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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