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Galileo PFI delayed by revenue fears

Euro satnav project wanders off track

The smart choice: opportunity from uncertainty

Galileo, the planned European rival to America's Global Positioning System (GPS), is in trouble.

Much of the ambitious project's construction is supposed to be privately funded, and plans call for a united pan-European company to oversee the set-up and running of the Galileo network.

But the various private companies involved so far cannot agree on the details. Delays caused by wrangling have effectively stalled the whole enterprise, with at least a year's delay already, and European Union (EU) officials are attempting to move things forward.

The main corporate players are EADS, the company which owns Airbus and has a substantial share in the controversial Eurofighter; Thales and Alcatel-Lucent from France; Italy's Finmeccanica; Aena and Hispasat of Spain; UK company Inmarsat; and a German alliance led by Deutsche Telekom. Most of these firms have substantial involvement with European national governments, and some commentators have suggested that the usual Euro struggle for national pie-slice is at the root of the trouble.

All this has led Jacques Barrot, the EU transport commissioner, to write firm letters to the companies demanding the reasons for the delays. And Germany, as the current holder of the EU presidency, is attempting to get the weight of the national governments behind the Brussels administration. German transport minister Wolfgang Tiefensee is to chair a meeting of his counterparts next week.

But national jostling for position may not be the whole story. Some are asking why the private sector should sink large sums into Galileo, when it is not clear how much revenue would ensue or who would get it. The current American GPS system is paid for by the US Department of Defense, and is free for users worldwide. This is hard to compete against.

The London Financial Times today quoted an unnamed corporate exec as saying "Why sell Pepsi when you can get Coke for free?" It also suggested that European governments might have to guarantee a revenue stream to get companies to invest, perhaps by requiring emergency services to subscribe to Galileo.

Galileo could offer significant advantages over the existing GPS constellation, however, which customers might pay for. GPS receivers often lose their locating signal where large areas of the sky are obscured, as in built-up areas, and new satellites may be able to eliminate or reduce this problem. Galileo is also intended to offer a paid-for signal accurate to less than 1 metre, which is much superior to ordinary GPS performance. Nonetheless, it is unclear whether or how much people will pay for this added functionality.

It isn't even clear that they will have to pay if they don't want to. GPS, for instance, was originally intended to offer its full accuracy only to US and allied forces, but workarounds were developed almost at once. One of the most popular is so-called "Differential GPS," (DGPS) where the regional error in the publicly-available GPS signal is constantly worked out by a ground station at a known location and transmitted to the DGPS receiver using any of a variety of comms links. Accuracy to rival the new Galileo signal is often achievable, and DGPS isn't hugely complex or expensive to set up.

There may be simpler ways to get Galileo pay functions for free. Galileo test satellites are already in orbit, and the encryption on their signals was cracked almost at once. This is not to say that the same will happen to the main system when and if it goes live, but it seems fairly likely. The situation is much the same as that with high-def DVD; legitimate customers must be able to get the content, so hackers will probably be able to as well.

And there are other foes for Galileo to face. The occasionally-erratic Russian GLONASS constellation has been around for a long time, and the nascent Chinese space industry is said to be moving fast with yet another rival. Meanwhile, other locator-tech solutions such as E-OTD have been implemented using existing mobile masts rather than satellites.

All in all, the Galileo companies' doubts over revenue seem quite understandable. Without a big injection of government cash, the route ahead may be a difficult one to navigate. ®

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