Power grids could be one of the infrastructures benefitting from a second civil GPS signal
The L2C Study: Benefits of the New GPS Civil Signal
How much will civilians benefit from further GPS modernization efforts? A recent study conducted on behalf of the U.S. departments of commerce and transportation focused on L2C applications other than those of aviation and military users. The analysis c oncluded that L2C will substantially benefit dual-frequency applications until alternative signals are widely used and could be a long-term boon for applications requiring three or more frequencies.
GPS has had enormous benefits to the economy and society that go well beyond military and civil aviation applications – that is becoming ever more widely understood. What has been more open to discussion are the civilian non-aviation benefits of further U.S. efforts at GPS modernization, particularly the introduction of additional signals.
In an effort to define and measure civilian benefits, the U.S. departments of commerce and transportation commissioned some economic analyses of civil signal modernization. Particular emphasis was placed on the value of the L2C signal centered at 1227.60 MHZ, which recently began broadcasting from the first modernized GPS Block IIR-M satellite. This article is an outgrowth of that effort.
The analysis focused on the value of signals at more than one frequency for precision non-aviation use by business and government. It considered how utilization of the second civilian signal and its benefits would evolve in the coming decades as the L2C constellation expands and as additional signals become available from GPS and other GNSSes.
In the study, projections were developed under four scenarios — with the “moderate benefit”scenario seeming most likely — that reflect combinations of developments, including the strength of markets, the timing of L2C signal availability, the timing of Galileo availability, and complementary and competitive relationships with augmentations.
The main findings of the study are:
In addition to the domestic benefits examined, L2C will undoubtedly have important international benefits.
The L2C Evolution
L2C signals can be used for both horizontal and vertical measurement and positioning along with L1 C/A as satellites become available over more areas and in more times of the day. The first satellite can be used for improved timing. L2C also can be used in configurations of three or more frequencies in combination with the forthcoming GPS L5 signal and with signals from Galileo and GLONASS.
At various times in each signal’s deployment and development of markets, other signals will, to varying degrees, provide complements to L2C and competitors to it. L2C has its greatest potential to generate benefits for dual frequency applications until alternative signals are widely utilized, and for long-term use in applications taking advantage of three or more frequencies.
The L2 signal is currently being widely used for augmentations, and the new signals can be used in that way along with the existing constellation. However, L5’s use as a competitor to L2C and as a partner to L2C in multiple frequency implementations primarily depends on the launch timeline for satellites carrying the L5 signal since L5, centered at the 1176.45 MHz frequency, is not currently in service. Plans call for its implementation on the GPS Block IIF satellites, with the first IIF now expected to be launched in 2008.
L2C deployment requires a commitment to operational capability. Decisions will be required as to launch dates and signal activation for each successive satellite containing the signal. The L2C benefits study is intended to contribute to decisions about L2C deployment with consideration of alternative scenarios informed by quantitative and qualitative analysis.
To explore the implications of L2C evolution, we make projections about the numbers of U.S. precision users, incremental benefits, and user costs, based on examination of applications and available evidence on value of benefits, and consider how these can unfold over the period 2006–2030.
The analysis focuses on precision users of L2C who use two or more frequencies, although we do include estimates for supplementary multiple-frequency users and single-frequency users. However, the estimates of these types of use are more conjectural and do not contribute much to the overall value of benefits.
Benefits net of user costs are measured according to the widely accepted economic productivity approach, which includes productivity gains and cost savings. This comprehensive approach is more appropriate than one that measures benefits simply by expenditures on equipment and services.
Incremental benefits and user costs are defined to include all differences in outcomes from what would be expected in the absence of L2C.
Signal Advantages and Availability
Higher signal power and forward error correction will improve GPS mobile, indoor, and other uses.
Multiple signals will allow many users to obtain greater precision and availability at lower cost than achievable with proprietary augmentation systems. However, signal combinations combined with public and private augmentations for even greater precision and reliability will support applications with some of the greatest potential benefits.
Combined use of L2C with L1 C/A and L5 will also enable some precision users to achieve even greater reliability and accuracy. Although available simulations differ on the size of benefits of three signals over two, many professionals expect important advantages from such “tri-laning” techniques.
The U.S. Air Force launched first satellite containing the L2C frequency on September 25, 2005, and the signal became available on December 16. Going forward, two to four Block IIR-M satellites are expected to be launched each year. With six to eight satellites anticipated to be available by about December 2007, users will be able to access at least one single satellite with L2C at almost all times. Eighteen L2C-capable satellites (including the Block IIF generation) will be available by about 2011 and 24 L2C signals, around 2012. (These statements are based on official 2005 launch schedules and are subject to revision.)
The first L5 launch is scheduled for March 2008. L5 does not have a GPS signal in use at its frequency, so it will not be usable to any great extent until a large part of its constellation is available. In contrast, L2 is in place to transmit the military P(Y) code and the carrier signals of the satellites are currently being used along with L1 C/A for higher-accuracy applications.
Consequently, the L2C signal can be used immediately as a second frequency. The GPS signal L1C, which is being planned now for implementation on the GPS III satellites scheduled for launch beginning in 2013, will be able to be used immediately, even for single frequency use, without augmentation because it is at the same frequency as the L1 C/A-code.
Using Multiple Frequency GPS
Scope of Benefits and Costs
In some organizations, dual-frequency GPS will be the catalyst for extensive changes in systems that will occur earlier than if dual frequency GPS had not been adopted.
In the L2C study, benefits are measured according to the “economic productivity approach,” which is superior to the expenditure/economic impact approach because:
L2C benefits can take both market and non-market forms, including increases in the productivity of business and government operations, user cost savings, benefits to the public through provision of public services and saving lives, and through improved health and environment.
Net benefits are benefits minus user costs. Incremental user costs include all additional costs that are expected with the availability of L2C, not simply the difference in costs between single- and dual-frequency receivers. These can take the forms of enhancements and accessories purchased when adding L2C capability (e.g. better displays, controllers and software) or costs associated with users upgrading to multiple frequency GPS from less sophisticated single-frequency GPS systems or non-GPS systems.
However, incremental user cost is net of savings from use of receivers with less proprietary technology and any reduced use of private augmentation subscription services.
Expenditures to develop the GPS system infrastructure (satellites and ground segment) are not included, however, because most represent nonrecurring, sunk costs. Moreover, if we added them to our L2C analysis, we would need to include benefits to aviation and military users as well as their associated equipment costs.
These scenarios reflect combinations of developments, including the strength of markets, the timing of L2C signal availability, the timing of Galileo availability, and complementary and competitive relationships with augmentations. (See the sidebar, “L2C Benefit Scenarios” at the end of this article for details of assumptions behind each.)
Probabilities are not given for the scenarios because the likelihood of alternative Galileo delays cannot be evaluated quantitatively. Moreover, the diluted benefits and opportunity lost scenarios are significantly affected by U.S. GPS policy, which is also not predicted.
Estimates of GPS Users
Within each scenario, projections are made for precision L2C users of three or more frequencies, dual frequency precision users, multiple frequency supplementary users, and single frequency users of L2C.
The starting point for determining the number of high precision users is a widely relied–upon estimate of 50,000 high precision users worldwide in 2000. We assumed that the United States had 40 percent of precision users in that year.
The study further assumes that the number of U.S. high-precision GPS users will grow by 18 percent per year from 2000 to 2030. This projection is based on a rate of price decline for user equipment of 15 percent per year and a corresponding a 1 percent increase in users for each 1 percent decline in price. Finally, we include an assumption of general growth in the economy (i.e., independent of GPS receiver price) that adds 3 percent per year.
These assumptions and calculations produce a projection of U.S. high precision GPS users — those using augmentations, of 38,776 in 2004. The estimated number of U.S. high precision users of any signal or combination nearly doubles to 75,177 from 2004 to 2008 and reaches 145,752 in 2012 and 333,445 in 2017.
We computed the numbers of multi-frequency GPS users by applying an estimated percentage to the number of high-precision users for each scenario. The number of multi-frequency precision users adopting dual versus three or more frequencies was then calculated using projected values for the percent of each category. Finally, the number of L2C users was calculated based on projections of the percent of multiple frequency users that use L2C, constructed to reflect the dynamics of each of the scenarios.
Rapid growth is projected in the numbers of U.S. precision multiple-frequency L2C users. In the moderate benefits scenario, the number of L2C users reaches 64,000 by 2017, of which 35,000 are dual frequency users and 29,000 use three or more frequencies. The numbers of L2C users vary widely among scenarios.
Average Net Benefits per User
Our research suggests that average annual incremental benefit per precision L2C user net of costs could reach the range of $8,000–$16,000 per year. This includes benefits across systems that are not attributable to specific numbers of users and non-market benefits, such as safety and environmental advantages, as well as market benefits associated with the value of goods and services transactions. Market benefits attributable to numbers of users are estimated at 60 percent of all incremental net benefits.
These are peak values after benefits have had an opportunity to rise with experience using the new signal. The values decline from their peaks as new users with lower benefits are attracted by declining costs and some high benefit users move to alternatives.
In considering the plausibility of these figures, consider that:
(This could result, for example, from avoiding 100 deaths due to industrial accidents or environmental impacts at a value of $4 million per incident.)
The present values of incremental user costs range among scenarios from $175 million to $514 million in year 2005 purchasing power.
Costs represent one eighth or less of the total value of benefits in each scenario.
Value of Benefits
We calculate the value of civilian net benefits of L2C through multiplying civilian net benefits per user by the number of L2C users for the user type and scenario. Higher net benefit scenarios result from higher benefits per user and larger numbers of users.
At a 7 percent real (above inflation) discount rate, present values of total net civilian market benefits range from $9.6 billion to $1.4 billion dollars. Benefits under the moderate benefits scenario have a present value of $5.8 billion and those under the high opportunity scenario $9.6 billion. (Values are discounted using annual data to calendar year 2006. That essentially places the values at the middle of 2006.)
Nearly all of the incremental benefits of L2C stem from precision use of two or more frequencies. That is both because of moderate numbers of other types of users in these and their low benefits per user.
The timeframe in which other signals become available after L2C plays an important role in the size of estimated benefits. In the high opportunity scenario, for example, dual-frequency net benefits appear higher than benefits from use of three or more frequencies because the latter applications start later as additional frequencies become available.
In the other scenarios, benefits from applications using three or more signals are higher than dual-frequency benefits because the benefits of dual frequency remain as strong when competing frequencies become available.
New spending can encourage greater long run economic growth, especially when it is associated with new technology for widely usable infrastructure. The spending may induce others to innovate, invest in greater capacity, take risks and/or provide financing. While direct estimates of the size of long run economic multipliers are not readily available, analyses of determinants of growth suggest that effects are modest, perhaps adding 20% to market benefits. Because of the uncertainty surrounding such estimates, no allowance is made for growth multiplier effects in the estimates shown.
The ratios of benefits to costs range from a multiple of 20 in the high opportunity scenario to 9 in the opportunity lost scenario. It would be surprising if benefit/cost ratios were not high because only direct user expenses (and not system costs) are included to get a picture of incremental costs of each set of outcomes.
The moderate benefits scenario, which has a ratio of 20, is considered more likely than the others. Because of the interest in obtaining the greatest benefits, focusing on the present value of net benefits is appropriate for policy rather than using the benefit/cost ratio when all ratios are high.
As mentioned, changes in various factors could substantially affect the outcomes of L2C benefits and produce either an overstatement or an understatement of these. See the “Benefit Variables” sidebar at the end of this article for a listing of the most important factors.
The economic productivity approach offers a means of considering benefits in a comprehensive way. Benefits and costs are incremental. They are defined to include all changes that occur as a result of the existence of L2C.
Defined comprehensively, benefits can encompass results from more extensive changes in equipment and systems and include both benefits that are attributable to specific numbers of users and those that may be incorporated in systems and spread over a broad population. They include both market and non-market benefits — those that are not bought and sold in markets, such as benefits to life, health, security and the environment.
User costs also are incremental, including all changes that occur with the availability of L2C, and are net of savings from moving to less sophisticated and less proprietary equipment.
Sidebar: The L1C Studies
Upper limits of total benefits of L1C for the single year 2005 — including those obtained by single- and multiple-frequency users in private households, businesses, governments — were estimated at approximately $2 billion: $640 million for mobile and wireless location services, $62.5 million for information/data services, $990 million for “commercial GPS,” and $490 million for in-vehicle information and navigation services (telematics).
The L1C study approximated a “rough order of magnitude” dollar value of L1C applications based on 2005 spending by applying a “team consensus” for an assumed incremental benefit as a percentage of market value (revenue) for each of 13 user categories. Spending in user group categories was based on a compilation of trade estimates.
Sidebar: L2C Benefit Scenarios
Sidebar: Benefit Variables
Understatement could result from
For figures, graphs, and images, please download the PDF of the article, above.
U.S. Defense Science Board, The Future of the Global Positioning System, Washington, D.C.: Office of the Under Secretary of Defense For Acquisition, Technology, and Logistics, October 2005, <http://www.acq.osd.mil/dsb/reports/2005-10-GPS_Report_Final.pdf>
Author ProfilesIrving Leveson, president of Leveson Consulting in Jackson, New Jersey, U.S.A., is an economist and strategic planner. He is principal investigator and author of the L2C Study analysis for the United States Departments of Commerce and Transportation. He previously held senior positions with Hudson Strategy Group and Hudson Institute and worked with the RAND Corporation and the National Bureau of Economic Research.
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