The botched launch of three of its satellites will delay Russia's bid to challenge U.S. dominance of the market for satellite navigation technology by at least six months, analysts said on Monday.
The loss of the three satellites, which crashed into the Pacific Ocean about 1,500 km (900 miles) north-west of Hawaii on Sunday, scuppers the Kremlin's much-touted plans to complete the GLONASS system this year.
The state has spent over $2 billion in the last decade on achieving what Russian Prime Minister Vladimir Putin has called satellite navigation sovereignty and has high hopes it will lead a domestic revolution in consumer devices like smartphones and vehicle sat-navs.
But experts estimated the crash cost 5 billion roubles ($160 million) and set Russia back six months in realizing the navigation system, which has its roots in the Cold War technology that was used to guide strategic missiles.
It's a very vexing loss: several billion roubles and several months to build the next three satellites, Igor Lissov, editor of the specialist space journal Novosti Kosmonavtiki, published by the federal space agency, told Reuters.
Full exploitation of the GLONASS system, 100 percent coverage, will be delayed by about half a year.
The satellites that crashed were the last of a batch of 24 needed to complete GLONASS, or Global Navigation System, Moscow's answer to the U.S.-built Global Positioning System (GPS).
To operate globally, GLONASS needs a minimum of 24 satellites, the number in the GPS constellation, not counting spares in orbit. Russia currently has 20 active satellites.
The U.S. system works, but ours doesn't yet, said defense analyst Alexander Konovalov, head of the Institute of Strategic Assessment and Analysis.
Without GLONASS, Russia's military fears that it is at the mercy of the United States, which it says could block or blur its GPS signal in a time of crisis -- allegations which were rife during the 2008 Georgia-Russia war, Konovalov said.
During that conflict, Russia could have avoided a number of civilian causalities and attacks on its war planes had it been equipped with navigation devices and a fully operational satellite network, he added.
But also driving the battle for control over navigation technology is the myriad of consumer applications that have driven booming sales of GPS devices worldwide.
Despite the latest setback, analysts said Russia's dreams of matching the U.S. system may be close to fruition thanks to a Russian firm, KB Navis, which claims to have developed the first chipsets capable of melding the two systems.
Once the technology is sold later this year, Russian officials have pledged protectionist, anti-GPS measures to stimulate the domestic market.
Deputy Prime Minister Sergei Ivanov said in October that Russian was looking to introduce duties of around 25 percent by 2012 on the import of mobile phones without the GLONASS navigation system.
The head of the GLONASS operator, Alexander Gurko, said in August that Nokia, Motorola and Qualcomm were in talks with Russian chip manufacturers about the mass production of GLONASS handheld devices.
Gurko also said that the Russian satellite navigation market, estimated at only $1 billion in 2010, will grow to about $10 billion in 2014 and that GLONASS will also market its technology in India, the Middle East and ex-Soviet countries.
(Editing by Mark Trevelyan)