TABLE 4.1: FRAMEWORK GRID FOR THE GMES DOWNSTREAM SECTOR
4.3 Conclusions from the grid
The following section focuses on the relative importance of each part of the framework grid, describing the key issues which are likely to have a potential impact on the competitive position of the EU GMES Downstream sector.
4.3.1 Regulatory conditions
In terms of the number, and high grading of importance factors within the regulatory conditions section of the table above, Sector specific Regulations and policies have the biggest impact on the competitive position of the EU GMES Sector. Specific regulations / policies in response to regulations which affect the competitiveness of the sector include: US ITAR Regime68, National Government interpretations of the U.N Principles relating to remote sensing, EU procurement practices (including GMES related EU policy objectives), and the INSPIRE Directive. Focusing on the INSPIRE Directive, the
diversity of data that the GMES services require and produce is expected to benefit from the development of a data policy that takes INSPIRE into account (Brussels, 3.2.2004 COM (2004) 65 final)69.
National interpretation of U.N Principles and the number of exceptions to non
discriminatory access policy for high resolution data is an increasing trend occurring in all countries. Controlled access by national member states will limit the opportunity for the European market to compete with the larger institutional market of the US, and the developing markets in India and China. This fragmentation of the European space market translates to the absence of tools at a pan European Level to structure market, in aspects such as regulation, licensing, or procurement process (EuroConsult 2007)).
Implementation of competition policy differs at a member state level. In these markets there is a tendency for defence and security value adding activities to be done by national government bodies, or companies under license70. In reference to national restrictions, framework conditions, described in the next section are also important influencing factors for competitiveness.
In general, the increasing number of commercial remote sensing activities and availability of affordable satellite technology are impacting on the global, EU and national trend to form space and remote sensing laws (National Center of Remote Sensing Air and Space Law (2007)).
4.3.2 Framework conditions
In terms of relative importance of grid analysis sections (Regulatory, Framework and Exogenous conditions), Framework Conditions are expected to have a big impact on the
68
ITAR means the International Traffic in Arms Regulation and is a set of United States government regulations that control the export and import of defence-related articles and services.
69 Furthe source reference: Global Monitoring for Environment and Security (GMES): Establishing a GMES capacity by 2008
- (Action Plan (2004-2008)) http://www.gmes.info/library/files/1.%20GMES%20Reference%20Documents/COM-2004-065.pdf
70
future competitiveness of the sector. Many of the identified factors scored seven or above in the factor importance scale, with the trends projected to increase.
Important framework conditions identified in the analysis include, labour force and knowledge skills, market access (trade and FDI), knowledge base development (R&D and role of SMEs), and data considerations. Also R&D in other sectors is important, as this results in improved inputs that has a positive impact on the productivity of the sector. Higher resolution images are an example, or more powerful computer processors. The issues regarding the limited and decreasing availability of highly skilled labour are a general problem in the EU and are also observed in other European knowledge intensive industries. This may pose a serious problem for the sector in the future. Added to this is the fact that there is an identified need for the industry to attract a more diverse workforce as it currently does not meet the intended age or gender distribution guidelines published by the European Commissions Integrated Guidelines for Growth and Jobs (2008-2010).71 This may not be a significant constraint in the majority of cases, but given the typical customer base and funding sources behind the industry, it may be worth considering any constraints that the Commission may place upon non-compliant sectors, or non-complaint companies as future funds are allocated
A major sector characteristic of the EO Global market, which has an effect on the competitiveness of the sector, is the involvement of the public funding. EO markets are, in part driven in Europe (and, globally) by the public sector, either through returning Government customers, or through inter-governmental frameworks, which initiate pilot studies looking to strengthen EO Services. Of relevance to the EO sector, an example of a public sector programme influencing the development of the sector is FP7. This European Union Research Framework Programme supports a number of participants in specific research and technological development projects. In fact, within the EO sector, most technical development activities are funded by clients / public funds, and not through direct internal investment.
Also important in knowledge base developments is the role of SMEs. SMEs involvement in the sector has been identified as an important factor for its knowledge based
development. ESA, one of the major EU public funded bodies have a number of policies which actively encourage SMEs to be become involved in its space programmes.72 For example, since the second quarter of 2006, ESA procurement processes have been streamlined making them more accessible to SMEs.
Access to finance, and therefore funding through public or private means has been identified in the literature as a factor influencing the competiveness of the sector. In both the space segment and the ground segment of remote sensing activities there is an
increasing trend towards financing projects through Public Private Partnership (The National Center for Remote Sensing Air and Space Law (2007)). This trend reflects the
71
Brussels, 11.12.2007 COM(2007) 803 final PART V Source: http://ec.europa.eu/growthandjobs/pdf/european-dimension- 200712-annual-progress-report/200712-annual-report-integrated-guidelines_en.pdf
wider understanding by the private sector that this form of funding can facilitate a risk sharing. However, major programmes such as GALILEO and GMES are now financed publicly.
In conclusion many of the framework conditions are either set, or influenced by the public sector. An advantage of this is that the public sector can influence in the future competitiveness of the sector. For example, continued access to public funding, could facilitate competitiveness in the sector by encouraging research, knowledge, growth and innovation.
4.3.3 Exogenous conditions
Global competition and demographic change are both exogenous conditions which rate highly on the importance factor scale, and / or are recognised increasing trends of activity. The demographic trend is related to the availability of high skilled labour to the sector in the EU. The exogenous condition of global competition can be analysed by three factors which could influence the competitive position of the EU EO sector, these
include:
• Competition amongst certain types of service provision, e.g terrestrial and space- based solutions in a commercial market;
• Competition from aerial photography, land-based surveys and mass market geo web browsers; and,
• Evaluating the extent to which the EO market is global.
One of the important influencing factors to consider, in the context of competition is the extent to which governments have invested in the application and are involved in its operation.
4.3.4 Conclusion
The ability for EO downstream service providers to overcome technological and economic hurdles will very much depend on whether the framework conditions that govern EO activities provide a supportive environment for such activities. Our analysis has shown that the public sector has an important influence on the sector, not only because it sets the legal and regulatory framework for the sector, but also because it has a large influence as a client, by funding the development of the sector and by shaping policies that influence market demand for EO services.