Galileo: Europe's Satellite Scheme is Lost in Space

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Ho New / Reuters

The Soyuz-Fregat launch vehicle carrying GIOVE-B lifts off from launch complex at the Baikonour spaceport

Every self-respecting world power wants to be in space. What better way to signal that your ambition exceeds mere earthly domains than by conquering the heavens with rockets, satellites, and inter-planetary spacecraft? That, at least, is one way of looking at the European Union's space ventures. It already has a European Space Agency, which launched a probe to search for Martian life a few years ago. Now it wants to pepper the sky with satellites. Its multi-billion dollar Galileo satellite program will, according to breathless officials, create state-of-the-art navigational, telecoms and transport services, ending Europe's dependence on the U.S. global positioning system (GPS). And with sat-nav capability increasingly incorporated into mobile devices, it could put Europe at the cutting edge of a new generation of satellite service applications.

Sadly for the E.U., the reality is less cloud nine and more pie in the sky. Plagued by epic delays and woeful cost overruns, Galileo is stuck on terra firma. Funding disputes have forced E.U. governments to bail it out, and there are awkward questions about the benefits of a system that seems to offer only marginally more than you can get from the free GPS service. It is, critics say, a vanity project, devoid of commercial logic.

Even some Galileo insiders are against the project. In a U.S. state department cable published by WikiLeaks recently, Berry Smutny, the chief executive of German satellite maker OHB Technology, disparaged Galileo as "a stupid idea" and "a waste of E.U. taxpayers' money." OHB has denied the comments, which were reportedly made in 2009, just before Galileo awarded the company a €566 million ($760 million) contract to build satellites — but a week after the cable was released, it suspended Smutny.

The full scale of Galileo's troubles was revealed last week in a European Commission report. When European leaders gave their formal backing to Galileo in 2003, its cost was estimated at €3.4 billion ($4.6 billion), and the system was supposed to be operational by 2010. Now six years behind schedule, the predicted cost of the project has almost doubled to €6.4 billion ($8.6 billion), with annual operating costs of €800 million ($1.08 billion). "Everything that could have gone wrong has gone wrong," says Mats Persson, director of Open Europe, a London-based Eurosceptic campaign group.

Originally, taxpayers were only expected to foot the bill for the first four of 30 satellites to be put into orbit, with the private sector paying two-thirds of the costs of the rest. But the promise of riches through encrypted pay services failed to entice money men even before the credit crunch: the private consortium of aerospace and telecom companies selected to build and operate Galileo collapsed in 2007. Amid accusations of infighting and political meddling, E.U. governments agreed to take on all the costs.

The delays have eroded Galileo's supposed technological edge. Although the system is touted as being more accurate than GPS, the difference is marginal — a few meters — and the U.S. system is due to be upgraded shortly in any case. "When you talk about business, you talk about the bottom line: Is there a reason to go with Galileo when the free GPS is available?" says Nate Hughes, Director of Military Analysis at the Austin, TX-based global consultancy Stratfor. "It is very easy to talk of the promise and value of this capability. But we are talking about a redundant capability [and] projecting business profits on the basis of faith."

The Commission has nonetheless attempted to put a gloss on the various Galileo mishaps. It points to the growing ubiquity of satellite-navigation services, and the potential for consumer applications, like using cellphones to find the nearest pizzeria and setting up automatic road-tolling systems for cars. Search and rescue services could find people faster, people with medical conditions could wear locators, and tourists could have multimedia delivered to their phones as they walk around.

Speaking at a news conference at the European Parliament in Strasbourg, on Jan. 18, E.U. Industry Commissioner Antonio Tajani predicted that the global satellite-navigation market would grow from €130 billion ($175 billion) in 2010 to €244 billion ($330 billion) in 2020. Some 6-7% of European GDP — or €800 billion ($1.08 trillion) — depends on satellite navigation, he said. "We need to bear in mind that Russia is engaged in deploying its global system and China is continuing to increase its own systems too. Japan and India are also entering the scene," Tajani said. "That means Europeans cannot lag behind."

Officials also argue that big projects like this often need a kickstart from the state before they take off. That was the case with Airbus, which was created with public money to break Boeing's grip on the civil-aircraft market. And like Airbus, they say Galileo will assert Europe's independence in the sphere of satellite systems. "The strategic argument was a good one: Europeans should not depend on America for such a system," says Daniel Keohane, an analyst at the Paris-based European Union Institute for Security Studies. "But it is hard to justify budget overruns of billions of euros in the current climate."

At the moment, the E.U. remains committed to the ill-starred Galileo, which may one day deliver all that it promises. But right now, it just looks like the blackest of black holes.