REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Mid-term review of the European satellite radio navigation programmes
Date: 2011-01-18
Institutions: European Commission
Subjects: EU programme, financing, satellite navigation

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EUROPEAN COMMISSION 

Brussels, 18.1.2011 
COM(2011) 5 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Mid-term review of the European satellite radio navigation programmes  

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REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Mid-term review of the European satellite radio navigation programmes 

Introduction 

This report constitutes the annual report and mid-term review provided for by Article 22 of 
Regulation  (EC)  No  683/2008  (hereinafter  'the  Regulation').  It  takes  stock  of  the  progress 
made on the programmes and sets out the challenges ahead. 

The figures in this report concerning the period after 2013 are provided for information only. 
They are without prejudice to the Commission's final decision concerning the ultimate content 
and  structure  of  the  programmes.  In  2011  the  Commission  will  table  a  legislative  proposal 
thereon, in the context of the preparation of the future multiannual financial framework. 

The figures presented also assume that the systems will be built to deliver all the services in 
accordance with Regulation (EC) No 683/2008. Other options will be examined as part of the 
impact study preceding the legislative proposal concerning the programmes. 

The European satellite radio navigation programmes commenced more than 10 years ago on 
the  basis  of  a  political  vision  to  develop  and  operate  a  global  system  that  would  allow  the 
European Union (hereinafter 'the EU') to pursue the economic and strategic benefits thereof, 
achieve  autonomy  with  respect  to  the  systems  of  the  USA  and  Russia  and  provide  satellite 
navigation services optimised for civil use.  

When  the  key  reform  of  the  programmes  took  place  in  2007  the  Council  and  the  European 
Parliament decided to stop the public-private partnership negotiations and reaffirmed the need 
to  establish  a  European  satellite  radio  navigation  system  on  the  basis  of  full  public-sector 
financing  and  risk  management,  emphasised  its  strategic  importance  and  stressed  its  added 
value  in  economic  terms.  Ensuring  the  independence  and  autonomy  of  the  EU  in  such  a 
crucial sector is both an imperative and an ambitious goal.  

Such  a  public  commitment  to  high-performance  satellite  radio  navigation  services  creates 
major expectations, on a worldwide scale, on the part of users and service providers. The new 
generations of such services offer substantial prospects in all fields of activity: many new jobs 
are bound up with the expansion of markets, which have grown at an annual rate of 30% over 
the  past  few  years.  It  is  estimated  that,  already,  6-7%  of  GDP  in  Western  countries,  i.e. 
€ 800 billion  in  the  European  Union,  is  de pendent  on  satellite  radio  navigation.  The 
promotion of this technology, which is a powerful driver for emerging from the crisis, fits in 
perfectly  with  the  Europe  2020  strategy  and  policies  for  sustainable  development.  For 
instance, as part of Europe 2020's flagship initiative 'An Industrial Policy for the Globalisation 
Era'  the  Commission  is  responsible  for  developing  'an  effective  space  policy  to  provide  the 
tools to address some of the key global challenges and in particular to deliver Galileo'.  

The  2007  governance  reform  was  recognised  as  an  innovation  in  the  history  of  European 
integration; on the one hand, it entrusted the ownership of the infrastructure resulting from the 
Galileo  and  EGNOS  programmes,  both  of  which  are  integral  parts  of  trans-European 
networks,  to  the  EU,  and  on  the  other,  it  made  the  Commission,  representing  the  EU, 

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responsible  for  managing  those  programmes.  Bearing  in  mind  the  scale  and  impact  of  the 
decisions to be taken, both with regard to security and in terms of the international, financial 
and 
institution  with  political 
the  Commission,  as  a  public 
responsibility, was the self-evident choice. 

industrial  dimensions, 

In accordance with its remit the Commission considers that it has sufficient material available 
to provide useful information for the European Parliament and the Council, via this report, on 
the progress of the projects.  

1. 

HOW THE PROGRAMMES HAVE DEVELOPED SINCE 2007 

When  the  Commission  took  over  responsibility  for  managing  the  Galileo  and 
EGNOS programmes in 2008, they were experiencing significant cost overruns and 
delays, as well as serious governance problems. Significant progress has been made 
over the last three years, despite the difficulties involved in managing such projects, 
as  a  result  of  the  action  taken  by  the  various  stakeholders,  including  partners  in 
industry,  and  support  from  the  Member  States,  the  European  Parliament  and  the 
Council.  

The  Galileo  Interinstitutional  Panel  has  monitored  the  process  and  ensured  close 
cooperation between the Commission, the European Parliament and the Council, in 
keeping  with  the  challenges  facing  the  programmes.  This  panel,  together  with  the 
various parliamentary committees, has regularly been kept informed of the progress 
being  made  with  the  projects.  Given  what  is  at  stake,  and  even  though  the 
Commission  remains  responsible  for  management,  the  three  institutions  must  work 
together as partners, and they share the ultimate political responsibility  

1.1. 

The main achievements 

1.1.1.  Establishment of the new governance framework 

The  Regulation  lays  down  a  clear  governance  and  financing  framework,  ensuring 
effective management of the current phases of the programmes. The Commission is 
responsible  for  managing  them,  and  this  includes  'all  questions  relating  to  the 
security of the systems'. The two other main players are the European Space Agency 
(hereinafter 'ESA') and the European GNSS1 Agency (hereinafter 'the EU Agency'). 

The role of manager of major industrial programmes leading to the creation of public 
strategic  space  infrastructure  is  a  new  departure  for  the  Commission.  It  has  had  to 
acquire  the  requisite  expertise  and  reorganise  some  of  its  departments  in  order  to 
carry out this priority task. It has also called upon a team of independent experts in 
the  field  of  project  management,  as  it  had  undertaken  to  do.  In  addition,  in 
accordance with Article 15 of the Regulation it has adopted a strategic framework2 
including  the  main  actions,  the  estimated  budget  and  the  corresponding  timetable 
necessary to meet the objectives laid down by the Regulation. 

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GNSS: global navigation satellite system. 
C(2008) 8378, 12.12.2008. 

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The Member States have been closely involved with the management of the projects, 
through their participation in the Committee on European GNSS Programmes and in 
various  working  parties  such  as  the  expert  group  on  the  security  of  European 
systems. 

The role of ESA, the technical expertise of which is irreplaceable within the EU, has 
been defined by two delegation agreements concluded between it and the EU, one on 
the performance of the industrial work relating to the Galileo deployment phase, and 
the other to tackle the obsolescence of the EGNOS infrastructure and ensure that this 
system is regularly updated. 

Finally,  the  new  Regulation  (EC)  No  912/2010  provides  a  framework  for  the 
EU Agency's activities in line with the Regulation. Important tasks such as security 
accreditation for the systems and management of the security centre now have a firm 
footing. 

1.1.2.  Detailed management of each programme 

1.1.2.1.  The EGNOS programme 

EGNOS,  which  reflects  EU  expertise  in  satellite  radio  navigation,  is  a  completely 
separate system which will need to exist side by side with Galileo in the long term. It 
already  has  several  major  user  communities  in  the  spheres  of  agriculture,  civil 
aviation, personal assistance, geopositioning in mobile telephony, cartography, etc. 

On 1 April 2009 the EU, represented by the Commission, became the owner of all 
the tangible and intangible assets associated with the EGNOS programme which had 
hitherto  been  held  by  ESA.  This  acquisition  was  an  essential  preliminary  to  the 
operation of the system. 

The  EGNOS  open  service  officially  became  operational  on  1  October  2009.  The 
system has operated since then in accordance with the requisite specifications. It is 
operated  by  a  service  provider  (hereinafter 
'ESSP')  under  contract  to  the 
Commission.  The main subject of the contract is the uninterrupted provision of the 
open service and of the safety-of-life (hereinafter 'SoL') service. 

A  milestone  was  reached  in  July  2010  with  the  certification  of  ESSP  under  the 
regulations governing the single European sky. The period for finalising the EGNOS 
system should be completed in the near future and the SoL service for the needs of 
civil aviation should be declared open in early 2011. 

In addition, it is planned to extend the area covered by EGNOS services gradually to 
include  all  the  countries  belonging  to  the  European  Civil  Aviation  Conference. 
Studies are also continuing into extending coverage into Africa, the Arab countries 
and the countries immediately to the east of the European Union. 

1.1.2.2.  The Galileo programme 

Where the development phase is concerned, the two experimental satellites, Giove A 
and Giove B, are operating very satisfactorily. They have made it possible to validate 
the  technology  for  the  subsequent  satellites  and  ensure  the  use  of  the  frequencies 
allocated to the Galileo programme by the international authorities. 

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In addition, the assembly of the first four satellites in the future constellation, which 
will be launched in 2011-2012 as ESA has confirmed, is currently being completed. 
The creation of the terrestrial element of the infrastructure is continuing in parallel; 
this involves choosing sites and building a large number of stations spread across a 
number  of  countries  and  regions  of  the  world:  Belgium,  France,  Italy,  Germany, 
Spain,  the  Netherlands,  the  United  Kingdom,  New  Caledonia,  Réunion,  French 
Guyana, Tahiti, Sweden, Norway, the United States, Antarctica (Troll, Adélie Land), 
etc. 

Work  on  the  deployment  phase  was  launched  in  2008  and  is  proceeding  actively. 
This  work  has  been  divided  up  essentially  into  six  packages,  each  of  which  is  the 
subject of a public procurement procedure. Competitive dialogue with the tendering 
firms is a key element in the procedures which have been launched. 

As a result, the first four contracts, with a total value of around € 1 250 million, were 
awarded  in  2010;  they  are  for  the  packages  covering  system  engineering  support, 
satellite construction (with an initial order for 14 satellites), launchers (for the launch 
of  10 satellites,  but  with  options  for  additional 
launches)  and  operations, 
respectively.  The  other  two  packages,  relating  to  ground  infrastructure,  will  be 
awarded in 2011. The contracts for additional equipment and facilities will also need 
to be awarded in the course of 2011. For those contracts where there was competitive 
supply,  savings  have  been  possible  with  respect  to  original  estimates,  whereas  this 
was not the case in monopoly situations. 

The work begun under these public procurement procedures already involves several 
hundred firms, located in most of the Member States, employing thousands of highly 
qualified staff for that purpose. The Commission has also been keen to comply with 
the 40% figure referred to in Article 17(3)(c) of the Regulation, which is intended to 
give a broad swathe of the EU's industrial network the opportunity to take part in the 
programmes. However, since not all the packages have been awarded as yet, and not 
all  the  subcontractors  are  known,  it  is  not  possible  to  give  precise  figures  at  this 
stage.  In  any  case,  a  tightly-woven  industrial  network  as  well  as  many  scientific 
communities  throughout  the  EU  are  now  actively  involved  in  all  the  activities 
associated with satellite radio navigation and the associated downstream markets. 

Finally, where the public regulated service (hereinafter 'the PRS')  is  concerned, the 
Commission has tabled a proposal for a decision of the European Parliament and of 
the  Council  on  the  detailed  rules  for  access  to  this  service,  focusing  on  security 
issues.  Adoption  of  the  decision  is  an  essential  preliminary  to  the  provision  of  the 
service. The Commission, in cooperation with the EU Agency, will also set up pilot 
projects  to  test  and  validate  the  procedures  and  mechanisms  envisaged  by  the 
proposal for a decision, using practical cases selected in agreement with the Member 
States. 

1.1.3.  Horizontal action 

On  the  international  front,  the  compatibility  and  interoperability  of  the  systems  are 
the  focus  of  complex  discussions  with  China,  the  United  States,  Russia,  India  and 
Japan, and also within the United Nations. With regard to China, the question of the 
overlay of frequencies is a major problem for the security of the EU and the Member 
States; despite the commitment of the Member States and the Commission it has not 

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yet  been  resolved,  and  a  solution  will  not  be  found  without  political  support  from 
those players and from the European Parliament. 

The  global  and  regional  systems  developed  by  the  USA,  Russia,  China,  Japan  and 
India  provide  a  challenge  for  the  European  programmes  not  only  in  terms  of 
frequency compatibility and interoperability, but also in competitive terms, so that it 
is  now  important  for  these  programmes  to  culminate  speedily  in  the  provision  of 
high-quality services in order to ensure efficient market penetration. 

Within  the  European  Economic  Area,  as  from  2010  Norway  has  enjoyed  treatment 
comparable to that of an EU Member State, while negotiations with Switzerland are 
also making progress. 

Where  the  development  of  downstream  markets  is  concerned,  in  June  2010  the 
Commission  adopted  a  GNSS  Applications  Action  Plan  to  promote  the  use  of 
satellite radio navigation in what it considers to be priority fields. It is important to 
implement  it,  so  as  not  to  establish  an  infrastructure  with  no  users,  which  would 
encourage  the  continuation  of  EU  dependence  on  foreign  military  systems  through 
the applications that they offer. 

Global navigation satellite systems make it possible to deliver positioning and timing 
information  worldwide.  They  are  a  catalyst  for  a  multitude  of  economic  activities, 
leading to the creation of wealth in e.g. the fields of personal mobility; civil aviation, 
particularly  at  regional  airports  and  heliports;  civil  protection,  emergency  services 
especially in the event of floods, earthquakes and terrorist attacks; humanitarian aid; 
tracking of ships, trains, trucks and containers; guiding people with reduced mobility; 
hazard  localisation;  precision  agriculture;  search  and  rescue  services;  dangerous 
goods tracking, land  plot identification  and  field measurements, particularly for the 
common  agricultural  policy;  energy  grids  and 
telecommunications  network 
synchronisation;  protection  of  sensitive  infrastructure;  time-stamping  of  financial 
transactions. Moreover, in the context of EUROSUR, there are plans to establish an 
operational service for the use of earth observation satellites for border surveillance 
(GMES  programme).  Galileo  and  EGNOS  could  profitably  be  used  to  provide 
information on the exact positioning of inspection teams. 

Upstream, the construction and deployment of the European systems are generating 
direct benefits for hundreds of companies throughout the EU, involving thousands of 
highly  skilled  jobs.  Downstream,  the  proliferation  of  applications  associated  with 
satellite  radio  navigation  represents  a  unique  opportunity  for  growth  for  firms.  The 
indirect socioeconomic benefits are set out in 2.2.5. below and detailed in the Annex.  

In addition to a number of regulatory measures, the action plan also includes research 
and  innovation  incentives,  particularly  for  SMEs,  and  standardisation,  coordination 
and accreditation measures for aviation and maritime transport, among others. It also 
encompasses  information  activities  targeted  at  industry  and  users.  For  instance,  the 
technical documentation for building Galileo receivers has to be updated on a regular 
basis.  In  this  connection  the  Commission  expects  that  as  from  2014,  as  a  result  in 
particular of the GPS interoperability agreement, at least 80% of the GNSS receivers 
in operation around the world will use the European satellite radio navigation system.  

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With  regard  to  activities  relating  to  applications  development  and  receiver 
technology, three calls for proposals have been issued under the Seventh Framework 
Research and Development Programme, with a total value of around € 120 million. 
The  first  two  calls  made  it  possible  to  fund  around  100  projects,  the  preliminary 
results of which were presented in March 2010. The third and final call is currently 
open. 

Finally, ESA is carrying out work, as part of a specific optional programme, on the 
development of technologies for future infrastructure. 

1.2. 

The experience gained: assessment of overall progress made 

The  remit  given  to  the  Commission  by  the  Regulation  goes  well  beyond  its 
customary  activities  relating  to  industrial,  infrastructure  or  research  projects,  in 
which it is usually involved only through grants, and not as the main player. 

To  ensure  that  the  programmes  continue  to  run  satisfactorily,  the  Commission  has 
worked  out  an  approach  which  is  appropriate  for  the  management  of  an  industrial 
project, on the basis of the work carried out by its various departments and despite 
the rigid nature of the rules it is required to follow. The experience gained since 2007 
will enable it to make further improvements to the management of the programmes 
and their uncertainties and also to risk management. 

1.2.1.  Management of the programmes 

Internally,  the  Commission  swiftly  put  in  place  a  structure  to  manage  the 
programmes  in  their  current  phase.  In  particular,  it  took  over  all  those  members  of 
the EU  Agency's  staff with the skills  needed to carry out its new remit, in order to 
ensure continuity in running the projects. It absorbed all these teams to manage every 
aspect of the programmes in accordance with the Regulation. It has also established a 
delegation  agreement  with  ESA  and  a  management  plan,  which  together  govern 
relations  between  the  two  organisations,  and  has  managed  to  create  the  requisite 
synergies  between  itself,  ESA  and  the  EU  Agency.  It  has  also  called  on  groups  of 
experts from the Member States. 

It should be borne in mind that the Commission has had to fill the highly qualified 
posts  needed  to  ensure  good  management  of  the  programmes.  There  have  been 
limited opportunities for internal redeployment owing to the nature of the activities, 
and external recruitment procedures have been subject to stringent rules. Most of the 
staff  ultimately  recruited  have  the  status  of  temporary  staff  with  contracts  running 
until 2013. It is essential to ensure their retention thereafter, since it is crucial to keep 
the acquired expertise for the continuation of the programmes. 

The  EU  budgetary  framework,  springing  as  it  does  from  a  financial  system  with  a 
limited  time  horizon,  makes  it  difficult  to  carry  funding  over  from  one  period  to 
another and complicates long-term planning, which is, after all, essential for projects 
running over several decades. The Commission believes that thought must be given 
to setting up budgetary mechanisms and instruments to cope with this situation. 

Externally,  there  are  questions  about  the  role  of  ESA  and  the  impact  of  decisions 
concerning system security. 

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First,  where  Galileo  is  concerned,  ESA  has  had  to  espouse  a  new  role  as  prime 
contractor,  following  the  disappearance  of  the  ESNIS  consortium.  The  new 
distribution  of  responsibilities,  under  which  ESA  has  become  de  facto  an 
implementing  agency  acting  on  behalf  of  the  EU,  is  proving  successful,  but  it  will 
have to be adapted to programme developments and future operational challenges. 

Secondly, with regard to EGNOS, its current operation involves the Commission as 
the programme manager, ESA as the technical player responsible for system design 
and  development,  and  ESSP  as  the  service  provider.  An  integrated  management 
model would make it possible to maintain the current teams in a more centralised set-
up, in order to improve the understanding of the risks inherent in supplying EGNOS 
services  and  to  ensure  better  coordination  of  the  industrial  activities  which  are 
currently split between ESA and ESSP. 

It is also important to ensure that future developments of the system incorporate the 
experiences  of  the  various  user  communities,  especially  the  aviation  sector,  taking 
into  account  the  work  of  the  SESAR  Joint  Undertaking  and  that  of  the  ESA 
development programme. 

Finally,  where  security  is  concerned,  it  needs  to  be  remembered  that,  while  the 
Commission is responsible for the management and security of the systems under the 
Regulation, its freedom is constrained in this area in two ways. 

–  First,  in  reality  it  is  the  Member  States  which  define  security  needs.  The  threats 
which might affect the security of sensitive infrastructure such as that supporting 
satellite  radio  navigation  are  constantly  changing,  and  the  design  of  the  systems 
must constantly adapt to those changes. Covering part of such risks is a matter for 
the Member States. 

–  Secondly,  the  Regulation  gives  responsibility  for  accrediting  the  security  of 
systems  to  the  EU  Agency.  Separating  the  functions  of  management  and 
accreditation  in  this  way  reflects  good  governance,  and  is  standard  practice  and 
essential for this type of project. 

In  both  cases  the  choices  made  or  the  decisions  taken  may  have  a  considerable 
impact on the programmes' costs and schedules. 

1.2.2.  Uncertainties of the programmes 

It needs to be emphasised that the existence of uncertainties is inherent in this type of 
complex programme. It requires  an effective risk  management  system  to  be  set  up, 
and may result in difficult decisions being taken. 

Starting with  the Galileo development  phase3, the transfer of project  supervision to 
ESA,  which  was  a  consequence  of  the  failure  of  the  ESNIS  industrial  consortium, 
has led to delays and cost overruns owing to the need to renegotiate some contracts 
and the requirements associated with actually putting the new arrangements in place. 

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The Regulation defines the development phase as comprising 'the construction and launch of the first 
satellites,  the  establishment  of  the  first  ground-based  infrastructures  and  all  the  work  and  operations 
necessary to validate the system in orbit'. 

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retain 

the  use  of 

In addition, it has proved necessary to launch a second experimental satellite in order 
International 
to 
Telecommunications Union. Finally, the timetable and costs have been revised as a 
result  of  technical  constraints  relating  in  particular  to  the  finalisation  of  certain 
security-related  aspects  and  the  delays  associated  with  setting  up  contracts  for  the 
deployment phase.  

frequencies  allocated  within 

the 

the 

The additional cost of the development phase amounts to some € 500 million in total. 
At the request of the Member States the Commission has agreed to bear this cost so 
as to ensure the continuity of the programme. Validation of the system in orbit is the 
keystone  of  the  Galileo  programme,  of  course,  and  a  lack  of  financing  would  have 
jeopardised  its  continuation,  with  a  loss  of  industrial  know-how  and  of  equipment 
already partly built. 

Turning  to  the  deployment  phase,  the  decision  to  opt  for  competitive  dialogue  has 
proved  successful.  Competitive  tendering  has  made  it  possible  to  keep  up 
competitive pressure on tenderers. However, where this is not the case the monopoly 
situation in which some players have found themselves has led to increased prices. 
The  price  of  launch  services,  for  example,  has  entailed  an  additional  cost  of  more 
than € 500 million by comparison with the original budget 4. 

Moreover,  the  requirements  of  Galileo's  SoL  service  are  having  an  impact  on  the 
programme's  funding  needs,  particularly  with  regard  to  the  ground  infrastructure. 
Studies to redefine this service are under way in order to adapt it to the new needs of 
users and new technological developments. The system also needs to be simplified, 
its  risks  and  costs  need  to  be  reduced  and  its  GPS  compatibility  needs  to  be 
improved.  The  decisions  on  these  issues  will  have  to  be  taken  over  the  next  few 
years. 

Where EGNOS is concerned, maintenance requirements and the need to develop the 
system have resulted in excessive expenditure, while satisfactory geographical cover 
of the European zone has yet to be achieved. 

To sum up, initial cost estimates have not been kept to because some risks, relating 
primarily  to  technical  issues,  security  requirements  and  the  situation  in  the  market-
place, have materialised during these very complex phases of the programme. 

However,  the  steps  taken  by  the  Commission  have  reduced  the  impact  of  these 
problems.  The  ultimate  objectives  are  not  being  called  into  question,  because  the 
budget available already encompasses the building and launch of 18 satellites, with 
the associated ground infrastructure, and the supply of the first services from 2014-
2015.  It  also  covers  the  initial  operation  of  the  EGNOS  services.  Studies  currently 
under way are seeking to identify the best ways of carrying out the programmes in 
line with future budgets. The first aspects of those studies are set out in Section 2.2. 

4 

This situation in the market-place and its consequences will be examined more comprehensively as part 
of a future Commission communication on the development of European industrial policy for space. 

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1.2.3.  The risks involved 

The Commission has placed the issue of risk management, the importance of which 
was highlighted when the governance reform took place in 2007, at the heart of its 
work.  All  the  risks  relating  to  the  programmes  are  recorded  centrally  in  a  register 
listing,  in  turn,  those  associated  with  the  industrial  supply  chain,  ESA,  the 
EU Agency, external factors such as the influence of political authorities and security 
requirements, and internal factors such as the organisation of the programmes. Each 
risk is allocated a degree of probability and an impact rating. The risk register also 
includes a list of measures intended to reduce the probability of a risk materialising. 
The risks are classified as follows: 

–  Technological risks: satellite navigation uses leading-edge technology which has 

yet to be validated and the specifications of which are constantly evolving. 

–  Industrial risks: establishing the infrastructure involves many industrial players, in 
a number of countries, whose work has to be coordinated effectively in order to 
arrive at systems which are reliable and fully integrated, particularly with regard 
to security. 

–  Market risk: what has to be avoided is a technical performance that is inferior to 
that  promised  having  a  negative  effect  among  users  worldwide,  and  the 
infrastructure  not  being  used  as  a  result.  In  addition,  the  availability  of  reliable 
receivers as from 2014-2015 must be ensured for the various initial services to be 
offered by Galileo, especially the PRS. 

–  Timetable  risk:  any  delay  in  implementation  would  jeopardise  the  window  of 

opportunity and would be likely to generate cost overruns. 

–  Governance risk: governance of the programmes requires various bodies to work 
together,  and  an  appropriate  degree  of  stability  and  organisation  has  to  be 
guaranteed.  Moreover,  differences  of  opinion  between  the  various  parties 
involved,  and  in  particular  between  the  Member  States,  have  to  be  taken  into 
account  on  several  major  issues.  In  this  context  the  sharing  of  some  risks, 
including  financial  and  security-related  risks,  among  those  players  who  are  best 
placed to cope with them, should be considered. 

–  Liability-related  risk:  as  with  any  infrastructure  the  two  European  systems  may 
cause direct or indirect losses to their users or to third parties. The analysis carried 
out  by  the  Commission  reveals  that  the  current  state  of  law  applicable  does  not 
provide  an  appropriate  legal  framework  ensuring  a  fair  balance  between  the 
interests  of  the  victims  and  those  of  the  owners  and  operators  of  the  European 
satellite radio navigation systems. Appropriate initiatives must therefore be taken, 
both in Europe and worldwide, to remedy this situation by 2014. The Commission 
is carrying out studies in this connection, in collaboration with other international 
bodies. 

In  the  light  of  the  these  risks  the  Commission  is  giving  priority  in  its  decision-
making  to  meeting  the  deadline  of  2014  for  the  permanent  provision  of  the  first 
Galileo services. In the longer term the ultimate objective remains, at this stage, the 
provision  of  high-quality  services  which  are  compatible  with  the  provisions  of  the 
Regulation  and  with  users'  needs  and  are  comparable  with,  or  better  than,  those 

EN 

10 

   EN 

provided by other systems. The decisions on security issues are being taken in close 
collaboration with the Member States. 

1.3. 

Financial overview 

The EU contribution to the Galileo and EGNOS programmes for 2007-2013 amounts 
to € 3.4 billion, in addition to which there is,  inter alia, a contribution from Norway. 
This budget has been split across the three main activities, namely completion of the 
Galileo  development  phase  (accounting  for  around  € 600  million),  the  Galileo 
the  operation  of  EGNOS  (around 
deployment  phase  (€ 2.4  billion),  a nd 
€ 400 million). 

Where  the  deployment  phase  is  concerned,  around  two-thirds  of  the  budget  has 
already been committed, mainly in connection with the procurement contracts signed 
in  2010.  Apart  from  the  contingency  reserve,  the  remaining  budget  will  enable  the 
contracts for the last two packages, covering ground infrastructure, to be awarded. 

With  regard  more  specifically  to  the  contingency  reserve,  a  detailed  assessment  is 
being  made  of  the  needs  to  be  covered.  The  budget  headings  to  be  funded  will 
depend  on  the  order  of  priority  of  the  risks  to  be  dealt  with  or  on  their  actual 
occurrence.  The  main  risks  identified  are  connected  with  significantly  reduced 
performance in the event of a restricted range of 18 satellites5 having to continue to 
be  used,  the  non-availability  of  launch  services,  the  impossibility  of  using  certain 
selected sites, a lack of redundancy in the ground infrastructure, or even design and 
integration  defects.  Maintenance  services  will  have  to  be  contracted  and  spare 
equipment  purchased  so  as  to  minimise  breakdowns  and  cope  with  the  system's 
obsolescence. 

Where EGNOS is concerned, the budget allocated has essentially been used for the 
contract with ESSP and the delegation arrangement with ESA, in order to ensure the 
provision of services and the system's continued existence. 

The  amounts  allocated  to  the  Galileo  and  EGNOS  programmes  under  the  current 
financial framework are summarised in the table below. 

5 

As a result of satellite losses at launch or in orbit. 

EN 

11 

   EN 

                                                 
OVERALL BUDGET [€ m]

3 480

 96

417

2 968

Development
phase

560

Deployment
phase

2 408

EGNOS [€ m]

Transponders

To be
committed

22

22

87

∑ = 417

Operator
(ESSP)

192
192

117

ESA

GALILEO: DEPLOYMENT PHASE [€ m]

System 
engineering

9

Sites

Operation

85

194

ESA

265

974

∑ = 2 408

Space
infrastructure

Total

Administration

EGNOS

Galileo

To be
committed

881

201011242200 Communication-AnH.ppt

2. 

THE CHALLENGES AHEAD 

The task assigned to the Commission by the Regulation consists in establishing the 
satellite  radio  navigation  infrastructure  supplying  high-quality  services,  worldwide 
and  regionally,  in  addition  to  the  existing  services.  This  ultimate  objective  remains 
unaffected,  since  if  the  quality  of  the  services  were  called  into  question  at  all  the 
immediate effect might be to destabilise the programme and cause market interest to 
dissipate. 

It should be pointed out that these markets are growing rapidly, and that their annual 
turnover worldwide is expected to reach around € 240 billion by 2020. Moreover, as 
a result of the advantages of Galileo and EGNOS compared with the other competing 
systems,  they  are  expected  to  generate  economic  and  social  benefits  worth  around 
€ 60-90 billion 6 over the next 20 years. 

However, this assumes that the full Galileo infrastructure will be completed, and that 
operation  of  the  systems  will  allow  reliable  service  provision.  Taking  into  account 
the  cost  overruns  arising  in  the  development  and  deployment  phases  (see  1.2.2. 
above), the Commission considers that additional funding of € 1.9 billion is needed 
to  complete  the  infrastructure  (see  2.2.1.  below).  The  estimated  average  annual 
operating  costs  are  around  € 0.8  billion  (s ee  2.2.2.  below).  Appropriate  financing 
mechanisms should therefore be established. 

6 

Source:  Market  studies  by  the  EU  Agency  (GNSS  market  monitoring  and  forecasting  tools,  2010 
figures).  The  total  value  of  the  net  benefits  generated  by  Galileo  and  EGNOS  over  the  period  2010-
2027 will depend upon the timing of Galileo's full operational entry into service. Each year's delay will 
decrease  the  value  of  the  benefits  by  10-15%  owing  to  both  the  loss  of  revenue  generated  and  the 
development of alternative solutions and competing systems. 

EN 

12 

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Bearing  in  mind  the  current  context,  the  Commission7  has  not  so  far  proposed  the 
allocation  of  additional  funding  for  the  programmes  under  the  current  financial 
framework.  This  will  entail  probable  delays  of  four  years  in  completing  the  full 
infrastructure of the Galileo programme, and also additional costs. 

In  the  absence  of  additional  funding  before  2014,  the  deployment  strategy  for  the 
programmes  must  be  redefined,  incorporating  the  trade-offs  between  service 
performance  and  the  associated  costs  on  the  one  hand,  and  the  need  to  provide  a 
service of sufficient quality to maintain a place on the market on the other. 

2.1. 

Short-term management of the programmes 

In order to meet the expectations of the markets, the Commission has developed an 
appropriate approach, that of ensuring the launch of services as soon as possible and 
preparing the operational phase. 

2.1.1.  The need to launch the first services in 2014-2015 

Worldwide  annual  turnover  from  products  and  services  directly  associated  with 
satellite  radio  navigation  was  estimated  at  around  € 130  billion  in  2010.  The 
corresponding  markets  will  probably  experience  double-digit  growth  rates  over  the 
next few years, and the experts consider that they should be in excess of € 240 billion 
in  20208.  This  remarkable  growth  is  explained  both  by  the  progress  made  with 
receiver  technology  and  by  proliferating  new  uses  which  are  generating  increased 
consumer demand. 

This strong growth in markets worldwide has been driven hitherto by the American 
system, GPS, alone. However, other global navigation satellite systems (hereinafter 
'GNSS'), particularly the Russian and Chinese systems, are likely to enter service in 
the medium term. It is vital for the European system to establish itself as quickly as 
possible  as  the  other  major  standard  GNSS,  alongside  GPS,  particularly  where 
receiver manufacturers are concerned. 

2.1.2.  The initial operational phase 

The public procurement contracts already  awarded are enabling  the Commission to 
adjust its approach to meet the deadline of 2014. Accordingly, the development and 
deployment phases will continue in parallel until 2012, when the development phase 
will be completed, and the exploitation phase for the first services will start in 2014. 

A  first  stage  will  be  the  partial  commissioning  of  the  infrastructure  (initial 
operational  capability,  or  IOC)  as  from  2014-2015  and  the  provision  of  the  open 
service, the search and rescue service and the PRS. At this stage, however, accuracy 
and availability will not yet have reached their optimum levels. 

While this first stage will be sufficient to test the services it should nonetheless be as 
short as possible, because it will not allow the system's full potential to be exploited 
and  will  not  meet  the  requirements  of  all  users.  This  phase  therefore  needs  to  be 

7 
8 

COM(2010) 700, 19.10.2010. 
Source: EU Agency (2010) GNSS market monitoring report. 

EN 

13 

   EN 

                                                 
linked  to  a  firm  commitment  by  the  Union  concerning  the  completion  of  the 
infrastructure, in line with the Galileo programme's objectives, in order to give users 
confidence and encourage them to invest. 

The Commission is also proposing that the EGNOS system be adapted so as also to 
improve the accuracy of the open service provided by the system resulting from the 
Galileo  programme,  in  the  same  way  as  it  is  currently  improving  that  of  GPS. 
EGNOS is the only system that the EU will have to provide an SoL service over the 
next few years. 

2.2. 

Long-term planning 

The European GNSS has one prime advantage over other systems: it is the only one 
designed  for  civilian  purposes  and  under  civilian  control.  It  has  other  potential 
advantages which should not be disregarded, such as its commercial service, which 
might  make  it  possible  to  authenticate  signals  and  further  improve  the  accuracy  of 
the  open  service.  Finally,  its  open  service  complements,  and  is  interoperable  with, 
the American GPS, so that the combined use of the two systems will afford a degree 
of reliability and accuracy which is likely to fulfil most users' needs worldwide in the 
mass applications market. 

However, most of these benefits will materialise only after the full infrastructure is 
complete. 

2.2.1.  Completing the infrastructure 

As  indicated  under  1.2.2.  above,  € 3  400  m illion  is  not  enough  to  complete  the 
infrastructure resulting from the Galileo programme, owing to the increased cost of 
the development phase, the increased price of launchers, the lack of competition for 
the  award  of  some  packages,  additional  costs  associated  with  the  EGNOS 
programme and the consequences of funding being deferred until after 20139. 

The  Commission,  after  consulting  ESA10,  has  carried  out  a  number  of  studies  to 
assess  the  costs  of  the  systems.  These  analyses  are  based  on  the  various  possible 
scenarios  for  the  procurement,  deployment  and  operational  cycles  concerning  the 
infrastructure,  including  maintenance  and  renewal,  actual  price  quotations  and 
experience with other space systems. They show that an additional financial injection 
of some € 1 900 million will be needed to co mplete the infrastructure of the Galileo 
programme.  This  amount  would  make  it  possible  to  set  up  a  system  providing  the 
services defined in the Regulation, based on a constellation of 30 satellites. 

This  amount  is  needed  to  finance  the  satellites  and  launchers  required  to  round  off 
the Galileo constellation and complete the ground infrastructure so that the full range 
of  services  can  be  provided.  As  is  customary  with  this  type  of  high-risk  industrial 
project, a reserve of around 20% has also been included to cover the uncertainties of 
the  programmes,  including  the  technical  risks  associated  with  the  final  integration 
phase. The table below summarises these funding requirements. 

9 
10 

All these factors combined represent an amount equivalent to the additional funding needs. 
Various meetings took place between the Commission and ESA, in particular over the summer of 2010. 

EN 

14 

   EN 

                                                 
It  should  be  noted  that  additional  analyses  are  being  carried  out  to  explore  the 
possibility  of  limiting  funding  requirements,  in  particular  by  staggering  the 
introduction of service provision and fine-tuning the SoL service. 

COMPLETION OF THE 
INFRASTRUCTURE [€ m]

1 900

Contingency 
reserve
400

400

Space
infrastructure 

1180

∑ = 1 900

320

320

Ground
infrastructure

201011242200 Communication-AnH.ppt

2.2.2.  Operating costs 

The  costs  of  operating  the  systems  cover  operational  management  of  the 
infrastructure,  management  of  the  services  and  the  replacement  and  renewal  of 
components with a limited service life11. They also include ongoing improvements to 
the systems so as to adapt services to the changing needs of users. 

The  estimates  include  a  contingency  reserve  based  on  the  risks  inherent  in  high-
technology  programmes.  However,  some  risks  which  would  have  an  impact  on  the 
budget  were  they  to  materialise  have  not  been  taken  into  account,  since  the 
probability that they will occur is low. This is the case with changes in the security 
context, problems of interoperability with the other systems and technological risks 
such  as  the  service  life  of  the  clocks  used.  Appropriate  mechanisms  need  to  be 
explored in order to avoid having to mobilise the corresponding funding. 

Lack of funding for the operating costs would lead immediately to a reduction in the 
quality  of  the  services  or  even  their  total  disappearance,  which  would  be 
incompatible with fulfilling the public service remit assigned to the systems. 

The  operating  costs  have  been  assessed  in  conjunction  with  ESA,  and  the  results 
have  been  validated  by  experts  from  the  Member  States  and  other  independent 
experts12. The assessment shows that average annual operating costs amount to some 

11 

12 

The satellites are designed to have a 12-year service life. The service life of the ground infrastructure is 
shorter. 
These consultations took place over the summer of 2010 in connection with the study concerning the 
operation of the programmes carried out by independent consultants. 

EN 

15 

   EN 

 
 
                                                 
€ 800  million  at  2010  prices,  not  adjusted  for  inflation,  of  which  € 110  million  is 
accounted  for  by  EGNOS;  the  figure  is  based  on  a  standard  satellite  life  cycle  of 
12 years. 

It should be noted that these costs will be lower in the early years of operation, after 
2014-2015,  since  services  will  be  introduced  gradually  as  the  infrastructure  is 
completed. Consequently, they will cover only the costs of ensuring the satisfactory 
operation  and  maintenance  of  the  infrastructure,  service  provision  and  the 
replacement of the first satellites at the end of their service life. Additional costs will 
arise subsequently from the development and commissioning of the new generations 
of systems. 

The table below summarises the main components making up the average operating 
costs for the full infrastructure. 

OPERATION: 
ANNUAL AVERAGE COSTS [€ m]

800

100

Other

EGNOS

110

Galileo

590

Management

Infrastructure 

Technological
developments
110

50

110

280

∑ = 590

150

150

Provision of 
services

201011242200 Communication-AnH.ppt

2.2.3.  Research and development costs 

Expansion  of  the  downstream  GNSS  market  lies  at  the  heart  of  the  generation  of 
indirect  added  value  by  Galileo  and  EGNOS.  The  development  and  promotion  of 
new applications need to be financed to  ensure that European firms have sufficient 
penetration  of,  and  are  strongly  positioned  on,  the  markets  for  goods  and  services 
associated with satellite positioning. The requisite funding can be mobilised through 
instruments  such  as  the  Framework  Research  and  Development  Programme  or  the 
successor to the CIP. 

2.2.4.  Projected financing and timetable 

As  indicated  above,  the  estimates  made  to  date  point  to  a  requirement  for  around 
€ 1 900 million in funding over the period 2014 -2019 to complete the infrastructure 
associated with the Galileo programme. Added to this will be the operating costs of 
the system once it has become operational, i.e. as from 2014-2015. 

EN 

16 

   EN 

 
 
Despite the use of public procurement procedures, in practice it has proved difficult 
not  only  to  keep  within  the  budgets  set  for  the  various  work  packages  but  also  to 
obtain  genuinely  fixed  prices  from  the  industrial  partners  involved  in  the 
programmes. This arises from the complexity and specific nature of one-off systems, 
the  components  of  which  are  being  developed  and  built  specifically  for  the  EU's 
needs alone by a very small number of manufacturers. Furthermore, combining those 
components  is  a  source  of  potential  problems.  In  this  context  the  need  to  limit 
financial  slippage  means  that  the  main  requirement  is  to  reduce  risk  and  adapt 
governance so as to ensure that the programmes are managed efficiently.  

To  that  end,  the  Commission  has  strengthened  its  risk  management  system,  as 
indicated  above,  as  well  as  its  controls  with  respect  to  costs  and  timetable 
compliance. It is essential to enhance the sense of responsibility of all stakeholders in 
the programmes in order to secure success.  

Finally, the fundamentals of a robust governance structure, capable of dealing more 
satisfactorily in future with the risks of loss of control, are examined in more detail in 
2.2.6. below. 

In its Communication of 19 October 201013 the Commission put forward an option 
whereby  the  EU  budget  would  make  a  fixed  contribution to major projects such as 
ITER and Galileo in the form of a predetermined annual amount; any overshoot of 
requirements would have to be covered by other sources of finance. 

Where  Galileo  is  concerned  the  Commission  will  continue  to  examine  the  various 
funding  mechanisms  which  might  be  envisaged,  taking  into  account,  in  particular, 
the Commission's working methods, the implications of each option for the various 
aspects of the programmes and the need to ensure that costs are kept under control 
and that activities continue as they should. 

The solutions examined will also need to take into account the fact that the costs of 
the programmes can be grouped into three main categories: 

–  first,  the  costs  of  building  the  systems  and  the  expenditure  associated  with 
maintaining and operating them; the latter can be estimated fairly accurately once 
the deployment phase has been completed; 

–  secondly,  the  costs  relating  to  the  uncertainties  inherent  in  this  type  of  complex 
programme, which may be covered by a 'contingency reserve' in accordance with 
normal  practice;  keeping  costs  under  control  during  the  various  phases  and 
making  all  those  involved  more  aware  of  their  responsibilities  should  make  it 
possible to minimise such uncertainties; 

–  thirdly,  the  costs  associated  with  the  materialisation  of  major  risks  unconnected 
with  the  management  of  the  programmes,  such  as  those  arising  from  serious 
technical  design  problems  or  from  non-contractual  liability  being  called  into 
question; there is little likelihood of such risks actually occurring, but if they did 
the costs involved could not be covered by the reserve provided for. 

13 

COM(2010) 700. 

EN 

17 

   EN 

                                                 
Against this backdrop there are three possible options.  

–  The  first  would  be  to  continue  to  fund  the  programmes  in  their  entirety  solely 

from the EU budget. 

–  The second option would entail the first two cost categories referred to above still 
being  financed  from the EU  budget, with the Member States taking on the risks 
which are unconnected with the management of the programmes. 

–  The third option would be based on a fixed contribution from the EU budget, with 

the Member States being responsible for financing any balance. 

These  options  will  be  examined  in  detail  in  an  impact  study,  and  the  solution 
ultimately  chosen  by  the  Commission  will  be  included  in  the  next  legislative 
proposal to amend the Regulation. 

At  this  stage,  and  subject  to  the  conclusions  of  the  studies  referred  to  above,  the 
Commission  takes  the  view  that  it  is  not  advisable  to  have  all  the  costs  and  risks 
associated with the programmes borne solely by the EU budget. Bearing in mind the 
size  of  the  EU  budget,  this  arrangement  might  actually  jeopardise  EU  funding  of 
other  priority  projects  or  programmes.  Moreover,  the  experience  gained  so  far 
indicates  that  the  option  chosen  should  aim  to  increase  the  awareness  of  all  the 
parties involved of their responsibilities with regard to keeping costs under control. 

With  regard  to  the  implementation  of  the  Galileo  programme,  the  table  below 
summarises  the  nominal  timetable  (without  margins)  for  completion  of  the 
infrastructure and for its operation.  

Galileo's  Full  Operational  Capability  (FOC)  should  be  achieved  in  2019-2020.  It 
might  change,  depending  on  availability  of  financing,  technical  problems  and 
industrial performance. 

TIMETABLE FOR STAGES OF COMPLETION OF THE INFRASTRUCTURE ARISING
FROM THE GALILEO PROGRAMME AND ITS OPERATION

Development phase

Deployment phase

Supplementary budget 
[infrastructure]: € 1 900 million

IOC (1)

FOC (2)

Operating cost (Galileo and  EGNOS)

Exploitation phase      

First services

All services

2008

2010

2012

2014

2016

2018

2020

2022

(1) IOC: initial operational capacity
(2) FOC: full operational capacity

201011242200 Communication-AnH.ppt

EN 

18 

   EN 

 
 
2.2.5.  The prospects for profitability and indirect benefits 

The prospects for direct financial revenues for the EU generated by the operation of 
the  systems  are  very  limited,  as  was  shown  during  the  negotiations  on  a  public-
private  partnership  which took place  between 2004 and 2007. This limited revenue 
potential undoubtedly contributed to the failure of those negotiations. 

–  The  EGNOS  and  Galileo  open  services  are  not,  and  will  not  be,  subject  to  any 
payment,  in  accordance  with  the  Regulation  and  in  line  with  the  other  systems 
which  are  already  in  use  or  which  will  emerge.  These  services  are  intended  for 
mass applications, and it is important for them to be adopted by as many users as 
possible in order to optimise the expected economic and social benefits; this also 
fits  in  with  the  systems'  public  service  remit.  Setting  a  royalty  on  chips  using 
Galileo  or  EGNOS  signals,  as  was  mooted,  would  run  counter  to  that  objective. 
The  direct  revenue  that  would  be  generated  would  be  considerably  less  than  the 
loss to the EU in terms of indirect revenue. 

–  The search and rescue service provided by the system resulting from the Galileo 
programme,  constituting  the  European  contribution  to  the  COSPAS-SARSAT 
system,  should  also  be  free.  There  are  no  charges  for  using  the  space  segment 
concerned or for receiving COSPAS-SARSAT alerts. 

–  Nor  should  the  EGNOS  SoL  service,  which  was  originally  conceived  primarily 
for civil aviation, generate any revenue in the long term. Introducing any form of 
payment  arrangement  would  be  very  likely  to  act  as  a  disincentive  for  potential 
users,  since  similar  systems,  such  as  WAAS  in  the  United  States,  are  provided 
free  of  charge.  However,  things  might  be  different  in  future  for  the  SoL  service 
provided by the system resulting from the Galileo programme, in that part of its 
technical design would be the outcome of consultation with users to meet specific 
needs and, in addition, this service and its pricing would match those of GPS. 

At this stage, in fact, only the commercial service and the PRS offered by the system 
resulting  from  the  Galileo  programme  are  likely  to  generate  revenue,  the  annual 
amount of which could rise steadily to reach an average of around € 70 million in the 
long  term.  Such  revenue  will  be  maximised  only  in  the  long  term.  Moreover,  the 
revenue  generated  by  the  PRS  will  depend  on  what  will  be  essentially  political 
decisions. 

While  the  direct  financial  revenue  generated  by  the  systems  seems  fairly  limited 
there  are,  by  contrast,  substantial  economic  and  social  benefits  to  be  gained  from 
these two sets of public infrastructure, comparable in a way to those arising from the 
spread  of  free  Internet  services:  they  are  estimated  at  an  aggregate  of  between€ 60 
and  90 billion  for  the  period  2010-202714.  These  benefits  arise  from  the  growth  in 
downstream  markets,  the  positive  effects  in  terms  of  public  utility  such  as  greater 
transport  efficiency  or  a  reduction  in  the  number  of  accidents,  and  the  knock-on 
effects of the investment made in the whole of the space sector. Since the operation 
of the  systems will constitute a public  service,  it  is  in the EU's interest to  optimise 

14 

There is a correlation between the level of these benefits and the date of completion of the deployment 
phase. The most recent delays have therefore had a negative impact on the expected returns from the 
systems. See footnote 6. 

EN 

19 

   EN 

                                                 
these economic and social benefits, rather than to seek to maximise direct financial 
revenue.  It  also  needs  to  be  remembered  that  Galileo  and  EGNOS  will  have  a 
significant positive impact on economic development and will stimulate growth.  

2.2.6.  Governance of the programmes 

2.2.6.1.  The Galileo deployment phase 

The  main  purpose  of  the  GNSS  Regulation,  which  was  recently  supplemented  by 
Regulation  (EC)  No 912/2010,  was  to  establish  a  stable  and  effective  governance 
framework  for  managing  the  development  and  deployment  phases,  based  on  an 
integrated model which included the delegation of tasks to ESA. Quite apart from the 
fact  that  this  framework  has  proved  satisfactory  so  far  (although  it  could  be 
improved), it would not be advisable to modify it to any major extent in the short or 
medium term. 

Given that deployment will not be completed before the end of the decade, making 
any  substantial  changes  to  the  governance  arrangements  before  then  would 
undoubtedly  constitute  a  risk  to  the  smooth  running  of  the  programme.  Stability 
provides an assurance of continuity and consistency, first with regard to the activities 
of  the  various  parties  involved  and  secondly  with  regard  to  the  various  decisions 
taken  throughout  the  whole  period  of  operation  of  the  programmes,  and  it  also 
ensures the programmes' credibility in the eyes of third parties. 

In  its  report  published  in  2009  the  Court  of  Auditors  highlighted  the  problems 
created by the over-frequent management changes which took place prior to 2007. 

2.2.6.2.  Operation of the infrastructure 

Operational  management,  which  includes  infrastructure  maintenance  and  renewal, 
has  four  components:  design,  construction,  operations  and  service  provision.  The 
experience  gained  with  EGNOS  shows  that  management  of  these  four  components 
cannot be compartmentalised; on the contrary, integrated management is a must. 

In  any  event,  taking  into  account  the  experience  gained  with  managing  the 
programmes, it is already clear that operational management, in addition to bringing 
together the four components that it comprises, needs to comply with the following 
principles: 

–  it must be compatible with the EU's role as owner of the systems and that of the 
Commission as the organisation responsible for managing the programmes, with 
the Commission as the sole decision-making body; 

–  it  must  be  based  on  a  simple  integrated  model  which  provides  a  clear,  single 

approach by the public sector; 

–  it  must  ensure  a  stable  long-term  framework;  afford  a  degree  of  flexibility  with 
regard  to  financial  management  and  staff  management;  be  organised  on  an 
effective,  reliable  and  transparent  basis;  have  clear  procedures  allowing  swift 
decision-making; 

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–  it must be able to retain all the expertise and knowledge built up in the course of 

the programmes; in particular, ESA know-how must be preserved; 

–  it must enhance the sense of responsibility on the part of industry and the prime 

contractor; 

–  it  must  ensure  the  independence  of  the  activities  concerning  accreditation  of  the 

security of the systems; 

–  it must take due account of the public nature of the services provided 

–  it must be able  to coordinate measures  to protect  the  systems  at European level, 

since they are highly sensitive. 

This  entails  entrusting  operational  management  to  a  support  structure  under  the 
Commission's control. In this connection, various possibilities can be envisaged 

With regard to EGNOS, the support structure might be ESA, the EU Agency, a new 
public  body  or  even  a  Eurocontrol  operational  entity.  The  Commission  intends  to 
discuss the  advantages  and  drawbacks of each of these options before submitting a 
detailed  proposal  to  the  European  Parliament  and  the  Council  in  2012.  The  set-up 
chosen will need to be established by 2014. 

Where Galileo is concerned, the exploitation phase for the initial services will start 
gradually  in  2014.  As  a  result,  the  deployment  and  exploitation  phases  will  run  in 
parallel  for  around  five  years.  During  that  period,  governance  of  the  programmes 
should  gradually  adapt  to  the  new  needs  arising  from  the  provision  of  the  first 
services. 

It also needs to be stressed that the operator will be required to satisfy the requisite 
conditions for certification as an air navigation service provider, in accordance with 
the regulations governing the single European sky. 

On  the  basis  of  the  forthcoming  discussions  on  the  financial  framework,  the 
Commission  will  submit  a  proposal  to  the  European  Parliament  and  the  Council  in 
good time concerning the various options for the governance structure to be set up to 
manage operations following completion of the full infrastructure. 

Conclusion 

The  European  satellite  radio  navigation  programmes  are  beyond  the  financial  and  technical 
capacity of individual Member States and therefore fall within the competence of the EU. In 
addition, and especially given their security requirements, all the EU Member States have to 
be involved in them. 

Since  the  reform  of  the  programmes'  governance  in  2007  the  Commission  has  recorded 
several  successes:  EGNOS  has  become  operational  and  is  performing  excellently,  and 
progress  is  being  made  with  the  deployment  of  Galileo.  Parallel  to  this,  several  horizontal 
measures  flanking  the  deployment  of  the  infrastructure  have  been  taken  on  the  regulatory 
front, with regard to international aspects and in respect of future uses. 

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However,  the  programmes  are  now  faced  with  fresh  challenges  arising  from  the 
materialisation of a number of risks which were previously identified by the Commission, and 
the  organisation  of  the  programmes  must  be  further  fine-tuned  in  order  to  increase  their 
efficiency. The project has experienced cost overruns attributable in particular to the increased 
cost of the development phase, the increased price of the launchers, the lack of competition 
for the award of some packages and additional costs associated with the programme. 

Furthermore, the economic situation of the EU and its Member States has led the Commission 
not to seek, up to now, the allocation of additional resources within the current multiannual 
financial framework, even though this is causing delays in completion of the full deployment 
of Galileo and an increase in overall costs. 

A new basis for the work on the European satellite radio navigation programmes needs to be 
established so that progress can continue without compromising the objectives laid down by 
the European Parliament and the Council. Accordingly, the recommended approach envisages 
the present organisation being maintained and improved over at least 10 years, although it will 
have to evolve in line with the needs of the exploitation phase. 

On the political front, several decisions still need to be taken. In a context in which Europe's 
economic  and  social  progress  is  heavily  dependent  on  mastering  and  using  leading-edge 
technologies  such  as  those  relating  to  nuclear  fusion,  space,  air  traffic  management  and  life 
sciences,  it  is  important  to  reach  decisions  about  the  means,  including  budgetary  means,  of 
coping with the risks inherent in such technologies. Conclusions also need to be reached on 
the development of the EU budget and on how the risks are to be apportioned between the EU 
and  its  Member  States.  The  decisions  laying  down  the  budgetary  and  financial  principles 
governing the continuation of the European satellite radio navigation programmes will need to 
be taken in parallel with those concerning the governance framework. This must seek to make 
all the players more aware of their responsibilities, in order to ensure an orderly transition to 
future governance arrangements while at the same time enhancing control of the project and 
of its associated costs.  

The adoption of such political decisions requires time and thought. Detailed proposals will be 
drawn up by the Commission at a later stage on the basis of the guidelines to be laid down by 
the European Parliament and the Council in the light of this report. 

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Annex 

Summary table of the expected use and impact of the EU satellite radio navigation programmes 

Domain 

Description 

Effect 

Road transport 

- improve road safety, especially in the event of emergencies, for cars, 
coaches and the transport of dangerous goods 

Reduce travel time and 
fuel consumption 

- improve road management and reduce congestion, help drivers with 
real-time travel, road and traffic information 

- improve tolling and electronic fee collection 

- improve level of services for travellers  

Logistics 

-  improve  management  efficiency  with  regard  to  containers  in  ports 
or railway stations 

Cut transport time 

- improve the level of service for customers 

Maritime transport  -  improve  traffic  management,  especially  in  ports  or  high-traffic 

corridors 

- improve safety of maritime traffic 

-  improve  police  authority  control  over  maritime  transport,  making 
checks faster 

- provide help for vessels in danger 

Air transport 

- facilitate use of less-well-equipped airports by civil aviation 

- contribute to the general objectives of the Single Sky policy and of 
SESAR 

- improve traffic management and safety at airports 

Agriculture 

- improve design and update of land registry information 

- allow precision agriculture and production monitoring 

- improve control over the use of EU subsidies 

Fisheries 

- vessel monitoring 

Improve  port  handling 
capacity  

Reduce  administrative 
burden and delays 

cancelled 
Fewer 
improved 
flights, 
airport 
capacity, 
especially at small ones

Increase 
farmers' 
productivity  by  10-
20%, 
reduce  CAP 
enforcement costs 

Reduce  administrative 
burden and delays 

Assistance to third 
countries 

- provide developing countries with easy-to-maintain infrastructure to 
cover basic needs, especially in transport 

Additional 
policy tool 

foreign 

Mobile com. 

- improve number and quality of services on telecom handsets 

New service offering 

Maritime activities  - improve search and rescue  

Reduce casualties 

Security  

- help Member States to fight terrorism, crime and illegal immigration  Increase security 

Disabled,  sick  and 
elderly people  

- improve the assistance tools for elderly, disabled and sick people on 
the move, promoting their mobility 

Improve quality of life 

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Fisheries and 
maritime transport  

- vessel monitoring 

- monitoring of rescue operations 

Make 
possible 

monitoring 

Limit  occurrence  and 
impact of oil spills 

Energy 

- energy transport monitoring 

Optimise grid 

- participate in the security of energy plants 

Environmental and 
civil protection 

- improve crisis management, including in third countries 

Reduce  response  time 
Enhance monitoring 

- increase safety of rescue teams  

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EU Agency:  European GNSS Agency.  

Glossary – List of acronyms 

–  Its  tasks  are  focused  mainly  on  security  accreditation  and  preparation  for  the 
commercialisation  of  the  European  satellite  navigation  systems  (the  new  legal 
basis for this Agency is Regulation (EU) No 912/2010 of the European Parliament 
and  of  the  Council  of  22  September  2010  establishing  the  European  GNSS 
Agency,  repealing  Council  Regulation  (EC)  No  1321/2004  on  the  establishment 
of structures for the management of the European satellite navigation programmes 
and amending  Regulation  (EC) No 683/2008 of the European Parliament and of 
the Council).  

ESA:  European Space Agency.  

–  The  European Space  Agency, an  international organisation, is Europe’s gateway 
to space. Its mission is to shape the development of Europe’s space capability and 
ensure that investment in space delivers benefits to the citizens of Europe and the 
world. 

CS:  Commercial Service.  

–  Encrypted and accurate to the nearest centimetre, the Commercial Service allows 
for  development  of  applications  for  professional  or  commercial  use  owing  to 
improved  performance  and  data  with  greater  added  value  than  that  obtained 
through the open service.  

Cospas-Sarsat:  

–  The  international  Cospas-Sarsat  programme  provides  accurate  and  reliable 
distress alert and location data to help search and rescue (SAR) authorities assist 
persons in distress, primarily in the maritime and aviation sectors. 

–  The objective of the Cospas-Sarsat system is to reduce, as far as possible, delays 
in  the  provision  of  distress  alerts  to  SAR  services  and  in  the  time  required  to 
locate  an  incident  and  provide  assistance. This reaction time has a direct impact 
on the probability of survival of a person in distress on land or at sea 

EGNOS: 

European Geostationary Navigation Overlay Service.  

–  EGNOS,  the  European  Geostationary  Navigation  Overlay  Service,  is  Europe's 
first  venture  into  the  field  of  satellite  navigation.  It  was  developed  to  increase 
satellite navigation reliability and accuracy by complementing the American GPS 
system.  

–  EGNOS  makes  existing  satellite  navigation  services  suitable  for  safety-critical 
applications such as flying and landing aircraft or navigating ships through narrow 
channels.  

ESSP:  European Satellite Services Provider.  

–  Founded in 2001, the purpose of this company is to operate the EGNOS system.  

FOC:  Full Operational Capability.  

–  Full  operational  capability  will  be  reached  when  the  entire  space  and  ground 

infrastructure of Galileo is completed.  

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Galileo: 

–  Galileo  is  the  global  navigation  system  developed  by  the  European  Union.  It 
comprises  a  constellation  of  orbiting  satellites  and  the  associated  ground 
infrastructure. 

–  It  will  provide  positioning  information  with  unprecedented  accuracy  and 
reliability. In its future configuration Galileo will provide coverage of the whole 
Earth,  with  any  given  point  covered  by  between  six  and  eight  satellites  at  any 
time. This means full and highly accurate positioning data for the entire planet.  

GNSS: Global Navigation Satellite System.  

–  GNSS  is  the  standard  generic  term  for  satellite  navigation  systems  that  provide 
geo-spatial  positioning  with  global  coverage.  By  extension,  it  also  includes 
regional augmentation systems such as EGNOS or its US equivalent, WAAS.  

GPS:  Global Positioning System.  

–  GPS is the American satellite geopositioning system operating worldwide.  

IOC: 

Initial Operational Capability. 

–  IOC is the minimum system configuration of Galileo ensuring the delivery of its 
initial services. This step is expected when the first 18 satellites are operational.  

OS:  Open Service.  

–  With positioning accurate to one metre, the freely accessible Open Service targets 
the mass market and is intended for motor vehicle navigation and location-based 
mobile  telephone  services.  Free  to  the  user,  it  provides  positioning  and 
synchronisation  information  intended  for  high-volume  satellite  radio  navigation 
applications.  

PRS:  Public Regulated Service.  

–  The  Public  Regulated  Service  is  restricted  to  government-authorised  users,  for 
sensitive  applications which require a  high  level  of service  continuity.  It  will be 
encrypted  and  designed  to  be  more  robust,  with  anti-jamming  mechanisms  and 
reliable  problem  detection.  This  service  is  intended  for  security  and  strategic 
infrastructure (e.g. energy, telecommunications and finance).  

Regulation:  Refers to Regulation (EC) No 683/2008 of the European Parliament and of the 
Council  of  9  July  2008  on  the  further  implementation  of  the  European  satellite  navigation 
programmes (EGNOS and Galileo). 

–  This Regulation lays down rules  for  the further implementation of the European 
satellite radio navigation programmes, including those relating to governance and 
the Community's financial contribution.  

SAR:  Search and Rescue.  

–  Galileo's worldwide search and rescue service will help to forward distress signals 
to  a  rescue  coordination  centre  by  detecting  emergency  signals  transmitted  by 
beacons and relaying messages to them.  

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SESAR: 

Single European Sky Air Traffic Management Research. 

–  SESAR  is  the  name  of  the  programme  aiming  to  provide  Europe  with  effective 
systems  for  air  traffic  management  in  order  to  upgrade  existing  systems.  This 
programme is the technological backbone of the Single Sky programme.  

SoL:  Safety of Life.  

–  The  Safety  of  Life  service  will  automatically  inform  users  within  seconds  of  a 
failure of any satellite or similar problem affecting performance. This service will 
be  made  available  for  safety-critical  applications  such  as  running  trains,  guiding 
cars, navigation and aviation. This service also fulfils the requirements of certain 
sectors for continuity, availability and accuracy and includes an integrity function 
alerting the user to any failure in the system. 

–   

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