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Cablegate: States, Industry Still Pin Hopes On Galileo Project

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DE RUEHFT #3043/01 1771321
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R 261321Z JUN 07
FM AMCONSUL FRANKFURT
TO RUEHC/SECSTATE WASHDC 2153
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNFRG/FRG COLLECTIVE

UNCLAS SECTION 01 OF 02 FRANKFURT 003043

SIPDIS

SIPDIS

DEPARTMENT FOR OES/SAT (MAUREEN WALKER)

E.O. 12958: N/A
TAGS: TSPA SENV KTIA SPCE GM
SUBJECT: States, Industry Still Pin Hopes on Galileo Project

REF: a) Paris 2634, b) Brussels 1035

1. SUMMARY: The EU's Galileo positioning/navigation/timing (PNT)
project, despite its well-publicized woes (reftels), remains a
beacon to state officials and industry/research in southwestern
Germany,, home to ESA/European Space Agency's "Houston" (the
Darmstadt control center) and much high-tech research and
production. Enduring interest in terms of industrial/technology
policy may help sustain Galileo despite the demise of private-sector
backing and even its future revenue streams. END SUMMARY.

Pinning Hopes on Galileo Tie-Ins, Spin-Offs
-------------------------------------------

2. While Galileo system control will ultimately come from new
centers in Italy and Bavaria (Oberpfaffenhofen), government and
business in various areas of southern/western Germany are hoping for
high-technology "tie-ins" (i.e. related procurement) and "spin-offs"
in terms of industry and research.

3. Outside of Bavaria, the state of Hesse (Hessen) has the deepest
links to Galileo through the European Space Operations Center/ESOC
in Darmstadt (near Frankfurt), which operates ESA's satellites,
ground stations, navigation, and communications networks. ESOC
Darmstadt will be deeply involved in the early stages of Galileo
through the ESA Navigation Office -- ESA's center of expertise in
PNT systems -- which will plan and manage the critical launch and
early orbit phases of Galileo satellites. ESOC currently employs
247 persons. Nearby Baden-Wuerttemberg -- home to one of Europe's
largest concentrations of high-tech electronic and mechanical
engineering -- has similar aspirations.

4. In 2006, the state of Hesse opened the "Hesse Galileo Center" in
Darmstadt to serve as a hub and platform for satellite navigation
applications in the state. The Center provides information on the
Galileo PNT system and offers services for start-ups and other
companies seeking to develop Galileo applications. This center was
established by the Hesse state government, ESOC, Darmstadt Technical
University, and the City of Darmstadt. Between 2006 and 2008, the
state of Hesse (in partnership with ESA) will provide about EUR
500,000 in direct grants to start-up companies.

5. Hesse also hosts the public-private Hesse Center for Satellite
Navigation (CESAH), which fosters Galileo spin-offs in cooperation
with ESOC Darmstadt. CESAH promotes the development of satellite
navigations applications and with a special emphasis on Galileo by
linking regional entrepreneurs with national and international
interests. Partners include: the state of Hesse, Technical
University Darmstadt, the city of Darmstadt, T-Systems, Vega IT, and
INI-GraphicsNet Foundation. CESAH affiliates hoping to become
suppliers or partners of the Galileo project include Deutsche
Flugsicherung, Accenture, Landesbank Hessen-Thueringern, Schenker
AG, Fraport AG, and ISC Opcorner AG.

6. Like Hesse, Baden-Wuerttemberg (B-W) is positioning itself to
gain from Galileo business as the heart of Germany's engineering
industry and home to the large EADS/Astrium satellite center (in
Friedrichshafen). The "Galileo-Initiative Baden-Wuerttemberg" forum
brings together universities, institutes, and businesses to explore
Galileo applications in the state; similarly, Galileo was the theme
for a 2007 CeBIT forum held in B-W. The Aerospace Forum
Baden-Wuerttemberg also works to promote cooperation and innovation
among industry, service providers, and researchers
(www.lrbw.de/sachdb/admin/show_all.asp) Finally, Baden-Wuerttemberg
International (one of the state's development agencies) provides
Galileo information and support to companies (domestic and foreign)
and researchers seeking to locate in the state.

7. The European Satellite Navigation Competition -- co-hosted by ESA
and the state of Bavaria -- has drawn spirited participation in the
region and three German underwriters (Deutsche Telekom, DHL, and the
German Aerospace Center). The competition aims to discover and
promote commercially viable PNT applications. The state of Hesse is
offering the winner of the European Satellite Navigation Competition
free office space at its Galileo Center.

Hanging in There
----------------

8. The unraveling of Galileo's unwieldy private consortium (Ref A)
and its spotty record in terms of official handling (ref B) are
widely recognized, as is the uncertainty currently surrounding the
project absent a funding mechanism (at least until the next EU
Transport Council meeting in October). Public-private consortia
have had a checkered history in German high technology (for
instance, the "Toll Collect" navigation/road-pricing consortium was
fraught with costly delays before final implementation). Still, the
region's companies and its conservative state governments remain
committed to a European PNT system and to pursuing whatever business
it will generate -- regardless of Galileo's ultimate financing

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mechanism and whether the current revenue model (based on user
subscriptions) proves commercially viable. Support for Galileo on
the grounds of industrial/R&D policy could in turn bolster
willingness to mandate its use in European military and
internal-security applications.

9. This message was coordinated with Embassy Berlin and ConGen
Munich.

POWELL

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