Strategy study (February 2009)

Main messages

The Galileo programme will bring important returns to the EU

GNSS enables a large and fast growing market which will account annually for about €236bn in revenues worldwide by 2025.

Galileo could provide cumulative public benefits of over €50bn in the 2008-2030 period.

The public sector's interest is to capture these benefits. As from today, it should activate the following two levers for both Galileo and EGNOS:

1. Optimise the systems for their use by citizens and businesses, via effective programme management.

2. Prepare the market for fast GNSS adoption in as many sectors as possible by leveraging R&D (e.g., Framework Programmes for Research), market monitoring and market development activities and especially by ensuring effective commercial operations for EGNOS.

Detailed findings and recommendations from the strategy study.

Market

GNSS enables a large and fast growing market which will account for about €236bn per year worldwide in 2025.

LBS and road transport are expected to account for more than 95% of total market revenues. Non-civil (e.g., police and fire) and professional (e.g. precision agriculture, GIS) markets are also relevant due to the Galileo differentiating factors vis-à-vis its competitors.

GNSS penetration in the road and LBS segments is foreseen to grow rapidly until Galileo reaches full operational capability (FOC), reaching close to 100%. After FOC, most receivers will be GPS and Galileo enabled, and might also include Glonass and Compass capabilities.

In the downstream value chain, service providers (e.g., Google, Vodafone) and device manufacturers (e.g., Nokia, TomTom) will drive the LBS and road markets.

Competition

Competition among GNSS providers will get tougher as other global systems are launched in the future. However, threats from alternative positioning technologies are minor.

Experts are expecting a three-year delay in Galileo FOC. By then Glonass, new GPS features (L2C, L5C) and possibly Compass will be launched.
Galileo is likely to have a competitive advantage in Open Service, Commercial Service, Public Regulated Service and Search and Rescue.

Alternative positioning technologies that are either satellite based (e.g., RTK, DGPS) or non-satellite based (e.g., WiFi, IMU) are complementary to GNSS.

GNSS Benefit

Galileo is expected to bring over €50 billion in benefits to the EU in the 2008-2030 period

Most benefits will come from the downstream sector (€37bn-€44bn), while benefits from the upstream sector will be limited (€4.1bn). Business and private users will be the second main beneficiaries (€11bn).

Significant social benefits are also expected (€3.1bn).

Public sector opportunity and key tasks

The public sector objective should be to maximise these benefits by acting now. Tough competition means these benefits will decline quickly over time. In case of programme delays, benefits are expected to decline at a rate of €3bn-€4bn per year. Due to the tight schedule and the inherent risks (e.g., satellite launches), tight programme management is essential to secure the expected benefits.

To achieve GNSS benefits, the EU should focus on the following tasks:

Prepare and optimise the systems to satisfy user requirements and to ensure their competitiveness in order to secure GNSS adoption by citizens and businesses – taking into consideration budgetary and procurement constraints.

 Prepare the market in order to maximise GNSS (hence Galileo) penetration in downstream applications by, for example, ensuring the development of appropriate tools (simulators, developer website including SIS ICD, etc.), promoting R&D and innovation, supporting adequate regulatory framework and improving general awareness in the market about the value-added of the systems, working on removing obstacles to take-off in the LBS and road markets.

Operate and exploit EGNOS with SoL introduction in aviation and market testing CDDS.

Author: LEK