Thursday (May 10) was the deadline for the consortium — which includes European aerospace giant EADS; France's Thales and Alcatel-Lucent; Britain's Inmarsat; Italy's Finmeccanica; Spain's AENA and Hispasat; and a German group led by Deutsche Telekom — to agree to the terms.

The consortium, however, proved reluctant to take on the economic risks, and missed the deadline to come forward with a single company structure to run Galileo, a chief executive and common negotiating position.

Michele Cercone, spokesman for the EC's directorate general for transport, said the Commission now intended to propose "different scenarios to put Galileo on the right track again" since the companies had made "insufficient progress."

The EC is expected to present new plans to overhaul the project on May 16, which will then be sent to EU transport ministers for approval in June.

The latest proposal from the EC is that public money would be used to guarantee the risks and debts of the project.

The original intention behind Galileo was that European goverments would inject more than Euros 1 billion into the early development of the project.

The deployment phase - the launch of the satellites and the construction of ground stations - was expected to cost at least another Euros 2 billion with two-thirds of the investment coming from the private sector.

The latter was also expected to pick up all the running costs in the long term. Cercone said the revised option would be better for Europe's taxpayers in the long run. He likened the alternative options to the difference between leasing a car and buying one. Originally, Galileo was to have started launching its 30 satellites by 2008. However, that date was postponed to 2011/12 due to previous disagreements between EU governments on how to pay for the system.

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