Leadership Talks: Is Galileo Real, or Not?

Javad Ashjaee, front left, with colleagues in his Moscow office.

Javad Ashjaee (JA) is president and CEO, Javad Navigation Systems. Alan Cameron (AC) interviewed him by phone at his Moscow office.

AC: What details can you give us about the “new beginning” you mentioned in your May profile?

JA: Things have changed a lot during the past six years. ASICs, microprocessors, and electronic technology in general have progressed significantly. These advances give us much better fundamental tools to implement new signal processing innovations and to design better and smaller products, while at the same time reducing their cost. With new GPS signals, improved GLONASS, and Galileo on the horizon, there are lots of opportunities and challenges to get me going for many years again. I phrased it as a “new beginning” because in the past six years I was not as productive as I wanted to be, due to situations beyond my control.

AC: How do you see your “complete independence” playing out in the marketplace?

JA: Now I can start working on GNSS technology again and hope to make a difference in this field again. The last six years were the darkest years of my professional life. The partnership that I had hoped would be a complementary force in pursuing the most innovative technologies turned out mostly frustrating, and it put stumbling blocks in the way of what I wanted to accomplish. By “complete independence” I mean the contractual limitations have expired, and I am free to pursue new technologies on my own and bring innovations to the marketplace that my team and I feel proud of.

We have just started this new round of technical development and we are trying to define the technical directions. I hope to bring a completely new generation of GNSS products to the market in the second half of 2007. What keeps me motivated and as excited as my first attempts of 25 years ago is the level of support and encouragement that I receive from all my colleagues, friends, and even some of my competitors.

AC: What technology challenges are you and your team tackling?

JA: One of my technology challenges is to bring high-end Galileo into the GPS/GLONASS picture. My first decade of GNSS involved GPS, the second decade GPS+GLONASS, and in the third decade I hope for GPS+GLONASS+Galileo. Of course there are also innovations in signal processing in every one of these navigation systems. As I said earlier, enhancements in the electronic industry, as always, keep pushing us to come up with new products, similar to what you see in the computer and mobile communications industries. The life of any product cannot be longer than two years.

I’m waiting for the Europeans to tell us what is really their plan for Galileo. I want to focus a lot on Galileo but I should admit that with Galileo I’m partially hopeful, but partially disappointed, too.

AC: Why are you disappointed about Galileo?

JA: I basically do not know, or I should say do not understand, the current plan of Galileo as presented; and I could not find anyone who could give reasonable answers to my questions. It is not obvious who the forces behind the Galileo project are, who is going to fund it, and who needs it to the extent that they are willing to pay for it. On several occasions, in different forums I tried to raise such questions and subsequently became convinced that unfortunately my worries and questions regarding Galileo were valid. Let me raise these questions once again here with you. I hope all my worries and suspicions regarding Galileo prove to be false and sincerely hope that Galileo to become a reality soon.

Despite all the questions and uncertainties about Galileo, but due to good publicity, in many communities Galileo has received much more attention than GLONASS, which already has about 20–25 years of on-orbit history and currently about 16 operational satellites on orbit — and recently, with current oil prices, a solid plan to complete the system soon. Until recently many companies were trying to fight or ignore GLONASS, believing that it was not likely that Russia would complete the system. Now Trimble, NovAtel, and Leica have recently announced that they have GLONASS in their receivers, too.

The attention given to Galileo, even before they have a first real satellite, is because of the credibility that the Europeans have earned. I hope this credibility continues to grow by providing open information to the public. Unfortunately, in my belief, so far they have not done so.

One of the issues confronting Galileo is the explanation of its funding and management. It has been said that Galileo will be funded as a private business, but no one has ever provided a business model. When I try to guess about the structure of any business plan based on the information I have received, I conclude that it is very unlikely that it can be funded as such. The fate of Iridium — which did have a detailed business plan but overestimated its number of subscriptions — makes us more worried about Galileo, which does not even have a business plan. Iridium had the support of large, experienced industrial names like Motorola.

Any company whose stock is being traded publicly will suffer a lot as soon as they announce involvement in any project that does not have a solid business plan. The larger the company, the more vulnerable they are to close scrutiny by stock-market analysts.

Funding in Doubt

In providing details on Galileo funding, it was said that most of the Galileo funding will come from bank loans. This makes the issue of a business plan much more urgent and critical for Galileo, especially given the fate of Iridium. Alternatively, the money could come from specific governments. This would easily put an end to the discussion of private funding and give much hope to all of us. I hope this will happen soon.

There are several other flaws in Galileo’s private financial planning. First, GPS tried to make itself a self-funded program but quickly concluded that it was not feasible. Second, if GPS authorities were wrong, and it could have been done as a self-funded project, now with GPS being offered for free, Galileo has a much tougher time to make it as a private enterprise. Note that GLONASS is also there for free. Can you start a pizza business, when you know the guy next door is giving away pizza for free?

Third, it is extremely unlikely that anyone will buy Galileo-only receivers, which means Galileo wants to piggy-back itself on GPS and receive money from the operational GPS. In our pizza example, imagine that your pizza shop can sell its pizza only if it can add slices of pizza from the free shop next door! Clearly the shop next door will stop providing you free pizza if it sees you are making money — or it will at least want its share of the profit.

The progress in GLONASS, also offered free of charge, makes it even harder for Galileo’s private plan to succeed. With 30 GPS and 24 GLONASS satellites, at any given instance we have more than 14 visible satellites. The critical number to have reliable and robust RTK is something like 10 satellites. The additional Galileo satellites are a plus, but the European system cannot survive if it bases its financial plan on riding on the shoulders of GPS (or GPS+GLONASS).

It short, the Galileo private funding scheme assumes free support from GPS — which means Galileo assumes that U.S. tax payers will continue to fund Galileo.

I am certain that even if GPS authorities do not object, the U.S. taxpayers will. U.S. citizens and organizations like the U.S. GPS Industry Council will take the issue to the proper authorities.

By collecting the first license fee from users or manufacturers, Galileo authorities open the door for large international disputes that put the fate of Galileo in question and raise the issue of customer liability, if it is going to be modeled financially as I mentioned earlier.

In the private business model of sharing profit with GPS, Galileo will be at a disadvantage for many years until they have operational satellites comparable to GPS.

The current situation of Galileo, as I see it, is that some independent and mostly research-oriented organizations have been able to collect enough money to define signals. We have seen some published information, such as Günter Hein’s article in GPS World (“Galileo Signal and Frequency Design,” June 2003) on the signal structure. But now when the ICD is published, the signal structure is drastically different.

The Military Question

Similar to GPS and GLONASS, the need for Galileo mostly comes from military establishments and markets. The two recent wars showed that the benefits of satellite navigation systems are no longer a luxury, but a necessity for any country that possesses a certain level of modernized military. The French government needs its own navigation system to independently market its Exocet missiles and Mirage 2000, for example. The Chinese government also has need for such systems, and this could be the reason that they push to fund and participate in the Galileo project.

Does this mean France will break from NATO and join forces with China? This brings us to the very difficult question of international alliances, much more serious than the financial and funding issues that I raised earlier. I find it unlikely that the United Kingdom may want an independent navigation system separate from the United States. France may be the only major country that is willing and can afford to fund such system. This is an extremely difficult issue. I cannot think of any country in Western Europe that is pushing for the breakup of NATO.

This is an order of magnitude more difficulty than money. This is an issue of East-West alignment, and the breakup of NATO, which has many more consequences.

It is very simple-minded if we think Paris taxi drivers are pushing to have their own system because they do not trust the United States!

Although the European military should be most concerned about the future of Galileo, they have been absent from all the Galileo conferences that I have attended. The only European military uniforms I have seen were those of a German Air Force brass band that played Mozart songs at the Munich ENC-GNSS conference.

At best, it seems that some large European companies have teamed up to lead the Galileo project and keep space, control, and user segments under their management and control, and then try to attract money from military sources. This scenario also does not seem to have much chance of success. It is unlikely that military organizations will allow leadership and control of their vital navigation systems to remain in private-sector hands. Under any circumstances, the military organizations will be the real force behind the Galileo even though they may hide it publicly, at least for a while.

Galileo’s best chance of success is for the French government to pay all or at least most of the costs, and not depend on support from other countries who do not have much vital interest and dependence on a new navigation system. I hope this will happen sooner rather than later.

Galileo is not going to delay because of technical issues. There is no problem for the Europeans to have a good signal structure, or to launch good satellites. There is enough intelligence in Europe, they can solve those quickly. Financial and, more important, political issues will determine the future of Galileo.

Will Galileo happen or not? I have no answer. I had a chance to share my thoughts with several prominent authorities. They mostly agreed with my concerns but they said it was politically incorrect for them to even discuss these sensitive issues.

To go forward, I will work on Galileo and will assume that the Galileo authorities will work with the GPS authorities and will make a playing field such that U.S. GPS manufacturers can have the same benefits from Galileo that Europeans have from GPS. Previously we followed the information that was released unofficially by Galileo (by semi-official authorities) and we made chips to track those signals. Next we will follow the new ICD and we will make receivers based on it.

Meanwhile we will try to tap whatever legal authorities, the GPS authorities in the U.S., to help us make the playing field level, to make the Europeans give us the same prompt access to information that they give to European organizations, without any charge.

The United States has been so generous and so open in providing complete and honest GPS information to all, that the first GPS satellite was actually tracked in the UK. Dr. Brad Parkinson noted this point in his keynote speech at the European Navigation Conference in Manchester.

I was so hopeful and supportive of Galileo in the article I wrote for you some months ago. But as I tried to find information regarding the future of Galileo, I developed serious concerns. I pray for Galileo to become a reality soon.

AC: What percentage of Javad Navigation Systems’ annual budget is devoted to research and development?

JA: We do not have a fixed percentage. Developing technology is our first priority and has always been a priority for me. We spend whatever it takes to have the best technology, even if we have to borrow money — though we have never had to. Probably this has been the reason that in all my history of involvement with GPS, the past 25 years, we were profitable every single quarter, because our focus was spending on technology, and giving priority to it. I don’t think there is any other GPS company in the world that can claim profitability for every quarter for 25 years. Our cumulative annual growth in each company was 45 percent. Currently we have a staff of over 100. Our Advanced Theoretical Design team alone consists of more than twelve professors and scientists with more than 200 person-years of experience.

AC: How can we best navigate the next years of new signals, structures, and so on?

JA: The main thing is that we request all U.S. GPS authorities to help to make this a level playing field.

If the Galileo authorities really intend to combine GPS with Galileo for commercial markets, they’d better be as gracious and open as GPS authorities were to them.

Iridium

Iridium communications service was launched on November 1, 1998, and went into Chapter 11 bankruptcy on August 13, 1999.

The system was originally to have 77 active satellites (later reduced to 66) to enable worldwide voice and data communications using handheld devices. Its financial failure was largely due to insufficient demand for the service. The system is currently being used extensively by the U.S. Department of Defense for its communication purposes.