In the previous chapter, an analysis has been made of the regulatory and framework conditions that affect the European GMES downstream sector. In this section, these conditions are compared with the US. The focus has been on these conditions that were scored ‘important’ (score 7 or higher) in table 4.1 for Europe. The results of this comparison are presented in the table below.
Table 5.5 Comparison of regulator and framework conditions
Regulatory and framework conditions Comparison with US
I Regulatory conditions
• Competition Policy
• Few formal regulatory entry barriers to competition.
• EO markets are open for non-US companies. However, also imports fall under the ITAR regulations for security and defence applications.
Regulatory and framework conditions Comparison with US
• US ITAR Regime • The US ITAR regulation adversely affects the ability of US Space firms to tap foreign markets.
• Restrictions also apply if a non US firm is using a classified component.
• INSPIRE Directive • There is no US equivalent to the INSPIRE directive. However, there is the public-private partnership “Open Geospatial Consortium”, that was founded in the US, and serves as a global forum for the collaboration of
developers and users of spatial data products and services, and to advance the
development of international standards for geospatial interoperability. It should be noted that is not specifically focused on the US.
• GMES supporting EU objectives and policy domains
• US develops Integrated Earth Observation system, as the US input to a Global Earth Observation System of Systems
• Environmental policy • Intensity of environmental policy making seems to be less in the US compared to Europe. Environmental policy making is also scattered, many different institutions and departments play a role, and overall Department of the Environment does not exist. Provision of environmental information seems to be more supply driven than in Europe.
• NOAA policy • NOAA, the National Oceanographic and
Atmospheric Administration provides the National Weather Service (NWS). Current regulations prescribe: “The NWS will not compete with the private sector when a service is currently provided or can be provided by commercial enterprises, unless otherwise directed by applicable law.”75 II Framework conditions
• Labour Force and Knowledge Skills
• Sector employment profile and non compliance with European Guidelines
• The EO Service Industry workforce in the US is highly qualified. 70% has a masters degree or above
• Future Workforce availability • A survey of 2004 indicated that attracting staff with sufficient skills, and keeping them is difficult. There is strong competition from
Regulatory and framework conditions Comparison with US
non-EO sectors to get the employ the qualified people. 76.
• Knowledge Base Development
• How Research / Technological Change is funded
• No US equivalents on federal level in R&D compared to ESA/FP7 for downstream industry
• R&D in other sectors • The EO downstream industry in the US is also dependent from R&D in other sectors, that results in improved inputs in their production process leading to productivity increases. Examples are higher resolution images, or more powerful computer processors.
• Energy and Environment
• Increased attention for mitigation the consequences of natural disasters
• NOAA stresses as well the contribution of EO for this topic.
• Attitude to public sector
• Public sector influence on EO Markets as a client
• Also in the US EO markets are driven by the government, although this is largely influenced by the security and defence part.
• Balance between the need for institutional funding and remaining a competitive industry
• The US sector is strongly dependent from institutional funding.
• Access to third country markets
• Increasing investment in developing countries • The rising development of new countries in this domain such as China and India hinders US companies as these do hinder European companies
• Data
• Cost of Data • The cost of data do not come forward as a
barrier in US industry surveys. III Exogenous conditions
• Demographic Change
• Impact on availability of labour for a highly skilled sector
• Demographic change in the USA is similar to Europe, although it is less intense, a higher fertility and immigration offset the ageing trend.
• Global Competition
• Competition amongst certain types of service provision
• Due to the international commercialisation of space related products and services competition issues arise across many applications This is as valid for the EU as for the US.
• Competition from aerial photography, land- • Growth in the satellite based high resolution 76
Regulatory and framework conditions Comparison with US
based surveys and mass market geo web browsers
imagery has been hampered by competition from competitor products. This holds for EU as for US companies.
• Technological Change • The US is ahead in innovation compared to the EU, and this has not been made up yet by the Lisbon initiatives.
The most important points to note from the comparison are:
• The US ITAR regulation adversely affects the ability of US Space firms to tap foreign markets.
• There is a strict prohibition of public institutions offering services that can be offered by private companies.
• Attracting and keeping highly skilled workforce is considered a key impediment for development by EO companies in the US.
• No US equivalents on federal level in R&D compared to ESA/FP7 for downstream industry
• The cost of data do not come forward as a barrier in US industry surveys.
5.9 Summary
The results from the comparison have been summarised in the following table. We refer to the explanations on sector definitions and sample methodologies in the previous sections which always need to be taken into account when comparing these figures.
Table 5.6 The US and EU downstream sector compared
Europe USA
Revenues (m€) 306* 845**
Employment 3,000*** 7,000
Average revenue growth p.a. 2% 9%
Defence/Homeland security share in total revenues 12-18% 40%
* Including revenues data sales, and including Canada. Based on VEGA (2008)
** $1 billion against a historic exchange rate of 0.845 (31/12/05). This includes data sales. Excluding data sales total revenue is estimated at € 730 million.
*** Including Canada
In summary the following observations can be made about the characteristics of the EO downstream sector in the US and its comparison with Europe:
• US Industry is between two and three times the size of Europe, depending on the exact definition of the sector.
• Revenue per head is approximately 20% higher in US. This statistic is related to the slightly larger average size of companies in the US.
• There are similar market profiles in terms of applications. The main difference is the much larger domestic defence / security market accessible to US companies.
• US industry appears to be growing faster than that in Europe.
• There is no direct evidence of any clear differences in export performance / market access between the US and Europe. Surveys on both continents reveal almost identical perception that other countries’ industry enjoys better protection in their domestic markets.
• Investment capacity is similarly limited within most companies. There is significant dependence on public sector investment in R&D.
• However, there is limited funding available for R&D for downstream industry from the federal budgets.
• There is a strict prohibition of public institutions offering services that can be offered by private companies.
• Attracting and keeping highly skilled workforce is considered a key impediment for development by EO companies in the US.