European Union To Sole-Fund Galileo

May 15, 2007

Financing for Europe’s GNSS, Galileo, will come solely from the public sector, the European Commission declared today, May 16, in Brussels. The public-private partnership (PPP) that had crippled the ambitious project was finally abandoned.

EU Transport Commissioner Jacques Barrot said that the 27-nations bloc's biggest-ever joint technological project could only reach orbit altitude if the public sector took full financial responsibility. He made the announcement as he presented three options for the bogged-down Galileo project: a complete EU takeover, partial public financing, or total elimination.

Barrot prefers to take over the project now, at an estimated public cost of about E2.4 billion ($3.26 billion) in addition to the E1.5 billion ($2 billion) already allocated in the 2007-2013 budget period, and to issue a new tender to operate the system once it is built and in space — by the end of 2012, according to most recent and optimistic forecasts. The European Space Agency (ESA) would oversee construction and deployment of the satellites, though European aerospace companies would still be involved in supplying technology, without the key stumbling block of assuming financial risk.

EU Industry Commissioner Guenter Verheugen ruled out cancelling Galileo. “Galileo is from the European Commission standpoint an absolutely essential project,” he stated. “We don’t have an option of giving up on Galileo.”

One industry spokesperson confided privately that while the companies banded awkwardly together in a Galileo operating consortium met the initial requirements imposed by Barrot two months ago, they had no intention of signing a contract requiring them to finance two-thirds of the project. “The market is just not there. We were too optimistic. GPS is fine for most purposes. Besides, who gets the money from satellite navigation services? Usually the maker of the device, not the satellite operator.”

Milestone. ESA reported transmission of the first navigation message from the Giove-A satellite, uplinked on May 2 from the Guildford ground station. The message was similar to those to be sent by the operational Galileo system and contained data needed by user receivers to calculate their position. Since January 2006, the satellite has broadcast only data for measuring receiver-to-satellite distance.

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