BEIJING: In the latest of a series of setbacks for the Galileo navigation satellite project, a European bid to create an alternative to the U.S. Global Positioning System, China is set to claim a frequency that the European Commission wants to use for a security-oriented portion of the service.

Talks between European and Chinese officials have failed to resolve the dispute, adding another obstacle to Europe's hopes of challenging the GPS network's global monopoly, just as China and Russia are moving ahead with competing programs of their own.

It is not the first time that Europe and China have clashed over Galileo. In what, at the time, the European Commission touted as a coup, China committed €200 million, or $270 million, in 2003 to participate in the development of the Galileo constellation of 30 satellites. But it was forced out of major decision-making in 2007 because of security concerns and the collapse of the financing plan for the program, which was to include public and private money.

The financing package evaporated when a consortium of European defense and space contractors, which was to have paid for more than half the costs ¡ª estimated to total at least €3.4 billion ¡ª in exchange for long-term concession rights, failed to get off the ground. The program was subsequently salvaged through a decision to underwrite it solely through public money, and to earmark an additional €2.4 billion of E.U. funds for the project. It is now expected to reach full deployment by 2013, five years behind its original schedule.

So far, only two Galileo satellites have been launched for testing; full-fledged Galileo satellites are set to begin launching in 2010. The European Commission, executive arm of the E.U., is awarding contracts for the building of the ground monitoring and control infrastructure as well as for the full constellation of satellites, but there are already concerns about whether these contracts can keep to revised constraints of budget and schedule.

While Galileo was falling behind schedule, the Chinese were developing their system, Compass/Beidou. Chinese officials have told the International Telecommunications Union, the United Nations agency that allocates radio spectrum frequencies for satellite use, that China plans to transmit signals on the wavelength that the European Union wants to use for Galileo's Public Regulated Service. An encrypted frequency for governmental, immigration, public safety and potentially military use, the Public Regulated Service would operate alongside Galileo's main operations, which are intended to be commercial.

Under the International Telecommunications Union's policies, the first country to start using a specific frequency is granted priority status, and later service providers transmitting on the same band must ensure that their broadcasts do not interfere with previously authorized signals. Because some of China's satellites are expected to begin transmitting before the Europeans can get to the frequency, China would effectively be able to gain ownership of it, meaning that Europe would be unable to use the wavelength unless it received China's permission. Even then, some European Union members, such as France, are raising security-related concerns that their encrypted signal might be compromised.

An agreement with the United States in 2004 on the Public Regulated Service makes it virtually impossible for Europe to move this signal to another frequency.

Two rounds of negotiations to resolve this "frequency overlay" issue have gone nowhere, bogged down by mutual suspicion and misunderstandings.

"Our sense is that in the last few years the Chinese developed their own ideas for their own system and have not really talked to anybody else ¡ª not to us, nor to the Americans and nor to the Russians," said Paul Verhoef, who heads the Galileo project at the European Commission. "The Chinese came to us with a couple of details and we then needed to go into a discussion, which at first they were reluctant to do. We had to point out problems, not just for us and the Americans, but for the Chinese as well."

Mr. Verhoef expressed confidence that the two sides would resolve the issue, though he gave no time frame. "It's late in the day to look for solutions," he said. "It's taking a bit of a political profile, which is not normal for commercial systems."

The negotiations are further complicated by European worries that China may plan to try to compete with Galileo for commercial business. Mr. Verhoef said it had indicated that Compass would be for military use.

"If we would be able to come to an agreement with China that our systems were to be interoperable, we would still be interested in having cooperation," he said. "If, on the other hand, they are not forthcoming in discussions on compatibility, then we would have to think how we would proceed."

According to Glen Gibbons, editor of Inside GNSS, an industry publication, officials from China's Ministry of Science and Technology said at a meeting of satellite navigation experts in Munich this month that they hoped to work out an agreement with Galileo before the launch of three new Compass satellites this year. But, according to Mr. Gibbons, they added that if they were unable to do so, China would continue with its program anyway, launching seven more satellites next year, with a full deployment of 30 satellites expected by 2020.

The ministry did not respond to requests for comment.

Analysts say China may feel slighted over the way the Europeans rebuffed their willingness to invest in Galileo. "Europe pulled back in a big way with China," Mr. Gibbons said. "China wanted direct access to the Public Regulated Service, but some of the more security-minded elements in the European Union felt that China was getting too much access to this major strategic type of utility, so they shut them out."

There is an element of d¨¦j¨¤ vu in Europe's struggle to keep up with the Chinese. In 2002, President Jacques Chirac of France gave voice to the fear among many Europeans that the continent risked becoming a technological "vassal" of the United States unless it built Galileo. "They do not want to be dependent on a critical infrastructure that they don't control," Gibbons said of the Europeans.

The same might be true of the Chinese, said Shen Dingli, a professor at Fudan University in Shanghai who is an expert on Chinese foreign and defense policy. "By having our own satellites in operation our country can avoid being manipulated," he said. "You would never know, if you solely rely on others' satellites, when you would be disconnected."