By Gerry Oberst

In a June report, the European Commission reported that the Galileo satellite navigation program is the largest pan-European industrial project ever. European scientists and industry have been working on this project for almost 10 years, but the report also notes that the program will not start commercial operation until the end of 2010 at the earliest — two to three years later than first anticipated and a development that could affect the commercial applications anticipated for the program.

When the idea of the Galileo project was broached near the end of the 1990s, the anticipated operational date was 2008. At the time, one government consultation assessed this schedule to be optimistic. The most recent paper on the project’s progress shows that assessment was correct.

A major sticking point is the development of a concession contract for the private operators of the system. Negotiations continue, but the Commission in June reported differences of opinion over sharing of risks with the system design as well as over market development and anticipated commercial revenue.

Delays in the Galileo program could have implications for the various sectors that the Commission believes will create a commercial market. The Commission lists several European legislative items that could support the economic viability of Galileo technology. Looking at these items closely, however, shows that Galileo’s slippage could affect its market viability as those potential market opportunities come into play earlier than the system itself.

For instance, the Commission refers to a 2004 directive on European electronic toll systems. That directive assumed Galileo would be in service by 2008 and requires electronic toll systems by January 2007 to use either satellite positioning, a 5.8-gigahertz terrestrial system or mobile telephony call location technology. The Commission is supposed to report on the migration of toll systems to these technologies by the end of December 2009, but if the European satellite system is not yet functioning, there will not be much to report on the Galileo aspects of the system.

Similarly, a 2005 Council regulation on protection of animals during transport clearly favors application of Galileo positioning. The regulation calls for all such transport to have a navigation system by 2009 (with a Commission report on the migration due in January 2008). Again, if Galileo is not up and running, this transport market will already be locked into alternative technologies.

As another example, the 2005 directive on river information services on European inland waterways recommends the use of satellite positioning technologies but requires technical specifications to be set by the end of 2006 — too early for Galileo.

Other potential markets identified in the Commission communication include emergency call services, which themselves have been delayed for years, and vessel traffic monitoring, which requires accuracy of within 500 meters — not the 1 to 2 meters promised by Galileo.

The GPS system already has demonstrated there are tremendous market opportunities for positioning and navigation systems. The Commission will no doubt take this potential in account when it presents a paper on Galileo applications at the end of 2006. If the program continues to slip, however, the Commission will have to scramble to amend the various directives already in place that call for implementation reports before the Galileo system will commence service.

The simple way to ensure that Galileo is used from the outset is to require it for certain applications by regulation. This approach would likely cause a public outcry so long as the U.S.-operated GPS system continues to be free.

An alternative approach would require a level of accuracy that only the Galileo system can ensure. The Commission’s initial 1999 paper on the potential system proposed this approach, stating that "regulatory action could thus underpin [European Union] objectives" and noting that Galileo would be designed to permit certification that other systems might not offer.

Even at that time, the Commission was warning that fast action was needed to avoid that other systems become market standards. That risk is even higher today, because there are other technologies available for location-based services.

The Galileo program is said to be perfectly in line with the European Union’s so-called "Lisbon growth strategy" that calls for the EU to become the world’s best economy by 2010. If Galileo slips further, it will not be a part of that strategy.