MUNICH SATELLITE NAVIGATION SUMMIT: IS GALILEO

C O N F I D E N T I A L SECTION 01 OF 03 BERLIN 000247

SIPDIS

SIPDIS, STATE FOR EUR/AGS, EUR/ERA AND EB/IFD/OMA

E.O. 12958: DECL: 02/28/2018
TAGS: EAIR ECON EINV ETRD PGOV PREL TSPA EUN FR GM
SUBJECT: MUNICH SATELLITE NAVIGATION SUMMIT: IS GALILEO
TRULY BACK ON TRACK?

REF: A. BERLIN 142

B. MUNICH 652

C. BRUSSELS 310

Classified By: EMIN Robert A. Pollard for reasons
1.4(b) and (d)

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SUMMARY
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1. (C) The 6th Annual Munich Satellite and Navigation
Summit, held February 19-21, 2008, focused largely on the
Galileo program's future. Though prospects have improved
from a year ago, the program still faces significant
challenges, including: an aggressive schedule for a fully
operational and certified 30 satellite constellation by the
year 2013; a European Parliament-imposed funding limit of 3.4
billion euros; and publicly visible political tension among
Galileo governing bodies, such as the Global Navigation
Satellite System (GNSS) Supervisory Authority (GSA) and the
European Commission (EC). The resounding theme at this
year's conference was "Galileo is back on track," though it
was evident from the various presenters that, from a schedule
and budget perspective, there is no room for error and that
Galileo could still easily become derailed again. This is
the first of two cables covering the 2008 Munich Satellite
Navigation Conference. This cable deals with
Galileo-specific issues. The second will address broader
worldwide GNSS issues. END SUMMARY.

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NO INCREASE IN GALILEO'S BUDGET FORESEEN
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2. (SBU) Paul Verhoef, Head of Unit at the Directorate
General for Energy and Transport within the EC with
responsibility for the Galileo satellite navigation program,
stated firmly in his presentation to conference participants
that both the EU Council and Parliament have made it very
clear that the 3.4 billion euro budget is the sum total of
resources that will be made available to the Galileo program
though 2013. He emphasized there would be no increases in
funding. This sentiment was echoed by Etelka Barsi-Pataky, a
member of the European Parliament (EP) Committee on Transport
and Tourism. Barsi-Pataky stated that Committee members are
convinced that restricting Galileo's budget to 3.4 billion
euro through 2013 is the only way to keep the project on
schedule and to obtain maximum return on the investment.

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PUBLIC SQUABBLING OVER GSA'S FUTURE ROLE
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3. (SBU) Conference participants questionedthe utility of
the GSA in the wake of the collape of the Public-Private
Partnership (PPP). Unti now, GSA had the lead on signing
and monitoringimplementation of concession contracts under
the PPP. In response to a question on whether the EP's
involvement would make Galileo's bureaucracy eve more
unwieldy, Barsi-Pataky said the EP has recmmended that the
GSA be dissolved or, at the very least, that its role be
re-evaluated. The EP recommendation was motivated by the
need to streamline bureaucracy and insure strong central
control. GSA's executive director, Pedro Pedreira, seated
next to Barsi-Pataky, appeared visibly disturbed by
Barsi-Pataky's comments. Pedreira later defended GSA's role,
stating publicly that he was disappointed by the Committee's
decision. Verhoef, speaking on behalf of the EC, defended
the GSA and stressed the need for experience and continuity.

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EU SOFTENING STANCE ON "COMPLETE" INDIGENOUS DESIGN
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4. (C) Giuseppe Viriglio, ESA Director of Telecommunications
and Navigation, spoke about the possibility that EU
industries might procure non-EU entities for certain
components that demonstrate significant advantage. When
asked to clarify this position, Viriglio stated that the
decision to permit contractors, under certain circumstances,
to look beyond the EU to procure components was made in the
best interests of Galileo. Asked about International Traffic
in Arms Regulations (ITAR)-related implications of the
decision, Viriglio said that ITAR would not be required.
Since Galileo is not being built for export, there should be
no concerns about exports to a third country. (COMMENT: We
suspect that the USG might take a different position.)


BERLIN 00000247 002 OF 003


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EADS ASTRIUM INTERESTED IN SUBCONTRACTING TO BOEING
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5. (C) Boeing Satellite representatives Frank Czopek and
Michael Rizzo approached Global Affairs officer with
information that EADS Astrium had made a "serious inquiry"
about procurement of signal generators for Galileo and the
program's interest in using six high-level Boeing Satellite
engineers on a temporary ("on loan") basis. Czopek and Rizzo
said Boeing is very interested in providing contractual help
to the EU in support of Galileo, but were concerned about
possible ITAR flags that may be raised. They would like to
get the ball rolling as soon as possible and initiate a
contract proposal to EADS-Astrium.

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OHB AND EADS-ASTRIUM TO RECEIVE CONTRACTS IN PARALLEL
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6. (C) In a conversation with USG officials on the margins
of the conference, Alain Bories, OHB Senior Vice President
for Strategy and Business Development, spoke glowingly about
the prospects for OHB's involvement with Galileo. When asked
how OHB will figure into the Galileo Satellite contract,
Bories stated that contracts for the first two of three total
batches of Galileo satellites to be procured (batches consist
of 10-12 satellites each) would be awarded to both OHB and
EADS-Astrium in parallel. Bories added that the better of
the two designs will be "rewarded" with the contract for the
final batch.

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THE MARKET IS NOT WAITING FOR GALILEO, BUT WHEN IT COMES...
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7. (SBU) The consensus of private industry representatives
was that the vast majority of customers are currently
satisfied with GNSS quality of service in terms of
interoperability with GPS and that any future fees associated
with new GNSS signals would not be received well by the
industry or customers. GNSS receiver chip manufacturers have
experienced an incredible boom in the personal navigation and
hand-held GNSS device markets in recent years and as a result
the industry feels it is in tune with customer demands and
needs. They assert that, as GNSS alternatives become viable
and more widespread, the increase in freely available signals
will only yield benefits for end-users by increasing
accuracy, stability and signal availability.


8. (SBU) Herbert Blaser, VP of Marketing for u-blox AG (a
Swiss semiconductor company and market leader in GPS modules)
told conference participants that "any licensing fee
associated with Galileo will dramatically reduce its effect."
Blaser went on to say that the industry has been waiting for
Galileo for some time now and has built in anticipation of
Galileo, but there "is still no Galileo." This sentiment was
echoed by Christian Lenz, a Systems Engineer from U.S.-based
Broadreach Space Flight Hardware and Vehicle Design.
Christian stated that there is currently no industry demand
right now for Galileo, but when it comes it will be used -
"provided that it is free."

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BUSINESS MODEL: SERVICE GUARANTEE BUILDS CUSTOMER TRUST
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9. (SBU) An essential aspect of the Galileo business model
is the idea that the proposed encrypted civilian service (CS)
- to be made available for a monthly service fee - will come
with a guarantee of service certificate. The EU is pinning
its hopes on the notion that private industry will turn to
CS, as opposed to other free-of-charge GNSS signals, for
critical applications because of the service guarantee. As
explained by Martin Grzebellus, Managing Director of Munich's
NavCert GmbH, certification of Galileo CS will provide an
integrity signal to all services and will answer liability
questions. He added that although certification does not
guarantee that a system will work, it does reduce incurred
risk and thereby increases safety. Kenneth Kvinnesland, Head
of Space Activity at DNV in Oslo, Norway, added that a
certification is really a bill of trust that ensures GNSS
accuracy, availability and integrity can be trusted.
Kvinnesland also noted that although Galileo development is
under way, the certification process has not yet begun. This
needs to "get going right now" if it is to be, in fact,
essential to the business model.

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BERLIN 00000247 003 OF 003


CERTIFICATION ASPIRATIONS COULD BE CLOUDED BY INTERFERENCE
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10. (SBU) A potential difficulty with the Galileo CS
certification model is how to address issues of reduced
quality of service due to external interference. As
explained by Francisco Salabert, Head of the Eurocontrol GNSS
Policy Office, interference is the main obstacle to
certification. Salabert promoted the use of inertial
navigation systems (INS) working in conjunction with GNSS
systems to offset interference problems. At the Galileo Test
and Environment (GATE) center located in Oberpfaffenhofen
Bavaria, Germany, interference problems have already
presented themselves. Guenter Heinrichs of IFEN GmbH stated
that radiation from a military signal in Austria has been
causing significant interference on the Galileo E5b and E6
signals. He added that destructive interference in the case
of the E5b signal has caused testing to fall short of desired
accuracy goals.

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GALILEO LAUNCH STATUS UPDATE
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11. (U) Sylvain Loddo, a manager at ESA Galileo Project
Office, stated that the next Galileo In-Orbit Validation
Element (GIOVE)-B launch is now scheduled to occur on April
26 2008 from a Soyuz launch vehicle at Baikonur space center
in Kazakhstan.

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COMMENT
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12. (C) While participants offered many justifications for a
3.4 billion euro satellite capability (e.g., economic growth,
development of strategic EU GNSS technical knowledge skills
and abilities and enhanced end-user accuracy and
availability),the program's main impetus is still the desire
to have a satellite capability independent of GPS, GLONASS or
any other GNSS system. EU-affiliated participants at the
conference portrayed GNSS independence as critical to the
EU's infrastructure, especially as more safety of life and
key infrastructure systems become increasingly dependent on
GNSS data.


13. (C) The proposed evaporation of the GSA, already a
contentious political issue, is not likely to go away given
the unresolved questions of how to balance power and
decision-making among the EC, ESA, and any remnants of GSA.
The issue has started to take on additional complexity given
that Galileo is now being funded directly by taxpayers in EU
member states. The controversy can be expected to heat up if
component contracts end up being issued outside the EU, a
prospect most conference participants considered likely if
(as expected) deadline and budget pressures resurface.
POLLARD