Commercialization of Space

31 March 2015

Commercialization

• Use of equipment sent into or through outer space to provide goods and services of commercial value

• Example: Telstar 1 (1962) demonstrated TV transmission

• Example: Syncom 3 (1964) broadcast Olympics from Japan

History

• NASA has always spent most of its funding on private companies:

• Aerospace corporations, launch service providers, subcontractors, universities

• Department of Defense similarly• It has also fostered commercial activities in

space:• Communications, microgravity uses,

manufacturing

Initial NASA Approach

• Specifications and control by NASA• Providers are sub-contractors, must meet

NASA specs• Profits and incentives determined by NASA

Outer Space Treaty (1967)

• Does not allow national claims of territory• Requires governments to supervise their

citizen’s activities• Vague on liabilities, definitions, procedures• Did not envision all possible activities• Do possible commercial activities violate the

treaty?

Commercial Space Ventures• Communications: highly profitable, supports

direct broadcasting• Satellite navigation• Natural resources and remote sensing: never

supported itself, until Google used free images• Launch vehicles• Transport to ISS to replace Shuttle, Russians• Tourism: expensive but popular• Mining: technically and economically feasible?

New Paradigm for Commercialization

• NASA will purchase complete services for a fixed fee

• Contractor decides how to meet specifications• Competition drives innovation and reduces

price• NASA concentrates more on deep space and

exploration

Selection of Boeing and SpaceX (2014)

• Selection of Boeing and SpaceX as the providers of a U.S.-based capability to take humans to the International Space Station (ISS) is a major milestone in the almost six-decade history of space exploration. It is just the latest sign that the old paradigm of government-only space travel is being replaced by something else -- a new business ecosystem composed of novel relationships among NASA and the aerospace industry

• No longer will NASA own the ISS "trucking company" -- specifying every nut and bolt. Instead, NASA is buying services from U.S. industry. To be sure, the new announcement made it clear that NASA will be carefully examining the safety aspects of each design. But the designs will still be those of Boeing and SpaceX and vetted by NASA.

• the rest of the world is still stuck in a nearly government-only mode, NASA, with the support of the Obama administration, is letting loose the creativity of American know-how.

• G. Scott Hubbard, Stanford University

• Beginning with the NASA Commercial Orbital Transportation Services competition, continuing with the Commercial Resupply Services (cargo) and now the Commercial Crew selection, NASA "bet the farm" on commercial companies filling the gap left by the retirement of the space shuttle, with the Commercial Crew companies (SpaceX and Boeing) replacing the Russians in bringing NASA astronauts to the ISS. This will allow NASA to invest the savings in deep space capabilities such as SLS and Orion.

• NASA's proper role can be summed up in three words: "Explore Deep Space." It is time for NASA to turn over the low Earth orbit work to industry while NASA focuses on getting humanity to Mars, following in the tracks of robotic rovers Spirit, Opportunity and Curiosity. History teaches us that without a trailing edge of commercial exploitation and profitability, exploration as large scale, routine human endeavor will not succeed.

Reasons for Government Support

• Financial market insufficient– High uncertainty and/or risk– Large fixed costs– Long lead times for payback

• Examples: Nuclear power, airmail

Results of recent launch failures

• Examples: OSC Antares, SpaceX Falcon 9• Show some risks and also recovery strategies

Summary

• Many uncertainties: Technical and economic feasibility still not demonstrated

• US has good record of fostering commerce• New paradigm may allow more focus on

exploration• Government is still the principal market