Space becomes a new frontier for business activities

Michael K. Simpson is Executive Director of the Secure World Foundation and a former president of the International Space University

Private industrial involvement in designing, building and operating space assets isn’t new. Large European companies like Airbus Defence and Space can boast more than 50 years of involvement in manufacturing space hardware, and smaller ones like Austria’s Magna Steyr can enthrall audiences with the story of how they came to be a world expert in building cryogenic feed systems for Ariane rockets.

What is new is the leadership the commercial space sector is showing in setting the space agenda. They are finding solutions to problems of space sustainability. They are shouldering serious business risk. And they are boldly identifying business opportunities worthy of substantial private investment.

As recently as a decade ago, it was rare to see private businesses represented at international gatherings focused on multilateral space policy. Today they are active participants in briefing United Nations forums such as the Committee on the Peaceful Uses of Outer Space and the High-level Forum preparing UNISPACE+50 – often there by invitation as others seek their expertise and insight.

The recently-founded Hague Space Resources Governance Working Group, which looks to identify policy building blocks to facilitate fair and orderly development of raw materials in space, has a wide range of members, including businesses. The government members of the Group on Earth Observations are actively considering giving business a greater say on the GEO’s work.

Winston Churchill likened private enterprise to a healthy horse, pulling a sturdy wagon. But space businesses are increasingly involved in designing the cart and setting its direction.

As private industry becomes more heavily engaged in space as a business opportunity, it also becomes less willing to wait for governments to overcome barriers to operating a successful business in the harsh environment of space. This phenomenon has been a driving force in the emergence of the European-born Space Data Association. This association adds member-provided ephemeris data (on location, timing and ‘health’ of objects) to government-generated surveillance and tracking information, dramatically improving the ability of satellite operators to make informed decisions about avoiding collision with the orbiting assets of other operators.

There are also a growing number of private solutions being proposed to address the hazard that space debris presents to space activity. The days when we look only to government laboratories for this kind of research are behind us – even if space entrepreneurs have yet to show that they can close a debris removal business plan without substantial public investment.

There are important changes in the way the private space commerce community is reacting to, and with, public investment. Where once the holy grail of space commerce was a government contract that covered costs and guaranteed a profitable return, businesses and governments are increasingly seeking more traditional purchase contracts for space services and assets.

When the American company SpaceEx lost a rocket and its payload to a launchpad explosion in September 2016, the company and its financial backers had to accept the resulting loss of income as a cost of doing business. That loss has been estimated at US$250m. Had the company’s return to flight in January 2017 not been successful, there is a chance that the company could have suffered irreparable damage. SpaceX clearly benefits from large government contracts, but what is changing is that it also shoulders considerably more business risk than was the case for space companies a decade or two ago.

What may yet prove to be private business’s greatest contribution to the human experience of space is the creativity with which this part of the space sector turns technical and scientific discoveries into business ideas. Private funding, creativity, and capital are moving ahead with plans that are pressing frontiers and, presenting challenges that were not part of the space activity environment until very recently. Virgin Galactic is pressing forward with a vision of suborbital space flights for private citizens in spite of reversals. Swiss entrepreneurs at S3 are seeking to demonstrate active debris removal capability with their robotic space plane. The Sierra Nevada Corporation is converting an abandoned NASA lifting body project into a Dream Chaser spacecraft with the potential for worldwide service.

All of these trends taken together have implications not only for the future of privately-funded, profit-seeking operations in space but for public space programmes as well. As private initiatives make progress on the ways to provide reliable space activities at reduced costs they increase their attractiveness to national space agencies and publicly-funded space projects. Former European Space Agency director Jean-Jacques Dordain made this point very clearly several years ago at a Global Networking forum sponsored by the International Astronautical Federation. Acknowledging the ESA’s support for the trend toward greater involvement of the private sector in publicly-funded space projects, he also noted pointedly “We want reduced costs.”

Fortunately, that’s what the commercial space sector wants too. In 2004 SpaceX founder Elon Musk told participants at the International Space University’s symposium that he expected to reduce the cost of launch by an order of magnitude and “maybe by two”.

Proposed new architectures, techniques or approaches are increasingly presented in terms of their promise to offer increased value and broader benefit at reduced cost. Businesses that deliver on these promises have a solid foundation for success. Those that don’t are likely to fail. Business is like that.