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The small matter of a few billion sat-nav euros

Jonathan Amos | 13:15 UK time, Tuesday, 1 February 2011

So, the European Commission has hunted down that statistic I mentioned on Friday which shows just how reliant the European economy now is on GPS.

I asked the EC to explain what was a fairly astonishing figure that appeared with the Mid-Term Review [200KB PDF] on the status of Galileo, Europe's answer to the American Global Positioning System.

Galileo will see its first "pathfinder" satellites launch this year - the spacecraft that will prove the system works end-to-end.

Rather than add to the bottom of the previous posting, I thought I'd give the explanation some space of its own. Just to repeat the figure:

"It is estimated that currently 6-7% of GDP of developed countries, €800bn in Europe, depends on satellite navigation."

The Commission tells me this assessment is based on several US studies and in particular on one from the Space Policy Institute of George Washington University, which identified the industrial sectors most exposed to sat-nav technology. These were listed as:

  • Delivery services
  • Utilities
  • Banking & Financial
  • Agriculture
  • Communications 

The GW study estimated the combined contribution of these sectors to US GDP to be $1,342bn, or about 9.5% of GDP in 2009. This was deemed to be a conservative assessment.

In the 27-member EU, these same sectors account for over 10 % of GDP (i.e. some €1,236bn). But a further assessment was then undertaken to try to establish the actual share of these sectors' contributions to GDP that is being impacted by sat-nav. This assessment returned the following observations:

Delivery services: Reliance was deemed to be 100%. The rationale was that fleet management and parcel tracking by sat-nav is used by all freight forwarders and couriers.

Utilities: Exposure was estimated to be 60%. The rationale here was that transmission and distribution networks such as electricity grids rely on sat-nav timing for synchronization.

Banking & Financial: The impact was estimated to be 35%. As I suspected last Friday, this relates to all those Big Money transactions that are stamped with GPS time.

Agriculture: The impact was considered to be 10%. This relates to so called "precision agriculture" whereby field management (spraying, etc) on the biggest farms across the EU is done with the assistance of GPS in the tractor or combine cabin.

Communications: The exposure was estimated to be 40%. The rationale here is that mobile phone turnover accounts for 40% of telecom turnover in the EU. Something like 300 million smartphones were shipped globally last year, with Europe one of the key markets. Does any modern smartphone not contain a GPS chip? It's hard to imagine a handset manufacturer omitting such a feature.

So, when this assessment was done, the conclusion it drew was that the sat-nav-sensitive contribution of these industries to EU-27 GDP was potentially 6-7%, or about €800bn.

In some countries within the EU-27, this figure will no doubt be more; in others, less. For example, consider the importance of the financial sector to the UK. How many of those big transactions in the City of London go through a server in the "back office" that uses GPS time.

To re-state - the point here is not really the accuracy of these estimations because, as I said, even if they off by a substantial margin, they remain huge. Rather, the point is to underscore the importance of global navigation satellite systems (GNSS) to the modern economy.

This is the background against which Galileo has to be considered, and what member states have to keep in mind when they decide whether or not to fund the extra 1.9bn euros needed to complete Galileo's roll-out by the decade's end.

Comments

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  • 1. At 2:42pm on 01 Feb 2011, ichabod wrote:

    Even for the mickey mouse, fairy tale, alternative universe that is the EU, which constantly inflates the benefit of grandiose schemes to justify its existence, this one is one of the best.
    How did delivery companies deliver before GPS? Was the entire UK and European distribution business created because of GPS? Of cousr not. People had maps, memories, followed sign posts, and asked for directions. The fact that 100% of lorries now have Satnav does not mean they constantly use it, nor does it mean that without it their task could not be completed.
    I'm surprised the Commission has not announced that GPS can cure cancer.

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  • 2. At 09:10am on 02 Feb 2011, Ian wrote:

    The dependence of the communications industry is not just the fact that smartphones typically contain a GPS receiver. Many of the networks, cellular and satcomms, rely upon the accurate time derived from GPS to synchronise their transmissions.

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  • 3. At 10:28am on 02 Feb 2011, olyus wrote:

    "How did delivery companies deliver before GPS? Was the entire UK and European distribution business created because of GPS? Of cousr not. People had maps, memories, followed sign posts, and asked for directions."
    Oh please, this is ridiculous. Why not go back to steam trains because it worked before, electric must be a waste. Ask for directions? Are you out of your mind? I'm not sure you really get the scale or efficienies modern industry provides. Going off on a little britain rant seems to expose more your own feeling of isolation from the a modern, dynamic and fast-moving world, than it does any fault of the EU. Is the world really such a terrible place, that economic and political integration with our neighbours is a sign of the end? That satelites flying high above us can be replaced with "stopping and asking for directions"?


    "The fact that 100% of lorries now have Satnav does not mean they constantly use it, nor does it mean that without it their task could not be completed."
    With that I realized you don't get it. These satelites aren't primarily intended to help drivers get where they're going, GPS doesn't an ok job on that. It is intended that from a central location, a company could track hundreds of thousands of parcels across the global automatically. Identify when a package has gone missing, intervene as it is getting lost, look for great efficanies, cut down on manual tracing etc.... I realize the face of satelite positioning technology you see everyday is sitting on your dash board, but I beg of you, do some reading.
    Jovian Moon certainly has!

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  • 4. At 12:16pm on 02 Feb 2011, david wrote:

    I think it is very important to distinguish between the costs (a lowest estimate for this is now known) and the benefits for the economy. It is true that express parcel services use satnav - but they will not get much better, faster or cheaper just because the EU develops its own GNSS! Similarly for timing.

    For this kind of money (or much less), the EU could fund a mobile/GSM based solution that would provide all the benefits for EU land-based users - and the aviation industry does not want more. They seem very happy with their mandated gyro-based navigation (and GPS integration too). The extra precision from Galileo may help people tell which end of their yacht they are on, but not that many people have a yacht so big that this is a problem :-)

    But according to the mid-term review, at least the misleading revenue forecasts have gone now. Now we just need to cut down on the glossy economic benefits and make a sober evaluation.

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  • 5. At 1:18pm on 02 Feb 2011, The Realist wrote:

    @ Post 1 - Jacko

    Use your head.

    Couriers within the EU now operate on a Continental scale. It wasn't like that before GPS. These days a Greek courier driver is required to trek through Europe to deliver a car part in the North of Scotland.

    That is why GPS penetration in the Delivery sector is now about 100%.

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  • 6. At 6:12pm on 02 Feb 2011, callisto wrote:

    Jonathan, you seem to have missed out a couple of big potential users, namely the Defence and Security forces, emergency services, transport recovery and rescue services. Just about every facet of life these days involves a GPS beacon. The Russians, Chinese and Americans have noted the benefits and are pumping billions into their respective systems. Are we in Europe the only ones who think backwards? In Germany and France, Europe has two of the most successful technocratic Nations on Earth (the UK used to be until the politicians became bean-pushing accountants in the 60's). The route to success and prosperity for ALL is through technology, not despite it. Embrace it.

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  • 7. At 8:38pm on 02 Feb 2011, khudson wrote:

    The U.S. uses some of their GPS satellites by putting hosted payloads on board to cut costs and to save time. I am wondering if this has been considered by the EU. Our readers over at www.hostedpayload.com have mentioned the pricey deal that was just reached for the ESA and their data-relay system that will save money by having a hosted payload on board. Interested to see what happens in the future!

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  • 8. At 06:55am on 03 Feb 2011, Jonathan Amos wrote:

    @callisto The GW study regarded its observations to be on the conservative side, so I am sure there are many other areas contributing to GDP that one could include.

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  • 9. At 11:56am on 03 Feb 2011, Robert Lucien wrote:

    GPS is so exciting, such a cutting edge tech, I'm sure the whole world would die if it didn't exist. [Yawn] Galileo is the EUs way of beating its chest and showing America- that we can make exactly the same system that they made 20 years ago.
    Galileo is really a way of burning a big load of excess money the EU had to get rid of. The only real advantage that it will gain us is in a few select military and secret service type areas.

    The only actual use for Galileo is as a redundancy if GPS fails, but then anything that knocks out the GPS system will probably knock out Galileo as well. The actual result of GPS systems has been the general de-skilling of people everywhere who rely on navigation. Imagine in another 20 years what would happen if there is a solar event that shuts down all these systems together? total chaos.

    My big complaint with technology in a whole load of fields including GPS is that it is systematically removing redundancy from society. Kill GPS and related systems like mobile phones + the internet for three weeks and we could be teetering on the edge of Armageddon. GPS is used to guide ships, GPS + mobile phones are used to control trucks and delivery schedules, the whole lot is connected to and dependent on huge computer networks.
    My background is in AI so I know the logical destination where all of this is all going. In twenty or thirty years there may well be no drivers in any of those trucks, just automated guidance systems based on things like satellite positioning. Machines are more efficient than people, they are cheaper, they don't need to sleep, or get tired and make mistakes. If they loose navigation they will just go as far as they can until they don't know where they are and then pull over on to the side of the road and wait. Without the navigation signal they could all just wait until everybody starves.
    Of course it wont happen, they will still have people in the cab - for loading and unloading and security, and their designers won't be stupid enough to rely on satellite positioning alone but will use inertial navigation as well. Of course that will all be a lot more expensive... Lets hope...

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  • 10. At 1:15pm on 03 Feb 2011, Richy_J_B wrote:

    This looks like a pretty shoddy example of mis-representation of the underlying data by the Commission - perhaps if the statement read "It is estimated that currently 6-7% of GDP of developed countries, €800bn in Europe, IS IMPACTED BY satellite navigation." rather than "..DEPENDS ON.." then it may be something like an accurate reflection of the actual underlying studies! Surely the statement is currently nonsense as it implies that the impacted activities would cease altogether without sat-nav.

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  • 11. At 9:08pm on 03 Feb 2011, knowles2 wrote:

    Let forget about the figures of how much GPS benefit Europe economy right now or in the future an how must Galileo may or may not add to the economy or the security factor of not having to rely on other nations for navigation.

    If the EU does not spend this money on Galileo , what else will they spend it, more agricultural subsidies, an area where way to much money is spent already, buy another shiny new building in Brussels, or what about a new fleet of cars to transport themselves across one side of the street to the other side or may be pay for a few parties in Italy in the name of economic aid.

    Personally I rather they spend these funds on Galileo. But if they are not they will not be spent on anything else useful. That I Guarantee.

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  • 12. At 4:42pm on 05 Feb 2011, gaks wrote:


    If the EU does not spend this money on Galileo , what else will they spend it, more agricultural subsidies, an area where way to much money is spent already, buy another shiny new building in Brussels, or what about a new fleet of cars to transport themselves across one side of the street to the other side or may be pay for a few parties in Italy in the name of economic aid.

    Personally I rather they spend these funds on Galileo. But if they are not they will not be spent on anything else useful. That I Guarantee.

    Or how about not spending it at all? Return the money to the nation states. Who can then decide how to spend it or shock horror return to the tax payer.

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  • 13. At 6:27pm on 06 Feb 2011, clifford wrote:

    Time-stamping Financial Transactions using GPS, will this lead inexorably towards a one-world currency, and the New World Order?
    ...ARE WE READY FOR THIS?

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  • 14. At 8:02pm on 07 Feb 2011, Mark Thornton wrote:

    The existing GPS system is OK where it works, but there are many holes in coverage. Gallileo should improve coverage.

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  • 15. At 01:43am on 08 Feb 2011, JosephThePoet wrote:

    Everyone who claims that there is a lot of evidence that proves Darwinism is making a statement that is contrary to accepted science. It is still called a theory people. The only reason it hasn’t been tossed yet is because it is a political hot potato because most people are not interested in accepting correction and because the majority of scientists, intellectuals, and the political and other elite of society choose it as their religion. Their type has always interfered with truth in science.

    If there was as much proof as some claim that supports the theory then it would no longer be able to be held back as simply a theory. There is too much desire to get rid of God in the world to hold back anything that would prove His existence is not necessary for life to exist. Use your dictionaries people to look up Darwinism and theory. And try to exercise your brains by thinking for yourself about all things instead of just spouting the current politically accepted smug lines.

    It is amazing how many people think they are smart simply because they repeat the same thing a whole bunch of other people are parroting. They say things like there are lots of books that prove it, yet there are plenty of books spouting all kinds of nonsense. Does there being a bunch of books claiming proof there are beings from other planets flying all over the place mean this must be true? How about the many books claiming the position of the stars at your birth dictate your entire life? Many scientists wrote papers and books proving you cannot fly, or later that you cannot fly faster than sound, but all those words didn’t make their claims true. Just because a bunch of scientists , like most everyone else, refuse to think for themselves or engage in honest scientific research and just parrot others doesn’t mean their yap has any validity in fact whether they put it in a book or online or not.

    Oh, and only fools claim that God and science can’t coexist. Who do you think created the sciences? And proof of God is everywhere in science, like in the massive and complex coding found in DNA that puts all computer programmers to shame. There are bees that shouldn’t be able to fly that are flying, and many other wondrous creations everywhere around the globe and wonders we are just now starting to be able to view in space itself.

    I have a very strong belief in God and science, but real science not someone’s foolish babble that has no basis in fact but is simply used to pretend God doesn’t exist or to pretend smug superiority over others. And while I consider myself to be a Christian I do not follow the false doctrine of the mainstream churches that ignore God’s Commandments and Laws and most everything else in the bible. A follower of Jesus would choose to act like Him, and He obeys God and follows His Commandments and Laws. You cannot be a Christian if you act contrary to what Jesus stands for and taught us, and you cannot separate God’s laws and Commandments out from anything in your life like some believe you can with politics.

    Okay, now let fly the personal insults from those who cannot give good arguments to support their positions and hate anyone who dares to believe in God, especially us Christians.

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  • 16. At 01:45am on 08 Feb 2011, JosephThePoet wrote:

    Sorry I thought I was elsewhere, can you block the post here and I'll post it where it belongs?

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  • 17. At 12:43pm on 15 Feb 2011, John wrote:

    And 100% of European Industry is impacted by telecommunications. Does that mean we need a new telecommunications system? Maybe, maybe not.

    But for the GPS issue, there are two questions that are relevant:
    1) How much would each of the industries suffer if GPS were no longer available (eg if the US were to suddenly decide to switch it off except for their own military use)? Would they be able to muddle through, or would they collapse?
    2) How much would each of the industries benefit from any new system or technology that is being planned?

    Also - part of (1), really - would the new system be more resilient in the face of such threats as a massive solar flare, and if so, how much is this extra resilience worth?

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  • 18. At 9:10pm on 15 Feb 2011, MaxSceptic wrote:

    Just as the Euro (common currency) was created for political rather than economic reasons, so Galileo is not a scientific, technological or economic necessity but a purely a political project aimed at demonstrating that the EU can act independently of the US. (As if..... )

    Utter stupidity and criminal waste of taxpayers' money.

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  • 19. At 11:28am on 17 Feb 2011, TonyD wrote:

    A large amount of the US 'space economy' .. and many, many jobs in a number of US states depend on the income from Federal projects, such as the one used to launch the US GPS system - and its replacement satellites, as needed.

    The EU isn't just creating a project that will benefit the banks, the courier companies and the utility companies, it is fostering the EU space industry, which generates jobs both in Europe and here in the UK. Its clear that many UK companies benefit from the 'space efforts' of various companies, and some UK companies are involved in the Galileo project.

    We can all wonder about whether Galileo will actually be of benefit to us as individuals, but the contribution from this project to our economy is surely an incentive to look more positively at this project.

    Apart from this, the technological requirements of this project will ensure a market for our graduates and the retention, and advancement, or skills across the community. It is naive to restrict our attention to the debatable requirement for a GPS clone ... countries across the EU are contributing to this project not because they want to see the satellites fly, but because the economic, technological and employment advantages are too tempting.

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