Friday, March 16, 2007

The Airbus of space

The EU's Galileo satellite navigation system is in the news in a small way this week, with even the BBC website reporting that the project is in trouble – although it will only concede that it is in a "decisive phase", facing "big delays and cost overruns".

On Wednesday, however, the Financial Times was distinctly less sanguine, noting that, "Profit doubts halt Galileo development" and that "doubts among private contractors involved in the project over its profitability" were at the root of the troubles.

This, we were told, had led EU transport commissioner Jacques "Wheel" Barrot to write to the eight companies forming the consortium which is building the system "to discover the reason for more than a year's delay in the project".

That, at the very least, is a tad disingenuous as, from July last year it was very clear that the project was in trouble, and progressively more so, through August, October, November, and December - all with minimal coverage by the media. It was in December, therefore, that we wrote of the "bizarre fantasy world of the commission", matched "only by the myopia of the MSM", remarking that we could have another "Airbus" on our hands – a "vastly expensive technological white elephant, draining precious funds from member states, with no hope of repayment."

There was no relief by late January, as it became increasingly evident that the commercial model on which the project was based was fundamentally flawed.

This in turn has led to a reluctance on the part of the projected operating consortium to pick up its share of the €3.2 billion cost of launching the 30 satellites and building the ground infrastructure. One third of the overall cost is coming from the EU but the rest was to come from the consortium, which would then recoup its investment by selling location-based technology and services.

By the end of 2006, the consortium was to have formed a single Galileo operating company and have appointed an independent chief executive so the project had a "clear decision making structure". However, no company has been formed, and the consortium remains rudderless - and unable to place orders for Galileo's critical satellites. Only four have so far been ordered and unless orders for the remaining 26 are placed shortly, delays will spiral.

The New Scientist reports that the continued delays in ordering the satellites are having an expensive knock-on effect. Last week, Galileo's technology developer, the European Space Agency, was forced to order Giove-A2, a €30 million Galileo signal testing satellite. It had not planned for the satellite – and only ordered it so it could place it in orbit and maintain rights to Galileo's frequency allocations.

When the current orbiting test craft Giove-A stops broadcasting Galileo signals in mid-2008, after its fuel runs out, the International Telecommunications Union can reassign the frequencies to others unless another craft replaces it.

Originally, Galileo's first four operational satellites (which have been ordered) were to have been in orbit by 2006 – but they have been pushed back to 2009 or beyond, not soon enough to maintain the frequencies. Another test craft, Giove-B, has suffered repeated onboard computer problems and is still grounded. If that craft can eventually launch, however, the newly ordered Giove-A2 satellite, which is funded by taxpayers, may remain grounded after all.

Nevertheless, Barrot yesterday chose to pin all the blame on the consortium, which includes Airbus owner, EADS, again writing to the members, complaining of "foot-dragging".

Barrot also wrote to the German presidency and the European Parliament saying the planned 2010 completion of the project was "in jeopardy." Yet again, this is extraordinarily disingenuous as Barrot's spokesman has already conceded that the timetable for putting the system in place had already been delayed until 2011 - from 2008 originally touted when the system was approved in 2004 - and that more slippage was expected. In fact, a German technology analyst, Bitkom, reckons Galileo will not be up and running until 2014 or later.

Just to add insult to injury, the Spanish government has decided to block any progress in talks by pushing for more control centres to be based in Spain. It wants two control centres on top of those planned to be built in Germany and Italy. That demand had prevented the two Spanish firms signing a pact with the others, prompting a complaint from an EU official that, "Member states are pushing more for national interests than for the overall community interests."

According to the New Scientist, the EU commission is losing patience and is now warning that it might look for new ways to complete the project, "based on a detailed technical, financial, programme management review." Even then, negotiations on a final agreement on a 20-year services and satellite contract for what ever operator is chosen are unlikely to be completed before the end of 2008.

All of this though ignores the underlying flaw in the project – that the EU is expecting to be able to charge for navigation signals that are at present supplied free of charge by the US Navstar system, with the expectation that signals will also be supplied by the Russians and the Chinese, through its Beidou satnav network, free of charge. Thus does the Financial Times cite an unnamed executive saying, "There is a doubt over the revenues," adding, "Why sell Pepsi-Cola when you can get Coca-Cola free?"

Anyhow, Barrot is going to dump the whole mess in front of the Commission next week and is looking for a mandate to set a 10 May deadline for the consortium to act. Based on their reaction, he expects to recommend to the EU transport council in June whether the project can go ahead in its current configuration and what options, if any, should be considered.

It is thus UKIP's Gerard Batten, who says, "It is looking increasingly like an Airbus in space." He is not alone. Paul Verhoef, Galileo programme manager at the EU commission thinks likewise. "Galileo is now being compared with the Airbus situation," he says. "Unfortunately that analysis is correct."

Batten thinks that taxpayers would be forced to bail out Galileo. That, however, is unlikely, as member states have been extremely reluctant to fund the spiralling costs, leaving the very real prospect that the project may have to be abandoned, jeopardising, as the IHT observes, Europe's aim of being a global technological player – and much more.


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