In the last month, 2 of the 5 commercial satellite operators in Europe have changed ownership; Deimos Imaging was acquired by Urthecast (Canada) and yesterday Blackbridge announced that the business which formerly traded as Rapideye would be sold to PlanetLabs (US). Both these deals are “industrial” or strategic, meaning it is not just a question of changing financial ownership. What does this mean?

After these deals, Europe is essentially left with 2 companies which offer satellite imagery; Airbus and E-geos/Telespazio. Neither of these companies owns the satellites they operate but rather have exclusive rights to distribute data commercially. Whilst SPOT 6 & 7 are owned by Airbus, the Pleides satellites are owned by CNES, ownership is shared between Airbus and DLR for TerraSAR-X and the satellites operated by DMCii have many owners whilst Cosmo is owned by the Italian government and data rights lie with Telespazio.

Hence the only two independent operators in Europe have been acquired by North American operators. It seems to be a strong vote for European technology and constitutes a strong, positive message concerning the future market, but the European backers of both Rapideye (which went into bankruptcy in 2009 before selling to the Canadian investment fund Blackbridge) and Deimos have preferred to see a capital return rather than continue to be present in the EO market. As far as I am aware these are both 100% exits and neither retains a stake in the enlarged businesses.

Does it reflect a lack of vision from European companies or are the reasons more fundamental? It demonstrates a dependence on public investment which is not the case in North America. Both Planetlabs and Urthecast are private companies backed by venture capital. They are taking risk to enter the emerging market for commercial EO services with the vision that this will be one key element in the Digital market. Recall also the presence of Google which acquired the Skybox Imaging business last year.

Whilst the NGA has recently announced that it wishes to open discussions with the “new operators” such as Planetlabs and Skybox Imaging, they depend almost exclusively on imagery coming from DigitalGlobe which holds a unique position in the market and underpinned by anchor tenancy contracts with the US government. Nevertheless, DigitalGlobe is a private company, backed by private capital even if it is dependent on government contracts. It is free to take commercial decisions which, even if they may be influenced by them, are not blocked by government policy.

I should hastily state that I do not necessarily see it as a problem that European companies have non-European owners. Personally, I believe in the strength of an open market and external investment can be a “strength” rather than a “weakness” but it does mean that future investment decisions could favour non-European technology. The key objective is still jobs and revenues in Europe and our actions should be oriented to ensuring that this remains the case.

I have stated before that I strongly prefer the anchor tenancy approach as part of a public-private partnership to the shared investment approach adopted in Europe. I think this view is supported by the two acquisitions which are market transactions unhindered by state investment. In Europe, despite Copernicus being a European programme, policy is determined by a few nations with own interests at heart. This means that whilst the EU market may represent 450m people, it is fragmented into 28 parts unlike the US where there is a single, 250m people market.

At the same time, the attitude towards and availability of risk finance is much more conservative in Europe. A culture of risk-taking and private investment is needed and paradoxically, European government policies will need to change to enable this to happen. This is also evident in the highly fragmented market for value added services where over 95% of the companies concerned have less than 50 employees. These companies will be squeezed out of existence or will also be acquired by non-European companies.

The recent proposals from the EC to establish legislation on the distribution of high resolution imagery, despite their claims, would not have addressed this problem which requires the EU to act as a single customer not as a single regulator. The EO services market is still dominated by government interests but the different approaches adopted in the US and in Europe are having a strong impact on this market. Talks must now start about what action can be taken in Europe to ensure that European companies do remain players in this emerging part of the Digital Market.

Alongside the recent EARSC AGM, we organised a workshop to develop a discussion between industry and the EEE’s (European Entrusted Entities) on how we can work effectively together on the Copernicus Services. The EEE’s are those organisations which will have delegated authority from the European Commission to deliver the Copernicus Services. Basically this gives them the responsibility to manage and spend public funds; something which it is very hard for a private company to be able to do. In consequence, and to be clear upfront, there is no contention that the responsibility to procure services should be held by public sector representatives.

However, we have the objective to maximise the potential for the private sector to exploit Copernicus. This means that industry should be involved to the maximum extent possible and that long-term relationships should be developed between the EC, the 7 EEE’s and the EO services sector. We should like that companies are able to figure more strongly in the supply of the services and indeed that everyone recognises the obligation to ensure that adequate resources are continuously available to meet the Copernicus demand. Hence we invited all those concerned to come to the workshop for an open discussion.

Not all the services are the same and the degree of public and private sector involvement will be different for each. There is a great deal of difference between the set-up for say the local component of the land service where private service providers are heavily involved under contract to the EEA and the climate services where is very little private sector involvement today. Given the strong scientific and research base for climate change this is not surprising, but industry is already eyeing markets for climate information which should grow sharply in the next few years. Hence companies are very keen to work with the ECMWF and others to develop new products and to find new markets – together.

These new markets are potentially everywhere and whilst there is a vision that simply making Copernicus services products’ available will be sufficient, we do not agree with this approach. Firstly, companies wish to be masters of the products and services which they are offering and hence need to ensure that they have assured access to both data and to knowledge. This implies a direct relationship either as a supplier or as a dedicated partner. This should be managed through competitive procurement which demands sustaining competition which should not be between public and private actors which we consider is generally unfair competition.

I was recently at a workshop organised by the OECD which illustrates this for me. Strangely it was a presentation by NASA which triggered the discussion; I say strangely because the boundary between public and private activity is generally clearer in the US. NASA offer an African wide service showing the outbreak of fires. It was described as to how it was used, how a private sector user had been found and how a survey had been conducted amongst the users on what they would like to see developed further. One attendee asked how many companies were involved in the project to which the response was none but this was not considered to be a product of commercial interest as the resolution was not high enough. But, I commented, we shall never know if this is really the case since whilst it is a free “government” product no company will even look at it as the competition is too biased away from a private sector interest.

Now, this is not to say that it is right or wrong that NASA publish the product. It is purely to illustrate the issue. If the US government requires NASA to produce this product for whatever reason then they should of course do so and it should be available on a free and open basis. But then no company will consider investing especially if NASA (or any other PSB) looks to develop further to suit “the market”. It is a complex issue but one which is especially pertinent in the domain of EO services where many government bodies (public sector bodies or PSB’s) are rightly interested. It is for this reason we believe that a dialogue is necessary and a closer understanding which will reflect the reality of the situation as well as the interests of all parties. Let me also in passing just say that the site where this product can be found http://earthobservatory.nasa.gov/GlobalMaps/index.php is really nice - I like it a lot!

In an ideal world, we may well not choose to start from where we are today. But the origins of the technology in surveillance and scientific research (on the environment etc) has created this “dual-use” and “dual-interest” which we try to deal with. The focus on economic benefits and job creation as well as the digital society place great importance on this issue and we were very pleased that the workshop has at least opened the doors for discussions.