Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and the Council on the implementation of the deployment and commercial operating phases of the European programme of satellite radionavigation (COM(2004) 477 final — 2004/0156 (COD))
Date: 2005-02-09
Institutions: European Economic and Social Committee
Subjects: EU programme, EU research policy, budget financing, international cooperation, research programme, satellite navigation

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Official Journal of the European Union

8.9.2005

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the
European Parliament and the Council on the implementation of the deployment and commercial
operating phases of the European programme of satellite radionavigation

(COM(2004) 477 final — 2004/0156 (COD))

(2005/C 221/06)

On 16 November 2004, the Council decided to consult the European Economic and Social Committee,
under Article 156 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 17 January 2005. The rapporteur
was Mr Rannocchiari.

At its 414th plenary session, held on 9 and 10 February 2005 (meeting of 9 February) the European
Economic and Social Committee adopted the following opinion by 134 votes with 3 abstentions:

1. Introduction

1.1
Recognising its fundamental strategic importance for a
competitive European system, the EESC has followed develop-
ments in the Galileo programme for satellite radionavigation
and positioning infrastructure since its inception. Galileo's
significance lies in its innovational impact on associated aspects
of the economy, employment and the social dimension, as well
as the enhanced quality of life for civil society that Galileo can
ensure (1). Furthermore, the EESC has been aware of the need
to involve the private sector in the development and use of the
system since the very foundation of the Galileo Joint Under-
taking (2), thereby ensuring sustained support throughout the
development and deployment phases (3).

In its most recent opinion (4) on the subject, the EESC
1.2
emphasised that ‘The Galileo programme finally entered the
actual starting phase following the agreement on 26 May 2003
in the Council of the European Space Agency (ESA) on the
respective financial contributions of the ESA Member States.’ It
also reaffirmed that ‘The Galileo programme represents a major
challenge for the European Union, its independence, its techno-
logical and scientific capacity, its economy and, primarily, its
space and telecommunications industries.’

2. Current state of play and anticipated developments

It should be remembered that the Galileo Programme

2.1
has four phases:

(1) OJ C 311 17/11/2001 p. 19.
(2) Galileo Joint Undertaking, set up under Article 171 of the EC Treaty
by Council Regulation EC 876/2002 of 21 May 2002. It ensures the
the Galileo
implementation of
Programme and provides for the management of the deployment
and operative phases. Its headquarters are in Brussels. Its founding
members are
represented by the
the European Community,
Commission, and the European Space Agency.

the development phase of

(3) OJ C 48, 21/02/2002 p. 42
(4) EESC opinion on the Communication from the Commission to the
European Parliament and the Council - Progress report on the
GALILEO research programme as at the beginning of 2004. OJ C
302 of 7 December 2004

— A definition phase from 1999 to 2001, during which the
architecture of
the system was designed and the five
services listed below were defined. This phase was primarily
funded by the 5th RTD Framework programme 1998-2002.

— A development and validation phase, which runs from
2002 to 2005 and covers the development of the satellites
and the system's ground components, as well as validation
in orbit. EU/ESA funding amounted to EUR 1.2 billion,
over and above the EUR 100 million contributed by the 6th
RTD Framework Programme 2002-2006.

— A deployment phase covering 2006 and 2007 will
involve the building and launching of satellites — the first
two satellites are due to be launched towards the end of
2005 — and the establishment of the entire ground-based
component. Overall funding is estimated at EUR 2.1 billion,
one-third of which (i.e. EUR 700 million) will come from
the Community budget. The remaining two-thirds (i.e.
EUR 1.4 billion) of the cost will be borne by the consor-
tium to be selected.

— The commercial operating phase is scheduled to begin in
2008. Estimated annual management and maintenance
costs amounting to approximately EUR 220 million are to
be borne entirely by the private sector, except for an excep-
tional total Community contribution of EUR 500 million
to cover the first years of this phase, in accordance with
decisions to be taken under the new Community financial
perspectives for 2007-2013.

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2.2
At the end of the definition phase in May 2002, the
Galileo Joint Undertaking was established for a four-year period
‘to ensure the unity of the administration and financial control
of the project for the research, development and demonstration
of the Galileo Programme and to this end mobilise the funds
assigned to that programme’.

Furthermore, Council Regulation 1321/2004 (1), which
2.3
establishes the GNSS (Global Navigation Satellite System)
Supervisory Authority and the Council
Joint Action
2004/552/CFSP (2), both of 12 July 2004, set up the opera-
tional structures of the system to ensure the management of
the public interests inherent
to the programmes and the
security and protection of the Galileo system.

At international

2.4
level, the European Union and the
United States of America signed an extremely important
agreement on Galileo and GPS (3) on 26 June 2004, following
negotiations that lasted four years. The agreement concerns the
promotion, supply and use of the two satellite navigation and
positioning systems' services and the full compatibility and
interoperability of related applications. The two systems will
operate side by side without signal
interference. This will
enable Galileo to become the world standard for open signals
in the civilian and commercial use of global navigation satellite
systems (GNSS). GPS is operated by the military. In addition, it
will also become accessible and ‘attractive’ to current GPS users
through a single receiver.

2.5
Also at international level, a cooperation agreement was
signed with Israel on 13 July 2004. This followed an agree-
ment that had been signed with China on 30 October 2003.
Negotiations
to obtain interoperability with the Russian
system GLONASS (4) have been ongoing for some time. These
negotiations have already reached an advanced stage, especially
for the acquisition of frequencies and the use of Russian launch
vehicles. Whilst cooperation agreements with the Russian
Federation itself, Ukraine and India are at an advanced stage of
negotiation, contacts with Australia, Brazil, Mexico and South
Korea have been initiated. Switzerland, Norway, and Canada
are also looking into the possibility of participating financially.

2.6
In the Mediterranean basin, an action plan was
launched by the Euro-Mediterranean Conference of Foreign
Ministers in Valencia in April 2002. The action plan included
Mediterranean cooperation in satellite radionavigation and posi-
tioning. More recently, in Cairo, the Galileo Joint Undertaking
for demonstration,
launched the Euro-Med GNSS project
training and coordination of
to
monitor, in cooperation with its Mediterranean partners, the
impact of EGNOS (5), a geostationary satellite and Galileo's
precursor.

the GNSS regional plan,

Once fully operational, the Galileo system will provide

2.7
five types of service:

— an open service that is suitable for mass-market applications

for the general public and services of general interest;

— a commercial service that will ensure the development of
professional applications, with increased navigation perfor-
mance and added value data, compared with the open
service, with particular reference to a guarantee for the
service;

— a high-level performance Safety of Life service for situations
where human life is at stake such as maritime and aviation
navigation;

— a search and rescue service to make decisive improvements

to existing humanitarian search and rescue systems;

— a Public Regulated Service (PRS) in encrypted form. It will
be resistant to radio jamming and interference. It will be
restricted mainly to public institutions involved in civil
protection, national security, peacekeeping missions and
law enforcement, where maximum levels of protection are
required (6).

2.8
Given Galileo's operational features, civil management
and predominantly commercial and professional applications,
the Commission considers that its potential market by 2010,
could stand at 3 billion receivers, with an annual return of
investment of up to EUR 250 billion and the creation of new
businesses and highly-skilled jobs in the hundreds of thousands,
including approximately 150 000 in Europe.

(1) Council Regulation on the establishment of structures for the
management of the European satellite radionavigation programmes
(OJ L 246, of 20 July 2004)
(2) See OJ L 246, of 20 July 2004
(3) US GPS: United States Global Positioning System, operated by the

military

(4) GLONASS: GLOBAL NAVIGATION SATELLITE SYSTEM.

(5) EGNOS: European Geostationary Navigation Overlay Service:
system based on the correction of the GPS signal via a network of
ground stations and geostationary stations. It was launched in 1996
and operated as Galileo's precursor. EGNOS is to be integrated with
the latter under the terms of the joint concession scheme..

(6) See Concession for the deployment and operation phases of the
Galileo programme 2003/S 200-179789, published on 17 October
2003

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2.9
The Galileo Joint Undertaking completed the competi-
tive negotiating phase in September 2004. It received the two
final tenders of two consortia that had applied for the conces-
sion contract (Eurely (1) and Inavsat (2)). The final selection was
based on the following three criteria: business and financial
capabilities;
technical capabilities; and legal and technical
aspects.

2.10
In accordance with its terms of reference, once the
Joint Undertaking had presented a report on the tendering
process to the Commission and the Commission had adopted a
Communication to the European Parliament and the Council (3)
on moving to the deployment and operational phase, it will be
able to obtain the ‘the necessary political directives on the
public funding of the next phases of the programme and
the public service tasks,
in particular the definition of the
services’. As a consequence, it will be able to present a bid for
signature by the Supervisory Authority, which is, in fact, the
implementing authority under Regulation EC 1321/2004.

The Committee is concerned that

2.11
the above-cited
procedures could prove too complex, with overlapping and
duplicated control measures, which are neither facilitating nor
clear.

Furthermore,

the Proposal

2.12
for a Regulation under
consideration provides that the Supervisory Authority, which
it defines as a Community agency to manage the public inter-
ests of the satellite radionavigation programmes covered by EC
Regulation 1321/2004, will not be set up until 2005.

3. The European Commission proposal

3.1
The proposal under consideration satisfies the need to
provide a specific legal instrument to ensure an independent
budget line that will permit more efficient management and
monitoring of the deployment and operation phases of Galileo,
from a financial point of view and also vis-à-vis the concession
holder.

3.2
The Proposal for a Regulation under consideration aims
to define the modalities of the financial contribution of the
Community for the implementation of the deployment and
commercial operating phases. It focuses on:

(1) EURELY: Consortium founded by ALCATEL, FINMECCANICA and

VINCI

(2) INAVSAT : founded by EADS Space, Inmarsat Ventures and the

Thales Group.

3.2.1
the need for the Community to guarantee a coherent
budgetary framework for the funds generated by the Com-
munity itself and the concession holder:

— through the provision of Galileo services;

— through licences and intellectual property rights on system
components granted to it free-of-charge by the Supervisory
Authority;

— through long term loans granted by the EIB.

3.2.2
toring framework for the Supervisory Authority.

An appropriate institutional management and moni-

4. General comments

4.1
The EESC believes that immediate steps should be taken
to provide greater detail concerning the technical aspects of
delivering the various services. This will ensure open standards
that will provide access for other service providers and innova-
tive services. Artificial barriers and exorbitant
levies would
thereby be avoided for newcomers, especially small-scale users.

the Commission's request

supports
line of EUR 1 billion for

4.2 With regard to the coherence of the budgetary frame-
work, the EESC hopes that new financial perspectives for the
Community budget will be adopted as soon as possible.
for a
it
Furthermore,
specific budget
the Galileo
programme, which would be independent of other budget
lines. The Committee also recommends that the sum should be
raised to ensure the development and integration of EGNOS
into the Galileo programme. The EESC considers that research
activities on GNSS satellite radiopositioning should also be
included in, and resourced by,
the 7th RTD Framework
Programme.

4.3
The EESC also believes that clarification is required as to
how any future public funding by third country institutions
that have already expressed an interest in contributing finan-
cially to Galileo will be included in the financial framework.

The EESC is aware that the budgetary framework fore-
4.4
sees advantages for the concession holder due to its role as
service provider and user of licences and free IPRs (4). The EESC
is compelled to express its concern that the concession holder
may acquire a dominant position or a monopoly, which could
distort competition or inhibit the free market.

(3) COM(2004) 636 final adopted 6 October 2004

(4) IPR: intellectual property rights.

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4.5 With regard to the appropriateness of the institu-
tional framework for the management and control, which
has been ‘externalised’ to a European agency (the European
Supervisory Authority of the global system for satellite radiona-
vigation),
the Committee would emphasise the following
points.

4.5.1
The European Space Agency is not represented on the
Administrative Board of the European GNSS Authority.
However it is a member of the current Administrative Board of
the Joint Undertaking.

The EESC reiterates (2) that it is essential that security
4.5.6
concerns and privacy and personal data protection issues
should be dealt with jointly, through consultation with the
Fundamental Rights Agency (3) wherever
European
possible, or by setting up an appropriate consultative
body. It would not appear sufficient to rely upon the provi-
sions of Regulation EC 45/2001 referred to in Article 19 of the
regulation establishing
Supervisory
Authority. The EESC considers that explicit guarantees for
privacy and personal data protection are no less important
than security considerations if the success of Galileo is to be
secured through the full support of civil society.

European GNSS

the

The managerial and supervisory responsibilities of
4.5.2
the Joint Undertaking are to be transferred to the European
GNSS Authority, which administers Galileo funds, acts as the
contracting authority for the concession contract, monitors
compliance with contractual obligations, grants the concession
to use the assets for the duration of the
holder the right
contract, manages the agreement with the EGNOS operator,
coordinates
regarding the
frequencies required to ensure that the system functions, guar-
antees
and enforces
including those that
compliance with security obligations,
derive from Joint Action 2004/552/CFSP.

certification compliance

the Member States'

component

initiatives

Bearing in mind the need to involve civil society, the
4.5.7
EESC notes that an initiative as important for Europe as the
Galileo Programme remains virtually unknown to most Euro-
pean citizens. For this reason, the EESC hopes that the Euro-
pean institutions, in coordination with national governments,
will
launch an information and awareness-raising campaign
that will not only raise European citizens' awareness and appre-
ciation of this excellent research product of European industry
but will also reassure them that their privacy is being safe-
guarded.

The EESC cannot conceal

4.5.3
its concern regarding the
extremely delicate transfer of authority from the Joint Under-
taking, due to be dissolved in May 2006, and the new Euro-
pean GNSS Supervisory Authority, which should become
operative in mid-2005.

5. Specific comments

The Committee

the
therefore
4.5.4
Commission and the Council should follow closely the ‘cohabi-
tation’ and transitional phase from Joint Undertaking to Super-
visory Authority.

recommends

that

4.5.5
The provisions of Joint Action 2004/552/CFSP and
the Regulation establishing the European GNSS Supervisory
authority, which foresees a System Safety and Security
Committee, will
regulate all matters relating to Galileo's
internal security.

The EESC believes that relations between the Galileo system
and other existing European initiatives such as Global Moni-
toring for Environment and Security (GMES) and COSPAS-
SARSAT (1) search and rescue system, justice and home affairs
networks and GRID multimedia networks should be strength-
ened forthwith.

(1) COSPAS (Russian acronym for ‘Cosmicheskaya Sistyema Poiska
Avariynich Sudov,’ or Satellite search system for vessels -SARSAT:
Search And Rescue Satellite Aided Tracking: an international satel-
lite search and rescue system with humanitarian objectives. Between
1982 and 2003 the system was responsible for rescuing more than
15,000 people worldwide.

5.1
In view of the foregoing, the EESC recommends that the
following points should be added to Recitals in the Proposal for
a Regulation:

New Recital 3(a):

5.1.1
‘In view of the impact that the
programme may have on the lives of European citizens, the
Commission will take steps to ensure that the European Funda-
mental Rights Agency, or an alternative ad hoc consultative
body, be entrusted with privacy and personal data protection in
the implementation of Galileo services. This will ensure trans-
parent development, and constant dialogue with potential users
and civil society’.

(2) See EESC opinion on the Proposal for a Council Regulation on the
establishment of the Galileo Joint Undertaking, Point 3.5. OJ C 48
of 21 February 2002

(3) See COM(2004) 693 of 25/10/04, a Communication from the
Commission that recommends the establishment of the agency in
2005, and proposes that it be entrusted with protecting individuals
in matters pertaining to the processing of personal data.

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Add to Recital 12:

5.1.2
‘, to secure further Community
resources on the same budget line for developing and inte-
grating EGNOS into Galileo, and to provide adequate attention
and resources within the 7th RTD Framework programme for
satellite radionavigation and its
integration with existing
networks.’

5.1.3
New Recital 13(a): ‘The Commission and the Council
shall ensure that the transition from the Galileo Joint Under-
taking to the new European GNSS Supervisory Authority shall
be implemented under conditions of absolute transparency to
avoid possible duplication, operational delays or, worse still,
market restrictions.’

5.1.4
New Recital 14(a): ‘The Commission shall ensure that
any financial contributions from third country institutions to
the funds of the European GNSS Supervisory Authority reflect
mutual
interests and existing balances through appropriate
agreements to be submitted to the Council and the European
Parliament.’

6. Conclusions

6.1
The EESC reaffirms its full support for the Galileo
programme and argues forcefully in favour of accelerating the
two final development phases so as to ensure that it is fully
operational in all respects by 2008.

6.2
The EESC urges the Commission to undertake an ex
ante assessment of the added value for the concession holder,
arising from the provision of services and intellectual property
rights, and to disseminate clear and precise information based
on the assessment's results.

Brussels, 9 February 2005.

6.3
The EESC considers that vital progress has been made
towards setting up global infrastructure, in particular the EU-
US cooperation agreement ensuring full compatibility and
interoperability between existing global satellite radionavigation
and positioning systems.

6.4
The EESC stresses the importance of international coop-
eration with China and Israel and believes that no effort should
be spared in concluding mutual interest agreements with Swit-
zerland, Norway,
India,
Australia, Mexico, Brazil and South Korea. The Committee
considers the Mediterranean basin to be a privileged area, in so
far as it
from EGNOS services.
it is of strategic importance for peace, stability
Furthermore,
and sustainable development in Europe.

the Russian Federation, Ukraine,

is already able to benefit

6.5
In this regard, the EESC is convinced that extending
accessibility to third countries constitutes a vital contribution
to the external dimension of European Union policy.

6.6
The EESC hopes that the European Commission will be
provided with a dedicated budget line for an information and
awareness-raising campaign that will not only raise European
citizens' awareness and appreciation of this excellent research
product of European industry but will also reassure them that
their privacy is being safeguarded.

6.7
Finally, the EESC hopes that its comments regarding
certain recitals will be accepted (protection of privacy, increased
financial resources, transitional phase and contribution of third
countries) as defined above. The proposals aim to contribute to
the clarity and transparency of the initiative and to ensure that
it is allocated sufficient resources. Consequently, they are in the
interest of the European institutions as well as civil society.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND