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Issues Affecting the Development of EO Industries
Briefing note on issues affecting the use of EO-based applications for environment and security and tentative solutions for the development of an efficient [Swiss] EO-based industry
Claude René Heimo
EEF-Switzerland and Sarmap Senior Associate
January 20-22, 2004
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Preamble
The objective of this briefing note is twofold: first, assess governance issues and policy distortions affecting the productivity, competitiveness and growth of Swiss value-adding companies (hereafter VACs) operating in the field of spaceborne Earth Observation (hereafter EO) for sustainable development, environmental conservation and security in Switzerland and elsewhere in the world; and second, propose some possible solutions to overcome these barriers in accordance to market economy principles.
It has been drafted based on both, the still dominant market position of the public sector (as illustrated in the figure below); and recent experiences accumulated after nearly three years of involvement in ESA-sponsored Earth Observation projects as Sarmap Senior Associate dedicated to policy, legal and institutional aspects of EO integration into the mandate of sector agencies (hereafter operating agencies).
The Problem
EO Information Technologies - including Remote Sensing (RS), Geographic Information Systems (GIS), and Global Positioning System (GPS) - are powerful tools to manage effectively our limited earth resources. As discussed during the CERN sessions of the recent Geneva WSIS, adding together present computer technology, the connectivity of the Internet, and the availability of EO data equates to great economic opportunities, notably improving the effectiveness and efficiency of development activities and economies of scale. Furthermore, many of the various environmental initiatives, treaties and conventions implemented over the last few decades require systematic observations of the earth that could only be derived from a more intensive use of new advances in EO information technologies.
However, most public or private operational agencies are presently unaware of the potential of EO information technologies, which could help them manage more effectively earth resources. This is generally attributed to a large information gap between the remote sensing community, operational agencies and end user communities such as farmer, natural resource managers, agronomists and livestock specialists, foresters, land planners, insurance managers, and small businesses, etc., not to mention the community in charge of disaster prevention and mitigation (flooding, drought, earthquakes, landslides, pollution, conflicts and wars).
Furthermore, the university culture hampers remote sensing applied research in a number of ways: basic elements of EO information technology have not yet generally been fully incorporated in traditional curricula of relevant universities' earth disciplines and barriers among disciplines are impeding applied remote sensing research, which should be interdisciplinary by nature (i.e. not only restricted to remote sensing specialists).
And finally, information that could be derived from EO data is generally restricted to scientists and remote sensing specialists. However, the civil society also needs up-to-date information concerning the physical, chemical and biological environment of our planet, as well as data on the human environment, pressures on the natural environment and environmental impacts on human well-being. So far, however, there have been very few initiatives to raise public awareness of the importance of EO information technologies for increasing public understanding of dynamic earth processes. In turn, a better public understanding of earth processes could certainly help national governments implementing environmental treaty's and space policies' obligations.
ESA, like other Spatial Agencies, and ESA national subsidiaries [such as the Swiss Space Office in Switzerland (SSO)] are currently playing a major role in providing the benefits of remote sensing to end users by supplying data, technical and scientific expertise, and by funding applied research on practical applications of EO information technologies. However, the applied research and applications communities need more help from these institutions in promoting and exploiting ESA's data. So far, however, in Switzerland, there is only limited assistance available to resolve EO integration problems into the mandates of operational agencies.
Issues
Despite important and constructive political, institutional and financial steps taken by Space Agencies, notably ESA and relevant ESA national subsidiaries (such as the SSO) to encourage development and use of remote EO applications, four major groups of technical or structural barriers and governance issues must be addressed if EO data are to fulfil their potential. They are briefly summarized below:
A. Data and Data Processing Constraints (affecting all categories of stakeholders)
One of the major barriers affecting the development of advanced EO application tools for the production of EO products and the development of EO services meeting the needs of operational agencies is related to timely access to data and data continuity as described in Box 1. In light of the heavy investment required for the development and use of EO products and services, VACs and operational agencies have to be assured of a reliable and continuous flow of EO-derived data and information for processing.
Box 1: Other Constraints Impeding the Use of EO Data
 Data from Space Agencies-EO missions are not "applications-ready" end products that could meet the needs of operational agencies;
 Often they do not meet the timeliness requirements of services;
 They are difficult to access;
 EO products require remote sensing specialists to be processed; and
 The development of EO services requires a constant interaction between remote sensing, GIS, GPS and sector specialists.
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B. Issues originated from Space Agencies and National Subsidiaries
Data acquisition is merely the first step in developing a service. Box 2 summarizes some of the most prevalent weaknesses affecting the use of EO data for the development of services meeting end users' needs. Furthermore, little research has been conducted on the full, life-cycle costs of developing remote sensing products and services meeting operational agencies' needs, how those costs can be reduced or, balancing these, the economic benefits of using remote sensing information in applied settings. Space agencies and national subsidiaries investing in application, products and service development must, therefore, be prepared to make additional efforts for the development and the establishment of a conducive policy environment, including the continuous development of awareness raising and capacity building/training activities leading to the development of proactive partnership agreements between VACs, research institutions and operational agencies.
Box 2: Other Issues Originated from Space Agencies and National Subsidiaries
 Space Agencies and National Subsidiaries are not investing enough in the EO downstream sector (promotion, training, information, support to operational agencies, etc.). As a result, there are relatively few training and extension/demonstration activities for expanding the use of EO among operational agencies;
 So far, Space Agencies and National Subsidiaries have not paid sufficient attention to operational agencies' information needs, although this issue is a the core of current EO development programs;
 User-driven EO R&D projects should be given more attention (most R&D projects are initiated and performed by remote sensing entities, which are considered by Space Agencies and National Subsidiaries as prime contractors). As a result, there is an overwhelming concentration of ESA-funded R&D activities in remote sensing departments of universities;
 There is no real action plan for expanding the use of EO among national operational agencies beyond global programs (GMES, TESEO, FP6, DUP, EOEP, etc.)
 Public access to R&D projects' outcomes is rather limited, if non-existent or non-available to operational agencies and the public; and
 There is a lack of CBA performed on the costs and benefits of EO-derived programs, notably to show that the cost of EO data IS NOT prohibiting the expansion of commercial applications.
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C. Issues faced by EO Industry (VAC)
Aside of data acquisition and data continuity constraints, most issues affecting VACs and the development of partnership agreements with operating agencies are of policy and corporate governance nature. They are summarized in Box 3. In addition, to transform data into information and applied products, remote sensing experts must understand end users' information needs, cultural contexts and organizational environments. Unfortunately, technologists often lack this information, and end users are not aware of existing processing technologies. Technology transfer research describes this gap as the “social distance” between those with technical skills and those who will use the information they produce. As a result, outreach efforts should be made to increase interactions and span the social distance between these two groups of stakeholders. Moreover, creating a sound corporate governance structure should be considered central to the success and growth of EO-based enterprises.
Box 3: Examples of Issues Faced by VACs
 The EO service industry is too fragmented and without comprehensive strategy;
 The EO service industry is generally working in isolation;
 There is a general lack of vertical integration with large companies and/or operational agencies;
 End users' expectations or operational agencies' information needs are largely unknown;
 There are relatively few R&D cooperation between VAC, universities and operational agencies;
 The competition for project between private (VAC) and (semi)public entities (such as universities) is often unfair from a market-based economy point of view;
 There is an excessive dependence from internationally funding sources for R&D activities;
 There are still large problems regarding data availability and, moreover, continuity in data availability (see point A above) and finally
 Financing opportunities for the integration of EO products and services into operational agencies' programs and capacity building are in short supply.
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D. Issues faced by Operational Agencies (End users)
Major barriers faced by operational agencies to integrate EO-derived products in their development programs are listed in Box 4. Basically, operational agencies (i.e. application end users) generally lack the technical understanding of EO information technologies. Applied users need products and services, not data. Their interests lie in the timeliness and accuracy of information to support decisions or actions. As a result, transforming raw EO data into products and services meeting the need of operational agencies relies mostly on the expertise of private sector remote sensing specialists who can process raw data into meaningful results and develop applied products and services from the data. Their development is, however, hampered by many public sector governance issues. Improving governance rules is, therefore, needed, notably those designed to enhance public/private cooperation. In this framework, awareness raising, capacity building and extension costs (e.g. education and training for technical staff) should also be recognized as continuing costs.
Box 4: Examples of Issues faced by Operational Agencies
 There are relatively few EO projects integrated in the agenda of operational agencies;
 The current availability of EO applications for sector development is largely unknown;
 The benefits from EO data and EO applications are largely unknown;
 Operational agencies are not equipped with a skilled work force capable of internally disseminating EO information technologies;
 There is a widespread wrong perception about the cost of EO data, which is still affecting the use of EO data;
 ESA R&D program and outcomes are largely unknown;
 ESA promotion, extension and data policy strategy is largely unknown at the decision-making level;
 There is no real interagency partnership for the development of EO applications;
 Lack of budget to include EO information technologies in current programs;
 Procurement rules are not fully respected, if not respected at all;
 Budgetary constraints are affecting the absorption of new technologies in spite of potential economies of scale;
 Doing business as usual still prevails (sector specialists' resistance to new technology); and finally
 The absence of a comprehensive reference framework (peer review, quality control, standards)
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Tentative Responses to Issues in Switzerland
The management of the Swiss' participation in European Space has been entrusted to the Swiss Space Office (SSO) under the State Secretariat responsible for national science policy. As such, Switzerland is involved in all the main decisions leading to the development of EO-derived applications in Europe. In addition, new space-related technology promotion mechanisms have been recently established to facilitate access to finance for the development of space-technology-related projects, promote new opportunities for researchers and provide assistance or business development support for the creation of space-related enterprises (ESINET, CTI-Space, NAVOBS).
However, in spite of the fact that Switzerland played a major role in the creation of ESA, which was decided during the European Ministerial Space Conference in Brussels in 1973, Switzerland is lacking a comprehensive Space Development Strategy. As a consequence, the use of EO data in Switzerland is generally restricted to both a small number of individual VACs and the applied research community.
Both, the fast pace of change and improvement in EO data availability and the emergence of space-related financing mechanisms have, however, created an urgent need for institutional organization measures that would go beyond the boundaries of the SSO. These measures are urgently needed in order to bring some form of structure to overcome the structural barriers and governance issues that have been described above. Otherwise, bridging the existing knowledge gap between institutions involved in applied research (including VACs) and operational agencies would be further compromised and VACs further weakened as they would become less capable of resolving their problems, which would result in a helter-skelter of individual solutions.
To overcome this issue, outreach efforts should be made by the SSO, VACs and Universities to develop new policies and strategies enhancing the use of EO data by national operational agencies. This can be accomplished by supporting the development of a conducive policy environment that would help (i) alleviating existing policy and governance distortions, both at the public and private sector level; (ii) promoting and generalizing the use of satellite data as a source of information for operational agencies; (iii) contributing simultaneously to infrastructure, data support and data use; (iv) introducing remote sensing in operational services; (iv) regrouping remote sensing scientists into expertise pools of international reputation; and (vi) better rewarding successful applied research. In turn, operational agencies should be more committed to (i) increase funding for the development of new remote sensing applications meeting their specific needs or the needs of their clients; and (ii) better supporting value-added service providers (VACs) that should be considered key institutions to bridge the gap between science research and applications.
To increase the receptivity of operational agencies, one of the key factors would be to increase their awareness in the use of EO data and products: great efforts have been made to inform operational agencies (and the public at large - tax-payers) of the progress of their nationally-funded space programs, this also to maintain adequate levels of political support.
Another factor would be the ability to transfer EO technologies to a wider base of users and the public at large as to create additional value. In this framework, VACs should be considered the main drivers of EO information as they have developed an extended capacity to exploit new advances in EO technologies and new inventions in a commercial manner. The rate of growth of the businesses is directly connected to the value found in the applications, and the words "better-faster-cheaper" should fit well into the jargon of EO businessman.
Consequently, increasing awareness and the ability to transfer EO technologies to and for the benefit of operational agencies in Switzerland should require the establishment of new and innovative institutional mechanisms. For the sake of discussion, some of possible institutional mechanisms are described below:
Preliminary Recommendations
As has been mentioned above, EO cuts across many sectors. Thus, information related to the benefits that could be derived from a more comprehensive use of EO data is becoming above all a problem of information coordination between data suppliers (ESA), data processors (VACs), applied research (VACs and universities) and product users (private/public operational agencies and the public at large). The best way of tackling the above technical, structural and coordination issues would be to accept, as a given, the multiplicity of diversity and the administrative and regulatory independence of existing operational agencies and involve them on a voluntary basis in a more or less formal information and training network with beneficial objectives. As the use of EO data and products by each operating public/private agency would depend on how it would benefit from the proposed network, this proposed institutional formula avoids challenging their respective mandates. As such, it is expected that such a network will influence the outline of operational agencies' programs through cooperation, dialogue, and intellectual, technical or moral persuasion.
The primary task of such a network would be to promote the sharing and exchange of information on the benefits that could be derived from a more comprehensive use of EO data and products. To be successful and impact on operational agencies' programs, such a network should function as an “information market” where information can be openly and freely “traded”.
Such a network should inevitably acquire a “network manager” or hub. This hub is expected to be proactive in the management of the network activities, which may tentatively include:
 Identifying the specific EO data and products' needs of operational agencies;
 Encouraging collaboration among network members (VACs, universities and operational agencies) to avoid duplication and promote economies of scale;
 Maintaining information about existing data and new applied research outcomes;
 Organizing technical workshops and meetings and training sessions;
 Offering a framework for sharing experiences and information; and
 Defining a common resource information policy
There is, however, no “black box” solution to the selection of the hub's institutional position as different institutions could be selected to serve as the network hub. They include government institutions such as SSO, technical (survey or environmental) departments, ad-hoc committees attached to scientific research departments or State Secretary, space-related professional associations; or private institutional set-up such as technology parks. Opting for a technical government department, perhaps with the exception of the SSO, may, however, introduce the risk that this department might be tempted to directly control activities of the proposed network, thus tainting its credibility as an honest broker. Furthermore, creating a new institution with the mandate to coordinate information to improve awareness on the use of EO data and products and implement capacity building program would not be the best response.
Yet, the recent emergence at Y-Parc, Yverdon, of the European Space Incubators Network (ESINET - http://esinet.com -including 30 European members) may well offer a new institutional opportunity, the more that ESINET is aimed at providing free advices and seed finance to public and private operators on the use and development of space-related products and enterprises specialized in telecommunication, navigation, remote sensing and monitoring and use of ESA's systems.
Other institutional solutions may well be envisaged. But, whatever the institutional solution promoted, the suggested establishment of an information and training network would require a series of initial measures to ensure its full operationallity
Next Steps
In the short-term, institutionalizing and operationalizing the above services in Switzerland would require two types of urgent initial and complementary actions:
A National Symposium designed to bring together decision makers, researchers, qualified sector specialists and users in the area of remote sensing applications. Its goal would be to showcase examples of programs and projects, which could bridge the gap between applied remote sensing research efforts and user communities, and to stimulate the development of new projects to be developed in partnership between Vacs and operational agencies. This symposium should provide (i) information about ESA and national space-related policies and strategies; (ii) an update of the current technical advances in EO applications (e.g. an opportunity for the Swiss VACs to present their recent research results); (iii) an occasion to discuss issues affecting the development of a Swiss EO industry (iv) an opportunity to learn about funding opportunities, access to data and images, and new programs; and (v) a forum of exchange of ideas and information. Plenary sessions, research presentations, and workshop discussions should allow participants to discuss remote sensing applications issues in a variety of settings.
The development of a full feasibility study, including a market research study, the assessment of operational agencies needs, their training requirements and a well-conceived business plan. The feasibility of these proposed services should also be based upon the outcomes of cost-benefit analyses (CBA) providing operational agencies with a comparative assessment of the social and financial costs and benefits of including EO data and products in their programs and determine the extent to which they are likely to add more in public welfare and economic gain by diverting resources or increasing the costs of doing business as usual. The CBA will comprise a set of discrete steps using the general methodology and principles of CBA outlined in ESA tender documents.
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