The European Space Agency (ESA) and the European Commission were to announce in Brussels the setting up of a legal vehicle, the Galileo Joint Undertaking, headed by a German, Helmut Grohe, ESA officials said at the Paris Air Show here.

"As of today, the Joint Undertaking will exist," ESA spokesman Franco Bonacina said.

Galileo, scheduled to be operational by 2008, is designed to encircle the globe with 30 satellites in medium Earth orbit, comprising 27 operational satellites and three reserves, plus two control centres on the ground.

It should provide users, ranging from aircraft and shipping to cars and trekkers, with a navigational fix accurate to within just one metrefeet).

At present, the only global satellite navigation system available to civilians is the US Global Positioning System (GPS), but it is accurate only to 100 metres (325 feet) for civilians, or 22 metres (71 feet) for the military, and is under the control of the Pentagon.

The current generation of GPS satellites have also had occasional accuracy problems, especially in some regions where coverage is poor.

The total development and launch costs are put at around 3.2-3.3 billion euros (3.8-3.9 billion dollars), with running costs from 2008 onwards of around 220 million euros per year for the following 20 years, the agency said.

The Galileo Joint Undertaking (JU) is an unusual shared venture between the European Union and ESA, Claudio Mastracci, director of application programmes at ESA, told reporters.

"The JU is a new machine never implemented before, we do not know how it will work exactly," he admitted.

The first phase, lasting 48 months and costing 1.1 billion euros, will see the satellites and ground systems developed and validated, followed by a 24-month, 2.3-billion deployment period.

The project was delayed for a several years after the United States voiced concerns about Galileo, suggesting that it could be a security threat because of its open access, and the project's major partners -- Britain, France, Germany and Italy -- squabbled over how to share out the contract work. The final hurdle was removed last May 26.

The first phase of the scheme will need public funds, but Mastracci said there were hopes that private capital would be used to at least partially fund the second phase.

When it is completed, the system will be handed to a future private firm, the Galileo Operating Company, which will have a 20-year operating concession.

The organisation will be based in Brussels, and the EU's representative to it will be the European Commission.

ESA said that a market study suggests there will be 1.8 billion people who will seek navigation-by-satellite services by 2010, which would rise to 3.6 billion in 2020.

According to ESA, Galileo will have "very significant economic benefits, with a 460 percent return on investment and creation of over 140,000 jobs."

SPACE.WIRE