INCEPTION IMPACT ASSESSMENT

Inception Impact Assessments aim to inform citizens and stakeholders about the Commission's plans in order to allow them to provide feedback on the intended initiative and to participate effectively in future consultation activities. Citizens and stakeholders in particular are invited to provide views on the Commission's understanding of the problem and possible solutions and to make available any relevant information that they may have, including on possible impacts of the different options.

Title of the initiative

Establishment of an EU Space-based Global Secure Connectivity System

Lead DG (responsible unit)

DEFIS.B.1 - Secure connectivity, Space surveillance and Applications

Likely Type of initiative

Legislative

Indicative Planning

Q1 2022

Additional Information

-

A. Context, Problem definition and Subsidiarity Check

Context

As the EU economy and society are undergoing a digital transformation 1  and geopolitical and cybersecurity threats are increasing, Europe needs secure and resilient global connectivity. Global satellite communication coverage for dual-use purposes is increasingly handled as strategic infrastructure. The EU satellite communication Industry is confronted with fierce competition from worldwide operators, operating with global satellite constellations and focusing on the consumer-end connectivity. Moreover, Russia and China are announcing government-backed global space infrastructures with a variety of connectivity strategic objectives.

President von der Leyen stressed the importance of secure connectivity in her 2020 State of the Union address 2 . The European Council conclusions of 1-2 October 2020 call for digital sovereignty in an open economy, and for new industrial alliances, including on secure telecommunication networks 3 . The present initiative was announced in the European Commission’s ‘Action Plan on synergies between civil, defence and space industries’ on 22 February 2021 4 . It will build, among others, on the GOVSATCOM component 5 of the EU Space Programme entering into force in 2021.

Problem the initiative aims to tackle

The core issue

EU lacks autonomous, secure, resilient, high-speed and ubiquitous connectivity to cover European governmental, commercial and citizens’ needs.

Key problems

1) Lack of resilient, secure telecommunication infrastructures and rising threats

·Changes in the threat environment and an increase in hybrid attacks has been observed;

·Vulnerability of digital information infrastructures leaves EU institutions, bodies, agencies and Member States, as well as businesses and citizens, exposed to cyber and hybrid attacks;

·Insufficient secure and reliable telecommunication capabilities available 

2) Growing data and service demands, which EU global digital competitiveness requires to be met

·Increased complexity and volume of governmental needs, and enterprise needs;

·Acceleration of digital transformation, security and high-speed is required for a developing Industry 4.0;

·Increased demand for information assurance (privacy, security) and guarantee of service.

3) Insufficient connectivity infrastructure within the EU and in the regions of strategic interest

·Regions of strategic interest to the EU (Artic, the Atlantic and Africa) lack connectivity infrastructure, affecting governments and businesses and populations;

·Fragmentation on the demand side of governmental users at regional, national and/or EU level generates considerable non-recurring costs for each individual project, thus preventing the acquisition of additional capabilities

4) Risk of strategic dependency & loss of digital sovereignty

·Global competition relating to satellite-based-internet is rising with support from foreign governments;

·The EU could fall behind in technological developments compared to initiatives launched in other regions leading to a loss of EU competitiveness and digital sovereignty;

·Risk of excessive reliance on non-EU connectivity solutions with fewer security assurances.

5) Digital divide, which challenges socio-economic development and a fully functioning single market

·Digital exclusion concerns about 3% of the total EU population and 10% of households in rural areas 6 ;

·Digital divide leads to a limited socio-economic development and to suboptimal functioning of the overall single market, affecting businesses, EU population, rural EU regions;

Basis for EU intervention (legal basis and subsidiarity check)  

The initiative will be based on Article 189 TFEU, which provides the legal basis for the EU to act in space policy matters. This is a shared competence. This initiative will support EU policies such as security and defence, transport and mobility, communication and digital infrastructure and international partnerships. While some Member States own communication satellites, provision of global satellite communication services for all EU governmental actors, and provision of high-speed, secure, reliable and affordable connectivity on the entire European territory and in territories of EU strategic interest (Arctic, the Atlantic and Africa) cannot be ensured by individual Member States acting alone, without EU coordination. For the governmental services, no Member State has the means or the mandate to provide operational secure services at European level open to all Member States, relevant stakeholders and EU institutions and bodies.

Therefore, the action at EU level is justified, creates economies of scale, leads to more efficient use of resources, and avoids duplication of efforts across the Union and between civil and military stakeholders.

B. Objectives and Policy options

General objectives of the EU space-based secure connectivity initiative are to:

·Support implementation of the EU policies through ubiquitous, secure, reliable and affordable connectivity;

·Safeguard EU sovereignty and security and avoid excessive reliance on non-EU based solutions, in particular for security-sensitive functions.

Specific objectives are to:

·Ensure resilient and secure connections with advanced technological features meeting EU needs on a globally competitive basis;

·Provide high-speed broadband availability across the EU and worldwide to overcome existing gaps and addressing growing data and service demands in support of the inclusive and sustainable development of EU regions; 

·Ensure that the considered solutions provide the EU with an appropriate level of strategic autonomy in terms of technologies, assets, operations and services.

Possible indicative policy options:

·0. Baseline: No additional EU action would take place beyond what is currently foreseen in the EU Space Regulation. Member States having satellite communication capabilities would continue using them for their own security domains (in case of governmental service), and part of the EU governmental services would be provided by the GOVSATCOM component of the EU Space Regulation;

·1. EU owned space infrastructure: A dedicated space and ground infrastructure is developed, operated and fully owned by the Union and potentially Member States. Connectivity services are provided by an EU body or delegated entities, with possible retail commercialisation agreements to address private users. The approach resembles that used for setting up Copernicus and Galileo under the EU Space Programme

·2. Fully private infrastructure:  The system conception and deployment, its operations, maintenance and the provision of services would be entirely left to commercial operators. For the core public secure connectivity services, the EU would act as public anchor tenant, federating the needs of EU and Member States public stakeholders for secure satellite services and thereby creating a critical demand mass.

·3a. Public-Private Partnership - Concession: The investment required for system conception and deployment is ensured by a Public-Private Partnership, with a combination of EU funds, Member States funds and private investments. The operations are ensured by a concessionaire who takes the commercial and operational risk, in particular for commercial services. The EU would commit to appropriate long-term service payments to cover the demand of EU institutions and Member States regarding public secure satellite services.

·3b. Public-Private Partnership – Availability model:  The investment required for system conception and deployment is fully ensured by a private sector contractor. The EU would commit to long term availability payments regarding the use of the system, complemented by start-up payments during the construction and deployment phase. Tailored incentive schemes would reward compliance with the availability, quality, performance and security requirements of the EU and Member States. Outside of the reserved capacity for use by the EU and Member States, the contractor could be tasked to market services to public, commercial and private customers with the revenues subject to a profit-sharing approach

·4. Purchase of a minority stake in one of the non-EU constellations being built: A Public-Private Partnership, with a combination of EU funds, Member States funds and EU private investments would acquire a stake in one of the non-EU constellations being built, getting access to a share of the system capacity. The access to this capacity would be complemented by EU infrastructure (e.g. additional space capacity, EU-owned cybersecurity systems, quantum communication infrastructure)

The costs to build, operate and maintain the system are currently being assessed in an ongoing study 7 . Based on use cases developed through consultations with potential end-user communities, a system architecture is being developed. Costs will be assessed for each cost breakdown element leveraging cost assessment tools developed by space system manufacturers who are currently contributing to the study, as well as ESA costing expertise and models.

The impact assessment will, for each possible policy option, assess the potential funding mechanisms and a target allocation by potential funding source, mostly depending on the risk shareline between Public and Private stakeholders. The approach that is currently being implemented consists in determining, for each component of the system, which stakeholder will own the component and hence bear CAPEX cost and associated risk. For OPEX risks, a concept of operations assigns for each policy options the entity in charge of running operations, as well as generating revenues, taking on the associated OPEX and revenues risks.

C. Preliminary Assessment of Expected Impacts

Likely economic impacts

·Increased development of European technologies related to the initiative (space and ground segments, system integrators, terminal developers, including cybersecurity), major boost for space and telecommunication-related SMEs and start-ups across EU; 

·Contribution to the development of cloud, edge and high performance computing and Artificial Intelligence.

·The initiative would avoid excessive supply chain dependence from foreign technology, while offering business opportunities for large enterprises, SMEs and start-ups, again benefiting the Single Market’s overall functioning;

·EU’s Digital Sovereignty, by making own choices on digitalisation, building on own trustworthy, resilient and secure technologies, and delivering quality services and infrastructures for all;

·Contribution to upholding the EU Satcom industry’s competitiveness and technological leadership, including with innovative technologies and applications, and providing new opportunities of scale for economic growth;

·Strengthened EU strategic advantage as a digital partner, e.g. in Africa, the Atlantic, the Arctic region and globally;

·The satellite manufacturing industry, the digital and security industry and their supply chains will be impacted positively in terms of jobs creation. Satellite manufacturing is much more labour-intensive than the other sectors and sub-sectors.

·More affordable connectivity in all parts of the EU, especially in remote and rural EU regions;

·Increased competitiveness of the EU economy as a whole due to the decrease of digital divide, and better functioning of the Single Market by providing secure and high-speed broadband across Europe;

·Improved attractiveness in remote regions leading to increased investment;

Likely social impacts

·For governmental services, the most important social impact will be on civil security. The initiative will improve the satellite communications for a range of security providers e.g. law enforcement and emergency responders at regional, national and EU level. This should result in more effective operations of those security providers, with a positive effect on the security environment of all EU citizens. It will also support more effective EU External Action worldwide, including Common Security and Defence Policy operations and humanitarian aid, which will benefit the population in third countries;

·Increased resilience of telecommunication solutions that are the backbone of modern EU society, and will therefore increase resilience overall in society.

·Reduction of the digital divide, enabling high social impacts notably in rural areas in the domains of e-health, education, e.g. improving access to digital skills everywhere in Europe through online education and changes in mobility needs and patterns by providing citizens with the opportunity to live and work where they want;

Likely environmental impacts

·Satellite communication could significantly support existing EU environmental monitoring systems;

·Governmental services could also play a role in the: 

oImproved montoring of environmental hazard areas e.g. Seveso sites and power stations;

oMonitoring of the sustainable exploitation of natural resources (fisheries, Arctic, etc);

oMonitoring and, if needed, in operations during potential environmental crises such as oil spills and of climate changes due to the pollution of the atmosphere from greenhouse gases, stratospheric ozone depletion, degraded air and water quality, land contamination, deforestation and biodiversity loss; 

·Smart grids and intelligent heating, ventilation and air-conditioning enables a lower individual energy production; Internet of Things (IoT) solutions to monitor the environment;

·A wider adoption of smart agriculture practices will be enabled, with positive environmental footprints; 

·Access to internet contributes to the attainment of the United Nations’ Sustainable Development Goals (SDGs) – of particular importance for Africa; 

·Space debris impact will be mitigated by compliance with international guidelines on debris mitigation 8 and subscription to the EU Space Surveillance and Tracking (SST)/ Space Situational Awareness (SSA) initiative to ensure a secure and sustainable space environment. 

Likely impacts on fundamental rights

No direct impact is expected on fundamental rights.

Having EU-controlled digital infrastructure fully subject to EU data protection and confidentiality standards will protect citizens’ digital rights and uphold EU principles and values online.

Securing lives through increasing resilience of critical infrastructure, civil protection and public service capabilities contributes to protecting EU citizens’ fundamental rights.

Likely impacts on simplification and/or administrative burden

An EU secured connectivity system is expected to further enable the development of e-government services by ensuring a secured and more robust connectivity to the end-users, i.e. citizens and businesses, hence simplifying administrative procedures and formalities, ensure digital trust and increase the digitalisation of public services. 9  

By meeting the governmental users demand at EU level through a single shared system, fragmentation will decrease and generate less non-recurring costs for each individual project, hereby reducing the administrative burden.

D. Evidence Base, Data collection and Better Regulation Instruments

Impact assessment

A full impact assessment will be prepared and will accompany any Commission legislative proposal. The Impact Assessment Report will be provided to the Regulatory Scrutiny Board in Q4 2021.

Evidence base and data collection

Governmental user needs have been largely collected through the work of the impact assessment and definition of the GOVSATCOM component of the EU Space Regulation (see data collected in document ‘High Level Civil Military User Needs for Governmental Satellite Communications (GOVSATCOM)’ 10  and other documents relating to the GOVSATCOM impact assessment 11 . This work can be used directly in the impact assessment for the EU space-based secure connectivity initiative.

The ongoing study ‘GOVSATCOM and EuroQCI: Building Blocks Towards a Secure Space Connectivity System’ 12 is collecting data on the subject conducting more than 60 interviews with critical end-user segments (e.g. aviation, maritime, automotive, telecommunication, road traffic management, energy and utilities, medical connectivity, finance and data centres), and has delivered an aggregated elaboration of user needs for an EU Space-based Global Secure Connectivity System in June 2021. The study is performed by leading industry players, including European satellite manufacturers, operators and service providers, telecommunication operators, and launch service providers. 

The EU space-based secure connectivity initiative will use contributions from the two studies on EuroQCI, (‘Study on the System Architecture of a Quantum Communication Infrastructure’) that will contribute to the analysis of use cases and the description of the corresponding user requirements based on EuroQCI.

Ideas on innovative solutions for a space-based secure connectivity infrastructure were collected from SMEs and start-ups during the workshop “Secure Connectivity initiative – opportunities for the European New Space Ecosystem” on 14 June 2021.

Additionally, the tender for a new study calling for disruptive ideas to contribute to the definition of the system architecture of an innovative EU space-based global secure connectivity system has been published by the Commission in July 2021.

Consultation of citizens and stakeholders

There will not be a dedicated Open Public Consultation on the Space-based secure connectivity initiative, because a range of stakeholders’ consultations have already taken place. For example, general public concerns for a better broadband infrastructure bridging the Digital Divide have been addressed in recent public consultations. Stakeholders consultations have also been carried out in the context of comprehensive studies on GOVSATCOM services and European quantum communication infrastructure (EuroQCI) (see above section).

Beyond these general objectives sought by this initiative, the options at stake for the impact assessment will mostly focus on technical and security concepts that will need to be addressed in expert forums rather than a broad public consultation:

·On technical options: through a targeted consultation of stakeholders, which is being conducted through the ongoing European Secure Space Connectivity Study, a one day workshop with SMEs and start-ups (which took place on 14 June) and the ENTRUSTED study that involves user communities and the industry;

·On security trade-offs: through a closed stakeholder consultation for the security needs, which is currently taking place and is still ongoing through several GOVSATCOM Expert workshops and through the ENTRUSTED study; 

·As the system is expected to provide both governmental and commercial services, the modalities of the financial involvement of the private sector during the implementation and service provision phases, will need to be defined. This implies using sensitive commercial data that cannot be addressed during a public consultation but is discussed with the identified stakeholders.

Stakeholders include: civil users, academia as well as research and technology organisations, governments, EU institutions, EU Committees (Committee or the Regions and European Economic and Social Committee), agencies and private economic operators (including the space industry, telecommunication operators and businesses). All stakeholders are represented in the activities described above. This Inception Impact Assessment serves as the main feedback mechanism for the general public.

Will an Implementation plan be established?

No implementation plan is foreseen at this point in time.