The European Commission warned on Thursday that it will examine new ways to complete the Galileo satellite navigation system, which has stalled amid doubts about its profitability.
The system, worth around 聙1.5 billion ($1.95 billion) and meant to be in space in 2010, is aimed at breaking Europe鈥檚 dependence on the free US Global Positioning System (GPS) used aboard many cars, boats and aircraft.
In a letter to the European Union鈥檚 German presidency, Transport Commissioner Jacques Barrot requested a mandate to study 鈥渞easonable alternatives鈥� to the current Galileo consortium of eight private contractors.
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Stepping up the rhetoric, he accused industry giants AENA, Alcatel, EADS, Finmeccanica, Hispasat, Inmarsat, TeleOp and Thales of being responsible for delays in the project (see Political infighting threatens Europe鈥檚 satnav plans).
鈥淚 consider that the delay so far accumulated and the absence of any sign of progress 鈥� must now be considered as risk for the delivery of the project in the timeline that we envisaged,鈥� Barrot wrote.
Spiralling costs
鈥淢oreover, we have to fear significant cost increases which could go well beyond the foreseen budget,鈥� he said in a letter that was also sent to the eight contractors and the European parliament. 鈥淚 will undertake to explore alternatives for delivering the project, based on a detailed technical, financial, programme management review.鈥�
Barrot complained that there was no single company structure to regroup the partners, nor any negotiator to speak with the Galileo Supervisory Authority, the public body overseeing the project.
Negotiations on a final agreement on a 20-year services and satellite contract are also unlikely to be completed before the end of 2008. Barrot鈥檚 spokesman said that the timetable for putting the system, planned to ultimately involve around 30 satellites, in place had already been delayed until 2011, and that more slippage was expected.
The Financial Times newspaper said there were doubts about whether Galileo could attract enough revenue, as people within the project doubted whether it would restart unless there were guarantees it could win business away from the free GPS.
鈥淭here is a doubt over the revenues,鈥� an unnamed executive told the paper. 鈥淲hy sell Pepsi-Cola when you can get Coca-Cola free?鈥�
May deadline
While it is difficult to see what real alternatives to the big eight Barrot has, the commissioner said he wanted to set a 10 May deadline for the companies to act, and expects to receive next week a mandate to make such a demand.
Based on their reaction, he said he would recommend to EU transport ministers in June whether the project could go ahead in its current configuration and what options, if any, should be considered.
A British industry insider, speaking on condition of anonymity, accused Spain鈥檚 Hispasat of being behind the delays. 鈥淚t is Hispasat of Spain which is causing the block, nobody else,鈥� the source said.
鈥淭hey are demanding work that has already been allocated to France, Germany and Britain. They are demanding a new ground station as well, and they are demanding more of the satellite building work and the operational value of Galileo,鈥� the source said.
When asked about the accusations, British consortium member Inmarsat declined to comment, saying only: 鈥淲e鈥檙e always optimistic about Galileo and we hope that all the issues will be resolved.鈥�
