Galileo and GPS: Cooperation or Competition?

This past March, the European Union Council of Transport Ministers agreed to fund a European satellite navigation system called Galileo. This decision put an end to long-running debates on the advisability of the project. As with other European cooperative industrial programs, one purpose of the Galileo project is to facilitate the entry of European firms into a new and important market. As a result, the U.S. government and U.S. firms have been wary of a European undertaking that they consider likely to compete with the Global Positioning System (GPS), an equivalent U.S. navigation system. Despite U.S. hostility, the Galileo project will go ahead, but that need not mean that U.S. fears will be realized. There is ample room for cooperation between Galileo and GPS that would make both systems more effective. Now that the EU has decided to fund Galileo, the time is right to assess the best way to realize that cooperative potential.

Navigation’s role in the economy and civil society

Satellite navigation systems bring tremendous benefits. By informing ground-based receivers of their exact location, these systems help manage movements of airplanes, ships and trains. Hikers and sailors already rely on hand-held receivers so that rescuers can find them in case of emergency. Geo-positioning services are also becoming increasingly available in passenger cars to provide automated directions and to facilitate emergency services.

Navigation satellites also feature atomic clocks that offer very high precision timing services, in the range of a billionth of a second. This function is less well known, but also of great importance to the economy. Precise orbiting clocks allow cellular phone companies to distribute radio frequencies among their users and computer networks to synchronize their encryption systems so that transactions between banks are secure. U.S. electricity companies also use them to ensure that their power lines are functioning smoothly.

New applications for navigational satellites seem to emerge almost monthly. The market for satellite navigation applications will likely experience very strong growth in the near future, similar perhaps to the explosion of the personal computer market twenty years ago.