Select Committee on European Union Fortieth Report

GALILEO: PROGRESS REPORT (11834/04, 13300/04)

Letter from Stephen Ladyman MP, Minister of State for Transport, Department for Transport to the Chairman

  I last wrote to your Committee about Galileo on 29 November 2005[34]. Your Committee maintains a scrutiny reserve on issues arising from Explanatory Memorandums 11834/04 and 13300/04. This letter is to update you on developments since November.

  We continue to support the UK objectives. The priorities are: a civil programme under civil control; and a robust, public private partnership (PPP). The main focus continues to be on the PPP negotiations. Discussions have just started at official level about the policy of access to the secure governmental service, the PRS.


  You asked in your letter of 14 December[35] for an explanation of the ways in which the project will add value to the advantages already available from similar commercial systems.

  In doing this I must draw a distinction between the provision of the infrastructure (the satellites and associated ground stations) for Global Navigation Satellite Systems (GNSS) and the development of applications that make use of the infrastructure (the receivers and the software associated with them).

  There are currently two constellations of GNSS satellites, the American GPS and the Russian GLONASS. The Russian system is slowly being resurrected from a rundown state caused by lack of funding. Both are fully publicly funded and are essentially military systems developed during the Cold War years although the open service is available so that anyone with a suitable receiver can use it. No guarantee of service and availability can be assumed. The US Government has given an undertaking of some level of continuity in recognition of the rapidly developing GPS applications. In December 2004, they broadened the management and funding of the system to include the Federal Transportation Department.

  Over the last 10 years or so, many commercial companies have made use of the existence of the GPS open signal to develop applications that provide positioning and timing data for civilian users. They do so, however with no guarantee of service and the applications are therefore unsuitable for safety-critical uses.

  To make use of the open GPS signal for safety-critical applications, regional augmentation systems are being developed which give users a virtually instant notification of errors in the GIPS and allow them to switch to a back-up navigation aid if necessary. These include the European EGNOS and WAAS, its American equivalent. These systems monitor GNSS performance at ground stations in a defined area and rebroadcast correction and integrity information via geostationary satellites. The differential GPS network provided in the UK by the General Lighthouse Authorities does the same thing around the UK coast, using VHF radio to broadcast the information—with a much more limited range.

  Galileo will provide a GNSS under civil, European control, and designed from the outset for civil purposes. It will be complementary with GPS. In its basic form the open service will supplement the existing GNSS signals to give a more accurate and reliable position, less so vulnerable to distortion and blocking. It will also provide additional services, not offered by GPS and GLONASS. These include a safety-of-life service with an integrity guarantee that will be available world-wide, and a commercial service that will allow service providers to offer equipment and software adding value to the basic positioning information. The other two services to be included in the Galileo signals are the PRS, the encrypted signal for use by government organisations in situations where it may be necessary to block the other GNSS signals, and an enhanced Search and Rescue service. This will give more accurate positioning of casualties and allow an acknowledgement of their distress signal.

  Although Galileo has been developed so far with public money, the opportunity for commercial added-value applications will enable the deployment and operation phase to be funded through a Public-Private Partnership. We expect that the increasing miniaturisation and cost-reduction in GNSS receivers will continue to encourage development of innovative applications in transport, energy, finance, recreation and other sectors.


  No decisions on Galileo are on the agenda for the Transport Council on 27 March. We expect an update on the key elements of the concession negotiations, which have been agreed with the consortium. Vice President Barrot may also comment on these key elements. Over lunch, the schedule may include a discussion about agreements with third countries during the deployment (PPP) phase.

  We expect the June Council to receive an assessment from the Commission on the final costs and risks of the concession contract. This is required by the Council conclusions of December 2004, and supported by a minutes statement by the UK and Austria. We continue to work with the Presidency and like-minded colleagues to ensure that this assessment will be rigorous and comprehensive.


  My November letter outlined the delays to the programme that resulted from the merger of the two consortia bidding for the PPP. Vice President Barrot asked the former Competition Commissioner Karel van Miert to broker a solution. The outcome was agreed by the members of the two consortia and presented for information to the Transport Council by Vice President Barrot. In subsequent correspondence, I stressed to the Vice President that the agreement between the consortium must be demonstrated to retain technical and economic efficiency. Council would have to decide whether the costs and risks of the concession contract were acceptable to the public sector. He assured me that the agreement did not commit either the Commission or the Member States, that the contract has to be affordable for the public sector and had to deliver considerable benefits. He also confirmed that the Commission will submit a reasoned analysis before signature of the contract "for a political assessment and endorsement by the Council and the Parliament". Officials have followed up these points with the Commission and Barrot's cabinet.

  The agreement between the consortium partners included decisions about lead responsibilities, if their PPP bid is successful. Inmarsat, the only UK company involved, will take the lead in the operating company, and its headquarters will be in London.

  Negotiations on the PPP concession are now under way. Partial agreement has been reached on nine key elements, and we expect this to be presented to the Council. The timetable for concluding the negotiations, including with the financial institutions which will provide most of the capital, is end 2006. This is more realistic than previous deadlines, but still demanding. The European Investment Bank is supporting the Commission, and an independent consultant has been appointed to produce the assessment expected for the June Council. Officials will continue to press for full transparency, especially on the overall costs and liabilities, and for a comprehesive assessment.

  I will provide you with an Explanatory Memorandum before the June Council.


  The Galileo Joint Undertaking (GJU) is the organisation managing the current programme and the negotiations. Under its statutes, established by Council Regulation (EC) No 876/2002, it has a finite life ending on 31 May 2006. To ensure continuity in the negotiations, the Commission proposes amending the Regulation to allow the GJU to be wound down gradually until the end of 2006. Budgetary and administrative procedures are being put in place to provide for a managed handover of responsibilities other than the negotiations from the GJU to the GNSS Supervisory Authority (GSA) during the course of the year.

  The GSA will own the Galileo system on behalf of the Community and act as regulator of the PPP. It is being established in Brussels for an interim period, for good logistical reasons. The UK bid for the GSA to be located in Cardiff continues to be promoted by the Welsh Assembly Government, with support from my officials and the FCO.


  It is not yet clear when the draft financial regulation for Galileo will be brought forward; discussions on the EU budget have not yet progressed to that level of detail.


  The timetable for completion of the satellite system has now slipped considerably. Because of earlier delays to the programme, and additional security costs, ESA asked its member states to contribute €187 million more for the In-Orbit Validation (IOV) phase of the programme. The Commission is expected to provide €201 million. The decision to open this funding process in ESA was delayed last autumn because of the political context of the merger of the two consortia. Provided ESA secures commitments from at least the five largest current contributors in the next few months, the launch of the first four operational satellites is now expected in the second half of 2008, with handover to the concessionaire in May 2009.

  The timetable envisaged by the prospective concession consortium envisages that the remainder of the thirty satellites will be launched by the end of 2010. As the Galileo system will be compatible with the existing GPS open service, some of the benefits of Galileo will start to become apparent from 2008 although the full commissioning of some of the specific Galileo services that are not available with GPS, such as the Safety of Life service, will have to await the deployment of the full constellation.

  The EGNOS service is expected to be certificated for aviation use in 2007. EGNOS was originally developed for aviation and will be integrated in the Galileo PPP.


  The Austrian Presidency expected to bring forward Council Conclusions on co-operation with third countries in the PPP phase. These have been delayed pending further discussion in the Commission on the legal position, and whether it is desirable that third countries become members of the Galileo Supervisory Authority. Under existing agreements, China and Israel are members of the Galileo Joint Undertaking. They, Norway, and Switzerland have requested membership of the GSA.

  In the preliminary discussions, we have stressed that membership, if granted, should mean sharing liabilities as well as costs. We would oppose giving access to the PRS governmental service to third countries. A lunchtime discussion may take place at the March Transport Council.

  Several other countries have expressed interest in some form of co-operation, including Saudi Arabia, Australia and New Zealand. It is agreed that the Commission will not seek new negotiating mandates until agreement has been reached on the principles.

21 March 2006

Letter from the Chairman to Stephen Ladyman MP

  Thank you for your letter of 21 March 2006, replying to my letter of 14 December 2005. Sub-Committee B considered your letter at its meeting on 19 April 2006.

  We were grateful for your update on this important project, and for your explanation of the timetable and the ways in which Galileo will add value to the similar systems already in existence and commercially available.

  You write that "Galileo will provide a GNSS under civil, European control and designed from the outset for civil purposes". Can you confirm whether Galileo will be used solely for civil purposes, or will there be military applications? If there were military applications, under what system of control and governance would they operate? Furthermore, could you clarify the difference between "Safety of Life Services" and "Enhanced Search and Rescue"?

  You also write that the Government's PRS signal "may be necessary to block other GNSS signals". Could you give us an example of where signal blocking would be necessary?

  We note that a number of key elements to this proposal are still to be negotiated and await the Explanatory Memorandum which you will provide to us before the June Council. We will maintain the scrutiny reserve at this stage.

24 April 2006

Letter from Stephen Ladyman MP to the Chairman

  Thank you for your letter of 24 April responding to my earlier one of 21 March on the Galileo programme.

  You asked about the nature of the programme. Galileo has been confirmed as a civilian system under civilian control. This has been restated by successive Transport Councils, most notably that of December 2004. It was also agreed at this Council that any change to that principle should be considered as a "Pillar II" issue; which, under the terms of the EU Treaty, requires the unanimous agreement of all member states. As you know Ministers have given assurances that we would use our veto to maintain this.

  You also asked for clarification of the purpose of three of the five services that will be provided by Galileo: the Safety of Life (SoL), the enhanced Search and Rescue (SAR) and the Public Regulated Signal (PRS).

  The SoL service is aimed at transport applications such as aviation and shipping, where guaranteed accuracy is essential It will provide a high level of integrity for such safety critical applications.

  The SAR service will enhance existing search and rescue systems in a number of ways, but most importantly it will enable distress messages to be received instantly from around the world (currently the average waiting time is about an hour) and for the location to be specified to within a few metres (rather than the current level of precision of about 5 kilometres).

  Finally, the PRS will be a highly robust and access-controlled service. Its signal would be encrypted, and be more resistant to jamming and interference. It would only be available to authorised government sponsored users, including emergency services, and is expected to remain available in periods where it may be necessary for other signals to be deliberately degraded or blocked to assist civil protection or in times of crisis.

  There are no decisions on the Galileo PPP on the agenda for the Transport Council in June and there is every liklihood that there will not be any before December. However, we expect there to be an oral presentation from the Commission. There has not been a great deal of progress on the Galileo programme since my previous letter, which is why I am sending this latest update as a further letter instead of the Supplementary EM that I had expected to be able to send you. I will continue to keep you informed of progress on this programme and expect to send you a Supplementary Explanatory Memorandum after the June Council.

18 May 2006

Letter from the Chairman to Stephen Ladyman MP

  Thank you for your letter of 18 May 2006, replying to my letter of 24 April. Sub-Committee B considered your letter at its meeting on 5 June.

  We were grateful to you for your responses to our questions. You write that the Safety of Life service (SoL) is designed for transport applications "where guaranteed accuracy is essential". Could you give an example of where this would apply? We will await the Supplementary Explanatory Memorandum from you following the June Council. We will maintain the scrutiny reserve at this stage.

6 June 2006

Letter from Stephen Ladyman MP to the Chairman

  Thank you for your letter of 6 June on the Galileo satellite navigation programme.

  I enclose Explanatory Memoranda (EM) on two recent Commission documents (not printed).

  EM 10431/06 refers to a Commission proposal to amend the Regulation that established the Galileo GNSS Supervisory Authority (GSA) and EM 10427/06 addresses the Commission communication on the current status of the Galileo programme.

  You had asked for a formal Supplementary EM to update the Committee on the Galileo programme. I understand your Clerk has since agreed with officials that given the broad and comprehensive nature of EM 10427/06, that you will be content to accept the enclosed document as meeting your request.

14 July 2006

34   Correspondence with Ministers 45th Report of Session 2005-06, HL Paper 243, pp 139-141. Back

35   Correspondence with Ministers 45th Report of Session 2005-06, HL Paper 243, pp 141. Back

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