Communication from the Commission to the European Parliament and the Council - Integration of the EGNOS programme in the Galileo programme
Date: 2003-03-19
Institutions: European Commission
Subjects: EU programme, organisation of transport, satellite navigation, space policy

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 19.3.2003
COM(2003) 123 final

COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

Integration of the EGNOS programme in the Galileo programme

   
COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

Integration of the EGNOS programme in the Galileo programme

The Council  of  the  European Union has variously  reiterated the need  to ensure optimum  or
appropriate  integration  of  EGNOS  in  the  Galileo  programme1.  This  paper  addresses  that
concern. It has been prepared by the Commission in close liaison with the following bodies:
the  European  Space  Agency,  Eurocontrol,  EOIG2  and  IATA.  Its  purpose  is  to  propose  the
framework within which EGNOS can operate and be integrated in the Galileo programme.

Before  considering  the  details  of  how  EGNOS  can  be  integrated  in  Galileo,  it  is  worth
reviewing the characteristics of EGNOS, examining its costs and advantages and what it can
contribute to the Galileo programme.

1. Review of the characteristics of EGNOS

1.1. Definition and composition of EGNOS

EGNOS is the acronym for "European Geostationary  Navigation Overlay  Service".  It  offers
all users of satellite radio navigation a high-performance navigation and positioning service,
superior to that currently available in Europe. The system uses the signals from the American
GPS  and  Russian  GLONASS  satellite  constellations  but,  unlike  these,  its  purpose  is  purely
civil  and  non-military.  It  is  composed  of  several  transponders  installed  in  geostationary
satellites  and  a  ground  network  of  34  positioning  stations  and  four  control  centres,  all
interconnected.  These  facilities  increase  the  reliability  of  the  services  provided  by  the  GPS
and  GLONASS  signals  in  a  geographical  area  covering  Europe,  the  Atlantic  Ocean,  the
Indian  Ocean,  South  America,  Africa,  the  Middle  East  and  Central  Asia.  The  technical
advantages of EGNOS are described in point 2.2 below.

EGNOS  transmits  an  integrity  message  which  makes  it  possible  to  provide  now  services
approaching  those  that  Galileo  will  offer  tomorrow.  It  is  dependent  on  the  GPS  system,
however.

1

2

Council  Resolution  of  5  April  2001  on  the  Galileo  project.  OJ  C  157,  30.5.2001.  Conclusions  of  the
Transport Council of 26 March 2002 on the Galileo programme. Conclusions of the Transport Council of
5 December 2002 on the Galileo programme.
EOIG is the acronym for "EGNOS Operation and Infrastructure Group", in which the following bodies are
represented: AENA ("Aeropuertos Españoles  y Navegación Aérea"); ANA,EP ("Aeroportos e Navegação
Aérea,  Empresa  Pública") ;  DFS  ("Deutsche  Flugsicherung  GmbH");  ENAV("Ente  Nazionale  Assistenza
Volo");  NATS  ("National  Air  Traffic  Services  Limited");  NMA  (Norwegian  Mapping  Authority);
SWISSCONTROL, CNES ("Centre National d’Etudes Spatiales").

2

                                                
1.2. History of EGNOS

EGNOS as a concept was first mentioned in a communication of the European Commission
of 14 June 19943.  It  was  adopted by  the  Council  of the  European  Union  in  its  resolution  of
19 December  1994  on  the  European  contribution  to  the  development  of  a  global  navigation
satellite system4 and at its meeting of 14 March 1995, where it called on the Commission to
take all necessary steps to lease Inmarsat transponders for EGNOS5. Furthermore, in 1996 the
European  Parliament  and  the  Council  included  satellite  radio  navigation  in  the  Community
guidelines for the development of the trans-European transport network6.

1.3. Development and deployment of EGNOS

The  development  of  EGNOS  is  based  on  a  tripartite  agreement  between  the  European
Community, represented by the European Commission (EC), the European Space Agency and
Eurocontrol.  Under  this  agreement,  approved  by  the  Council  of  the  European  Union  on
18 June 19987:

– 

– 

– 

the  European  Space  Agency  is  responsible  for  the  technical  developments  of
EGNOS and its operation for testing and technical validation purposes;

Eurocontrol  provides  the  civil-aviation  user  requirements  and  validates  the
resulting system in the light of these requirements;

the European Community contributes to the consolidation of the requirements
of all users and to the validation of the system in the light of such requirements,
in particular in the framework of its trans-European networks and research and
development  actions.  It  also  provides  for  the  establishment  of  EGNOS  by
taking  all  appropriate  measures,  including  the  leasing  of  geostationary
transponders.

The three parties thus agreed to design, develop and deploy EGNOS up to the completion of a
first  implementation  phase  involving  the  use  of  at  least  two  geostationary  navigation
transponders. The agreement does not cover the following phase, which should run in parallel
with the initial period of operation of Galileo for several years and be integrated in the Galileo
programme.

1.4. Role of EGNOS in European Union satellite navigation policy

EGNOS  is  the  first  phase,  GNSS  1,  of  the  European  Union's  policy  on  a  global  navigation
satellite system or GNSS; the second phase, GNSS 2, is the Galileo programme and the actual
launch  of  a  new  constellation  of  radio  navigation  satellites.  EGNOS  should  be  fully
operational in 2004.

3

4

5

6

7

COM(94) 248 final.
OJ C 379, 31.12.1994, page 2.
1834th Council meeting on transport in Brussels, 13 and 14 March 1995; point 11.
Decision No 1692/96/EC of 23 July 1996, OJ L 228, 9.9.1996, page 1.
Council Decision of 18 June 1998 (98/434/EC). OJ L 194, 10.7.1998, page 15.

3

                                                
In the long term a dual  structure  is  conceivable,  based  on  the  one  hand  on  the  GPS  system
augmented by EGNOS and, on the other, the Galileo system. The two systems would be fully
interoperable  and  supply  complementary  information.  Such  duality  would  be  extremely
useful,  as  it  would  further  improve  the  reliability  of  the  services  provided  by  satellite  radio
navigation. The option of a dual structure will have to be the subject of studies at a later stage,
however, in the light of developments in the Galileo programme over the next two years.

1.5.  Place  of  EGNOS  in  the  international  architecture  of  satellite  radio  navigation
systems

The  technology  used  by  EGNOS  is  compatible  with  the  technical  standards  defined  at
international level by the ICAO and the International Maritime Organisation (IMO).

EGNOS  is  also  Europe's  contribution  to  the  international  satellite  radio  navigation  system
drawn  up  by  the  International  Civil  Aviation  Organisation  (ICAO),  based  on  using  SBAS
technology (satellite-based augmentation system) to augment radio navigation signals. When
EGNOS becomes fully operational in April 2004, it will be an important regional part of this
system, which is a vast network covering the entire world that is designed to augment satellite
radio  navigation  signals  to  satisfy  the  reliability  requirements  of  certain  user  communities.
The  SBAS-based  systems  that  make  up  the  network  include  EGNOS  in  Europe,  WAAS
(Wide  Area  Augmentation  System)  in  the  United  States  and  MSAS  (Multi  Satellite
Augmentation System) in Japan and the Far East.

WAAS
WAAS

EGNOS
EGNOS

MSAS
MSAS

EGNOS is an integral part of currently 3 inter-
regional systems

European
Commission

EGNOS coverage can be extended outside Europe to regions such as South America,  India,
and Africa if the network of ground stations is suitably enlarged.

1.6. Financing of EGNOS up to the operational phase

EGNOS  is  one  of  the  projects  selected  for  the  trans-European  networks  (TENs).  In  this
framework, it receives  European  Community  funding  of  116.4 million  euros,  the  equivalent
of about one-third of the total cost of the programme.  It  has paved the way for Community
funding  of  the  second  global  navigation  satellite  system  (Galileo)  and  anticipated  the  new
priorities accorded to the aeronautical and space sectors by the Sixth Framework Programme
of  Research  and  Development  (2002-2006).  In  addition  to  financial  contributions  from  the
European Community and the European Space Agency, public administrations and corporate

4

members of the EOIG from the civil aviation sector have provided some 100 million euros for
the development of EGNOS.

Summary table of Community support to the EGNOS project:

Year

1995

1996

1997

1998

1999

2000

2001

2002

2003

Total

EC
contribution
(in million
euros)

9.5

9.5

5.5

6.0

9.5

12

16

25

23.4

116.4

2. Costs and advantages of EGNOS

2.1. Cost of EGNOS

The total cost of development and deployment of the EGNOS system, in the form due to be
physically  delivered  by  the  European  Space  Agency  in  April  2004,  amounts  to  310 million
euros8.

The  annual  cost  of  operating  the  EGNOS  system  in  the  next  phase  will  amount  to  some
33 million euros9, which is about 15% of the total annual operating costs of Galileo.

The  costs  of  the  EGNOS  approval  procedure,  the  development  of  specific  applications  and
promotion expenses will total around 14.4 million euros.

These figures cover the basic operation of EGNOS and the approval expenses for all transport
modes.

Summary table of Community contributions to EGNOS during the various phases of the programme:

Phases of the EGNOS programme

Development and deployment

EC contribution
(in million euros)

116.4

Integration of EGNOS in GALILEO (2004-
2008)

≤ 33 /year for 2004, 2005, 2006
and pro mem. for 2007

The following table summarises the Community financial contributions to the Galileo project
as a guide:

Summary table of Community contributions to EGNOS during the various phases of the programme:

Phases of the GALILEO
programme

Cost

(in million
euros)

Validation and development (2001-
2005)

Deployment (2006-2007)

1100

2100

EC
Contribution

(in million
euros)

550

to be decided

Operational (2008-…)

220/year

to be decided

8

9

Source: PricewaterhouseCoopers report – second phase – January 2003.
Including operational and maintenance costs and the costs of leasing transponders.
Source: PricewaterhouseCoopers report –second phase –January 2003.

5

                                                
2.2. Advantages of EGNOS

Of  the  various  advantages  offered  by  EGNOS,  the  general  benefits  should  be  distinguished
from those of a sectoral character. EGNOS's contributions to Galileo are discussed in part 3.

a) General advantages

EGNOS involves progress on both a technical and political level.

i) Technical level

One  of  the  great  merits  of  EGNOS  is  that  it  has  enabled  the  European  Union  to  develop  a
technical capability and know-how in the advanced sector of satellite radio navigation.

Since  October  2002,  the  infrastructure  created  for  the  EGNOS  programme  has  made  it
possible to provide successful coverage of the whole of Europe and the Mediterranean Basin
in  the  framework  of  the  EGNOS  system  test  bed,  or  ESTB.  In  2004,  EGNOS  will  begin
transmitting the first operational European satellite radio navigation signal. It will enhance the
services  offered  by  the  GPS  and  GLONASS  systems  by  significantly  increasing  their
reliability for all user communities. The EGNOS signals will be available throughout Europe
as an open service, i.e. one offered without technical or financial constraint to anyone with a
receiver. It must be stressed that EGNOS will be available for use by everybody and anybody.
Receivers for the general public with the option of receiving SBAS-based signals are already
on offer on the international market.

EGNOS offers Europe's citizens satellite navigation services which are vastly superior to any
service relying solely on GPS signals. EGNOS provides substantial added value compared
with the straight GPS system, because it:

– 

– 

– 

improves  the  accuracy  of  positioning  and  increases  the  reliability  of  the
positioning  information,  by  supplementing  the  GPS  signal  with  signals
from three separate geostationary satellites10;

offers  superior  reception  in  certain  places,  because  additional  satellites  are
used;

will provide  the  user  with information on the reliability of the  system  by
transmitting "integrity messages" within six seconds whenever the quality
of the signals received falls below certain thresholds.

In addition, EGNOS transmits a Universal Time signal (Universal Time Coordinated, UTC
for short).

10

This  is  particularly  important  for  professional  applications.  For  civil  aviation  applications,  satellite
navigation  depends  on  FDI  (fault  detection  and  isolation)  and  RAIM  (receiver  autonomous  integrity
monitoring) algorithms, requiring signals to be received continuously from at least six satellites.

6

                                                
The  technical  reliability  and  security  offered  by  EGNOS  means  that  it  will  be  possible  to
consider  providing  a  legal  guarantee  of  availability,  continuity  and  integrity  for  certain
services11. It also means, for example, that EGNOS can be used for civil aviation in Europe
for all phases of a flight, from takeoff to landing, and a wide variety of maritime and ground
applications.  However,  although  EGNOS  will  be  primarily  geared  to  safety-of-life
applications12, it will also be of interest for commercial services and more everyday satellite
navigation applications. It is destined to become the de facto standard in terms of quality and
reliability  for  satellite  radio  navigation  in  Europe,  the  first  step  towards  the  services
subsequently to be provided by Galileo.

This  development  will  be  accentuated  by  EGNOS's  interoperability  with  similar  systems
already in use in the United States and Canada, and soon to come into service in Japan, India
and  China.  As  already  mentioned,  the  technology  used  by  EGNOS  is  recognised  as  an
international  standard  by  the  International  Civil  Aviation  Organisation  (ICAO)13  and  the
International Maritime Organisation (IMO)14.

ii) Political level

EGNOS  also  has  important  political  advantages.  Firstly,  as  already  mentioned,  the
establishment  of  EGNOS  will  complete  the  first  phase,  GNSS  1,  of  European  policy  on  a
global navigation satellite system, as defined in Council Decision No 98/434/EC of 18 June
1998.

In  addition,  the  new  Member  States  of  the  European  Union  will  benefit  from  EGNOS
services,  since  coverage  extends  to  all  the  territories  of  the  candidate  countries  for
enlargement.  This  extension  of  EU  policy  on  satellite  radio  navigation  to  the  whole  of
geographical  Europe  will  facilitate  Galileo's  market  launch  in  third  countries  already
interested in participating actively in the programme.

Furthermore,  the  safety-of-life  services  offered  by  EGNOS  will  be  much  in  demand  from
many  developing  countries  which  still  have  very  limited  infrastructure  in  this  area.  The
European  Union  could  help  them  develop  such  capacity.  Moreover,  by  extending  its  signal
reception area, EGNOS could benefit regions beyond Europe and the Mediterranean Basin.

Finally, while EGNOS is mainly based on GPS signals, it is also designed to use signals from
the  GLONASS  system.  It  is  therefore  a  product  of  cooperation  with  the  United  States  and
Russia.

b) Sectoral advantages

In  view  both  of  the  growing  role  of  satellite  radio  navigation  in  aircraft  guidance  and  the
direct involvement of the aviation sector in EGNOS development, the advantages of EGNOS
for civil aviation should be distinguished from those benefiting other sectors of the economy.

11

12

13

14

This  contractual  guarantee  does  not,  however,  extend  to  the  availability  of  signals  from  the  GPS  et
GLONASS systems, over which the EGNOS operator obviously has no control. It will thus be limited to
the  quality  of  service  provided  by  the  EGNOS  system  itself  (augmenting  GPS  and  GLONASS  signal
quality, integrity messages).
Safety-of-life services are services of very high quality and integrity for applications where human lives are
at stake, such as aviation or shipping.
EGNOS is already recognised by the ICAO, which has included it in the list of certified navigational aids
(cf. annex 10 to the Civil Aviation Convention, volume 1).
EGNOS was approved as a navigation system at the 76th session of the IMO Maritime Safety Committee.

7

                                                
i) Civil aviation sector:

Civil aviation has been a driving force in the use of satellite radio navigation from the outset
and the first to invest in this new technology.

In  future,  air  navigation  world-wide  will  be  based  largely  on  satellite  radio  navigation.
EGNOS will enable European Union air carriers to become familiar with the new technology,
giving  them  an  advantage  over  their  competitors  in  planning  its  large-scale  introduction.
Airbus  Industrie  and  several  airlines  have,  moreover,  already  begun  work  on  fitting  their
aircraft with EGNOS equipment.

EGNOS could also improve the operating conditions of European air carriers. However, it is
difficult to quantify the environmental advantages of EGNOS in individual airports or those
resulting from enhanced safety during flight phases for which there are no or few other means
of guidance. In any event, EGNOS is fully in line with ICAO policy on the significant use of
satellite navigation to guide aircraft in all phases of a flight and ultimately to eliminate ground
support to air navigation (see footnote 13).

Last but not least, EGNOS will help combat the noise pollution suffered by people living near
airports,  as  a  result  of  new  landing  and  takeoff  procedures  involving  the  overflight  of  less
densely populated areas around airports.

ii) Other sectors:

For  years,  some  observers  thought  that  EGNOS  would  principally  be  geared  towards  civil
aviation.  It  is  now  clear  from  surveys  of  several  user  communities  that  EGNOS  is  also  of
interest  to  many  other  sectors.  Civil  aviation  has  been  most  closely  involved  in  the
development of EGNOS simply because of the rigorous procedures and rules applied in this
advanced sector.

In  fact,  as  in  the  case  of  Galileo,  EGNOS's  applications  extend  well  beyond  the  transport
sector. In this respect, EGNOS primarily concerns two categories of users: those interested in
commercial services offering a legal guarantee of reliability and those interested in safety-of-
life  services.  EGNOS  is  a  crucial  step  in  the  direction  of  establishing  a  full  range  of
commercial and safety-of-life services based on satellite radio navigation.

EGNOS will be of particular benefit to the following activities:

–  Maritime  and  inland  waterway  transport.  These  sectors  could  use  the
information  supplied  by  EGNOS  to  develop  new  information  and  guidance
systems  for  use  on  waterways  and  in  ports.  In  addition,  the  IMO  is  currently
introducing automatic identification (AIS) for merchant shipping, and reliable
information  on  the  position  of  ships  and  their  movements  will  have  an
important role in any applications of EGNOS and, subsequently, of Galileo.

– 

Railways. The use by the  civil aviation sector of  safety-of-life  services  based
on EGNOS may act as a catalyst for the adoption of comparable services by the
railways, given that the existence of systems with proven reliability is essential
to the introduction of technology changes relating to safety in rail transport.

8

– 

– 

– 

Road  transport.  Current  road  guidance  systems  are  based  on  networks  of
ground  antenna  and  direct  reception  of  GPS.  Road  guidance  will  therefore
benefit  from  the  improved  reception  possibilities  and  more  particularly  the
reliability which EGNOS offers. The same will be true of electronic payment
systems for road charges already based on GPS, as EGNOS will substantially
reduce the risks of invoicing errors.

Agriculture.  In  Europe  and  the  United  States,  farmers  are  already  using
systems equivalent to EGNOS. European farmers will use EGNOS to develop
precision  crop  management  through  better  management  of  fertilisers  and
pesticides,  so  generating  savings  and  enabling  compliance  with  Community
rules to be monitored.

Synchronised networks. EGNOS will be of great value to users of synchronised
networks,  such  as  financial  institutions  and  energy  utilities,  which  require
extremely  precise  time  measurement  and  for  which  reliability  of  the  GPS
synchronisation  signal  is  of  the  utmost  importance.  The  EGNOS  integrity
message will guarantee these users the reliability they require.

Finally, most of the applications for which the use of EGNOS has major advantages are of a
public  nature,  implying  macroeconomic  benefits  for  society  as  a  whole.  This  is  hardly
surprising,  as  EGNOS  is  mainly  about  improved  safety  of  use  of  the  GPS  and  GLONASS
systems, and safety by its very nature is a major concern of the public authorities.

3. EGNOS's contributions to Galileo

By offering the first European satellite radio navigation service, EGNOS is an essential step
in the development of this technology in Europe. It has enabled Europe's industry to acquire
expertise in the technologies concerned, particularly for the safety-of-life services which will
distinguish Galileo from GPS. The know-how accumulated in the framework of the EGNOS
programme, both on the technical and institutional level, places Europe in a good position to
embark  on  the  ambitious  Galileo  programme.  Most  of  the  hundreds  of  European  engineers
who  have  worked  on  EGNOS  are  also  actively  involved  in  Galileo.  The  experience  gained
during  the  validation  and  operational  phases  of  EGNOS  will  also  be  invaluable  for  the
implementation of Galileo.

EGNOS is making a significant contribution to the success of Galileo.

3.1. As a precursor of Galileo

EGNOS will significantly increase confidence on the part of receiver owners in the soundness
and reliability of Europe's policy on satellite radio navigation which is, moreover, consistent
with the international policy and standards.

The  services  offered  by  EGNOS  are  a  precursor  to  future  Galileo  applications.  Thanks  to
EGNOS,  Europe  is  now  fully  party  to  the  shaping  of  international  policy  on  satellite  radio
navigation.  In most  parts  of  the  world,  countries  interested  in  introducing  new  technologies
can  be  confident,  because  of  EGNOS,  in  the  advantages  conferred  by  advanced  satellite
navigation  technologies  transmitting  an  integrity  message,  of  which  EGNOS  is  now  an
example, and which Galileo will offer world-wide. Because it permits the implementation of a
specific policy of international cooperation in the field of satellite radio navigation, EGNOS is
paving the way to future international acceptance of the Galileo system.

9

3.2. By facilitating Galileo's entry into service

The experience gained during the validation and operational phases of EGNOS, including its
approval, will be invaluable  for the design, development, validation, operation and approval
of Galileo.

The  approval  and  certification  of  procedures,  equipment  and  standards  involving  satellite
radio  navigation  in  certain  types  of  activities,  particularly  safety-of-life  services,  calls  for
prior  verification  of  often  lengthy  study  and  examination  phases  given  the  highly  sensitive
nature of such activities, which do not tolerate any margin of error.

The  approval  procedures  carried  out  for  the  EGNOS  services  will  make  it  possible  to
operate the Galileo system within the planned timeframe and as soon as it is deployed.
Without  EGNOS,  Galileo  would  suffer  delays.  No  satellite  navigation  system  has  yet  been
approved.  EGNOS  is  the  first  tool  which  will  enable  users  in  Europe  and,  subsequently,
throughout the world to certify such systems, since it offers a quality of service that satisfies
the minimum requirements in those sectors where its use makes certification necessary.

These procedures, which in particular involve a number of conformity and reliability tests in
real time, are exacting and time-consuming, taking a minimum of one to two years. EGNOS,
the characteristics of which are very similar to those of the future Galileo system in the case
of safety-of-life services, will enable the necessary approval procedures to be launched and, in
most cases,  completed. The future  Galileo services  will  therefore be  available  for  use  when
the system is deployed in 2008, and sectors such as air and maritime transport will not have to
wait  a  further  one  or  two  years,  until  2009  or  2010  respectively,  before  being  able  to  use
them. The ability to use the services provided by Galileo in its first year of operation (2008)
should translate into operational savings which, on their own, would equal the operating costs
of EGNOS for  a  period  of  more  than  five  years.  The  net  present  value  of  these  operational
savings can be put at some 166 million euros by 2020, while the operating costs of EGNOS
for five years, at 2002 prices, amount to about 165 million euros15.

These figures show how important it is, for the Galileo programme, that EGNOS should come
into service quickly in 2004.

15

Source: PricewaterhouseCoopers report – second phase – January 2003.

10

                                                
Estimate of annual revenues from Galileo (million euros in nominal terms)

600000

500000

Galileo - advanced by 1 year

Galileo basecase

NPV of Revenues from 
Galileo (with EGNOS)
€1.523bn
(A)

400000

300000

200000

100000

0

2002

Net Increase in
 NPV of Revenues 
(A) - (B) = €166m

NPV of Revenues from 
Galileo (without EGNOS)
€1.356bn
(B)

2005

2008

2011

2014

2017

2020

3.3. By permitting direct savings in operating costs

An  examination  of  the  various  options  for  integrating  EGNOS  into  Galileo  shows  that  this
will generate savings in operational costs for Galileo, whichever option is chosen.

Galileo's operating costs are estimated at 140 million euros per year16 and those of EGNOS at
33 million  euros.  The  cost  savings  resulting  from  integration  could  amount  to  9%  of
combined  operational  costs,  i.e.  15.1 million  euros  per  year  if  the  two  systems  continue  to
function  independently  and  12%  or  21.8  million  euros  per  year  if  their  operation  is  fully
integrated17.

These savings result from:

- joint use of the technical infrastructure,

- accumulation of know-how on development of the system and its operation,

- early, speedy market penetration by a European system,

- complementary, non-competitive nature of the services offered by EGNOS and Galileo,

- sharing of the distribution and user support networks.

Lastly, the experience gained with EGNOS and its integration in Galileo will result in better
control  of  the  costs  of  the  Galileo  programme,  a  reduction  in  certain  technical  risks  of  the
programme and enhanced prospects of success.

16

17

The costs of system maintenance estimated at 80 millions euros per year must be added to the operational
costs.
Source: PricewaterhouseCoopers report – second phase – January 2003.

11

                                                
3.4. By exploring and reserving the market

More  than  85%  of  the  economic  effects  of  the  Galileo  programme  will  concern  the
development of services and the sale of receivers.

The  advent  of  EGNOS  gives  the  European  Union  the  unique  opportunity,  firstly,  to
position itself now on  the  world market  for  satellite  radio  navigation  and,  secondly,  to
enable  European  technology  to  serve  the  European  market.  Twenty-two  European
countries will shortly be equipped with EGNOS installations. It will thus be much easier for
Galileo to penetrate these markets and take over the goodwill already created by EGNOS by
offering  better  services.  Failure  to  take  this  opportunity  will  result  in  potential  foreign
competitors  of  Galileo  and  EGNOS,  such  as  WAAS,  EGNOS's  counterpart  for  North
America,  taking  over  European  and  world  markets  for  high-precision  satellite  radio
navigation and imposing their standard before Galileo comes on stream.

In order to promote European technology, EGNOS demonstrations can immediately begin in
most  parts  of  the  world.  These  demonstrations  would  show  the  possibilities  which  an
enhanced  satellite  radio  navigation  system  can  offer  users  in  a  specific  geographical  area.
They would convey an excellent image of the European Union's capabilities in this field and
facilitate the future introduction of Galileo on the world market. Many third countries, such as
China,  Israel,  South  Korea,  Australia,  the  major  countries  of  Africa,  the  Mediterranean  and
Latin America have already asked for demonstrations and tests of the system. Organising such
demonstrations in various parts of the world is very important politically, for it can ease the
introduction  of  new  technologies  in  the  developing  countries,  more  particularly  in  sub-
Saharan  Africa.  In  addition,  as  it  is  an  important  upcoming  technology,  it  fits  in  with
European policy on development aid.

3.5. By enabling interoperability with GPS

By augmenting the quality of the GPS signals, EGNOS facilitates the interoperability of the
future Galileo system with the current GPS system, and thus satisfies the requirement of full
complementarity of the two systems for the benefit of future users.

3.6. By favouring industrial developments

The  public  sector's  continued  support  for  EGNOS  can  only  increase  private  investor
confidence  in  the  European  Union's  political  commitment  to  developing  satellite  radio
navigation technologies. It thereby encourages the private sector to  get involved  financially,
not only in EGNOS, but also in the Galileo programme and its commercial applications.

EGNOS creates immediate awareness of the "Galileo" brand on the satellite radio navigation
market. This effect would be even greater if EGNOS was "debaptised" and given a name with
an acronym  containing the word "Galileo". This could but facilitate the rapid penetration of
Galileo on the market.

12

4. Ways of integrating EGNOS into Galileo

With  regard  to  the  future  of  EGNOS,  three  options  are  possible  a  priori:  ending  public
subsidies  to  the  EGNOS  programme;  complete  independence  of  EGNOS  activities  from
Galileo; full integration of EGNOS in the Galileo programme.

The three options are examined in turn below, without prejudice to the rights of the European
Space Agency and Eurocontrol. In any event, these two organisations will be involved in the
operation of EGNOS.

4.1. Options other than full integration

a) Ending public subsidies to the EGNOS programme

Ending  public  subsidies  to the EGNOS programme would signal the end  of  the  programme
and any prospect of operating the system. It is very unlikely that a private investor could be
found who would wish to continue the programme without public support, as EGNOS's main
advantages are of a macroeconomic character and, according to the studies done, operation of
the system would create few sources of financial revenue.

Furthermore,  ending  the  programme  would  have  serious  disadvantages.  Above  all,  without
EGNOS, it  would not be  possible to  achieve rapid approval  of  European  know-how  for  the
new  services  offered  by  satellite  radio  navigation,  notably  commercial  and  safety-of-life
services. All  the costs  relating to such  approval would  be  borne by  the  Galileo  programme,
thus delaying Galileo's arrival on the market. The possibilities for exporting European satellite
navigation technology would also be compromised if EGNOS were not used in Europe.

Terminating  EGNOS  would  above  all  result  in  the  prolonged  absence  of  any  European
satellite navigation service and the capture of the entire market, including for future Galileo
receivers, by American and South East Asian technologies. It would increase the risks of the
Galileo programme and give more power to the foreign companies active in the satellite radio
navigation  sector.  It  would  in  fact  mean  the  lack  of  any  European  participation  in  ICAO-
approved  SBAS  technology.  The  European  market  would  thus  be  wide  open  to  the
introduction  of  non-European  systems,  such  as  the  American  WAAS,  together  with  the
corresponding standards. It is also highly likely that, in this case, European users would have
to  bear  at  least  part  of  the  cost  of  their  introduction.  In  view  of  the  subsequent  resulting
commercial handicap for Galileo, this threat alone is sufficient justification for continuing the
EGNOS programme.

Finally,  terminating  the  EGNOS  programme  at  the  end  of  the  development  phase  currently
being  conducted  by  the  European  Space  Agency  would  mean  that  Europe  had  spent  some
300 million euros on developing a system that never got beyond the design and testing stage.

13

b) Complete independence of EGNOS from Galileo

Independent  operation  of  the  EGNOS  and  Galileo  systems  is  theoretically  possible,  but  it
would  spell  the  end  of  the  EU's  single  European  policy  on  satellite  radio  navigation18.
According to this scenario, EGNOS and Galileo would engage in unfettered competition  on
the same market segments. This would result in duplication of expenditure and Galileo could
not benefit from the synergies resulting from full integration.

4.2. Full integration of EGNOS in Galileo

The  technical  and  institutional  aspects  of  fully  integrating  EGNOS  in  Galileo  should  be
distinguished.

a) Technical aspects

Integrating EGNOS in Galileo does not pose any specific technical problems.

In the very early stages of European work on satellite radio navigation, the plan was for the
GNSS 2 phase, i.e. Galileo, to be compatible with EGNOS, the GNSS 1 phase. For European
users, the integration of EGNOS in Galileo basically means that they will have a high-quality
service  as  they  will  receive  signals  simultaneously  from  the  Galileo  and  the  GPS  satellite
constellations.

On the equipment side, EGNOS infrastructure, such as sites and communication links, can be
reused  for  Galileo.  Moreover,  the  software  created  for  the  EGNOS  integrity  messages  has
contributed to the development in Europe of know-how that will be used by Galileo to build a
high-quality system and reduce development costs.

On the practical side, effectively integrating EGNOS in Galileo means that the approval and
implementation  of  EGNOS  will  be  carried  through  to  a  successful  conclusion  in  all  the
transport modes concerned. It is thus important to encourage service providers in all possible
areas of EGNOS application, above all civil aviation, to take the necessary steps immediately
to  introduce  satellite  radio  navigation  in  Europe.  As  already  discussed  in  point  3,  this  is  a
prerequisite for the success of the future Galileo services.

From  a  more  commercial  point  of  view,  as  we  have  already  seen,  EGNOS  can  be  used  in
practical  demonstrations  of  the  possibilities  offered  by  highly  precise,  reliable  European
satellite  navigation  techniques.  Thanks  to  EGNOS,  countries  which  do  not  yet  have
experience  of  this  technology  will  realise  the  value  of  satellite  radio  navigation  and  will
subsequently be able to support the operation of Galileo services on their territory. The use of
EGNOS  to  demonstrate,  throughout  the  world,  the  possibilities  offered  by  satellite  radio
navigation will raise awareness everywhere of the value of Galileo programme.

b) Institutional aspects

Integrating the management of the EGNOS and Galileo programmes in a single entity would
be the best solution from the point of view of  coordination, irrespective of  whether this is a
short- or long-term option.

18

Council  Resolution  of  5 April  2001  on  the  Galileo  project.  OJ  C  157,  30.5.2001.  Transport  Council
Conclusions of 26 March 2002 on the Galileo programme. Transport Council Conclusions of 5 December
2002 on the Galileo programme.

14

                                                
i) Short term

The  operation  of  EGNOS  must  enable  the  system  to  be  tested  on  a  large  scale  by  a  large
number of users, including many from outside the aviation sector. It is also intended to ensure
constant improvement of the system in line with technical developments in GPS and receiver
design. If EGNOS is to be operated from 2004, an operational body will have to be set up this
year  and  a  suitable  operator  selected,  to  guarantee  optimum  functioning  of  the  system.
Operation  under  a  concession  agreement  appears  to  be  the  solution  that  imposes  the  least
burden on the available budget and may encourage the main users of EGNOS to invest in the
system.  The  European  Space  Agency  has  therefore  taken  steps  to  prospect  the  market  for
possible candidates to operate EGNOS.

The best approach to ensure that the services provided by EGNOS are fully coordinated with
the future Galileo services would be to place EGNOS under the control of the Galileo Joint
Undertaking, created for a duration of four years by Council Regulation (EC) No 876/2002 of
21  May  200219.  The  main  role  of  the  Galileo  Joint  Undertaking  is  to  ensure  the  unity  of
administration of the Galileo programme. The Undertaking's first task, as stated in Article 2 of
its  Statutes,  is  to  "oversee  the  optimal  integration  of  EGNOS  in  the  Galileo  programme".
Consequently,  the  EGNOS operator  should  be  placed  under  the  control  of  the  Galileo  Joint
Undertaking,  which  would  be  responsible  for  supervising  activities  under  the  concession
agreement between the public authorities and the EGNOS operator.

The  call  for  tenders  to  select  the  EGNOS  operator  is  of  course  totally  different  to  the  one
which the Galileo Joint Undertaking must launch over the next few months to select the future
Galileo concession holder.

ii) Medium and long term

The solution proposed above for the short term is a preliminary stage and does not represent
optimal integration. In the longer term, the most efficient scheme would be to adopt the same
approach  as  that  taken  for  the  Galileo  programme  and  to  operate  the  EGNOS  and  Galileo
systems  under  the  contract  to  be  concluded  with  the  future  Galileo  concession  holder.
According to this scheme, EGNOS would be an integral part of the Galileo programme and
would  be  offered  to  the  future  Galileo  concession  holder,  which  would  have  the  task  of
managing  and  coordinating  the  two  systems.  As  in  the  case  of  Galileo,  EGNOS  ownership
would  remain  in  public  hands.  Only  the  commercial  management  and  operation  would  be
contracted out.  The concession  holder would thus have an instrument  enabling  it  to  prepare
the market for the arrival of Galileo, including with regard to certification procedures, which
would be a major commercial advantage.

This solution requires EGNOS to be placed under the control of the Galileo Joint Undertaking
immediately.

The future of EGNOS after the validation and commissioning of the Galileo system will have
to be decided in due course by the users, taking account of the experience already gained in
the first years of Galileo's operation.

19

OJ L 138, 28.5.2002, page 1.

15

                                                
4.3. The costs of integrating EGNOS in Galileo

The technical and institutional aspects of integrating EGNOS, as described in point 4.2 above,
do not give rise to any significant cost. On the technical side, not only does integration cost
nothing, but it will also provide returns owing to the synergies achieved with Galileo.

The annual cost of the basic EGNOS system, comprising the lease of transponders for signal
transmission  and  maintenance,  amounts  to  some  33 million  euros,  as  indicated  in  point  2.1
above.  This  is  a  modest  figure  in  view  of  EGNOS's  contribution  to  the  political  and
commercial success of the Galileo programme, as described in part 3 above. These costs, or at
least  a  substantial  part  of  them,  should  be  borne  by  the  public  authorities  as,  on  a
macroeconomic level, EGNOS will be of considerable benefit to society as a whole and more
particularly to those modes of transport which tend to be within the public sector. The costs
relating  to the  approval  procedures  and  the  development  of  applications  would  be  borne  by
the users or the future Galileo concession holder.

Furthermore,  due  account  should  be  taken  of  the  fact  that  there  will  not  be  an  immediate
return on the investment already made in EGNOS. The period beginning in 2004 is essentially
a large-scale test involving numerous potential investors.

The  assumption  by  the  Galileo  Joint  Undertaking  of  the  subsidies  granted  to  the  EGNOS
operator  would  also  bring  about  the  financial  integration  of  EGNOS  in  Galileo.  Should  the
Council  confirm  this  option,  which  could  involve  amending  Article  1  of  the  Statutes  of  the
Galileo Joint Undertaking annexed to  Council Regulation (EC) No 876/2002 cited above, it
will be necessary to examine what share of the funding could be carried by the Community
budget.  Additional  funding  could  be  obtained  from  a  complementary  programme  of  the
European Space Agency20, such as the introduction of a system of Community charges on the
sale of receivers.

4.4. Timetable for integrating EGNOS in Galileo

The  integration  of  EGNOS  in  Galileo  should  proceed  in  the  following  three  phases  if  the
option recommended in points 4.2 and 4.3 above is adopted by the Council:

a)

20

21

its
In  2003  the  Galileo  Joint  Undertaking,  following  a  decision  by 
Administrative  Board  on  which  the  Commission  and  the  European  Space
Agency are represented, will launch a call for tenders21 to select an operator for
EGNOS  in accordance  with  its  own rules of  procedure.  The  concession  holder
chosen would have the  task of operating EGNOS from the  end of  the EGNOS
"Operation  of  Readiness  Review"  (ORR)  in  2004  until  the  beginning  of  the
operational  phase  of  the  Galileo  system  in  2008.  The  concession  holder  will

SBAS  systems,  of  which  EGNOS  is  one,  are  evolving  systems  which  must  continually  adapt  to  users'
operational  requirements.  Certain  new  requirements  expressed  since  the  launch  of  EGNOS  have  already
been taken into account in the development programme. Others are being studied and will probably be the
subject  of  additional  developments,  including  those  to  improve  the  system  in  order  to  reduce  the
operational  costs  in  the  long  term  and  increase  its  reliability  in  the  light  of  the  recommendations  of  the
international  standardisation  and  certification  groups.  One  solution  would  be  to  create  a  "post  ORR-
EGNOS"  programme  within  the  European  Space  Agency.  This  programme  would  be  supervised  by  the
Joint  Undertaking  under  an  agreement  to  be  concluded  with  the  latter  and  the  Agency,  similar  to  that
concluded for Galileo.
This  call  for  tenders  must  be  launched  as  quickly  as  possible  on  the  basis  of  experience  gained  by  the
European Space Agency, which has conducted a similar exercise.

16

                                                
remain under the control of the Galileo Joint Undertaking during the lifetime of the
latter, which is responsible for concluding the concession agreement and verifying its
proper  application.  The  contract  provides  that  the  EGNOS  operator  must  take  all
necessary  steps  to enable the  Galileo  programme  to  profit  from  the  experience  and
know-how  derived  from  the  management  of  EGNOS.  The  amount  of  funding  for
EGNOS  operation  may  not  exceed  33  million  euros  per  annum.  After  the  Galileo
Joint Undertaking is wound up, the task of supervising the operation of EGNOS will
pass  to  the  public  authority  charged  with  monitoring  the  future  Galileo  concession
holder.

From 2005 until the operational launch of Galileo, operation of EGNOS will be
the responsibility of the Galileo concession holder, to be chosen before the end
of  2004.  In  this  context,  EGNOS  should  be  managed  separately  from  Galileo  until
the Galileo  services  are  available  on  the  market.  The  concession  holder  selected  to
operate  Galileo  will  be  free  to  renegotiate  the  EGNOS  concession  agreement
concluded  by  the  Galileo  Joint  Undertaking  in  2004  if  it  is  able  to  obtain  better
financial terms from other market operators.

When  Galileo  becomes  operational  in  2008,  its  public  owners,  the  concession
holder and  the  users  of  the  two  systems  will  evaluate  respective  advantages  of
the  latter  and  will  thus  be  in  a  position  to  state  their  views  on  the  future
development and evolution of the systems. Such a decision will be the subject of a
proposal from the Commission to the Council.

b)

c)

It is therefore recommended that:

Conclusions

– 

– 

– 

– 

– 

the  EGNOS  programme  should  be  continued  and  EGNOS  used  both  as  a
precursor to Galileo and as an instrument enabling Galileo to penetrate rapidly
the market for the various satellite radio navigation services;

the EGNOS programme should  henceforth  be placed under the  control of the
Galileo Joint Undertaking and the Undertaking should be entrusted with:

– 

– 

the  task  of  supervising  the  operation  of  EGNOS  after  the  Operational
Readiness Review is completed in June 2004,

the launch as soon as possible of a call for tenders in order to conclude a
concession agreement with an economic operator charged with operating
EGNOS from June 2004;

the management of EGNOS should be an integral part of the future concession
agreement for the management of Galileo;

the  basic  EGNOS  system  should  receive  public  funding  of  33 million  euros
annually, from 2004 to 2008;

the  extension  of  EGNOS  to  other  parts  of  the  world  should  be  promoted  to
share its operation with these regions;

17

– 

the decision whether or not to continue with operation of EGNOS after Galileo
is  fully  deployed  should  be  taken  by  the  Council,  on  a  proposal  from  the
Commission,  in  liaison  with  the  service  providers  and  the  users  once  Galileo
becomes fully operational.

18