EU to name Galileo satellite system supplier in December

The European Union will announce in December which of three industrial consortia will set up and operate its Galileo satellite...

The European Union will announce in December which of three industrial consortia will set up and operate its Galileo satellite navigation system.

Rainer Grohe, executive director of the Galileo Joint Undertaking, said the decision on which bidder wins the contract will be decided by 17 December and formally announced after EU leaders approve the decision.

The three consortia competing for the contract have to submit their bids by 1 September. They include Eutelsat, made up of Eutelsat, Hispasat, Logica CMG and Aeropuertos Españoles y Navegación Aérea; iNavSat, comprised of European Aeronautic Defence and Space Company, Inmarsat Ventures and Thales; and the Vinci Concessions Consortium, made up of Vinci Concessions, Alcatel and Finmeccanica.

The winning consortium will be responsible for the deployment of Galileo, including the launching of 26 to 28 satellites before the system becomes operational in 2008.

The winning consortium will have to find at least two-thirds of the £1.4bn cost of the deployment phase.

The successful bidder stands to win a contract that could represent multibillion-dollar business, according to Grohe. Studies prepared by the Galileo project estimated that the market for satellite navigation-based services was worth £10bn in 2001 and could rise to £94bn by 2015.

In the initial phase the heaviest users of Galileo's services will be in transport management. However, Grohe predicted that over time the bulk of the revenue will come from mass market applications such as devices for personal use. "I feel strongly that satellite navigation will be a mass product and consumers will use it like they use mobile phones," he said.

In future, all mobile phone chipsets will be equipped for satellite navigation and the mass market will have the most potential, although it will be up to the concessionaire to develop this, Grohe said.

However, because Galileo becomes operational towards the end of the decade, service providers are reluctant to commit to projects now, he said.

"The planning times for service-orientated business are much shorter than in the big investments industry," Grohe said. "We are finding there is an enormous interest in service industries such as telecommunications. The first question they ask is when can they use the system. If we say 2010 they say come back in 2009. The lack of compatibility between their planning horizons and ours is one of the problems," he said.

Galileo was designed to complement the US' Global Positioning System, not compete with it directly, Grohe said. Nevertheless, he said the Galileo system will have some advantages over GPS.

"GPS is and remains a military system designed for military purposes and not for commercial ones, and Galileo is a civilian system," Grohe said. "We will have better accuracy, but the next generation of GPS, GPS III, will probably match that."

As the core function of GPS was to serve the military, the US had no interest in providing extra features to customers and would not provide the legal liability Galileo will offer, he said.

Grohe claimed that one of the main benefits of the European system was signal integrity. This means that users are notified in real time if there has been any signal disruption. Poor signal integrity can prove problematic in areas such as air traffic control when aircraft cannot accurately pinpoint their position because of an impaired GPS signal.

According to Grohe, Galileo will have better coverage, especially at high latitudes that are crossed by aviation routes, as GPS signal penetration in densely populated areas is unreliable.

Galileo's planned application range covers transport, timing, engineering, science and research, environmental monitoring and control, search and rescue and recreation with direct applications for oil and gas, banking and insurance, telecommunications and agriculture.

Simon Taylor writes for the IDG News Service

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