In principle, it would be 
possible for this to be financed from national budgets. But Galileo is a key part of the 
Transport TENs26 and the Common Transport Policy and an essentially Trans-European 
project, bringing direct benefits to all Member States (helping them meet their public service 
and international obligations with respect to providing navigation aids). This constitutes a 
strong case for funding at EU level. 
At the European level, a number of possible financial sources can be identified: 
• First, for infrastructure development and deployment, the Commission has, in the context 
of AGENDA 2000, proposed some €5.5 billion for the Trans-European Networks. With 
24 N.B. the estimates are based on the assumption that research and development, deployment of the ground 
segment and operational costs are constant for all options. 
25 Local area augmentations required to meet performance targets for Galileo (reduced constellation) amount 
to an estimated €200 million (based on equipping 250 major cities). 
26 GNSS is clearly identified as a prime element of the positioning and navigation network and a project of 
common interest in the present TEN-Transport guidelines (Decision N° 1692/96/EC of the European 
Parliament and of the Council of 23 July 1996 on Community guidelines for the development of the trans-
European transport network; OJ. L 228 of 9 September 1996). 
14 
the recent adoption of the common position on the revised TEN financial regulation, multi-
annual indicative programming should soon become possible27. This should create the 
stable environment needed to encourage private investment and support market 
development. The Commission's intention would be to propose in its future multi-annual 
programme to earmark around €500 million (which is 10% of the budgetary envelope 
proposed for the Trans-European Transport Networks) for Galileo and to report regularly 
to the Council and the European Parliament on the progress of the project. This is in line 
with the Commission's objective of giving greater relative priority to intelligent transport 
systems. 
Second, within the overall budgetary envelope envisaged for the 5th Framework 
Programme28, the Commission considers that around €120 million could reasonably be 
found for Galileo. The lifetime of the 5th Framework Programme is limited to 2002, and a 
continuation of funding beyond 2002 would be proposed, subject to evaluation of the 5th 
Framework Programme. 
Third, for co-operation with the Russian Federation and other countries of the former 
USSR, the Commission's TACIS programme offers possibilities of support in the fields of 
training and conversion of industries from military to civil purposes. 
• Fourth, ESA would, in the context of its institutional mechanisms, potentially be able to 
mobilise funds of the same order as under the TENs. 
Thus, in total, up to €1.25 billion could be mobilised on the European level for a Galileo 
programme for the period 2000-06, compared to a total cost of €2.2 to 2.95 billion spanning 
2000-08. On the level of the EU, this would not involve the creation of a new programme but 
would be done by earmarking certain sums in established Community programmes. ESA 
would have to launch a new programme. 
On the basis of the estimates described above, a further sum of between €950 million and 
€1.70 billion would be required (before taking account of potential EU funding in 2007-8 
which is outside the current financing period). A number of options exist to mobilise this 
additional money: • 
• First and foremost, the identification of potential revenue streams could attract the 
involvement of the private sector in Galileo. This might also allow the EIB, (and, in the 
case of a Euro-Russian co-operation, the EBRD), to finance part of the project through 
long term loans; 
27 This should respond to the Opinion of the Parliament's Committee on Budgets that the lack of clear political 
direction and commitment from the European institutions had a detrimental effect. 
28 Proposal for a decision of the European Parliament and the Council covering the 5th Framework 
Programme of the European Union for research, technical development and demonstration activities (1998 
to 2002), COM (97) 142 final. Use of the expertise of the Joint Research Centres (in particular, the Space 
Applications Institute) and actions under the thematic programmes 'improving the quality of life and the 
management of living resources' and 'promoting competitive and sustainable growth' as well as the 
horizontal programme 'confirming the international role of Community research' may be involved. 
15 
• co-operation with other countries may allow sharing of costs between international 
partners; and 
• a number of Member States may be able to contribute individually; in particular to ensure 
that aspects of the European GNSS which are security related are adequately handled. 
5.3. Potential revenue streams enabling public-private partnership 
Revenue streams will reduce the need for public subsidy and facilitate PPPs. Furthermore, the 
Parliament requested the Commission to investigate new and even unconventional methods to 
ensure that future users pay for GNSS services they receive29. The Commission has, therefore, 
considered a number of potential sources of revenue streams. 
• First, a possible revenue source relates to different levels of service (two or more signals 
from the space segment, one generally available, and one or more offering higher levels of 
service based on controlled access). Different receivers or smart cards would need to be 
developed for the different levels of service: 
- level 1 service to the mass market 
- level 2 a certifiable service 
- level 3 safety of life and security-related services. 
It is envisaged that level 1 services, consistent with present US policy on the equivalent 
standard positioning service of GPS and the Russian Federation's civil GLONASS signal, 
would be available free of charge. Should the US and/or Russian policy on charging 
change, the European position could be revised. 
Levels 2 and 3 would be controlled access services, available to subscribers in return for 
certain fees. In some cases, the use of these services might be mandatory, such as in 
connection with electronic fee collection for access to infrastructure or monitoring fishing 
activities, freight and coach transport and road safety services. It may be noted that IMO is 
requiring internationally-registered ships to carry GNSS equipment from 2000 and GNSS 
is an integral part of the CNS/ATM concept adopted by ICAO30. 
Levels 2 and 3 could be made even more attractive if liability cover was provided for the 
services subscribers received. This would in a way represent a form of insurance which 
would allow Galileo users to rely on services in a way which they could not do using the 
basic signal. Similarly, the fact that level 2 and 3 services could be certified for safety-
critical and similar high-performance tasks (in a way that GPS could not) would constitute 
a marketable asset. Insofar as Galileo allows existing ground based air navigation facilities 
to be replaced and provides a better and more reliable service to airlines, it can be expected 
that airlines will contribute to the revenue stream. 
29 
30 Opinion on the Commission's Communication of 21 January 1998 by the Committee on Budgets. 
Communication, Navigation, Surveillance/Air Traffic Management 
16 
• A second possibility would be a levy on receivers for all satellite-based radio-navigation 
services. This would need to be introduced throughout the EU and be applicable to all 
receivers sold in or imported into the EU. The advantage of this levy would be to apply 
also to the mass-market (such as equipment for in-car-navigation, leisure activities, etc) 
and would therefore also cover level 1 equipment. This would be entirely in line with the 
general Commission philosophy of marginal infrastructure cost charging and could be 
limited to very small sums. Issues of user acceptability would have to be dealt with by 
showing a combination of cost saving, and improved service availability particularly in 
urban areas. Funds received could contribute, for example, to the cost of operating and 
updating the system once in place. Levies are already used in a large number of Member 
States for certain products, inter alia, for recording equipment, photocopiers and video 
cassettes. Equally, certain services, such as public television broadcasting, are also funded 
through mandatory user charges. A levy of €20 on receivers would lead to receipts of 
€140-205 million annually and could go a considerable way to filling the financing gap for 
project construction and development31. It would also be conceivable to introduce, but 
probably more difficult to implement, an annual operating license fee for the reception of 
satellite navigation signals. 
• Equally, 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 
and security-critical payloads. This may also include some dedicated communications 
payloads on some satellites. A number of these functions could be used to comply with 
public service obligations (such as search and rescue). A 'shadow toll model' may be a 
way of guaranteeing revenue streams to a private operator. Clearly, giving Galileo 
additional capabilities to support such services will have costs that need to be compared 
with the extra revenue generated. 
Annex IV gives some tentative market forecasts for Galileo, which indicate the broad 
prospects for revenue from the sources identified in this section. A number of these revenue 
streams, such as introducing levies and making certain uses of Galileo mandatory, depend on 
regulatory decisions; others, such as controlled access and encryption, depend on the 
definition of the technical characteristics of the system. Moreover, a number of other possible 
revenue streams may only be identified over time since the market for satellite-applications is 
growing exponentially. Industry will, therefore, need to work further on this, in the context of 
the overall financing package, while the public sector will need to address the related 
regulatory decisions. 
5.4. Establishing a public private partnership 
As in other TEN projects, there is significant scope for attracting private investment to 
develop parts of the infrastructure, provided potential revenue streams are clearly identified 
and there is a clear allocation of risks, which may involve Government guarantees. One aim 
should be for public sector funding to be largely replaced by private funding by the 
operational phase. 
31 Assuming that by 2010 around 50% of new cars are equipped with a GNSS-based positioning device, and 
with around 14 million car sales in Europe annually, a levy of €20 would raise €140 million per year. 
17 
A PPP for Galileo could provide complementary finance, improve project design and ensure 
overall value for money. In particular, the need to encourage take-up of the service in order to 
generate income and reach profitability would provide a powerful mechanism for ensuring 
users' needs are given central importance, while a PPP structure will help keep costs under 
control since much of the risk of construction cost over-run would normally fall on the private 
sector. It would also reflect the fact that Galileo combines public service and commercial 
aspects. 
A PPP is therefore the recommended approach. Indeed, this would be fully in line with the 
priority given up to now to such an approach. The Commission Communication on PPPs32, 
which was broadly endorsed by the Council and the Parliament, sets out a number of 
important recommendations that are relevant for Galileo. These include: 
• that private sector involvement should begin at as early a stage as possible, so they can 
participate in project design; 
• that the public sector should seek, as much as possible, to specify project requirements in 
terms of outputs (service levels) rather than detailed technical specifications; 
• the most effective structure for a PPP normally involves a specially created vehicle 
company, clearly accountable for project delivery, and with the management autonomy to 
run an efficient project; and 
• that risk should be allocated according to scope to control them. This would, for example, 
mean that the private sector should be responsible for construction cost over-runs, while 
the public sector would be responsible for cost increases caused by regulatory changes. 
These general principles need to be applied in a way that takes full account of the unique 
features of Galileo, including the public service component (safety of life services) and the 
security dimension. 
The ideal approach would be to set up a full PPP as soon as possible. This would mean the 
design-build-operate model but a significant amount of further work will be required in the 
following areas: 
• more precise specification of performance requirements, based on users' needs; 
• identifying risks, and how they should be allocated, so that private sector investors can 
make a commercial judgement on the risk/reward ratio; 
• identification of revenue streams, which means both more precise assessment of overall 
market potential and market segments likely to be willing to pay for a restricted access 
service, and a commitment from the public sector to take the regulatory action necessary to 
secure these revenue streams (e.g. the levy). 
Each of these areas needs to be explored in co-operation with the private sector. This would 
be a central part of the definition phase of the project, which is described more fully in the 
next section. If this ambitious approach does not prove viable in good time (for example, if 
32 COM (97) 453 final of 10 September 1997 
18 
the public sector is unwilling to put revenue streams in place), a more traditional model (with 
a Programme Development Office running the project through conventional public works 
contracts) would be a possible fallback for the initial stages. The Programme Development 
Office would be disbanded once the vehicle company was in place for the deployment and 
operational phases. It should be noted that, while the Commission is promoting the setting up 
of a PPP and a vehicle company, it would not engage itself in commercial business activities 
(these are not provided for in the Treaty). 
Conclusion: As long as the US continues to provide the basic GPS signal free of charge, 
public money will be needed to allow Galileo to be developed and provide a similar, free 
basic public service. However, a number of potential revenue streams have been 
identified, some of which depend on public regulatory action. The Commission will 
investigate, together with ESA and the EIB, the potential for setting up a vehicle 
company already in the initial phase of the project. If this is not immediately possible, 
because of lacking public commitment to ensure the necessary framework conditions for 
revenue streams, a two stage approach would be proposed: the first, preparatory, stage 
would depend essentially on public financing (TEN, Community Research Framework 
programmes, ESA and possibly national contributions) disbursed through a Project 
Development Office (risk would be shared through a tightly controlled cost contract with 
industry); the second, implementation, stage would imply much higher investment and 
commercial risk for the private sector. 
6. ORGANISATIONAL FRAMEWORK 
6.1. Designing, building and operating Galileo: basic principles and immediate 
decisions 
The Commission's Communication of January 1998 summarised the roles and 
responsibilities which should be included in a GNSS organisational framework. The 
GNSS-2 Forum has further refined the work on these questions. Bearing in mind the 
Community approach of separation of regulatory and operational functions and the 
intention to build as much as possible on existing bodies and structures, the Commission 
is proposing the following preliminary conclusions (Annex I) sets out, in schematic 
form, the stages of project development, which are referred to in the remainder of this 
section). 
It is, in this context, important to note that, for a number of questions, no immediate 
answers need to be given. 
• With the decision to go ahead with the Galileo programme, the only firm 
commitment that needs to be taken is to set up the appropriate structures for the 
definition phase (i.e. up to December 2000). 
At the same time, the organisation of the remaining phases needs to be prepared. 
Here, the Commission's clear intention is to promote a PPP and to undertake 
everything, including regulatory proposals, to make this possible, ideally from the 
beginning of the development stage, but in any case before the deployment phase. 
One of the immediate actions necessary is to ensure that appropriate frequencies are 
available. 
19 
6.2. Strategic Aspects 
The overall aim is to ensure that a robust structure is in place to take strategic decisions, 
oversee international negotiations, and control compliance of Galileo with international, 
Community and national regulations and policies. It is proposed that the EU institutional 
framework be used for this purpose, with the Commission providing the necessary input 
to the other institutions. This is a pragmatic choice: given the wide range of sensitive 
political, international, economic, industrial and security issues that will need to be 
balanced, only the EU institutional structures (and not exclusively the first pillar) appear 
suitable. 
The Commission (in certain cases, together with the Member States) should represent 
EU interests at the international level on the basis, where appropriate, of mandates from 
the Council. This might include negotiating global standards and ensuring 
interoperability and compatibility between different global and regional systems. This 
might then mean taking a central role in discussions on GNSS signal structures, a global 
methodology to achieve certification, a global liability regime, and in ensuring a global 
integrity monitoring network33. 
The GNSS High Level Group34 has proved useful over the last years and would have an 
important role in steering the Galileo programme: i.e. giving overall direction to the 
programme, developing and monitoring the application of a European Radio-Navigation 
Plan35 and ensuring that strategic considerations, including those related to security36, are 
kept in view. This might include policy on the Galileo controlled access service. The 
Commission would ensure that an appropriate consultation platform exists for users so 
that policy recommendations reflect user demands37. 
6.3. The development phase 
In order to ensure tight control on costs and effective use of public resources, 
considerable attention needs to be given to project management. A sound and stable 
structure needs to be established, identifying specific roles and responsibilities. 
33 For cost-efficiency, the ground network under definition for EGNOS should be integrated with Europe's 
needs for GNSS-2. Further, appropriate political choices of location of infrastructure are important. It is, 
therefore, proposed that the Commission includes this aspect in its discussions with third countries (cf. 
paragraph 2.4). 
34 The High Level Group was set up under Council Resolution 94/C 379/02 of 19 December 1994; OJ C 379 
of 31 December 1994. 
35 Providing expert input on the development of an appropriate network of terrestrial and satellite-based 
systems, fully taking into account the capabilities of different components and the need for safe and cost-
efficient transition in accordance with Article 17 of the Trans-European Network Guidelines. 
36 cf. GNSS-2 Forum, working group 3, report on security issues. 
37 It is envisaged that the user group established under the Commission's GNSS-2 Forum should develop into 
a permanent users' forum 
20 
One important element of this would be to examine the possibility of the EU and ESA, 
together with any other contributors, pooling financial resources (c.f. annex I). The 
purpose of this would be to ensure that Galileo is run from the outset as a single 
integrated project. Advice on this will be sought from the EIB. 
A programme management board, consisting of the Commission, ESA, national space 
agencies and other investors, would need to be set up, to put in place the vehicle 
company through public tender; in the period before the vehicle company is in place, it 
would approve choices of contractors and monitor compliance with contracts. 
The overall execution of the project would be managed and carried out by a vehicle 
company which might include the primary industrial contractors of the Galileo project. 
This would act in accordance with a contract (possibly to design, build and operate the 
system) a key element of which would be the financial provisions relating to public 
subsidy and availability of revenue streams. It would, in principle, be responsible for any 
cost overruns. 
In the definition phase, before the vehicle company is set up, the programme 
management board would need technical support. Since this stage is imminent, this could 
be provided by a technical task force, which might consist of experts from ESA, national 
space agencies, the Commission, potential service providers and, as required, other 
organisations. 
If it is not possible to set up the vehicle company in time to manage the subsequent phase 
(i.e. development) of the project, the technical task force would need to be given more 
formal status, perhaps as Programme Development Office. Its role would be to co­
ordinate planning and development of the space and ground infrastructure. The office 
would need to ensure that user demands and requirements for development of 
applications, as well as the possibilities for integration with local area systems and 
GNSS-1 infrastructure, are important service drivers and are fully taken into account in 
the Galileo project. 
The Programme Development Office would be disbanded once the vehicle company was 
in place. 
6.4. The Operation phase 
6.4.1. Galileo management 
To manage the operation of Galileo, the Commission would propose a small public 
structure in the form of a Galileo Administration. This would, in essence, be the 
successor of the Programme Management Board, responsible for ensuring the operation 
of Galileo, while contracting out actual operations. This would have to be established by 
Council decision as it would need to have legal personality in order to deal, for example, 
with liability issues. Such a permanent structure should boost public confidence and 
encourage industry to develop applications (so facilitating private investment and 
revenue streams). 
21 
38 
39 
40 While the size of the Administration and the tasks to be carried out are not yet fully 
defined for Galileo, the equivalent structure should be in operation, initially for EGNOS, 
by the end of the year 200038. 
Tasks which might be assigned could include liaison with the different international 
organisations39 involved in GNSS exploitation. It might also have a role in establishing 
an international integrity monitoring network and establishing appropriate relationships 
with providers of specific augmentation services, such as in the northernmost latitudes. It 
could also accept responsibility for peacetime co-ordination and liaison, as appropriate, 
with defence and security organisations, including NATO and the WEU, the Conference 
on Security and Co-operation in Europe, Interpol and Europol, and ensure respect of 
arrangements related to nuclear missile and non-proliferation regimes. In practice, its role 
would then involve management of encryption related to the controlled access service 
and the definition of responses to possible security incidents, including real time 
dissemination of information related to interference. With respect to liability, the 
Administration would be responsible for dealing with any claim relating to Galileo. 
6.4.2. Galileo operation 
The Commission considers that the private sector could, by way of concession, perform 
the main functions of a Galileo operator. If the approach to establish a PPP to design, 
build and operate the system is accepted, this function would be carried out by the same 
vehicle company responsible for putting the system in place. The vehicle company 
would then have responsibility for running the system on a sound economic basis40, and 
integrating new technology, where appropriate, to improve services and adapt to new 
user demands. It would also be possible to contract out operation of the system to the 
private sector even if earlier stages do not involve a PPP. 
6.5. Securing Radio Spectrum 
Securing radio spectrum availability is a pre-condition to implementing Galileo and 
ensuring its interference-free operation. 
Frequency allocation decisions at the global level are taken at World 
Radiocommunications Conferences (WRCs), organised under the auspices of the 
International Telecommunication Union (ITU) with its 186 Member Countries. European 
positions for WRCs are developed and negotiated within the framework of the CEPT 
(European Conference of Postal and Telecommunications Administrations) which 
If this time scale is not possible, the EGNOS Operations and Infrastructure Group currently being 
established should be able to assume the management responsibilities for EGNOS. In the case of EGNOS, 
however, there is currently no plan for a vehicle company to operate the system, so the EGNOS equivalent 
of the Galileo Administration would have a wider role. 
It might thus benefit from the wider membership and ties of these organisations under international 
agreements. 
Charging policy might be subject to approval by the Galileo Administration on the basis of Community 
guidelines and regulatory acts; fee collection would be the responsibility of the operator under concession. 
22 
41 
42 
43 
44 comprises 43 European countries and therefore potentially leads to harmonised 
frequency allocations beyond the Community borders41. 
It is essential to develop a common European position so as to ensure that the frequency 
requirements for GNSS and Galileo are recognised and met within ITU/WRC as well as 
in the framework of the CEPT. As described in the recent Green Paper42, there are wide-
ranging and increasingly conflicting interests and a large number of actors involved in 
the preparation for the WRCs. The Commission would therefore recommend that, with 
regard to CEPT, consideration be given to reaching political and legal agreement 
through European Parliament and Council Decisions. This would follow the precedent 
set in the case of the harmonised introduction of mobile and satellite personal 
communications systems in the Community43. 
Further, especially as CEPT is in a minority within ITU, education and awareness actions 
will play a vital role in securing the frequencies that will permit Galileo to come into 
service, as well as in generating the potential market for Galileo. Alliances with like-
minded countries and blocks should thus be sought for the WRCs. 
As the US is also particularly concerned about protection of present radio-navigation 
satellite frequencies (GPS and GLONASS) in view of the forthcoming discussions at 
WRC 200044, there is an opportunity for co-operation and agreement which should be 
taken into account in establishing a mandate for international GNSS negotiations. In 
advance of this, early technical discussions with the US may be critical to defining a 
jointly acceptable approach and protecting European industry's opportunities in GNSS 
with new equipment and service design. Similar considerations apply with the Russian 
Federation, especially if Galileo is built jointly, using the GLONASS frequency band. 
The Community has the status of observer within ITU/WRC and counsellor to CEPT, providing information 
on the Community policies and their spectrum requirements. See further information in the Communication 
from the Commission to the European Parliament and Council on the World Radiocommunications 
Conference 1997 (WRC-97), COM (97) 304 final, 18 June 1997, and Communication from the 
Commission to the European Parliament and the Council on radio frequency requirements for Community 
policies in the context of the World Radiocommunications Conference 1999 (WRC-1999), COM (1998) 
298 final, 13 May 1998. 
Green Paper on Radio Spectrum Policy in the context of European Community policies such as 
telecommunications, broadcasting, transport and R&D; COM (1998) 596 final, 9 December 1998 
Decision N° 710/97/EC of the European Parliament and Council Decision on a co-ordinated authorisation 
approach in the field of satellite personal-communication services in the Community, OJ L 105/4, 23 April 
1997. Decision N° .../98/EC of the European Parliament and Council on the co-ordinated introduction of a 
third generation mobile and wireless communication system (UMTS) in the Community. Under these 
Decisions, CEPT is mandated to harmonise frequencies and authorisation conditions for UMTS and S-PCS; 
where work by CEPT or the implementation by the Member States is not satisfactory, further action at the 
Community level shall be taken. 
The next WRC will be held in Istanbul between 8 May and 2 June 2000 (WRC-2000). One item on the 
agenda is allocation of spectrum for GNSS and other radio-navigation satellite services. CEPT has 
provisionally accepted the need to protect the current spectrum for radio-navigation satellite services. 
23 
6.6. Regulatory Co-ordinator 
Generally, international law provides a framework for regulation of critical activities 
(e.g. relating to safety, industrial standards, environment and implementation of public 
policy) which is implemented in more detailed national legislation. For navigation, a 
regulator is necessary to ensure that systems and related services meet the legal 
performance requirements set, most notably for safety. At this stage, decisions on GNSS 
navigation, positioning and timing regulation clearly remain at national level or within 
the Community and international entities which are under definition (e.g. EASA45) and 
regulatory audit conclusions will need to be referred to the national regulators for 
approval. 
Consideration needs to be given to whether there is a need, beyond the already existing 
co-ordination function that the Commission has, to set up a European GNSS Regulatory 
Co-ordinator, taking responsibility for the development of standards, where required (for 
example for certification or type approval), for Galileo and other parts of the Trans-
European Positioning and Navigation Network46. In some cases, this may require the 
creation of new centres of expertise to develop standards47; in others, existing bodies will 
be able to support the work. The standards developed could then be incorporated into 
regulation by the appropriate bodies (e.g. ICAO, IMO, ISO, CENELEC, IEC, 
EUROCONTROL and ETSI). The Regulatory Co-ordinator will also be able to offer 
system performance monitoring so that Member States can be assured that their 
obligations are satisfied. This structure would also have an important role to promote the 
introduction of harmonised regulatory performance requirements across transport modes 
and between user groups. 
The role of regulatory co-ordination can, at this stage, be performed by a specialist group 
of national experts nominated by the Member States, with the support of observers, as 
required, from other organisations and disciplines (e.g. national regulators; relevant 
international and Community regulatory entities; European standardisation bodies; 
agriculture, Customs and fisheries authorities; security-related activities organisations 
and third countries). It will monitor the work of the Programme Management Board. 
A future Regulatory Co-ordinator might, at a later stage and particularly when the 
Galileo Administration becomes established and needs regulatory support, be 
empowered to develop mandatory standards to be implemented by all Member States to 
45 Draft recommendation for a Council Decision authorising the Commission to start negotiations with a view 
to establish a European Organisation responsible for civil aviation safety, SEC 2152, 16 December 1996. 
While it is noted that, in the field of civil aviation and safety regulation, the emerging European Aviation 
Safety Authority (EASA) is mode-specific, input from EASA will be an important element in the definition 
of the GNSS safety policy. 
46 Including wide and local area augmentations making use of the satellite-based infrastructure (e.g. 
differential systems, such as DGPS, DGLONASS and Eurofix) 
47 This conclusion was drawn in a study carried out on behalf of the Commission and entitled 'Study to Devise 
a Legal/Certification Framework for a Satellite-Based Navigation and Positioning Service (CLAIM 
GNSS),' September 1998. 
24 
satisfy the objectives of the Trans-European Positioning and Navigation Network. This 
would need to be set up in a way that does not conflict with the Treaty. 
Conclusion: the following organisational structure is proposed: 
For strategic decisions to be taken at EU level, with the Commission taking its usual 
role, supported by the GNSS High Level Group. 
during the preparatory and implementation phase 
an appropriate programme management structure through a Programme 
Management Board supported initially by a technical task force, and subsequently 
granting a concession to a Vehicle company; 
in the operations phase, 
a small GALILEO Administration, working with the vehicle company to manage 
the provision of satellite-based navigation services and guarantee performance, as 
well as ensuring peacetime defence and security co-ordination 
for regulatory issues 
a GNSS Regulatory Co-ordinator to develop mandatory standards to be 
implemented by all Member States to satisfy the objectives of the Trans-European 
Positioning and Navigation Network. 
7. THE FEASIBILITY OF, AND POSSIBLE PARTNERS FOR, A JOINT DEVELOPMENT OF A 
SYSTEM: CONCLUDING AGREEMENTS 
Negotiations will be necessary in order to conclude agreements with international partners, 
including potentially those hosting terrestrial infrastructures. The Commission will propose 
negotiating guidelines in each case, tailoring the content and scope to the nature of the co­
operation envisaged with the different countries (industrial, political and security issues). The 
aim will be to ensure that Europe's interests are safeguarded in the international field, as 
requested by the Parliament in its January 1999 Resolution. 
In the immediate future, only two decisions - to open negotiations with the US and the 
Russian Federation - will be sought from the Council. Further technical discussions will 
continue to take place whilst the Council is considering the proposed recommendations for 
decisions and the negotiating guidelines. With other countries, such as Japan, further 
exploratory talks are necessary. 
As to the US, the Commission will propose to the Council to open negotiations on the 
assumption that Europe will develop a global constellation fully compatible with GPS. Europe 
should seek maximum involvement in the GPS modernisation programme (including the 
evolution of the signal structure) and the future development of a global integrity network. 
Equally, an agreement with the US would need to contain provisions for an appropriate joint 
management board responsible for co-ordination of policy and technical issues (signal 
structure, integrity networking, etc). The negotiation would also need to consider development 
25 
of a dispute settlement mechanism and any further requirements which may emerge from the 
ESA comparative study. The US has also made it clear that they could consider increasing 
European insight and input into the operation and management of GPS civil functions (e.g. 
through civilian representation at the civil GPS augmentation centres); reciprocally, 
equivalent treatment of the US within Galileo would be expected. 
With the Russian Federation, the Commission will propose to the Council to open 
negotiations on an agreement with a view to developing a joint Euro-Russian Galileo. The 
agreement would need to reflect the gradualist approach set out in section 3.2 above. On the 
scenario of joint development, there would need to be provision for the creation of a joint 
steering committee to approve development of an appropriate signal structure and co­
ordination of policy and technical issues, including co-ordinated infrastructure planning to 
ensure cost-effective transition and deployment of the future positioning and navigation 
networks. Respective rights and obligations under a joint development programme would also 
need to be agreed in detail, including dispute settlement procedures and authorised 
interlocutors48. Security concerns would need to be addressed. 
The scope of co-operation with the Russian Federation will have important implications for 
other aspects of project development, notably financing and organisational structures, and 
negotiations will need to clarify what is realistic in good time for the necessary decisions in 
these areas. 
8. THE WAY FORWARD : IMPLEMENTING THE STRATEGY 
In line with the conclusions of the above sections, the following scheme to develop a 
European GNSS-2 constellation (Galileo) is recommended. It is envisaged that the EU 
Council of Ministers, and perhaps the European Council, will take decisions on the main 
issues by the end of June. The European Parliament also has a crucial role to play. Within this 
framework, the meeting of the ESA Council in May should provide clarification of the role 
ESA can play in the technical, financial and organisational development of Galileo. 
The decisions should cover the whole period, including the operations phase. However, a 
major milestone will be reached by the end of 2000 when it will be possible to review these 
orientations. 
• setting the strategy in motion 
A decision is needed now that Europe will develop Galileo, in order to provide the political 
commitment necessary for industry to invest, to allow Europe to negotiate the parameters of 
the system with its international partners and to ensure that Europe is able to exert an 
influence in the development of this strategic market. This commitment could take the form of 
a European Council orientation to treat Galileo as a key TENs priority, in line with the 
48 It will be important that Europe is fully aware of the various responsibilities of its Russian partners, 
including industry, the Russian Space Agency and the Ministry of Defence. The development of 
Internavigatsia as an industrial-financial consortium, responsible under its charter, inter alia, for developing 
the use of GLONASS for civil users (per decision of the Government of the Russian Federation, N° 1435 of 
15 November 1997) and developing navigation systems within the framework of the European GNSS 
programmes, may provide helpful focus and coordination. 
26 
recommendation of the European Parliament. This political commitment will need to be 
translated into a number of specific decisions set out below. 
The main features of the recommended Galileo are: 
• it must be an open, global system, fully compatible with GPS, but independent from it, 
with a significant role for the Russian Federation; 
• it should be based on medium Earth orbit (MEO) satellites, and would include a restricted 
access service. But decisions now should not restrict the scope to adapt design to 
technological progress; 
• it should be developed as a public private partnership, with significant funding at European 
level (EU and ESA), and development of new revenue streams. 
• financing Galileo 
This Communication has identified the potential cost of Galileo and the options for financing 
it, on the basis that, with the GPS signal currently available free, significant public finance 
will be needed. It is not necessary or possible, now, to make final decisions on the exact split 
between different sources of finance, but endorsement is sought for each of the aspects of the 
financing approach. 
First, a significant allocation of EU funding now will give the project a solid foundation. This 
requires a number of specific decisions: 
- appropriate funding for TEN-T in Agenda 2000 on the basis of the Commission 
proposal and the Parliament's opinion 
- adoption of the revised TEN financial regulation with provision for multi-
annual programming and the possibility to go up to 20% funding for projects of 
European interest, such as Galileo 
- Council and Parliament endorsement of the proposed allocation of €500 million 
for Galileo in the transport TEN multi-annual programme 
- Council and Parliament recommendation to the Commission to facilitate the use 
of 5th Framework Programme resources of around €120 million for the Galileo 
development 
Second, on revenue streams: 
- a decision is needed on whether to pursue the option of a levy on receivers, 
which could make a significant contribution to financing the project. 
- other revenue streams are reliant on the extent to which specialised users will 
pay for a better quality, guaranteed or certified service. The Commission is 
setting up a Special Task Force, led by the private sector, to carry out the 
substantial further work needed to look into this. Once revenue streams which 
would allow the establishment of a PPP and needs for regulatory action have 
been identified, the Commission could be mandated to develop appropriate 
proposals. 
27 
Third: 
- endorsement of a PPP approach. As well as helping to improve value for money 
and giving users' needs a central role, this will be a clear signal that the private 
sector should confirm its own commitment to the project by investing risk 
capital in it. Setting up a PPP will require a significant amount of further work 
on performance requirements, risk allocation and revenue streams, which 
should be a priority for the definition phase. 
• managing the development of Galileo 
The definitive organisational structure does not need to be decided now. The first priority is to 
make clear arrangements for the definition phase (June 1999 to December 2000). This means: 
- confirming that the key strategic decisions should be taken in the EU 
institutional framework (and not solely the first pillar), with the GNSS High 
Level Group to support the Commission by giving strategic orientations and 
accompanying the development of the Galileo programme, including the 
international discussions and negotiations 
- putting in place a Programme Management Board, chaired by the Commission, 
to develop an appropriate programme management structure (involving a 
vehicle company), to co-ordinate research and development for Galileo, to 
finalise performance requirements and to establish, on the basis of private sector 
input, a business case for the public private partnership. This would be 
supported by a technical task force in the definition phase. On the basis of the 
work of the Project Management Board, the Commission would make 
recommendations to the Council and Parliament, at the end of the definition 
stage, allowing firm decisions on programme structure and financing 
As far as the long-term organisational structure is concerned, the Commission envisages a 
Galileo Administration in the operations phase to manage (through the vehicle company) 
provision of satellite-based navigation services and guarantee these services and performance. 
The Commission will also need to develop further the concept of regulatory co-ordination, 
based on existing regulatory structures 
• establishing the international environment 
There is a need to go beyond the exploratory stage in discussions with the US and the Russian 
Federation. Key decisions in the definition phase depend on the nature of the commitments 
our partners are willing to make. The Commission intends to submit, as soon as possible, the 
negotiating guidelines foreshadowed in this Communication for endorsement by the Council. 
Exploratory discussions with other countries will also need to take place, to assess the scope 
for their practical involvement in Galileo. 
28 
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24 
Annex II a): Main Characteristics of Orbits Considered for Galileo 
Several different scenarios could be envisaged for the Galileo space segment. The choice 
of orbit or the combination of orbits results from a compromise between different 
parameters, such as number of satellites, coverage, cost, ground segment required, etc. 
LEO (Low Earth Orbit) 
The LEO approach (up to 2000 km) has previously been chosen for numerous personal 
telecommunications constellations, including Globalstar and Iridium, as well as for the 
Transit system for navigation. Its main advantages come from the low cost of receivers 
and satellite payloads. However, the orbital period is 45-90 minutes, with each satellite in 
view only for a short period (approximately 15 minutes). A large number of satellites is 
therefore required. 
MEO (Medium Earth Orbit) 
The MEO approach (between 5000 and 20,000 km) was selected for GPS and 
GLONASS. Both operate in circular orbits around 20,000 km, leading to two complete 
orbits per satellite per day (orbital period of 12 hours). The launch cost is higher than for 
LEO satellites but the number of satellites required is lower. 
GEO (Geostationary Earth Orbit) 
GEOs (at 36,000 km in the Equatorial plane) have been used for telecommunications, 
television and the navigation satellite system augmentations being developed by the US, 
Europe and Japan (respectively, WAAS, EGNOS and MSAS). It involves a circular orbit 
of a period of 24 hours, so that they appear to be stationary over a fixed point on the 
Earth's surface. However, a principal disadvantage is that high latitudes are poorly 
covered. Further, the cost of the satellites and launches is relatively high. 
IGSO (Inclined Geosynchronous Orbit) 
IGSOs (which are a variation on the GEO approach, similarly at 36,000 km) follow a 24 
hour circular period orbit, inclined at the Equatorial plane. This facilitates coverage of the 
polar regions. No IGSOs have yet been brought into commercial application. The cost of 
the satellites and launches is relatively high. 
3<9 
ANNEX ILb): ACRONYMS 
Global systems 
GNSS: 
(Global Navigation Satellite 
System) 
• GNSS-1 
• GNSS-2 
GPS: 
(Global Positioning System) 
GLONASS: 
(Global Navigation Satellite 
System) 
"GALILEO" a world-wide position, velocity and time determination 
system which fulfils on a permanent basis potential user 
requirements for civil applications 
an initial implementation of GNSS, based on GPS and 
GLONASS augmented by civil systems (such as 
EGNOS, WAAS and MSAS) 
a second generation system which meets the 
requirements of civil users for position, velocity and 
time determination and is capable of providing a sole 
means of navigation for defined applications 
satellite positioning system developed, owned and 
operated by the US Department of Defense 
satellite positioning system developed by the USSR and 
now operated by the Russian Federation (currently the 
Ministry of Defence) 
proposed European contribution to GNSS-2 based on a 
satellite constellation, fully interoperable with the GPS 
signal structure. It will be integrated with augmentations 
and terrestrial systems to form the trans-European 
positioning and navigation network. 
Regional augmentations. 
designed to provide the user with sufficient independent monitoring of the whole system, 
as well as additional precision and satellite availability 
EGNOS: 
(European Geostationary 
Navigation Overlay Service) 
MS AS: 
(MTSAT1 Satellite-based 
Augmentation System) 
WAAS: 
(Wide Area Augmentation 
System) 
LAAS: 
(Local Area Augmentation 
System) 
Differential GNSS: multi-modal augmentation of GPS and GLONASS being 
developed by Europe. EGNOS will, as appropriate, be 
integrated into Galileo. 
regional augmentation of GPS being developed for civil 
aviation by the Japanese Civil Aviation Bureau 
regional augmentation of GPS being developed for civil 
aviation by the US Federal Aviation Administration 
local augmentation, generally required for specific 
applications, such as precision navigation (e.g. to support 
aircraft landing and ship docking) or enhancement of 
satellite signals where necessary because of geography 
(e.g. the high latitudes). These may form sub-regional 
networks. 
a correction of basic satellite signals (currently, GPS and 
GLONASS) calculated at ground stations and broadcast 
to provide local or wide area enhancements of services 
MTSAT: Multi-functional Transport Satellite 
31 
ANNEX III a): FINANCIAL STATEMENT 
1. TITLE OF OPERATION 
Communication from the Commission: "Galileo - involving Europe in a new 
generation of satellite navigation services" 
2. MAIN BUDGET HEADINGS INVOLVED 
B5-700 Financial support for projects of common interest in the trans-European 
network 
B6-6 Fifth Framework Programme, Information Society Technologies (6-
6121) and Sustainable and Competitive Growth (6-6131) 
Other budget headings will be used as appropriate. 
3. LEGAL BASIS 
One or more of the following depending on the actions undertaken: 
Articles 74, 84(2), 113, 129c and 130i of the Treaty. 
Decision No 1692/96/EC of the European Parliament and of the Council of 23 July 
1996 on Community guidelines for the development of the trans-European transport 
network. 
Council Regulation (EC) No 2236/95 of 18 September 1995 laying down general rules 
for the granting of Community financial aid in the field of trans-European networks 
(and proposed amendment to Council Regulation 2236/95 laying down general rules 
for the granting of Community financial aid in the field of trans-European Networks, 
COM (98) 723 final, 4 December 1998). 
Other relevant documents 
Communication from the Commission to the Council and the European Parliament -
'Towards a Trans-European positioning and navigation network: including a European 
Strategy for Global Navigation Satellite Systems (GNSS)' 
Council Conclusions of 17 March 1998 on a European Strategy for Global Navigation 
Satellite Systems (GNSS) 
European Parliament report of January 1999 on a European Strategy for Global 
Navigation Satellite Systems (GNSS) 
Annex III: 1 
3^ 
4. DESCRIPTION OF OPERATION 
4.1. General objective 
The Communication proposes a follow-up to the strategy developed in the 
Commission's Communication 'Towards a Trans-European positioning and 
navigation network: including a European Strategy for Global Navigation 
Satellite Systems (GNSS)' (COM (98) 29 final of 21 January 1998). It envisages 
development of a European satellite system (Galileo) which will contribute to 
the implementation of a trans-European positioning and navigation network. The 
objective of establishment of such a network is to improve the efficiency of 
transport systems by placing at the disposal of users a system allowing 
geographical positioning and precision timing. This contributes to development 
of sustainable and safe mobility for persons and goods, one of the fundamental 
objectives of the Common Transport Policy. The strategy also supports other 
Community policies such as for employment, industry, environment, cohesion 
and co-operation and development. 
More specifically, a Galileo would provide added-value in the form of a 
controlled-access service, for which a high level of service would be guaranteed, 
making it more attractive to safety-critical and commercially-sensitive users. It 
will also enable PPP structures to be developed, involving considerable private 
investment in the development of a system required for public strategic reasons. 
Different possible revenue streams are identified in the Communication, some of 
which require regulatory action (Commission proposals to the Community 
institutions). 
Galileo will also support the acquisition of a share of the rapidly expanding 
global export market for European industry. 
4.2. Period covered and arrangements for renewal or extension 
Full implementation of Galileo is expected over the period 2000-08. This fiche 
considers only EU Budget financing in the current financing period (1999 -
2006) (extension of provisions under future programmes succeeding the present 
TENs and 5th Framework Programmes may be envisaged) 
5. CLASSIFICATION OF EXPENDITURE OR REVENUE 
5.1. Non-compulsory expenditure 
5.2. Differentiated appropriations 
5.3. Type of revenue involved 
Not applicable 
Annex III: 2 
*3 
TYPE OF EXPENDITURE 
- Subsidy for joint financing with contributions from other parties (including the 
European Space Agency, industry, national space agencies); 
- Research and Development activities (Framework Programme) 
- Feasibility studies and demonstration projects (maximum Community contribution: 
50%) eligible for financial aid under the TEN 
- Grants or risk-capital participation for investment funds under the TEN 
- TACIS support for training and the conversion of Russian industries from military 
to civil purposes, in line with the Galileo programme 
- Interest-rate subsidies, funded on European Investment Bank loans 
- Loan guarantees premium, on European Investment Fund guarantees 
FINANCIAL IMPACT 
7.1. The estimated cost of Galileo is between €1.6 - 2.2 billion. In addition, costs 
will arise from the provision of a controlled access service, security and safety 
certification (approximately €600-750 million). As far as the EU budget is 
concerned, these costs will be met from resources already envisaged in the 
existing financial programming, mainly for TENs and the Fifth Framework 
Programme: TENs financing is an issue for the Agenda 2000 negotiations, the 
Fifth Framework Programme has been agreed. The Communication sets out 
other potential sources of finance. 
The table below shows the breakdown of expenditure on GNSS-1 and GNSS-2 
to date: 
(€ million) 
B2-7 Transport 
Commitments 
Payments 
B5-700 Trans-European 
Networks 
Commitments 
Payments 1995 
0 
0 
9.50 
4.75 1996 
0.75 
0.27 
10.80 
5.39 1997 
0.81 
0.62 
6.60 
0.55 1998 
0.81 
0.23 
10.04 
7.83 Total 
2.38 
1.12 
36.94 
18.52 Ofwhich: 
GNSS-1 GNSS-2 
2.38 
1.12 
36.55 
18.52 0 
0 
0.39 
0 
Annex III: 3 
%h 
B6-7 Fourth Framework 
Programme 
Commitments 
Payments 
B7-8 External Aspects 
of Community Policies 
Commitments 
Payments 
TOTAL 
Commitments 
Payments 8.10 
2.80 
0 
0 
17.60 
7.55 0.40 
2.27 
0.23 
0 
12.18 
7.94 5.08 
5.15 
0 
0.23 
12.49 
6.55 4.86 
2.20 
0 
0 
15.71 
10.26 18.43 
12.43 
0.23 
0.23 
57.98 
32.30 12.45 
9.95 
0.23 
0.23 
51.61 
29.82 5.98 
2.47 
0 
0 
6.37 
2.47 
The total development cost of Galileo, between now and 2008, is expected to be 
as follows1: 
System Engineering and 
Management 
Space Segment 
MEO 
GEO 
Ground Segment 
Operations 
Sub-total 
Certification 
Security 
Controlled Access Service 
TOTAL € million2 
142 
868 
188 
252 
135 
1584 
249 
63 
300 
2198 
A more detailed breakdown of costs is attached at Annex III b). 
These figures are based on a constellation of 21 MEO and 3 GEO satellites. The overall development 
costs might be reduced through technical cooperation with the Russian Federation. 
Annex III: 4 
1> 
For the fixed costs, the following indicative sources of revenue at European level 
have been identified in the period 2000-6 only: 
Sources of Finance for Fixed Costs 
ESA3 
EC 
Of which: 
TEN-Transport 
FP5 + FP64 
TOTAL € million 
500 
740 
500 
240 
1240 
7.2. Itemised breakdown of cost5, 
Breakdown 
TENs (B5-700) 
Research (B6-6; 
FP5 only) 
Total 1999 
30 
30 2000 
70 
30 
100 2001 
70 
30 
100 2002 
70 
30 
100 2003 
80 
80 2004 
70 
70 a 
2005 
70 
70 million (currentprices) 
2006 2007 2008 
70 
70 tbd tbd Total 
500 
120 
The annual breakdown of financing is provisional, and will depend on both the 
phasing of the project and the availability of funding. 
FRAUD PREVENTION MEASURES 
The fraud prevention measures contained in each of the instruments which are 
proposed to finance the different operations will apply. These include inspections, 
reporting, monitoring and evaluation under Regulation 2236/95, as amended, laying 
down general rules for the granting of Community financial aid in the field of trans-
European networks: in particular, Articles 12(4) and (5) provide for regular on-the-
spot checks by Commission staff and Articles 15(5) and (7) provide for monitoring 
and evaluation. Similar measures exist for the other Community financial instruments 
involved. 
ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 
9.1. Specific and quantified objectives; target population 
The development of a Galileo would require significant investment, from both 
the public and private sectors. However, the strategic importance of such an 
Subject to ESA approval procedures. 
This assumes a continuation of funding by the Research Programme beyond 2002 which is subject to 
evalution of FP5 
Figures applicable from 2000 are indicative and depend on the approval procedures of the respective 
instruments. The table considers only Community instruments (and not, for example, ESA funding). 
Annex III: 5 
M 
infrastructure is demonstrated by the level of investment by the US and Russian 
governments in their systems. For example, US public investment in the current 
GPS is estimated to have amounted to $ 10 billion already and the annual cost of 
sustaining the constellation is estimated at $ 420 million. 
Without Galileo, the EU would be entirely dependent on an externally controlled 
and managed system for safety-critical applications (aviation, maritime) without 
any guarantees on continuity and acceptable levels of service. 
Furthermore, the investment in Galileo makes sense in economic terms. The 
GPS hardware market in Europe was estimated by US researchers in 1997 at 
$228.7 million and was anticipated to grow to $960 million in 2004. A study on 
behalf of the Commission estimated the cumulative GNSS goods and services 
market in Europe (1998-2007) to be worth €39 billion. New studies have 
confirmed further important benefits which would depend on having Galileo in 
addition to GPS, including an additional €40 billion from sales of equipment, 
and €40 billion from value added services over the period 2005-2023. Expected 
total benefits in the transport sector alone are in the region of €18 billion over 
the first five years of operation. 
The Community strategy has the following objectives: 
— improving the efficiency of the multi-modal transport system (increasing 
traffic capacity, reducing environmental damage caused by transport, 
monitoring consignments of dangerous or polluting substances, etc.) 
while increasing safety; 
— providing added-value through a highly accurate service, with guaranteed 
service levels for users with safety-critical needs; 
— ensuring close co-operation between Member States and institutions in 
order to maximise benefits and minimise costs at the Community level 
and to support the development of interoperability within a global system 
appropriate to present day and future transport needs; 
— promoting European economic growth by stimulating the development of 
harmonised standards and the global market for value-added goods and 
services, with significant opportunities for European industry. 
9.2. Grounds for the operation 
— The Community contribution should be seen in the context of the 
measures to implement the guidelines for the development of the trans-
European transport network, particularly the navigation and positioning 
network and the Common Transport Policy. Organising co-operation on 
the basis of a clear strategy using the resources available in Europe is the 
only means of ensuring a role for Europe in the development of GNSS. 
Annex III: 6 
n 
— In its Communication, Towards a Trans-European Positioning and 
Navigation Network, (COM (98) 29 of 21 January 1998), which was 
endorsed by the Council in its Conclusions of 17 March 1998, the 
Commission set out the need for efficient and cost-effective navigation 
systems for civil use and compatible with military needs, high levels of 
safety with adequate European control for safety-dependent systems, and 
opportunities for European industry in the emerging satellite navigation 
markets. 
— The Commission recommended in its Communication on Space (COM 
(96) 617 final of 4 December 1996) the preparation of a specific action 
plan to develop GNSS as a key space application for European industry. 
9.3. Monitoring and evaluation of the operation 
The operation must be monitored and evaluated on the basis of the following 
criteria: 
— contribution to sustainable mobility through increase in air space and 
other traffic capacity, 
— reduction of environmental damage caused by transport and monitoring 
of consignments of dangerous or polluting substances; 
— improved safety, leading to a reduction in the number of accidents caused 
by guidance system error or failure (landing/ docking, collisions between 
vessels, etc.) 
— rationalisation and optimisation of navigation systems, leading to a more 
coherent and interoperable global navigation aid structure appropriate to 
present day and future transport needs; 
— allowing European industry to compete fairly and freely in all segments 
of the developing satellite navigation market, including commercial 
transport and other applications, development and maintenance of 
satellite equipment, ground stations and receivers. This will have a 
significant positive effect on European economic growth and 
employment. 
The organisational structure put forward is designed to ensure the cost-effective 
management of the project including effective monitoring and evaluation. 
Annex III: 7 
^ 
10. ADMINISTRATIVE EXPENDITURE (PART A OF SECTION III OF THE GENERAL 
BUDGET) 
The allocation of administrative resources for this action will depend on the annual 
Commission decision on allocation of resources, taking particular account of 
additional staff and resources granted by the budgetary authority. The supplementary 
needs cannot, in any case, prejudge the decisions that the Commission will need to 
take concerning: 
the request for new posts in the framework of the annual budget proposals 
the resources allocation. 
10.1 Effect on the number of posts 
Type of post 
Officials or 
temporary 
staff A 
B 
C 
Other resources 
Total Staff to be assigned to 
managing the operation 
Permanent 
posts 
4 
2 
2 
8 Temporary 
posts Source 
Existing 
resources in 
the DG or 
department 
concerned 
2 
1 
1 
4 Additional 
resources 
2 
1 
1 
4 Duration 
3 
3 
3 
3 
10.2. Total financial impact of human resources 
Officials 
Temporary agents 
Other resources (indicate 
budget heading) 
TOTAL Amount (0) 
2 520 000 
2.520000 Method of calculation 
8x3 years x 105 000 
The amounts express the total cost of the additional posts over the total duration of the operation (if 
fixed) or for 12 months (if indefinite). 
Annex III: 8 
3? 
10.3. Increase in other operating expenditure as a result of the operation 
Budget heading 
(number and title) 
A-7010 (Missions, travels...) 
TOTAL Amount (U) 
105 000 
105 000 Method of calculation 
30 annual missions within 
the Community 
25 annual missions outside 
the Community 
Estimated expenditure on missions, by redeployment of existing resources: Article A-130: 
Annex III: 9 
I) O 
Annex III b). Galileo - detailed breakdown of costs 
FIXED COSTS 
(Implementation) 
System Engineering 
and Management 
Total System 
Engineering and 
Management 
Space 
MEO 
Payload 
Platform 
Launches 
Insurance 
GEO 
Payload 
Platform 
Launches 
Insurance 
Total Space 
Ground Segment 
Mission 
MEO station 
GEO station 
Total ground segment 
Operations 
Total operations 
Sub-total 
Certification 
Security 
Controlled Access 
Service 
GNSS organisational 
framework (annual 
running costs: this will 
initially rely on staff 
seconded from national 
administrations) 
TOTAL Development 
2000-
15 
65 
83 
25 
173 
-
-
188 
34 
-
50 
272 2 proto-
flight 
EGNOS 
reuse 
2005 
37 
24 
38 
48 
18 
128 
68 
33 
20 
121 
55 
341 
26 
32 
50 
449 21MEOs 
3GEOs 
2005-2008 
90 
116 
158 
232 
86 
-
70 
67 
26 
755 
92 
21 
18 
131 
80 
1056 
189 
31 
200 
1476 Total 
Implementation 
costs 
12000-2008 
142 
205 
279 
280 
104 
-
95 
67 
26 
1056 
252 
135 
1585 
249 
63 
300 
2197 RECURRING 
COSTS 
per year 
Beyond 2008 
1.2 
60 
10.8 
70.8 
56 
128 
5.6 
-
6.4 
15 
155 
Figures above are based on submissions made by industry in the framework of ESA's GNSS-
2 systems comparative study. These are indicative only and do not necessarily reflect the 
opinion of the Commission. 
Annex III: 10 
V 
ANNEX IV: MARKET ANALYSIS AND ECONOMIC BENEFITS 
Some of the main benefits of Galileo are political rather than economic, notably the advantage 
of retaining control over safety critical services. Other economic benefits, such as providing 
'insurance' against future charging for GPS, are difficult to quantify. The analysis below can 
therefore give only a partial view, concentrating on1: 
• How Galileo will enlarge the overall market for satellite navigation, primarily because GPS 
and Galileo together can provide a more accurate and reliable service ; 
• How Galileo will improve prospects for European firms, because they will have a larger 
share of a larger market; 
• The direct and indirect benefits to users from Galileo. 
No reliable figures are available on the extent to which Galileo will produce savings by 
replacing existing navigation aids, though this is also likely to be significant. Market forecasts 
over such a long period, in an area where technological change is rapid, must be treated with 
considerable caution, though the broad orders of magnitude indicate that the overall economic 
benefits are very significant. (For example, the new generation of mobile phone technology -
UTMS- has the potential to combine with Galileo in some functions, and to displace it in 
others). A priority for the project definition phase (June 1999 to December 2000) is to take the 
market analysis to a stage where firm decisions can be taken on system performance, and where 
the private sector is willing to make financial commitments on the basis of future expected 
revenue. 
It is important to distinguish between the benefits identified here, which relate to the socio­
economic desirability of Galileo, and the issue of financial viability. Many of the benefits 
identified here will not result in project revenue without regulatory action. Nonetheless, the 
prospect of greater involvement of European industry in the applications market should increase 
its willingness to participate in a PPP to put Galileo in place. 
The impact of Galileo on the satellite navigation market 
A key measure of market growth is the penetration rate, which indicates what proportion of a 
category (e.g. new cars) is fitted with a navigation device. Forecasts suggest that penetration 
rates will rise much more rapidly, to a higher 'saturation' rate in the GPS + Galileo scenario 
compared to the GPS only scenario. Among the segments where the difference is particularly 
significant are: 
• automobile navigation (reaching a maximum of 93% in 2013 compared to 90% in 2016); 
• railways (reaching a maximum of 50% in 2019 compared to 10% in 2016); 
• fleet management (reaching a maximum of 95% in 2013 compared to 90% in 2016); and 
• mobile telephony (reaching a maximum of 70% in 2014 compared to 55% in 2018). 
1 Most of these figures were produced by industry in the framework of an ESA 
comparative study. 
L^1±<ri 
This difference is explained by the fact that these segments are particularly sensitive to service 
maintenance and accuracy in built up areas and in terrain (e.g. forested areas and deep valleys) 
which "traditional" GPS receivers find difficult, and where interoperable Galileo/GPS will offer 
an improved service. 
Economic benefits for Europe 
The following table gives an estimate of gross economic benefits (turnover for European 
industry, and direct benefits for European users) from equipment sales and value-added services 
in the satellite navigation market, on a baseline GPS scenario, and on a GPS+Galileo scenario. 
It suggests that the benefits of Galileo could amount to around €80billion over the period 2005-
23. These benefits arise from a combination of a larger market (as indicated above) and a 
bigger share for European industry. On the latter, it is assumed that the market share for EU 
industry under the Galileo+GPS scenario (rising from 30% in 2005 to 60% in 2023) is 
substantially higher than for GPS alone, (15 and 30% respectively). These figures result from 
research with industry, but are subject to a considerable margin of error. The figures do not take 
account of displacement effects. 
These figures do not, however, take account of indirect benefits of Galileo, which arise for 
those not using the service directly (e.g. reduced congestion, environmental benefits). These 
can however, be expected to be significant, given that, generally, about half of all congestion 
costs are 'indirect'. 
GPS 
GPS + Galileo 
Benefits of Galileo 2005-23 
Value Added Services 
€74bn 
€113 bn 
€39bn Equipment sales 
€79 bn 
€122 bn 
€43bn Total 
€154bn 
€235bn 
€82bn 
^ 
^r 
ISSN 0254-1475 
COM(99) 54 final 
DOCUMENTS 
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