Communication de la Commission au Conseil et au Parlement européen sur Galileo
Date: 2000-11-22
Institutions: European Commission
Subjects: satellite, satellite communications, space navigation, space policy, telecommunications

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 22.11.2000
COM(2000) 750 final

COMMISSION COMMUNICATION
to the European Parliament and the Council

On
GALILEO

TABLE OF CONTENTS

Summary

Introduction

A challenge facing Europe

Part 1: Definition of the system

1. Users’ needs and services offered

2, System architecture

3. The integration of Egnos into Galileo

4. Regulation, standardisation and certification

5. International cooperation

Part 2: Economic and financial aspects

1. The cost of Galileo

2. Galileo funding

3. The benefits provided by Galileo

4. Cash flows

Part 3: The management structure

1. The interim structure

2. The final structure

Recommendations

ANNEXES

1. The market in satellite radio navigation

2. The search and rescue service

3. The Galileo development plan

4. The integration of Egnos into Galileo

5. Summary description of Galileo

6. List of studies

7. Financial statement

2

Summary

Satellite radio navigation is a leading-edge technology which enables the user of a receiver to
pick up signals transmitted by several satellites and thereby determine to a high degree of
accuracy and from one moment to the next not only the exact time but also his own position
in terms of longitude, latitude and altitude.

This technology, currently dominated by the United States with its GPS system and by Russia
with its Glonass system and financed and controlled by the military, is notching up success
after success and is coming up daily with new applications in the countries of the Union and
throughout the world. The uses of these applications and the markets available to them
already cover a multitude of activities ranging from all types of transport (positioning and
measurement of the speed of moving bodies, insurance, etc.) to medicine (remote treatment of
patients, etc.), law enforcement (surveillance of suspects, etc.), customs and excise operations
(investigations on the ground, etc.), agriculture (grain or pesticide dose adjustments
depending on the terrain, etc.).

In its communication of 10 February 1999 the Commission presented an autonomous
programme on satellite radio navigation, known as Galileo, to be developed in four proposed
phases, including the definition phase due to be completed at the end of 2000.

The successive phases of the Galileo programme

* Development and validation phase (2001-2005)

- Overall detailed definition of the segments (space, ground, user);

- Development of the satellites and ground-based components;

- Validation of the system “in orbit”.

* Deployment phase (2006-2007)

-

-

Production, launching of the satellites;

Installation of the complete ground segment;

* Operating phase (2008 onwards)

Replacement of the satellites, operation of the Centres, maintenance.

Stressing the need to give a positive boost to our industries and services, while at the same
time ensuring Europe’s independence in a technology as crucial as this one, the Council, in its
Resolution of 19 July 1999, called on the Commission to develop a system for civil and
global use managed by public civil authorities and offering significant added value in relation
to the existing systems, while remaining compatible therewith.

During the definition phase in 2000, the Commission and the European Space Agency have
mobilised a very large part of the European space industry as well as a large number of
potential service providers with a view to defining the broad outlines of this project.

The present communication sets out the results of this phase. It reaffirms the strategic and
economic importance of the project and endorses a proposal that it be continued beyond 2001,

3

albeit subject to certain conditions regarded by the Commission as essential to the successful
implementation of Galileo.

These conditions are as follows:

The Commission takes the view that:

– satellite radio navigation is a key technology for the development of our economies and
that the deployment, to that end, of a constellation of EU satellites is indispensable to
safeguarding our independence;

– cost/benefit studies show Galileo to be cost-effective and sufficiently attractive to obviate

the need for any further public funding in the form of subsidies from 2007;

– for the development and validation phase (2001-2005), the essential funding from public
there is no need to call upon additional public

subsidies has been so planned that
contributions, under budgets of the Community or European Space Agency;

– the funding of the deployment phase, comprising the construction and launch of satellites
and the establishment of the ground-based infrastructure network, will require private-
sector investment of some
1.5 billion; and that an appropriate public–private partnership
will be in place in time for the development and validation phase;

€

– the setting-up of a public-private partnership requires a legal and financial framework as

soon as possible.

• A coordinated, provisional management structure for

the Galileo project,
involving the Commission and the European Space Agency, should be set up by
2001.

• The proposals needed to set up the final structure with an investment budget
combining all the funds earmarked for the project will be drawn up by the
Commission.

• Egnos should be controlled by this structure.

• A report will be made each year to the Council and to the European Parliament on
the progress made in this area, and on the setting-up of the programme
management structures, and to describe the funding of the deployment phase
(2006-2007) by December 2004.

4

Introduction

Satellite radio navigation is a leading-edge technology. It results from the transmission in
orbit of signals which indicate the time with extreme accuracy. A receiver picking up these
signals from a constellation of several satellites can then determine to a high degree of
accuracy and from one moment to the next not only the exact time but also its own position in
terms of longitude, latitude and altitude.

This technology, currently dominated by the United States with its GPS system and by Russia
with its Glonass system and financed and controlled by the military, is notching up success
after success and is coming up daily with new applications in the countries of the Union and
throughout the world. The uses of these applications and the markets available to them
already extend to a multitude of activities covering, of course, all
types of transport
(positioning and measurement of the speed of moving bodies, insurance, etc.) but also taking
in medicine (remote treatment of patients, etc.), law enforcement (surveillance of suspects,
etc.), customs and excise operations (investigations on the ground, etc.), or agriculture (grain
or pesticide dose adjustments depending on the terrain, etc.). Furthermore, it is possible for
any individual to obtain, for a very modest outlay, a GPS receiver enabling him to pinpoint
his position on the road, at sea or in the mountains, albeit without any guarantee of accuracy
or continuity of service.

As long ago as March 1998, at the instigation of the Council, the Commission presented in its
communication of 10 February 19991 an autonomous programme on satellite radio
navigation, known as Galileo, to be developed in four proposed phases: a definition phase in
2000, a development and validation phase up to 2005, a deployment phase up to 2007 and an
operational phase thereafter.

The Cologne European Council in 1999 and the Feira European Council in 2000 emphasised
the strategic importance of Galileo and the need to take a decision on continuing the
programme in December 2000.

Stressing the need to give a positive boost to our industries and services, while at the same
time ensuring Europe’s independence in a technology as crucial as this one, the Council, in its
Resolution of 19 July 19992, called on the Commission to develop a system for civil and
global use managed by public civil authorities and offering significant added value in relation
to the existing systems, while remaining compatible therewith.

In their Decision of 23 July 19963, on Community guidelines for the development of the
trans-European transport network, the European Parliament and the Council included the
positioning and navigation systems as integral parts of the network and the related projects as
projects of common interest. In their Regulation on the granting of financial aid in the field of
trans-European transport networks of 19 July 19994, these two institutions also raised the
level of Community aid for the positioning and navigation projects to 20%, thereby according
them clear priority.

1

2

3

4

COM(1999)54 final, 10.2.99
OJ C 221/01, 3.8.1999
Decision No 1692/96/EC of the European Parliament and of the Council – OJ L 228, 9.9.96
Regulation (EC) No 1655/1999 of the European Parliament and of the Council amending Regulation
(EC) No 2236/95 – OJ L 197/1, 29.7.99

5

With the support of a large majority of countries on all continents which have supported the
development of Galileo as a European system compatible with the existing systems, the
European Union has taken steps to ensure that the necessary frequencies were set aside during
the World Radiocommunication Conference held in Istanbul in May 2000.

Lastly, the Council has emphasised on a number of occasions the importance of cooperation
with the European Space Agency in collaboration with which the Commission has just
prepared a communication on space which paves the way over the next few months to the
development of a genuine European strategy in the space sector. In this, Galileo will play a
key role.

During the definition phase in 2000, the Commission and the European Space Agency have
mobilised a very large part of the European space industry as well as a large number of
potential service providers with a view to defining the basic elements of this project.

The present communication sets out the results of this phase. It confirms the strategic
importance and economic attractions of the project and proposes that it be continued beyond
2001, albeit subject to certain conditions regarded by the Commission as essential to the
successful implementation of Galileo.

The successive phases of the Galileo programme

* Development and validation phase (2001-2005)

- Overall detailed definition of the segments (space, ground, user);

- Development of the satellites and ground-based components;

- Validation of the system “in orbit”.

* Deployment phase (2006-2007)

-

-

Production, launching of the satellites;

Installation of the complete ground segment;

* Operating phase (2008 onwards)

Replacement of the satellites, operation of the Centres, maintenance.

6

A challenge facing Europe

In its communication on Galileo of 10 February 1999, the Commission drew attention to a
number of major problems which Europe will have to face up to over the next few years.

Satellite radio navigation enables dating signals to be transmitted which represent a vital
benchmark for our increasingly integrated economies. The banking, telecommunications and
energy networks and the ability to synchronise signals for the transmission of data of all kinds
are essential elements in this complex system of interrelationships. Europe (and the wider
world) cannot afford to rely exclusively on one, or even two, non-Community systems under
military control for the establishment of standards in areas which are of such crucial
importance and where the introduction of advanced safety features on a coordinated scale is
required.

The number of consumers of services generated in this sector is increasing day by day in all
areas of activity (management of moving bodies, positioning of objects, insurance, geodesy,
etc.). Day by day turnovers are growing, thereby placing our economies more and more at the
mercy of these positioning and speed measurement systems based on satellite radio
navigation. Leaving aside the need to ensure a technical abundance of signals compatible with
the high-precision applications affecting, in particular, the safety of human lives, can we
really afford to be dependent on just one non-European signal in order to safeguard these
turnovers and the jobs that will depend thereon?

Galileo will open up possibilities for developing applications, many of them hitherto
undreamed of, which will help in the performance of public service tasks in a very wide
variety of areas (customs and excise, transport, policing operations, searches for missing
persons, the pursuit of offenders, judicial enquiries, humanitarian operations, etc.).

As part of a new Community approach adapted to a new century, the most obvious user of a
precise positioning and speed calculation signal, viz. the transport sector, will be one of
Galileo’s key customers:

• Airspace and airports are becoming increasingly congested. More effective management
structures are gradually being put in place, but it is clear that this will not be enough. The
report of the High Level Group on a Single European Sky emphasises the importance of
introducing new technologies as a way of boosting capacity. While satellite radio
navigation is a key element, it will also be necessary for safety reasons to ensure an
abundance of systems (given that mere reliance on a foreign military system is out of the
question) as well as ensuring integrity, i.e. a knowledge of the quality of the signal used.

• Tighter controls are also needed in the development of sea transport. The Commission has
presented proposals for Directives5 in this respect. Recent disasters such as the sinking of
the Erika oil tanker and the Ievoli Sun chemical tanker demonstrate the need for a certified
position report that only Galileo6 can provide, in support of the new regulations on
maritime safety.

5

6

COM(2000)142.final, 21.3.00
Other satellite navigation systems will also be capable of providing this service to the extent that it is
certified and guaranteed by the service operator

7

• Inland transport, the principal mode of transport for goods and persons in our modern
economies, also needs to undergo reforms. According to the Commission’s White Paper on
the Common Transport Policy7, no infrastructure will be capable of managing its own
growth unaided. An appropriate measure might be the imposition of an automatic, certified
reporting and registration obligation with regard to position and speed. Across the entire
territory of the European Union, only Galileo6 will have the capabilities needed to enable
the authorities not only to identify traffic flows more effectively and hence manage them
more efficiently but also to reorganise the economy in the transport sector.

• The urgent need to speed up significantly policing,

judicial and insurance dispute
procedures (with a resulting reduction in the cost of premiums) or commercial disputes
associated with transport (thefts, accidents, delivery delays, etc.) will mean that very soon
an active or passive position notification system, albeit of course certified and guaranteed,
will become an essential prerequisite. Once again, only Galileo will be capable of
providing the market with such a system. The same certified and guaranteed system will
enable users to pass by motorway, urban or other tollbooths automatically, and without
stopping.

Leaving aside dating and transport, Europe also needs to be wholly involved in the satellite
navigation revolution. Recent GSM and UMTS8 developments in Europe (the two generations
of portable telephone which will eventually include the Galileo signal), and before that
developments involving Ariane and the Airbus, have clearly demonstrated the positive impact
that a determined, politically inspired and sectoral approach to modernisation will have on
employment, on industrial and economic development and on the enhancement of the
international influence of the European Union.

The whole range of positioning applications (whether certified or not) will bring in their wake
a plethora of new services to be developed by a very large number of companies. The Galileo
receivers, which will also be capable of receiving Russian (Glonass) and American (GPS)
signals, will need to be able to penetrate those markets. The GPS, under pressure from users
and with the prospect of Galileo’s arrival on the scene, has benefited from the cessation
(overnight, as it were) of selective degradation9 in May 2000. It is difficult to accept that our
receiver manufacturers and their users should be obliged to adapt, without prior warning, to
the vagaries of a signal decided on elsewhere.

Lastly, a further challenge inherent in this project is the mobilisation of the private sector.
This communication demonstrates that - apart from the socio-economic benefits which are
enough in themselves to justify the public funding of the entire project - there are sufficient
opportunities for generating economic returns from the development of Galileo to interest
industrialists and bankers.

Many other investors, be they companies interested in supplying components, satellites and
ground equipment, or, more importantly, large, medium or small enterprises specialising in
the provision of services, have confirmed that they will participate in Galileo once the
following two conditions have been met:

7

8

9

COM(2000)…. final, ...
3rd generation of mobile telephony allowing the use of very high-speed Internet capabilities
Degradation of signal accuracy, limiting civil use

8

• the necessary political and financial decisions on the launching of the development and

validation phase have been taken;

• a single entity, operating within a precise institutional framework, has been appointed to

manage the various aspects of the programme.

9

Part 1: Definition of the system

The aim of this chapter is to present the Galileo system based on the overall picture that has
emerged in the course of the studies conducted during the definition phase. The presentation
takes as its point of departure the needs expressed by the potential users and goes on to
describe the services needed to meet those requirements. The next part seeks to describe the
architecture of the system, designed in such a way as to be capable of providing these
services. Subsequent chapters tackle related matters pertaining to Egnos10 and to certification
and international aspects which have been, and will have to be, taken into account during the
programme development and validation phase.

1. Users’ needs and the services offered by Galileo

A. Users’ needs

The approach to setting up a navigation infrastructure is based on the requirements expressed
by the potential users of the services offered, from the end user to the service providers
(important stakeholders in the value-added chain) and including the public authorities
responsible for implementing a wide variety of rules and regulations.

During the Galileo programme definition phase, consistent work has been carried out
involving consultations with a broad range of users covering a significant number of areas.
Various forums have been held in several areas of application such as aviation, the railways,
the maritime sector, road-linked applications, applications involving the general public,
scientific applications and time-distribution applications.

For each forum, 50 or so of the most representative persons in their field, spread fairly among
the European countries involved in the Galileo programme11, were contacted and their help
enlisted in drawing up the specifications for the positioning, navigation, time and search and
rescue services.

As a result of these large-scale consultations, there is now a clear realisation of the need for a
global service, that is to say a service that covers the entire globe including the oceans and
desert areas, with a view not only to ensuring the continuity of services involving maritime
and aviation applications12 but also to enabling the equipment manufacturers (notably the
receiving equipment manufacturers) to achieve economies of scale in an unsegmented market.
The majority of the public and private players involved in these consultations also stressed the
fundamental need for channels of communication: only through the achievement of perfect
synergy between the positioning, navigation and dating services, on the one hand, and the
communication services, on the other, is there any likelihood that the services on offer13 can

10

11

12

13

Egnos, the European precursor of Galileo, is a satellite radio navigation system that relies on the
American GPS and the Russian Glonass systems and ensures their integrity, i.e. it warns the user over a
very short timespan of any malfunction that might affect the quality of the signal retransmitted by
geostationary satellites
Also including the member countries of the European Space Agency which are not Member States of
the European Union as well as countries applying to join the European Union
In addition, this global cover will enable Galileo’s services to be supplied to the non-European
territories of Member States of the European Union or of the European Space Agency in other regions
of the world
At user level, the technical choices for implementing these channels of communication are immaterial

10

be exploited to the full. Consequently, the concept of a “panoply” of services will need to be
fully incorporated into the parameters of the navigation system.

Such a service is provided for in the basic solution presented in this communication through
the establishment of certifiable interconnections between Galileo and communication
networks located on the ground or installed in existing satellites. A technical alternative is
being studied as an option that could be exercised as early as the first half of 2001 and which
would involve launching a communications payload on the satellites. This possibility will be
adopted only if it entails no appreciable cost implications for the public investor.14

Involving communications facilities will also necessitate an in-depth examination of the
regulatory aspects and, in particular, of the licensing and interconnection arrangements in the
internal market for electronic communications networks and services.

Applications will be forthcoming to improve mapping in Europe and beyond, particularly in
developing countries with which the Community has special relations. Applications focusing
on earth observation will also be studied as part of a global and sustainable development
strategy.

Galileo includes a set of equipment designed to provide a modern search and rescue service15.
The signatory states to the International COSPAS-SARSAT16 Convention, which are
currently implementing the only system of this kind covering the entire globe, have been
contacted and have openly expressed interest in a new service to be provided by Galileo. The
United States, for its part, is examining the possibility of setting up a similar and potentially
complementary system on future generations of the GPS. Apart from the number of lives
saved, this service is obviously of interest on a geopolitical and planetary scale.

On the basis of the accompanying analysis of the present and future needs of users and of the
markets associated with the underlying applications, it has been possible to identify a set of
forecasts (number of users per field of application) used in the cost-benefit analysis.

Lastly, several parameters describing the different levels of service required for each type of
application have emerged from the analyses described above. The principal parameters
concern a global need for a degree of accuracy that is at least as good as that provided by the
GPS, for integrity17 in certain specific areas - mainly those where human life is at stake18 -
and for the availability of an improved service, both in urban (local) areas and in the Nordic
regions.

B. The services offered by Galileo and their applications

14

15

16

17

18

This assessment will need to include the possible legal, and hence financial, risks that such a solution
could entail, having regard to the commitments entered into in the framework of the World Trade
Organisation and given that the telecommunications sector is covered by the General Agreement on
Trade in Services (GATS, 1994).
See Annex 3
France, Canada, the United States and the Russian Federation
Information on the integrity of the system is relayed to the user by means of an indicator providing him
with information, virtually in real time, on the quality of the signals transmitted and on any malfunction
detected
The demand for integrity in the range of services offered is expected to become the general norm in a
growing number of applications

11

On the basis of the consultations conducted with the users, three categories of services have
been defined to meet their needs.

1). The general service

This will involve the provision of a positioning, navigation and dating service compatible
with the existing services but offering a greater degree of accuracy. It will be available for use
by any person in possession of a Galileo receiver receiving all the existing signals. No
authorisation will be required to access this service.

The principal applications will be private road navigation, network dating, traffic information
systems and systems providing information on alternative routes in the event of congestion,
mobile telephony, etc. Numerous types of receiver will be developed at widely varying prices,
depending on the applications proposed.

In principle, there will be no charge for using this signal, although a quality certificate regime
(see Chapter 4, Part 2) may be envisaged for high-quality, expensive receivers.

2). The commercial service

Service providers using this service to give added value to their range of products will pay a
fee to the Galileo operator. The signal will contain data relating to the additional commercial
services being offered. In return for the fee, the Galileo operator will be able to offer certain
service guarantees.

The main applications will concern professional users who are ready to pay for a service
guaranteed by the Galileo operator, notably in the areas of geodesy and in activities involving
customs and excise operations, network synchronisation, sea fleet management, vehicle fleet
management, road tolls, etc.

There will be controlled access to this service for end-users and the providers of value-added
services. This controlled access will be based on protected access keys (along the lines of the
PIN code for GSMs) in the receivers. Such a solution, yet to be confirmed by the service
providers, will avoid the need for the more onerous technique of signal encryption, although
the latter will still come under scrutiny during the validation phase. In fact, controlled access
will enable revenue to be collected from users who are subscribers.

12

3). The public service

This service will be offered to users who are highly dependent on precision, signal quality and
signal transmission reliability. It will need to offer a very high level19 of integrity and,
consequently, to provide the user with a very rapid warning of any possible malfunctions. It
will need to be certified in accordance with the regulations applicable to the various modes of
transport (the ICAO regulations in the case of air transport, the IMO regulations in the case of
sea transport, as well as any future European regulations relating to the Common Transport
Policy). This service will require specialised receivers providing access to this enhanced-
quality signal. Depending on the decisions taken by the European or international standards
organisations,
this service may be restricted to authorised users. Because of security
requirements, it will not be possible for all of the signals intended for this service to be
provided on the same frequency.

Of particular concern are applications intended for air and sea navigation, the management
and regulation of road and rail traffic, the emergency services, road tolls, controlled access to
towns and cities, transport of dangerous substances, carriage and monitoring of dangerous
persons, humanitarian operations and, lastly, the registration of black boxes.

The relevant revenues will be generated by providing controlled access to the signal for such
users as air traffic controllers, air companies, public network managers, rail companies, road
traffic controllers,
the customs and excise authorities, etc. For services with high-level
security requirements, a signal encryption option has been included in the financial estimates,
and a decision on whether or not to exercise this option will be taken during the validation
phase.

In addition, a specific public service designed to assist in search and rescue20 operations will
make it possible to locate persons and vehicles in distress. The vehicles will be fitted with
beacons which, having been activated in the event of an emergency, will send an alerting
signal to a rescue centre. An acknowledgement that the signal has been received and logged
will immediately be sent back to the stranded person.

Furthermore, the use of one of the three services described above in conjunction with a
telecommunications service, e.g. GSM or UMTS, will enable positioning data to be supplied
or distributed in a much more user-friendly fashion, where necessary combined with other
information such as a road map, the distance to be covered, the pinpointing of traffic
congestion and information on alternative routes. It will also enable payments to be made for
tolls of all kinds.

19

20

No satellite radio navigation system of this quality, combining universality, accuracy, certification and
guarantees, exists at present
A working party has been set up to incorporate this service within COSPAS-SARSAT (see page 9),
which at present does not send back this crucial signal in order to keep up the morale of the victims nor
does it guarantee that the alert will be sounded instantaneously. The service will be free but will require
a licence for the purchase of the beacon

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2. System architecture

The Galileo system architecture must be designed in such a way as to permit:

-

-

-

adaptation of the response to the needs of users and to market trends;

integration of services other than navigation;

minimisation of development and operating costs;

minimisation of the risks, other than financial risks, inherent in a project so unusual by

-
virtue of its scope, complexity and the challenges it poses;21

interoperability with existing systems, notably GPS, while at

-
maintaining autonomy and competitiveness.

the same time

1. The main foundations of the Galileo system

The concept is global, that is to say it is based on the distribution of signals over the entire
surface of the globe, offering three major categories of navigation services:

-

-

-

a general service;

a commercial service;

a public service.

With the exception of the general service, all the Galileo services provide system integrity22
information. The architecture is such as to enable other regions (groups of countries that may
have entered into partnership agreements with Galileo) to personalise the system integrity
information at a regional level.

With a view to facilitating interoperability at the user sector level and to promoting the
penetration of certain markets, it is also planned to disseminate integrity information relating
to the GPS satellite and, where appropriate, the Glonass satellite in addition to the integrity
information on the Galileo satellites.

Lastly, the need for information exchange or the onward transmission of the position of
Galileo users will result in the incorporation of the low-volume communications services in
addition to the navigation information. These services will rely on the existing terrestrial or
space infrastructure.

21

22

These risks may be political or international in character, due mainly to the dual nature of the
technologies employed (some of Galileo’s equipment or components will be subject to the existing
rules governing the sector so as not to compromise the commitments and objectives of the European
Union in the field of non-proliferation), or the risks may be legal in character by virtue of certain
international conventions and obligations (cf. law of outer space, international regulations governing air
and sea navigation, WTO, etc.).

Information on the integrity of the system is relayed to the user by means of an indicator providing him
with information, virtually in real time, on the quality of the signals transmitted and on any malfunction
detected

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The Galileo signals

The definition and optimisation of the services are wholly dependent on the characteristics of
the signal transmitted from the satellites and from the local ground components as well as on
the constraints affecting the use of the electromagnetic frequency spectrum. A twofold
approach is being adopted with regard to the Galileo signal frequencies:

– The basic solution set out in this communication relies on the frequency bands newly
allocated to Galileo following the World Radiocommunication Conference (WRC2000),
which offers Europe real technical opportunities in defining the signal, although certain
technical conditions still need to be verified; the preparation of the next WRC, planned for
2003, forms part of the validation phase activities.

– Two further options, based on the sharing and partial recovery of the frequency bands
allocated to the existing systems (the American GPS and the Russian Glonass), are
currently being studied with a view to ensuring optimisation of the use of frequencies and
of the performance offered, while at the same time reinforcing interoperability, and hence
robustness, without having a significant impact on the total cost of the system.

The final choice of signal characteristics will be made on the basis of the best technical
solutions23 to emerge from a pooling of the results of the international negotiations. At all
events, a choice will be made in the first half of 2001 during the validation phase.

The security constraints

Given that the use of Galileo by malevolent forces could pose a danger to European interests,
provision must be made for preventive action and countermeasures (withholding of the
service, controls on the export of certain sensitive components). These constraints will take
the form of measures to ensure the physical protection of the system and to control access to
certain services. In addition, Galileo will need to be protected against any external or hostile
intrusion into the system aimed at modifying by whatever means (physically or electronically)
the system itself or the services which it provides.

Consequently, in the event of a crisis, a European political body independent of Galileo
management structures - to be defined under the CFSP - will need to be empowered to take
the necessary measures. In addition, operational procedures will need to be put in place, under

23

The definition studies carried out over a 12-month period reveal that:
-

Band C (5010 – 5030 MHz) offers certain attractions for new services to be envisaged in the
future, notably because it is more resistant to interference; consequently, an experimental payload
will be installed during the validation phase with a view to taking a decision on the gradual
introduction of this option in future generations of the Galileo system; funding is provided for
under the associated technological programme;
all the proposed services require, as a minimum, the simultaneous use of 2 frequencies, in this
instance in Band L, with an adequate frequency separation (Bands L1, and L2) (1164 – 1300 MHz;
15590 – 1610 MHz);
given the personal safety implications of the public service (aviation being a typical example) and
the need for it to be protected against all forms of interference from other systems, this service will
use the band reserved for aeronautical applications (ARNSS - Aeronautical Radio Navigation
Satellite-Based Services);
the requirements associated with the protection of such services as the service needed to
implement the Common Transport Policy will probably necessitate the segregation of the relevant
frequency spectrum

-

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-

15

the CFSP, between the body eventually designated and the Galileo management structure in
order to manage possible crisis situations.

Data protection – and, in particular, the protection of private data – will be assured under
existing legislation.

2. The principal components of the architecture24

The Galileo architecture is made up of four principal components:

– the global-coverage space component;

– the regional components;;

– the local components;

– the user receivers and terminals.

a) The global-coverage space component consists of the space sector, in this instance a
constellation of 30 medium earth orbit25 satellites, and the associated ground control sector.

Before settling on this choice, several types of constellations26 were studied using different
criteria. In particular, these studies show that the recommended architecture based exclusively
on satellites in orbit, and the architecture recommended here, ensures more uniform
performance both in terms of accuracy and availability and offers greater robustness in
crippled mode (satellite failure), particularly in the case of high latitude countries or in towns
and cities, while at the same time being less onerous .

The size and mass of the satellites under consideration for this type of mission should ensure
optimum deployment of the constellation through multiple launchings (5 to 6 satellites per
launcher).

The ultimate choice of launcher(s) will be made on a competitive basis and will depend on the
payload capability (number of satellites) for the period in question, on reliability factors,
proposed costs and contractual conditions (insurance).

The ground segment27 consists of the satellite control centres (telemetering and telecommand
stations to keep the satellites on station) and the centres needed to provide the services.

24

25

26

27

See development plan in point 4
The MEO (medium earth orbit) satellites are evenly distributed over 3 orbital planes at an altitude of
about 23 000 km
As mentioned in the communication of 10 February 1999, various types of orbit were considered for the
constellations: LEO (low earth orbit), MEO (medium earth orbit), GEO (geostationary earth orbit),
IGSO (inclined geosynchronous orbit). During the definition phase, several studies focused on
constellations based solely on MEOs (10 to 33 satellites at different inclinations) and on a combination
of MEOs (18 to 27) and GEOs (8 to 9). Lastly, two types of architecture were subjected to more
detailed comparisons: 30 MEOs on 3 planes and 24 MEOs and 8 GEOs, all in the light of different
criteria (performance attained, geographical uniformity, risks and costs, management constraints). The
best performance is provided by the 30 MEO architecture, particularly at high latitudes and for a
significantly lower cost
The terrestrial segment whereby the service is provided consists mainly of:
-
-

the integrity control stations;
the interfaces with other systems (COSPAS-SARSAT, Universal Time);

16

b) The regional components

The system is global and integrity is spread world-wide. However, the design of the system is
such as to permit the introduction of regional components (up a maximum of 8 all over the
world), thereby making it possible to “personalise” integrity under partnership agreements
with the relevant countries. The cost of this component will be borne by the region in
question.

A regional component is made up of an additional network of stations to oversee the integrity
of the signals and a processing centre to provide this service.

c. The local components

The Galileo system will provide a high level of performance to users world-wide, even in
places where there is no ground infrastructure. However, in the case of specific applications in
given areas, even more demanding levels of positioning performance will be necessary or,
alternatively, integration with other functions, e.g. local communications, will confer added
value on the basic service.

In this way, starting from a common generic conception, it will be possible to adapt local
elements to specific requirements:28 airports, ports, rail, roads, urban areas, etc. Furthermore,
each application will need to make provision for specific cases: road tunnels, urban buildings,
underground parking complexes, etc. The definition phase has enabled a preliminary
conception to be formed of these local elements, and this will be elaborated further during the
development and validation phase.

Typically, a local element will need to ensure the onward transmission of the signal, including
integrity monitoring and data processing and transmission.

Data may be transmitted to the user's receiver either via a specific link or by means of
external systems: mobile communication networks (using GSM or UMTS standards), Loran-
C maritime navigation system, etc. In the last mentioned instance, detailed information on the
user's exact position will also be available to the operator. By means of messages linking the
Terminal and the Service Centre it will be possible to confer added value on the basic service,
e.g. pinpointing the location of distress calls or breakdowns. This, in turn, will cause thought
to be given to the introduction of possible changes to the existing standards, with a view to
incorporating the capabilities offered by Galileo.

For certain modes of transport such as aviation, the existence of a local component offering a
landing service adapted to the meteorological conditions prevailing in Europe will play a key
role in rationalising the existing structures and making satellite navigation more attractive
economically. For this reason, the Commission is committed to promoting the necessary
technical and economic studies and, if the scheme is clearly feasible, it will facilitate the
organisation of a local service through the structures put in place.

3. The Galileo receivers

28

the communication networks between the various terrestrial segment components;
the navigation mission control centres

-
-
In general, these specific requirements will focus on the need for a high degree of accuracy (down to
less than a metre) and the need for local integrity information to trigger an alarm in a very short space
of time (e.g. less than a second in the case of civil aviation) or to facilitate the continuity of the service
in an urban environment when satellite visibility is reduced or down to zero

17

These receivers will be the crucial link in the Galileo chain and will need to satisfy market
requirements:

– competitive performance and costs compared with the existing systems;

– adequate tailoring to the needs of users (general public and the professional market);

– potential for change and integration of the services (e.g. communications);

– possibility of multi-modal use;

A wide range of Galileo receivers will be available providing the various types of satellite
radio navigation services on offer, whether or not combined with other functions. In addition,
the technological potential will lead to a high degree of integration of these functions
(standard "microchips" tailored to a specific function). By way of illustration the following
examples may be cited:

– Galileo mini-terminals for use by the general public, or the incorporation of a positioning
function as an integral feature in mobile telephones (UMTS standard), providing value-
added services or position location facilities in the event of “112” calls (emergency
services);

– the integration of a navigation service certified under aircraft industry standards in the

operational support system for aircraft pilots;

– an in-vehicle navigation platform offering the driver combined positioning and traffic

information monitoring facilities.

The challenge of the market in Galileo receivers represents one of the major factors that will
determine whether the European industry successfully takes off in this area.

4. The Galileo development plan29

Under the arrangements to extend the definition phase which is due to conclude at the end of
2000, the Galileo development plan will be divided into two main phases:

A development and validation phase (2001–2005)

The development and validation phase, due to commence in 2001, will cover the detailed
definition and subsequent manufacture of the various system components: satellites, ground
components, user receivers.

This validation will require the putting into orbit of prototype satellites from 2004 and the
creation of a minimal terrestrial infrastructure. It will allow the necessary adjustments to be
made to the ground sector with a view to its global deployment and the launching,
if
necessary, of operational prototypes manufactured in parallel. During this phase it will also be
possible to develop the receivers and local elements and to verify the frequency allocation
conditions imposed by the International Telecommunication Union.

A constellation deployment phase (2006–2007)

29

See diagram in Annex 5

18

This deployment phase will consist in gradually putting all the operational satellites into orbit
from 200630 and in ensuring the full deployment of the ground infrastructure so as to be able
to offer an operational service from 2008 onwards.

technical

During the system validation phase, as described above, the risks inherent in the programme
will be reduced by a programme of technological support to help finalise the critical choices,
both
of Band C,
telecommunications payload,
to consider these
activities so as to ensure that the second-generation Galileo system remains adapted to the
changing needs of users.

(atomic
intersatellite links, etc.). It

receivers,
is important

technological

clocks,

and

use

Consequently, users will have an operational Egnos service at their disposal from 2003 (see
Chapter I.3) and will witness the gradual introduction of an operational Galileo service by the
beginning of 200831 at the latest, with the Egnos services being provided in parallel until they
are phased out altogether.

3. The integration of Egnos into Galileo

Egnos, the European precursor to Galileo, is a satellite radio navigation system that relies on
the American GPS and the Russian Glonass and monitors their integrity, thereby warning the
user in a very short space of time of any malfunction that could affect the quality of the signal
relayed by geostationary satellites.32

Annex 5 describes the characteristics and benefits of Egnos, its potential for mobilising
European expertise in engineering, manufacturing and the provision of services in the field of
space applications and, lastly, the process whereby it will be gradually integrated into the
architecture and structures of Galileo, eventually disappearing from the scene by about 2015.

4. Regulation, standardisation and certification

Galileo will make an essential contribution to the good management and safety of all modes
of transport. It will enhance the quality of existing systems by virtue of its being managed by
civilians and by virtue of its global coverage, precision, integrity and the guarantees it will
offer.

The provision of these features will require a system for regulating the activities in question
through the imposition of standards to be complied with and the monitoring of such
compliance by the competent Community bodies.

Regulation and certification will
In developing and
implementing such a regulation and certification system, the Commission will enlist the aid of
the existing public structure, to which certain activities could be delegated.

require Community legislation.

30 I
31

32 I

n order to ensure adherence to this timetable, satellite production should commence no later than 2004
Access to the market would require a more concise development plan, and a number of approaches are
being examined: e.g. provision of a commercial service for the general public in advance of the other
technically more exacting services. However, given the risks currently being assessed (availability of
clocks, etc.), it would be premature to commit oneself to such a timetable. Nevertheless, once the initial
technical tests have been carried out, work can begin on the campaigns to promote the Galileo satellite
applications and to verify the regulatory uses, probably starting in 2006
n circular orbit 36 000 km above the terrestrial equator

19

Given that Galileo will be providing services on an international scale, the European Union,
in cooperation with the European certification bodies, will need to define the positions to be
defended by the Member States within the framework of international organisations such as
the ICAO and the IMO.

5. International cooperation

International cooperation is essential to a project of such international potential as Galileo. It
is equally essential in terms of ensuring interoperability with existing systems, of involving
third country markets and, lastly, of installing the ground sector components in certain parts
of the globe. A Committee, made up of representatives of the Member States, will be
responsible for assisting the Commission in the negotiations / discussions with third countries.

In accordance with the mandate which it was given by the Council in October 1999, the
Commission has embarked on formal negotiations to identify potential areas of cooperation
with the countries that own the existing systems, viz. the United States and the Russian
Federation, and,
in the
development of Galileo.

in a wider perspective, with third countries having an interest

The results of the World Radiocommunication Conference held in Istanbul in May 2000 have
demonstrated not only the strong support for Galileo on the part of many countries across five
continents but also the need to coordinate access to new frequencies allocated to radio
navigation under International Telecommunication Union rules.

1. The negotiations with the United States have helped to clarify a number of the points that
have to be dealt with.

Initially, the European Union and the United States have discussed and documented their
ideas on the spectrum,
the systems, standardisation and
interoperability requirements. Both parties are agreed that the principal objective is to ensure
compatibility and interoperability between Galileo and the GPS.

the security of

the signal,

The European Union has, on a number of occasions, voiced its determination to forge ahead
rapidly with the technical discussions. As far as the present American delegation is
concerned, the top priority is probably the Council Decision of December, followed by the
preparation of a framework agreement on the principles signed up to at high level, which
would serve as a basis for all subsequent technical work.

Nevertheless, the Commission intends to pursue contacts at all levels so as to be in a position
to consolidate the definition of the interoperability and frequency sharing options with the
GPS before the middle of 2001 and to reconcile international technical positions as within the
ICAO, IMO or COSPAS-SARSAT.

2. Negotiations with the Russian Federation are taking place at political and technical levels.
They are based on a cooperation scenario aimed at promoting the coexistence of two
independent constellations (Glonass and Galileo), while at the same time seeking to achieve
possible reductions in investment costs. They are based on the principles associated, on the
one hand, with an exchange between interoperability and frequency sharing and, on the other,
with industrial cooperation.

20

Four significant industrial cooperation projects, financed by the European Space Agency, the
Commission and certain Member States, have started up under the supervision of the special
negotiation Committee set up by the Council to assist the Commission.

Initial discussions on a possible framework agreement with Russia and spectrum sharing are
making good progress. It is proposed to draw up an initial balance-sheet by the end of 2000.

At the last EU/Russia Summit on 30 October 2000, the Joint Declaration mentions that: The
sides recognise the importance they attach to pursuing the cooperation initiated between the
Russian and European satellite navigation systems (Glonass/Galileo).

3. The Commission is eager to involve other partners in Galileo at an early stage. At the
Council’s request it has identified and verified the interest expressed by a number of countries
in participating in Galileo, notably on the occasion of the World Radiocommunication
Conference referred to above.

Moreover, the configuration of the system will be such as to confer a high regional profile on
the integrity information, thereby proving particularly attractive to third country groupings.

Such participation could take place at two levels: at the level of the direct investment and
industrial work necessary in the development and operational fields, or at the level of user
applications and equipment.

In Europe, the participation of Switzerland and the EFTA (European Free Trade Area)
countries is assured, and discussions are currently under way with Central and East
European countries and Ukraine.

Canada is involved financially in the Galileo definition studies. This promising cooperation
will help to develop the regional element across the American continent - an indispensable
requirement if regional signal quality control is to be guaranteed. In accordance with the
Council Resolution, the Commission is likely in the near future to present a draft mandate for
formal negotiations with Canada.

Contacts with a number of Latin-American countries will need to be renewed and
intensified in 2001 so as to enable Egnos to be validated in real time. Exploratory contacts
have been initiated with Australia.

Israel and a number of African countries (South Africa, Kenya, Egypt, etc.) as well as
the
several Asian countries (China, Korea, India, etc.) expressed a keen interest at
Telecommunications Conference and in the course of bilateral meetings.

A particular effort will be made to examine the possible uses of Galileo and their specific
in developing countries in the context of Community
nature and economic potential
agreements like the one concluded with ACP countries.

21

Part 2:

Economic and financial aspects

The first chapter incorporates a table setting out (a) the cost of the various phases of the
programme (see summary table below) and of the management of the operating system and
(b) the socio-economic benefits for society in general when it becomes operational, and the
more immediate financial advantages - in terms of service supply and equipment sales.

The second part describes the funding schedule for the various stages of the programme by
listing both the public and private-sector contributions. Here the Commission stresses that, in
view of the expected turnover figures, the private sector could contribute
1.5 billion to the
funding of the deployment phase.

€

The final part describes various sources of revenue, and more particularly a special tax when
Galileo becomes operative.

The successive stages of the Galileo Programme

Development and validation phase (2001-2005)

Detailed definition of the sectors as a whole (space, ground-based, users);

– development of satellites, ground-based components;

– “in-orbit” validation of the system.

Deployment phase (2006-2007)

– satellite assembly and launching;

– installation of complete ground-based component;

Operating phase (from 2008)

– satellite renewal, operation of the Centres, maintenance.

1. The cost of Galileo

The cost estimate covers a Galileo system able to offer the various general, commercial and
public-interest services described in Chapter I.1. The cost covers the entire development,
validation and deployment phases of the complete constellation enabling an operational
service to be supplied to customers. Basically this involves:

– detailed definition studies preceding the production of the spatial, ground-based and user

components;

– assembly of the satellites,

including prototypes and then production models, and the

associated testing equipment;

– assembling ground-based components, deploying these and the relevant testing;

– satellite launching and their in-orbit validation;

22

These costs are summarised in the table below, which sets out the main items and draws a
distinction between the development and validation phase and that of deployment of the
various planned installations.

Certain hypotheses or details are worthy of mention:

– the deployment of local components,

including those in Europe,

is not

included33;

conversely the definition and generic design part is included;

– a “search and rescue” service on board Galileo is included;

– the deployment of the ground-based stations needed in order to introduce an optional
regional (specificity) for integrity (outside Europe) is not included (conversely definition
and generic design are included); the States concerned will bear the cost of any such
deployment;

– the cost of incorporating Egnos into Galileo will be taken into account via the approach
described in Annex 5 (Egnos’ initial operating phase between 2004 and 2008 is not
included and booked as being borne by its operator);

– the technological-support activities and the initial studies for the next generation of Galileo

are included;

– the launch cost is an average price for the commercial launchers in the Ariane 5, Proton
range on the basis of a multiple launch; if a launch fails the cost of the relaunch, but not
replacement of the satellite, is included in the estimate given);

– the costs of security aspects are estimated on the basis of sensitive civilian infrastructures;

– the Galileo-certification aspects are based on the Egnos precedent;

– the cost of developing a basic receiver for each service is taken into account in the estimate

but not its tailoring to the wide range of applications.

Cost in millions of
euros (2000 price
estimate)

Management,
engineering, systems
design
Satellites
Launches
Ground-based
component
Global and regional
Local
Operations

Development
Validation

Deployment

160

240
80
480

70

130

660
660
380

210

33

€
100 000 for general-public needs to

The cost of local factors is highly variable depending on the applications under consideration (by way
1 million for aviation
of illustration and per installation: from
needs). The short duration of their assembly (three months - one year) will permit adaptation to a
European development plan which remains to be drawn up in the light of the applications. Indeed, these
ground-based components, which directly relay the signal in inaccessible spots (5% of Galileo cover)
are especially necessary for the services to be licensed. The market will determine demand for these,
their location and funding. The generic design and definition of these components form part of the
development and validation stage and are included in the estimate

€

23

Technological-design
support programme

illustrative

Galileo
estimate
Incorporating Egnos
Total cost

70

110034

-
3250

60

2100

50

Activities outside the development and deployment of the system as such, as will be
necessary to ensure the emergence of the markets identified, are set out in the table below.
The funding shown is a minimum expenditure threshold to ensure economic viability of the
programme as a whole. Other funding (private sector) is expected to come from the public-
private partnership context.

€

150 million

- Development of applications

- Support for user sector

- Standardisation measures

- Support
components

for

the deployment of

local

The annual cost of operating Galileo, including constellation replacement, is estimated to be
€
70 million of which are operating and maintenance costs. The annual
220 million per year,

€

€

25 million per year between 2003 and 2007.

operating cost for Egnos is

Annual operating cost
in millions of euros

25

Egnos
2003 – 2007

Galileo
2008

220

Cost of Galileo Programme (per phase) including Egnos (in millions of euros):

definition (1999-2000):
development and validation (2001-2005):
deployment (2006-2007):
operating (2008-): 220 per year

2.150

80

1.100

2. Galileo funding

1.

The development and validation phase (2001 – 2005)

According to the financial estimates the cost during that period will be roughly

€

1.1 billion.

That amount will be provided entirely by public funding (Community budget and that of the
European Space Agency).

34

This does not include support for the deployment of local components or for the development of
applications and receivers which do not form part of the architecture as such.

24

Community funding

The Community nature of the programme and its being a crucial feature of the common
transport policy and the “trans-European transport networks” initiative did, in essence, justify
the European Community’s role in both political and financial terms during the definition
phase.

The same applies to the subsequent phases of the programme and, as stated in the
Commission’s communication of February 1999, the European-Union budget assigned to
Galileo will receive funds already earmarked in the existing financial forecasts (essentially the
trans-European networks and the 5th framework research programme and possibly future
research actions which are subject to decisions of the Council and the European Parliament.

As part of the trans-European networks programme, the introducing of Galileo into the MIP
(Multiannual Illustrative Programme) was put to the Committee on trans-European transport
networks by the Commission in September 2000. The latter proved this in principle in
accordance with the Council and European Parliament Decision of 19 July 1999. The amount
corresponding to the activities under the Galileo Programme for the years ahead is roughly
€
550 million. Under budget heading B5-700 this enables 50% of the cost of the design stage,

including technical support, to be covered.

The 5th framework research programme will continue to set aside top-up funds for the
Galileo Programme’s development and validation stage. Any contribution from future
research actions is subject to its being adopted by the Council and the European Parliament.
These funds (5th framework programme and future research actions) will cover support for
the development of applications and receivers not forming part of the architecture as such, but
whose specification will be necessary when private partners or an operator are to be
identified.

The level of Community funding is critical since it will determine whether political control
can be maintained of the following phase of the programme. It will also help to guard against
any drawback resulting from the rules of geographic return provided for by the Convention
establishing the European Space Agency.

The European Space Agency’s contribution

it had long ago used its institutional
The European Space Agency has confirmed that
550 million35 for the
machinery to make plans for asking the Member States to subscribe
validation phase if the political decision to continue with the programme were taken by the
transport Council on 20 December.

€

In short the cost of the development and validation phase amounts to
infrastructure and
development of applications and receivers.

1.1 billion for
150 million for the deployment of local components and the

€

€

All of the needs for the development and validation of the infrastructure have already been
covered by European public funding (European Union and European Space Agency) that has
already been scheduled. No further public contribution by the Member States will therefore be
needed.

35

That request was based on the European Space Agency’s programme Declaration in 1999 estimating
the development and validation phase at

1 000 million

€

25

2. The deployment phase (2006-2007)

Beyond the current financial outlook the origin and amount of the Community’s contribution
and that of the European Space Agency still need to be determined during the validation
phase.

During that phase the estimated costs are
borne by the private sector and

€

0.6 billion borne by the public sector.

€

2.1 billion of which

€

1.5 billion can justifiably be

Other sources of funding can likewise be mobilised by the machinery used to award licences
for service suppliers or operators (calls for tender, bids, etc.) for example for the commercial
operation of the Galileo signal associated with local factors.

The table below sets out the private and public contributions to the three phases and, as
regards the latter’s contributions, a breakdown between those made by the European Union
and those by the European Space Agency:

Sources of funding

European Space Agency36
European Union
of which:
Trans-European transport
networks
5th Framework research
programme
Future research actions

Private sector
TOTAL

Million

Definition phase
40
42.5

Million
Development and
validation phase

Million
Deployment phase
(estimated)

550
580 + pm

600

(EU38 and European
Space Agency)

550

30
pm37

0
82.5

0
1 130 + pm

1 500
2 100

3. The operational phase (from 2008)

As soon as possible during the validation phase the Commission intends to propose that a
fund be set up to receive the public contributions while being open to private investment and,
where appropriate, an input from non-member states. This fund should give it
legal
personality and funding rules that are suitable for approval by the contributing parties.

No funding in the form of subsidies will be necessary downstream of the deployment phase.
Indeed, this could take place within the public - private partnership (see following section)
and via the new revenue flows described in Chapter 4 below.

36

37

38

The funds needed for the following two phases will be mobilised subject to approval by the Member
States of the European Space Agency.
The references to future research actions in no way prejudice the political decision of the European
Parliament and the Council as to those actions’ priorities, resources and management.
The contribution of the Community budget to the funding of Galileo for 2007 will be examined as part
of the process of preparing financial forecasts relating to the period after 2006.

26

4. The public - private partnership

This will be an essential factor for the success of the Galileo Programme. It will be built up
through an interim management structure responsible for the legal and financial package,
from the development and validation phase onwards in order to involve the private sector in
carrying out the programme as quickly as possible.

It should again be borne in mind, on a preliminary basis, that the cost incurred during the
deployment stage is estimated to be
1.5 billion are estimated as able to
2.1 billion of which
be borne by the private sector39 and
0.6 billion by the public sector.

€
€

€

In order to meet a request made by the Council on 17 July 1999, which called for substantial
funding from the private sector in Galileo, the Commission issued a call for an expression of
interest
in order to establish the conditions needed in order to set up a public-private
partnership. Several European industrial consortia responded to this.

It emerges from the analyses carried out with the latter and from identifying the turnover
involvement by private investors in the
figures expected from Galileo operation,
that
programme is a thoroughly likely prospect
in line with the estimated funding for the
deployment of the system, the local factors and the subsequent development of receivers and
services. However, there are a certain number of prerequisites:

The political decision to continue the programme in December 200040; all insisted on an
urgent decision on that date.

The essential requirements regarding sound commercial operation of the services provided by
the satellite navigation system must be taken into account when the programme specifications
are drawn up - without which any subsequent adjustment to those requirements is likely to
increase the system costs significantly.

Ensuring that the technical risks attached to the project are kept under control by funding
prior studies.

Providing a single public management structure41 is proving to be an essential prerequisite for
reassuring potential investors as to the institutional stability of the project and to complete an
adequate funding schedule.

The predictive timetable for the intended spending would have to be accompanied by an
identification of the sources and amounts of public funding throughout the various stages of
the project, from the development and validation phase up to the deployment phase for the
constellation and the corresponding ground-based installations.

39

40

41

See Section 3 B: the financial benefits deriving from Galileo
See in this connection item 10 in the conclusions reached by the Transport Council on 9.10.97: “... TEN
projects require a firm political commitment on the part of the Member States, including from the PPP
point of view, and welcomes the Commission's willingness actively to support efforts to establish PPPs,
the identification of which will be the responsibility of the Member States”
See in this connection item 5 of the conclusions reached by the Transport Council on 9.10.97:
“considers that it is essential that a climate favourable to PPPs be created both at national and at
Community level and stresses the need for private sector involvement from the outset in the preparation
of PPP projects, while keeping a balance between commercial and socio-economic criteria in the
planning of the projects, and the need for appropriate risk-sharing”

27

All of these conditions should be met by 2003 provided that a firm decision on continuing the
programme is taken in December 2000.

Active inclusion of private partners from the system's initial development and validation
phase should enable not only the overall cost, but also the provision of effective management
and cost-control systems to be optimised. Moreover that involvement will help in drawing up
commercial-operation and cash flow management schedules that are associated with the
services provided.

It would seem that the contributions expected from private partners could cover a wide range
of areas spanning both involvement in kind and direct financial contributions, including the
development of equipment, carrying out pilot projects, acquiring operating licences or
transferring technological and commercial know-how.

However, despite the encouraging long-term forecasts, the length of the period of return on
investment virtually requires deferred funding of the deployment phase.

There will have to be a detailed description of the background to and machinery for selecting
the various partners and private investors in order to give the partnership an optimum balance
in the light of the successive phases referred to above. Compliance with the rules of the World
Trade Association also has to be ensured.

3. Benefits provided by Galileo

A detailed cost-benefit analysis of the Galileo system is set out in a Commission working
document. This is based on a macro-economic approach which emphasises the net gains to be
had from setting up and running Galileo. It only provides the information needed to aid the
decision to carry out the project.

Europe’s crucial dependence on the American GPS in several strategic and commercial
applications is still escalating. It is possible to quantify that dependence by using data
concerning the current and potential use of GPS on markets linked to positioning and dating
services (principally the transport, communications and finance sectors). The cost of a sudden
halt (for whatever reason) in the sale of those services for just a few days, without counting
1 billion in 2015. That
the system destabilisation resulting from that halt would amount to
strategic factor must naturally be taken into account when analysing all of the benefits
provided by Galileo.

€

The advantages set out in the cost-benefit analysis concern only the extra activities generated
by Galileo as compared with the current situation of a GPS monopoly, otherwise known as
"zero option", and the emergence of positioning systems by mobile telephony networks
(GSM, UMTS, etc.). The existence of two independent but interoperable systems highlights
new areas of application and use and speeds up the introduction of navigation systems into
several areas where double sourcing is important. For example, the occultation constraints
inherent in the majority of urban landscapes reduce the availability of positioning service
supply to some 55% of the territory, whereas the two satellite constellations together increase
this availability to 95%.

Numerous factors help to highlight the difference that should attract, and even create in some
cases, a significant market for Galileo. On the one hand, the high reliability of the system
makes for a system of guarantee and liability that would be hard to imagine with existing
satellite navigation systems. On the other, taking account of its existence and, in some cases,

28

the direct incorporation of other infrastructures, other services (UMTS) and local factors into
the basic design of the Galileo system will ensure complete compatibility across the whole
chain of services provided to users. A practical example of this would be the sector of
insurance, monitoring of marine pollution and civil aviation, as a precursor to the use of
satellite navigation.

As regards methodology, the overall assessment based on changes in current markets provides
estimates which are being supplemented and validated by the second system set up during
Galileo’s definition stage, namely consulting potential navigation-system users and service
suppliers (road, rail, air and sea transport, communications and infomobility processing
systems, scientific research, etc.). Summarising the data acquired has enabled the orders of
magnitude in the various areas of application to be better defined.

By way of a guide, market estimates for satellite navigation products and services suggest that
Galileo's market share could run to
9 billion in 2015. The inclusion of a positioning service
in mobile telephony applications will probably one of the main reasons for the spectacular
increase in the use of these services (see Annex 1).

€

With Galileo Europe will gain a foothold on the market of satellite navigation products and
services, which at present is totally dominated by other players, led by the US. This will have
a positive impact on the competitiveness of European industry. Mobile telephones or even
lap-top computers will incorporate a positioning chip in the not too distant future. The
demand that this creates should enable Europe to step up its production of components and to
add to its hand in the area of integrated systems and services, particularly motor vehicle
navigation and telematics services.

The macro-economic cost-benefit analysis has thus helped to quantify the greater net
economic gains for producers42 (constructors of space systems, manufacturers of receivers
and application, service providers, etc.), on the one hand, and the "social" benefits, on the
other, such as greater safety in means of transport, greater fluidity in traffic, more efficient
road transport and less emission of noxious gases, etc. The analysis also focuses on the
strategic value of Galileo, not just in terms of the compatibility of its infrastructure with
existing systems, but also as a possible tool for implementing European policies on transport,
agriculture, environment, etc. The hypotheses underlying the analysis are limited to a very
conservative range of values, e.g. for reducing congestion in road traffic only a small
percentage will be down to Galileo, despite a number of fairly promising results from other
studies.

The results obtained from the macro-economic analysis clearly show the need for Europe to
put in place a navigation system as soon as possible. The high rates of return indicated by the
analysis show, unsurprisingly, the intrinsic value of a system of this kind and the need to
involve the public sector in the initial funding of the project. Given the size of the markets and
the profits, manufacturers will be increasingly keen to be part of it and the private sector will
doubtlessly be a major player as from the deployment stage.

4. Cash flow

42

At macro-economic level, any outlay on navigation equipment and services by consumers, who have
fixed purchasing power, will limit their purchasing power for products from other sectors, which will
mean a modest overall gain for producers as a whole. On the other hand, Galileo will obviously
generate huge market potential and thus gains for the manufacturers of navigation equipment and
providers of services.

29

The use of Galileo is likely to generate several types of specific income, which are described
below. The first may arise from three services (of general, commercial and public relevance)
provided, while the others will come only from controlled-access services.

1. The potential cash flow from all Galileo services

The Commission needs to look at how to introduce a duty on receivers.

A duty based on industrial (or intellectual) property rights

A second source of income could be based on Community legislation enabling holders of
industrial (or intellectual) property rights to receive a royalty on their inventions. This already
applies to music and books (royalty on recordings and photocopies). That could easily be
extended to Galileo receivers.

A quality label

A quality label granted by the Galileo's operator would consist of a sort of stamp on the
receiver certifying that the product is approved by the operator. Such a system would of
course not be obligatory. It could be accompanied by certain guarantees.

The operator could grant service-quality certification - similar to ISO certification - to
suppliers of Galileo services. This would be a sales argument in favour of an approved service
enabling reliable use to be made of the signal supplied by a service provider.

Certification of this type would boost confidence in the Galileo system, but it would not
replace the certification required by the public authorities for "vital" applications such as
aviation.

2. The cash flow generated by the commercial service and by the public-interest service in the
case of "vital" applications

A licence fee

A fee of this type would be considered to be a means whereby a service could generate
income. Provided that the means to control use of the signal were available the Galileo
operator could conclude licence contracts with value-added service providers.

A sequence of licence contracts would enable a cascade of income to be generated by the
commercial service.

A PIN code

A PIN code in chips inserted into receivers (similar to that in GSM mobile phones) could
enable a service to be introduced with controlled signal access. In practice users must enter a
code in the receiver in order to activate this for receiving Galileo's signals.

Concluding a contract between the Galileo operator and the receiver manufacturers is needed
in order to implement that option. The access codes will form part of the contract drawn up
between the operator and the service provider. The income would come from the final user on
acquiring a PIN code for his receiver.

A contribution from non-member countries using the system

30

Non-member countries or regional international organisations wishing to invest in Galileo
could make a financial contribution in exchange for the right to use the commercial service,
with certain guarantees. That would enable Galileo to be promoted and add impetus to the
standardisation process.

Part 3: Management structures

Currently the Galileo programme's management is shared between the Commission and the
European Space Agency, each of whom manages a certain number of contracts intended
successfully to complete the programme's definition phase in accordance with their own
administrative and budgetary rules. One particular consequence of this is that the Commission
and the European Space Agency refer here to two different "steering committee", the first
consisting of the Member States of the European Union and the second the Member States of
the European Space Agency. The Programme Management Board (the PMB) comprising a
representative of the Commission and one of the European Space Agency is attempting, with
assistance from a coordinating office (the GPO), to compile the results of the activities
undertaken and to draw up a coordinated plan for the future.

In view of the increasing complexity of the activities to be undertaken from 2001 onwards
and of the amounts of money involved, continuing with the programme needs to tie in with
budget management so as to guarantee that the activities conducted by the Commission, a
political
institution, and the European Space Agency, a technical organisation, are
complementary.

1. The interim structure

Until the final structure is provided, a coordinated management framework for Galileo has to
be established as from the beginning 2001, clearly assigning political responsibility to the
Commission and technical responsibility to the European Space Agency.43

This will take the form of:

1. regular, joint meetings of the two steering committees already set up by the Commission
and the European Space Agency designed to define the strategic approaches of the
programme, given that both committees already have their own terms of reference and rules;

2. technical management by the European Space Agency as part of a service-provision
contract with the Commission.

2. The final structure

The final structure has to follow on from the interim structure. It has enjoy a certain amount
of legal and financial independence in respect of its backers and be the contracting authority
for Galileo. It will thus have a budget combining all the funds for the programme. Once the
Galileo system is operational it will have to be managed by a private body (responsible for
marketing the services provided by Galileo and system maintenance) subject, of course, to the
relevant Community rules.

The Commission will submit the respective proposals.

Conclusion

43

In accordance with the resolution on a European space strategy adopted on 16 November 2000 by the
Research Council.

31

The Commission takes the view that:

– satellite radio navigation is a key technology for the development of our economies and
that the deployment, to that end, of a constellation of EU satellites is indispensable to
safeguarding our independence;

– cost/benefit studies show Galileo to be cost-effective and sufficiently attractive to obviate

the need for any further public funding in the form of subsidies from 2007;

– for the development and validation phase (2001-2005), the essential funding from public
there is no need to call upon additional public

subsidies has been so planned that
contributions, under budgets of the Community or European Space Agency;

– the funding of the deployment phase, comprising the construction and launch of satellites
and the establishment of the ground-based infrastructure network, will require private-
sector investment of some
1.5 billion; and that an appropriate public–private partnership
will be in place in time for the development and validation phase;

€

– the setting-up of a public-private partnership requires a legal and financial framework as

soon as possible.

• A coordinated, provisional management structure for

the Galileo project,
involving the Commission and the European Space Agency, should be set up by
2001.

• The proposals needed to set up the final structure with an investment budget
combining all the funds earmarked for the project will be drawn up by the
Commission.

• Egnos should be controlled by this structure.

• A report will be made each year to the Council and to the European Parliament on
the progress made in this area, and on the setting-up of the programme
management structures, and to describe the funding of the deployment phase
(2006-2007) by December 2004.

32

ANNEXES

Annex 1: The satellite navigation market

Size of markets and breakdown by application sector

(i) Summary table of the market (

€

billion)

1999

2005

2015

2020

GPS

Market share due to
GALILEO in a GALILEO +
GPS environment

Europe

World

1

-

6

-

7

22

11

42

(ii) Size of European satellite navigation market 1999 – 2005

Market sector

Aviation

Maritime trade

Road vehicle navigation

Fleet management

Rail

Cartography

Agriculture

Signal improvement

Mobile communications

Dating

Personal navigation

Defence

Total market

1999

€

million

2005

€

million

40

15

700

40

1

50

5

50

0

5

50

300

70

20

2000

90

25

100

10

60

3000

10

100

500

€

1 billion

€

6 billion

33

»
»
»
»
»
»
»
»
(iii) World Galileo market in 2015

Application

Drivers (all vehicles)

Location/communication services

Pedestrians

Vehicle management

Vehicle tracking

Recreational craft navigation

Personal navigation

Route finding

Cartography

Emergency services

Other

Total

2015

€

Million

12600

5100

1500

900

600

190

120

110

100

150

750

€

22 billion

34

»
»
»
»
Annex 2: search and rescue (SAR)

The Galileo Programme provides a search and rescue service for users based on the
humanitarian and public service principles of the international Cospas-Sarsat system, while at
the same time making search and rescue operations more effective.

Present system

The Cospas-Sarsat system consists of four low-orbit satellites and three geostationary
satellites, which can pick up sea and air distress signals and identify their location. This
information is then forwarded to Mission Control Centres, and then in turn to Rescue
Coordination Centres, which organise and initiate rescue operations.

The countries which set up the system are the USA, Canada, France and Russia. Many
countries, including countries in Europe, have their own data processing centres.

Expected improvements

The following table shows current performance of the Cospas-Sarsat system and the expected
performance of the SAR Galileo system:

Criteria

Cospas-Sarsat

Galileo

Return link to user

No

Yes

Time taken for transmission of distress
signals to search and rescue centre

Up to one hour

Approx. 1 minute

Coverage

Accuracy

Number of false alarms

Restricted

Several km

> 90%

Global

10 m

< 10%

The search and rescue service will be improved by combining the conventional distress signal
detection system using the 406 MHz waveband with the positioning capabilities and
permanent coverage of Galileo. The aim is also to establish additional links to ensure the
transmission of distress signals, and organisation of rescue.

Performance of the present system will be improved by using the constellation of 30 satellites
and their corresponding ground sectors, with the following advantages:

– continuous coverage by a number of satellites of any point on the earth’s surface, including

the polar regions;

– shorter transmission times because each satellite is always visible from a ground station;

– highly accurate positioning data, because of the use of receivers incorporated into beacons
and by improving the “Doppler” positioning accuracy of beacons not equipped with
Galileo receivers;

35

– improved probability of detecting distress signals because of the simultaneous visibility of

several satellites at different angles of elevation;

– reduced size and cost of distress beacons as a result of system performance and

technological integration capacity by 2008.

Not only will this considerably improve the existing system but there are also plans to
incorporate new services, most of them based on establishing a communication link with the
people in distress. Return links to users will allow rescue teams to reassure victims that they
have received their distress signal and are organising a rescue operation. Return links will also
make it possible to develop other applications such as removing doubt (in cases of false
alarms or presumed accidents), preventing accidents (by warning of danger), and coordinating
rescue operations on the spot.

Establishment of a search and rescue service by Galileo will prompt the Member States of the
European Union to participate in the Cospas-Sarsat search and rescue programme, alongside
the Member States which have signed the intergovernmental agreement and the suppliers of
the space sector (USA, France, Canada and Russia). This will demonstrate at international
level that they are prepared to participate in a major humanitarian programme.

36

Annex 3: Galileo Development Plan

ACTIVITY

2001

2002

2003

2004

2005

2006

2007

2008

2009

Development

Construction
infrastructure

&

Validation in orbit

Deployment

Inclusion of Egnos

SERVICES

Validation of Egnos

First Satellite Orbit

Egnos
OPERATIONAL

Demonstration
and validation
of Galileo

Galileo
Operational

Egnos

37

Annex 4: Integration of Egnos into Galileo

1.

Background

As requested by the Council in December 199444, Egnos was designed as a supplement to
GPS and Glonass. Egnos is also Europe's first satellite navigation project.

Egnos will provide its users with enormous economic benefits and should eventually make it
possible to do away with a number of conventional navigation facilities.

However, the potential advantages of the system are hampered by a number of limitations: it
is totally dependent on the GPS constellation, which is completely outside Europe's control;
its geostationary satellites do not fully cover the Nordic regions of Europe, and the concept
was implemented on a regional basis (Europe, North America) rather than globally.

One of the reasons for developing Galileo is the need to overcome these limitations (but also
to provide new services).

Egnos includes a dysfunction warning system (the integrity concept) which the GPS and
Glonass constellations do not have. This service is essential for those users in the transport
sector who require a reliable GPS signal. The Egnos service will also meet an international
civil aviation standard.

The rapid commercial introduction of Egnos will not only open a new market but will also
encourage partnership in the future with those who do not have Galileo.

The infrastructure required for Egnos will gradually be integrated into the Galileo
infrastructure, while maintaining the minimum requirements to supply a service which meets
international standards until approximately 2015.

The Egnos and Galileo infrastructures will have to be integrated and managed centrally.

2.

Integrating Egnos into Galileo

Architecture

As it emerges from the definition phase, Galileo will enable the best possible integration of
Egnos. This will be done in three stages.

During stage one, starting in 2003, Egnos45 will allow the early introduction of a guaranteed
service based on a system for warning of GPS failures (integrity).

44

45

Council Resolution of 19.12.1994 on the European contribution to the development of a Global
Navigation Satellite System (GNSS) – OJ C 379, 31.12.1994, p.2
The Egnos ground segment will consist of:
reference stations to receive data from satellites;
control centres to process this data and monitor the whole system;
up-link stations to send information back to the geostationary satellites;
a network for communicating between ground installations.
The Egnos space segment will consist of three geostationary satellites; two which are currently leased
from Immarsat and a third, Artemis, which is being developed by the European Space Agency

38

By 2008, the Egnos infrastructure will have been integrated into the Galileo architecture, once
Galileo starts to operate. As a result of this integration:

– the configuration of Egnos control centres and other infrastructure will be rationalised so

that they also become one of Galileo's control devices;

– the Egnos reference stations and up-link stations will be maintained;

– Egnos' communication capabilities will be reinforced for integration into Galileo's ground

segment;

– the geostationary satellites will be kept in operation until around 2015 with navigational

payloads.

After this date, the GPS service, with guaranteed integrity, will be provided entirely by
Galileo, and possibly by GPS III itself. The long-term optimisation of the Egnos ground
sector should provide users with a better service at lower prices.

Management

Egnos will be incorporated into the client structure established for Galileo.

In 2001 the Commission of the European Communities, the European Space Agency and
Eurocontrol, the European Tripartite Group currently implementing the Egnos system, will
launch a procedure to select the body to operate the Egnos system.46

A contract will be signed with the operator selected for the management of Egnos. It will be a
limited-term contract and will have to be reviewed before the date on which Galileo is put
into operation.

46

In 2001 an operator will be selected to manage Egnos infrastructure on the basis of an agreement
covering:
the level of service required;
operating costs;
liability for system dysfunctions;
commercial policy;
sources of income and methods of collecting revenue;
interoperability with existing regional systems

39

Annex 5: SUMMARY DESCRIPTION OF GALILEO

SERVICES

Galileo is a non-military programme. Its coverage is global and it provides three services.

1. General service:

-

free access to signals;

- no information on the integrity of the system used.

2. Commercial service:

-

-

restricted access;

integrity information available;

- excellent time accuracy (100 nanoseconds).

3. Public service:

Services related to personal safety:

– information on signal quality (integrity: users are warned of anomalies within 6 seconds);

– service available 99.9% of the time;

– restricted access;

Services allowing the public authorities to regulate or operate certain activities (e.g.
transport)::

– same performance levels;

– guaranteed service with certified controlled access.

Search and rescue:

– activated by distress signals;

– acknowledgement of signal sent to distressed person immediately.

All these services allow two-way exchange of individual messages defining the location by
using existing systems (or using Galileo satellites - option available until 2001).

SYSTEM

1)

Signal:

Each service requires simultaneous broadcasting on two frequencies;

The basic solution presented in this paper uses:

a frequency scenario consisting of the wavelengths allocated to CMR 2000 (option terminates
in 2001);

a possible scenario requiring negotiation with the Russians or Americans which should help
to improve the performance of the services provided.

40

2)

Architecture

Constellation of 30 satellites orbiting at average height;

The whole system has a level of security equivalent to that of sensitive public infrastructure

The system is global with integrity distributed throughout the world. It also allows each
region (a maximum of eight over the globe) to personalise its integrity signal

Local relay stations (at airports, ports, towns, etc.) make it possible to receive signals in
confined spaces: studies into defining and manufacturing prototypes have been financially
accounted for; on the other hand, this is not the case with deployment of the corresponding
infrastructure, which will be funded by the provider of the service concerned.

TIMETABLE
• Galileo

* Development and validation phase (2001-2005)

-

-

-

Al the detailed definition of sectors (space, ground, user):

Development of satellites, ground components;

Validation of the system "in orbit".

* Deployment phase (2006-2007)

-

-

-

Building and launching satellites;

Establishing the entire ground sector:

Integrating Egnos.

* Operational phase (2008 onwards)

-

Renewing satellites, running centres, maintenance.

• EGNOS

This is a land-based infrastructure which will make it possible to augment the integrity of the
GPS system using geostationary satellites for users equipped with a special receiver.

*

*

*

Development phase in progress - 2003

Operational phase - Egnos only

Operation alongside Galileo

(integration of land-based infrastructure)

2003 - 2008

2008 onwards

SUMMARY

Budgetary estimates are based on the various assumptions given above, including integration
of Egnos.

*

Validation phase

€

1 100 million

41

*

*

Deployment phase

Operational phase

€

€

2 150 million

220 million/year

42

ANNEX 6: LIST OF STUDIES

There are several packages of studies:

1. GALA

The objective of this package was to provide the mission specification, the global architecture
and system specifications for GALILEO. The programme included the interfacing with the
the
other activities carried out during the GALILEO definition phase,
architectural design was co-ordinated and coherent

to ensure that

Documents carrying a security restriction are not included on the distribution list.

Doc No

Document Title

Dd001 Applications Definition & Sizing - Executive Summary (dd001)

Dd005 Market Research Methods and Overall Results (Volume 1)

Dd005 Market Research Methods and Overall Results (Volume 2)

Dd043 Overall Architecture Definition – Component definition

Dd058 PILOT PROJECTS - Synthesis of LLD (dd058 v1)

dd067 Development plan.

Dd087 Conclusions and Recommendations

GALA Trade-Off Between MEO and MEO+GEO Constellations

GALA Communication Service

GALA EGNOS Integration

GALA Synthesis on Service Definition

GALA Support Segment – Architecture Co-ordination

2. GEMINUS

The aims of the GEMINUS programme were to define the services that GALILEO has to
provide to meet the requirements of the international subscribers. In addition GEMINUS
performed a series of case studies focused on specific aspects of the service provision chain to
validate the study results.

Doc No

Description of Deliverable or Working
Paper

D8.1
D1.1.2
D2.1
D4

1.

TECHNICAL ANNEX
Draft Final Summary Report
Galileo User Forums Report 2
PPP Environment Interim Report 2
Service Definition Report

43

3. INTEG

Since 1995 considerable effort has been dedicated to the EGNOS programme allowing
Europe to develop expertise in the GNSS field and to build an augmentation system for GPS
and GLONASS. The objective of the INTEG study was to analyse a seamless transition from
EGNOS to GALILEO from technical, economical, operational and institutional points of
view.

REF

TITLE

INTEG-ASPI-D2.1B

EGNOS Integration into GALILEO (INTEG) Report on INTEG
Requirements

INTEG-ASPI-D4

EGNOS Integration with GALILEO (INTEG) Galileo/EGNOS
Interface Definition

INTEG-ASPI-D3

GNSS-1 Programme Implementation Phase

EGNOS Integration with Galileo (INTEG) Report on Proposed
EGNOS upgrades

4. GALILEOSAT

The GALILEOSAT programme covered the definition of the GALILEO space segment (the
satellite constellation) and of its related ground system.

DOCUMENT TITLE

Reference

Issue

SYSTEM

Architecture definition

ADD/GAL/0020/ALS

System Verification Plan

SPACE SEGMENT

Space Segment Definition Report

GALI-ASMD-RP-0100-0001

Navigation Payload Definition

GSAT.RP.00001.P.ASTR

GROUND SEGMENT

G/S Baseline Definition

GSAT.SP.00002.P.MMS

2

1

1

1

44

5. SAGA

SAGA was designed to set up a platform for continuous standardisation activities up to the
operational phase of GALILEO. By establishing, through international bodies, a worldwide
recognition and interoperability between GALILEO and other systems such as GPS and
GLONASS, SAGA contributes standards for Galileo to be adopted inside and outside Europe

Doc No Output WP

Description of Deliverable or Working Paper

D1

No
WP1000

2.

COMMON STANDARDISATION ISSUES AND BASELINE FOR
GALILEO

6. SARGAL

This project is to study the possibility of providing search and rescue services (SAR) through
the GALILEO satellites and also to expand these services by introducing a data link capability
for feeding back an acknowledgement to the distress beacon. It is addressing the technical,
institutional and operational issues with a view to replacing the current SAR (dedicated)
COSPAS-SARSAT satellites by the GALILEO constellation.

Doc No
D2.10

Description of Deliverable or Working Paper

3.

SARGAL INTERIM REPORT

7. MUSSST

MUSSST objective was to establish the generic principles for the safety approval of the use of
GNSS by the transport community. The outcome of the study was a methodology focusing on
the development of a safety case for GNSS. The methodology was validated against existing
and future GNSS programmes.

Doc No
D9

4.

Description of Deliverable or Working Paper

MUSSST
FINAL
RECOMMENDATIONS

REPORT

–

SYNTHESIS,

GUIDELINES

AND

45

ANNEX 7: FINANCIAL STATEMENT

1. TITLE OF OPERATION

Communication from the Commission: “Galileo – results of the definition phase

2. Main Budget Headings Involved

B5-700
network

Financial support for projects of common interest

in the trans-European

B6-6 Fifth Framework Programme, Information Society Technologies (6-6121) and
Sustainable and Competitive Growth (6-6131)

Other budget headings could be used as appropriate

3.

Legal Basis

One or more of the following depending on the action taken

Articles 74, 84(2), 113, 129c and 130i of the Treaty

No 1692/96/EC

Decision
the
Council of 23 July 1996 on Community guidelines for the development of the trans-European
transport network

Parliament

European

and

the

of

of

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 (as amended by
Council Regulation (EC) No 1655/99 laying down general rules for
the granting of
Community financial aid in the field of trans-European Networks

Decision of the European Parliament and of the Council of 22 December 1999 concerning the
fifth framework programme of
technological
development and demonstration activities (1998 to 2002)

the European Community for

research,

Other relevant documents

Communication from the Commission “Galileo – Involving Europe in a New Generation of
Satellite Navigation Services” COM (1999) 54 final, 10.02.1999

Council Resolution (EC - 1999/C 221/01) of 19 July 1999 on the involvement of Europe in a
new generation of satellite navigation services – Galileo – Definition phase.

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)

46

4.

Description of Operation

4.1.

General objective

The Communication demonstrates the technical and financial viability of the Galileo project
and proposes validation of the Galileo concept during the second stage. In fact the project
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 project design 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 guaranteed high level
of service, 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-strategy reasons. Different possible revenue
streams are identified in the Communication, some of which require regulatory action.

4.2.

Period covered and arrangements for renewal or extension

Full implementation of Galileo is expected over the period 2000-08. This statement considers
only EU Budget financing for the current financial perspective period of 2001 – 2006.

5.

Classification of expenditure or revenue

5.1.

Non-compulsory expenditure

5.2.

Differentiated appropriations

5.3.

Type of revenue involved

Not applicable

6.

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 from European Investment Bank loans

Loan guarantees premium, on European Investment Fund guarantees

47

7.

Financial impact

€

The estimated cost of Galileo for the next two stages is put at

3.25 billion, which
7.1.
will help to develop and deploy the system as such, plus a Community contribution to be
determined to facilitate the emergence of the markets identified. As far as the EU budget is
concerned, the cost will be met from resources already envisaged in the existing financial
programming, mainly for TENs. The additional costs linked to the emergence of the markets
identified will be met first from the fifth framework programme and also possibly by future
research actions which are subject to decisions of the Council and the European Parliament.
The Communication identifies other potential sources of revenue.

The total cost of developing Galileo, until 2007, is expected to be as follows

€

million

Cost in
(2000)

Development and
validation phase

Deployment
phase

Total
2001-2007

Management & engineering

160

240

80

480

70

70

110047

Satellites

Launching

Ground sector:
Global
Regional
Local

Operations

Technology support
programme
Galileo - Illustrative
estimate

Incorporation of EGNOS

Total cost

130

660

660

380

210

60

2100

50

290

900

740

860

280

130

3200

3250

Activities outside the development and deployment of the system as such, as will be
necessary to ensure the emergence of the markets identified, are set out in the table below.
The funding shown is a minimum expenditure threshold to ensure economic viability of the
programme as a whole. Other funding (private sector) is expected to come from the public-
private partnership context.

47

This does not include support for the deployment of local components or for the development of
applications and receivers which do not form part of the architecture as such.

48

€

30 million + pm

- Development of applications

- Support for user sector

- Standardisation measures

- Support
components

for

the deployment of

local

To sum up, the cost of the development and validation phase amounts to
1.1 billion for
architecture and a budget to be determined for the deployment of local components and the
development of applications and receivers.

€

The following indicative sources of financing at European level have been identified in the
period 2001-2006 only:

Sources of finance for fixed costs

Validation and development phase

€

million

ESA48

EC

Of which:

TEN-Transport

FP5

Future research actions

550

580

550

3049

pm50

TOTAL

1130 + pm

48

49

50

€

Subject to ESA approval procedures.
Galileo will receive
balance being committed in the Sixth Framework Programme.
The references to future research actions in no way prejudice the political decision of the Council and
the European Parliament as to those actions’ priorities, resources and management.

30 million for the period 2001-2002 from the Fifth Framework Programme, the

49

7.2.

Itemised breakdown of cost51
€

million (current prices)

Breakdown52

2001 2002 2003 2004 2005 2006 200753

2008 Total

Tens
(B5-700)

Research
(B6-6)

100

170

80

70

70

60

pm

pm

550 +
pm

30

-

pm54

pm54

pm54

pm54

pm

pm

30 + pm

Total

130

170

pm

pm

pm

pm

pm

pm

300 +
pm

The annual breakdown of financing is provisional, and will depend on both the phasing of the
project and the availability of funding.

8.

Fraud prevention measures

The fraud prevention measures contained in each of the instruments proposed to finance the
different operations will apply. These include inspections,
reporting, monitoring and
evaluation under Regulation No 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.

9.

Aspects of cost-effectiveness analysis

9.1.

Specific and quantified objectives; target population

Reference is made to the Commission working document on the results of cost-benefit
studies.

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.

51

52

53

54

Figures applicable from 2001 are illustrative and depend on the approval procedures of the respective
instruments. The table considers only Community instruments (and not, for example, ESA funding)
2001-2005 = development and validation phase; 2006-2007 = deployment phase: 2008 = beginning of
operational phase.
The contribution of the Community budget to the funding of Galileo for 2007 will be examined as part
of the process of preparing financial forecasts relating to the period after 2006.
The references to future research actions in no way prejudice the political decision of the Council and
the European Parliament as to those actions’ priorities, resources and management.

50

– 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 but 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.

– Council Resolution C 221 of 19 July 1999 (1999/C 221/01)

– Commission Communication “Europe and Space : turning to a new chapter” (COM 597

final of 27 September 2000).

It is necessary to rely solely on public funds during the development and validation phase as
the private sector is unable to free funds needed at the same speed, given the estimated
timetable for the initial return on investment. The private sector will come on board as from
the deployment phase to the tune of

1.5 billion.

€

9.3. Monitoring and evaluation of the operation

The operation must be monitored and evaluated with the aid of the Program Management
Board on the basis of the following criteria:

• Evaluation of the conclusions of the definition phase

• Credibility of specification for the various system components

• Consistency of component construction with specifications

• Validation of land components

• Validation in flight after launch of the first experimental satellite

• Validation of Galileo system (ground and space segments, user receivers)

• Evaluation of private investment

Evaluation is important for the continuation of the programme in that moving on to the
subsequent phases will depend on results.

10.

Administrative expenditure (Part A of Section III of the General Budget)

The requirements in human and administrative resources must be covered by the budget
allocated to the operating DG.

51

10.1 Effect on the number of posts

Type of post

Officials

Total

Type of post

Temporary
agents out of
research budget

Total

A

B

C

A

B

C

Staff assigned
to managing
the operation

Source

Permanent
posts

Existing resources
in the DG or service
concerned

Additional
resources

5

2

2

9

5

2

2

9

None

None

Staff assigned
to managing
the operation

Source

Permanent
posts

Existing resources in
the DG or service
concerned

Additional
sources

2

-

1

3

2

-

1

3

None

None

52

10.3.

Increase in other operating expenditure as a result of the operation

Budget
(number and title)

heading

€
Amount (

)

Method of calculation

END (B6-6130)

148 604

AUX (B6-6130)

INT (B6-6130)

TOTAL

78 320

44 238

271 162

Budget
(number and title)

heading

€
Amount (

)

A-7010 (Missions)

105 000

TOTAL

105 000

4 END paid

2 END not paid

2 AUX-C

1 INT-C

Method of calculation

150 annual missions
within the Community

25 annual missions
outside the Community

53